Document and Entity Information
Document and Entity Information - USD ($) shares in Thousands, $ in Billions | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 06, 2017 | Jun. 17, 2016 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | BLACKHAWK NETWORK HOLDINGS, INC | ||
Entity Central Index Key | 1,411,488 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 55,763 | ||
Entity Public Float | $ 1.6 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 1,008,125 | $ 914,576 |
Restricted cash | 10,793 | 3,189 |
Settlement receivables, net | 641,691 | 626,077 |
Accounts receivable, net | 262,672 | 241,729 |
Other current assets | 131,375 | 103,319 |
Total current assets | 2,054,656 | 1,888,890 |
Property, equipment and technology, net | 172,381 | 159,357 |
Intangible assets, net | 350,185 | 240,898 |
Goodwill | 570,398 | 402,489 |
Deferred income taxes | 362,302 | 339,558 |
Other assets | 85,856 | 81,764 |
TOTAL ASSETS | 3,595,778 | 3,112,956 |
Current liabilities: | ||
Settlement payables | 1,626,827 | 1,605,021 |
Consumer and customer deposits | 173,344 | 84,761 |
Accounts payable and accrued operating expenses | 153,885 | 119,087 |
Deferred revenue | 150,582 | 113,458 |
Note payable, current portion | 9,856 | 37,296 |
Notes payable to Safeway | 3,163 | 4,129 |
Other current liabilities | 51,176 | 57,342 |
Total current liabilities | 2,168,833 | 2,021,094 |
Deferred income taxes | 27,887 | 18,652 |
Note payable | 137,984 | 324,412 |
Convertible notes payable | 429,026 | 0 |
Other liabilities | 39,653 | 14,700 |
Total liabilities | 2,803,383 | 2,378,858 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock: $0.001 par value; 10,000 shares authorized; no shares outstanding | 0 | 0 |
Common stock: $0.001 par value; 210,000 shares authorized; 55,667 and 55,794 shares outstanding, respectively | 56 | 56 |
Additional paid-in capital | 608,568 | 561,939 |
Accumulated other comprehensive loss | (48,877) | (40,195) |
Retained earnings | 228,451 | 207,973 |
Total Blackhawk Network Holdings, Inc. equity | 788,198 | 729,773 |
Non-controlling interests | 4,197 | 4,325 |
Total stockholders’ equity | 792,395 | 734,098 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 3,595,778 | $ 3,112,956 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2016 | Jan. 02, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common Stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 210,000,000 | 210,000,000 |
Common stock, shares outstanding | 55,667,000 | 55,794,000 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
OPERATING REVENUES: | |||
Commissions and fees | $ 1,315,755 | $ 1,259,801 | $ 1,107,782 |
Program and other fees | 336,317 | 268,661 | 155,489 |
Marketing | 94,298 | 104,871 | 64,768 |
Product sales | 153,408 | 167,745 | 116,924 |
Total operating revenues | 1,899,778 | 1,801,078 | 1,444,963 |
OPERATING EXPENSES: | |||
Partner distribution expense | 933,142 | 874,043 | 762,245 |
Processing and services | 355,268 | 304,232 | 221,501 |
Sales and marketing | 274,799 | 260,638 | 189,408 |
Costs of products sold | 143,267 | 154,625 | 110,917 |
General and administrative | 99,428 | 92,172 | 64,029 |
Transition and acquisition | 11,465 | 7,639 | 2,134 |
Amortization of acquisition intangibles | 57,060 | 27,550 | 19,705 |
Change in fair value of contingent consideration | 2,100 | (7,567) | (3,722) |
Total operating expenses | 1,876,529 | 1,713,332 | 1,366,217 |
OPERATING INCOME | 23,249 | 87,746 | 78,746 |
OTHER INCOME (EXPENSE): | |||
Interest income and other income (expense), net | (449) | (1,970) | (184) |
Interest expense | (21,864) | (13,171) | (5,647) |
Income before income tax expense (benefit) | 936 | 72,605 | 72,915 |
INCOME TAX EXPENSE (BENEFIT) | (4,102) | 26,796 | 27,490 |
NET INCOME BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS | 5,038 | 45,809 | 45,425 |
Income attributable to non-controlling interests, net of tax | (380) | (200) | 122 |
NET INCOME ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC. | $ 4,658 | $ 45,609 | $ 45,547 |
EARNINGS PER SHARE: | |||
Basic (in usd per share) | $ 0.08 | $ 0.84 | $ 0.86 |
Diluted (in usd per share) | $ 0.08 | $ 0.81 | $ 0.83 |
Weighted average shares outstanding—basic (in shares) | 55,734 | 54,294 | 52,531 |
Weighted average shares outstanding—diluted (in shares) | 57,260 | 56,313 | 54,309 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
NET INCOME BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS | $ 5,038 | $ 45,809 | $ 45,425 |
Other comprehensive income: | |||
Currency translation adjustments | (9,034) | (21,413) | (16,587) |
COMPREHENSIVE INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS | (3,996) | 24,396 | 28,838 |
Comprehensive loss (income) attributable to non-controlling interests (net of tax) | (28) | 488 | 112 |
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC. | $ (4,024) | $ 24,884 | $ 28,950 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
OPERATING ACTIVITIES: | |||
Net income before allocation to non-controlling interests | $ 5,038 | $ 45,809 | $ 45,425 |
Adjustments to reconcile net income to net cash used in operating activities: | |||
Depreciation and amortization of property, equipment and technology | 48,379 | 40,983 | 28,548 |
Amortization of intangibles | 62,045 | 32,366 | 24,371 |
Amortization of deferred program and contract costs | 29,015 | 28,991 | 24,451 |
Amortization of deferred financing costs and debt discount | 6,506 | 1,187 | 533 |
Employee stock-based compensation expense | 32,592 | 30,130 | 15,365 |
Distribution partner mark-to-market expense | 0 | 0 | 1,312 |
Change in fair value of contingent consideration | 2,100 | (7,567) | (3,722) |
Reversal of reserve for patent litigation | 0 | 0 | (3,852) |
Loss on property, equipment and technology disposal / write-down | 9,838 | 1,761 | 1,062 |
Deferred income taxes | (8,899) | 29,810 | (11,825) |
Other | 5,093 | 4,800 | 3,453 |
Changes in operating assets and liabilities: | |||
Settlement receivables | 6,076 | (111,678) | 276,413 |
Settlement payables | 19,907 | 231,662 | (86,005) |
Accounts receivable, current and long-term | (13,012) | (57,171) | (33,998) |
Other current assets | (13,891) | (17,210) | (2,280) |
Other assets | (24,690) | (20,434) | (28,379) |
Consumer and customer deposits | 13,772 | (54,402) | 35,096 |
Accounts payable and accrued operating expenses | (14,835) | (2,988) | 942 |
Deferred revenue | 33,362 | 14,363 | 17,574 |
Other current and long-term liabilities | (21,707) | 16,877 | 1,402 |
Income taxes, net | 8,542 | (2,609) | (16,852) |
Net cash provided by operating activities | 185,231 | 204,680 | 289,034 |
INVESTING ACTIVITIES: | |||
Expenditures for property, equipment and technology | (52,332) | (52,738) | (39,709) |
Business acquisitions, net of cash acquired | (220,605) | (115,481) | (237,605) |
Investments in unconsolidated entities | (10,541) | (5,877) | 0 |
Change in restricted cash | (7,691) | 1,811 | (5,000) |
Other | 1,408 | (98) | (499) |
Net cash used in investing activities | (289,761) | (172,383) | (282,813) |
FINANCING ACTIVITIES: | |||
Payments for acquisition liability | 0 | (1,811) | 0 |
Proceeds from issuance of note payable | 250,000 | 0 | 375,000 |
Proceeds from issuance of note payable | (463,750) | (11,250) | 0 |
Payments of financing costs | (16,544) | (2,063) | (3,783) |
Borrowings under revolving bank line of credit | 2,985,490 | 2,473,529 | 215,000 |
Repayments on revolving bank line of credit | (2,985,490) | (2,473,529) | (215,000) |
Proceeds from notes payable to Safeway | 0 | 0 | 27,678 |
Repayments on notes payable to Safeway | (890) | (14,285) | 0 |
Repayment of debt assumed in business acquisitions | (8,964) | 0 | (41,984) |
Proceeds from convertible debt | 500,000 | 0 | 0 |
Payments for note hedges | (75,750) | 0 | 0 |
Proceeds from warrants | 47,000 | 0 | 0 |
Proceeds from issuance of common stock from exercise of employee stock options and employee stock purchase plans | 10,302 | 13,817 | 9,080 |
Other stock-based compensation related | (2,284) | (1,729) | (946) |
Repurchase of common stock | (34,843) | 0 | 0 |
Other | (156) | (1,494) | (44) |
Net cash provided by (used in) financing activities | 204,121 | (18,815) | 365,001 |
Effect of exchange rate changes on cash and cash equivalents | (6,042) | (10,521) | (9,987) |
Increase in cash and cash equivalents | 93,549 | 2,961 | 361,235 |
Cash and cash equivalents—beginning of year | 914,576 | 911,615 | 550,380 |
Cash and cash equivalents—end of year | 1,008,125 | 914,576 | 911,615 |
Cash payments during the year for: | |||
Interest paid (net of amounts capitalized) | 12,756 | 11,691 | 4,596 |
Income taxes paid (refunded) | (2,854) | 13,880 | 28,828 |
Spin-Off income taxes paid (refunds received), funded by (remitted to) Safeway | (890) | (14,285) | 27,678 |
Noncash investing and financing activities: | |||
Net deferred tax assets recognized for tax basis step-up with offset to Additional paid-in capital (see Note 10—Income Taxes) | 0 | 363,889 | 0 |
Note payable to Safeway contributed to Additional paid-in capital (see Note 10—Income Taxes) | 0 | 8,229 | 0 |
Financing of business acquisition with stock | 0 | 0 | 1,595 |
Financing of business acquisition with contingent consideration | 21,652 | 0 | 13,100 |
Forgiveness of notes receivable and accrued interest as part of business acquisition | 5,445 | 0 | 0 |
Intangible assets recognized for the issuance of fully vested warrants | 0 | 3,147 | 0 |
Conversion of income tax payable and deferred taxes to (from) additional paid-in capital | $ 0 | $ (882) | $ 1,807 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Income (loss) | Retained Earnings | Total Blackhawk Network Holdings, Inc. Equity | Non-Controlling Interests |
Beginning balance (in shares) at Dec. 28, 2013 | 52,913,000 | |||||||
Beginning balance at Dec. 28, 2013 | $ 228,164 | $ 53 | $ 107,139 | $ (126) | $ (2,873) | $ 116,975 | $ 221,168 | $ 6,996 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Comprehensive income | 28,838 | (16,597) | 45,547 | 28,950 | (112) | |||
Stock-based employee compensation expense | 15,365 | 15,365 | 15,365 | |||||
Exercise of options (in shares) | 589,000 | |||||||
Exercise of options | 6,834 | $ 1 | 6,833 | 6,834 | ||||
Surrender of stock-based equity awards for taxes | (888) | (504) | (384) | (888) | ||||
Excess tax benefit from stock-based awards, net | 2,608 | 2,608 | 2,608 | |||||
Issuance of restricted stock awards (in shares) | 34,000 | |||||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 29,000 | |||||||
Issuance of common stock in acquisition (in shares) | 62,000 | |||||||
Issuance of common stock in acquisition | 1,595 | 1,595 | 1,595 | |||||
Shares purchased under employee stock purchase plan (in shares) | 111,000 | |||||||
Shares purchased under employee stock purchase plan | 2,271 | 2,271 | 2,271 | |||||
Mark-to-market adjustment on warrants issued to distribution partners | 1,312 | 1,312 | 1,312 | |||||
Reclassification of income taxes payable and deferred taxes to additional paid-in capital | 1,807 | 1,807 | 1,807 | |||||
Exercise of warrant (in shares) | 316,000 | |||||||
Purchase of convertible note hedges | 0 | |||||||
Retirement of treasury stock (in shares) | (549,000) | |||||||
Retirement of treasury stock | (510) | 510 | ||||||
Contribution from non-controlling interests | 133 | 133 | ||||||
Dividends paid | (260) | (83) | (83) | (177) | ||||
Ending balance (in shares) at Jan. 03, 2015 | 53,505,000 | |||||||
Ending balance at Jan. 03, 2015 | 287,779 | $ 54 | 137,916 | $ 0 | (19,470) | 162,439 | 280,939 | 6,840 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Comprehensive income | 24,396 | (20,725) | 45,609 | 24,884 | (488) | |||
Stock-based employee compensation expense | 30,130 | 30,130 | 30,130 | |||||
Exercise of options (in shares) | 783,000 | |||||||
Exercise of options | 9,959 | $ 1 | 9,958 | 9,959 | ||||
Surrender of stock-based equity awards for taxes (in shares) | (10,000) | |||||||
Surrender of stock-based equity awards for taxes | (1,654) | (1,654) | (1,654) | |||||
Excess tax benefit from stock-based awards, net | 6,816 | 6,816 | 6,816 | |||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 231,000 | |||||||
Shares purchased under employee stock purchase plan (in shares) | 124,000 | |||||||
Shares purchased under employee stock purchase plan | 3,857 | 3,857 | 3,857 | |||||
Reclassification of income taxes payable and deferred taxes to additional paid-in capital | (882) | (882) | (882) | |||||
Net deferred tax assets recognized for tax basis step-up | 372,118 | 372,118 | 372,118 | |||||
Exercise of warrant (in shares) | 1,161,000 | |||||||
Exercise of warrant | 1 | $ 1 | 1 | |||||
Purchase of convertible note hedges | 0 | |||||||
Warrants issued to distribution partners | 3,147 | 3,147 | 3,147 | |||||
Repurchase of non-controlling interests | (1,360) | 533 | 533 | (1,893) | ||||
Dividends paid | (209) | (75) | (75) | (134) | ||||
Ending balance (in shares) at Jan. 02, 2016 | 55,794,000 | |||||||
Ending balance at Jan. 02, 2016 | 734,098 | $ 56 | 561,939 | (40,195) | 207,973 | 729,773 | 4,325 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative adjustment upon modified retrospective adoption of ASU 2016-04 and ASU 2016-09 | 16,521 | 650 | 15,871 | 16,521 | ||||
BALANCE —After adoption of recent accounting pronouncements | 750,619 | $ 56 | 562,589 | (40,195) | 223,844 | 746,294 | 4,325 | |
Comprehensive income | (3,996) | (8,682) | 4,658 | (4,024) | 28 | |||
Stock-based employee compensation expense | $ 34,685 | 34,685 | 34,685 | |||||
Exercise of options (in shares) | 324,904 | 299,000 | ||||||
Exercise of options | $ 5,018 | $ 0 | 5,018 | 5,018 | ||||
Surrender of stock-based equity awards for taxes (in shares) | (8,000) | |||||||
Surrender of stock-based equity awards for taxes | (2,233) | (2,233) | (2,233) | |||||
Issuance of common stock upon vesting of restricted stock units (in shares) | 385,000 | |||||||
Shares purchased under employee stock purchase plan (in shares) | 193,000 | |||||||
Shares purchased under employee stock purchase plan | 5,284 | 5,284 | 5,284 | |||||
Reclassification of income taxes payable and deferred taxes to additional paid-in capital | 0 | |||||||
Equity component of convertible notes including related tax benefits, net | 66,818 | 66,818 | 66,818 | |||||
Purchase of convertible note hedges | (75,750) | (75,750) | (75,750) | |||||
Warrants issued to distribution partners | 47,000 | 47,000 | 47,000 | |||||
Repurchase of common stock (in shares) | (996,000) | |||||||
Repurchase of common stock | (34,843) | (34,843) | (34,843) | |||||
Dividends paid | (207) | (51) | (51) | (156) | ||||
Ending balance (in shares) at Dec. 31, 2016 | 55,667,000 | |||||||
Ending balance at Dec. 31, 2016 | $ 792,395 | $ 56 | $ 608,568 | $ (48,877) | $ 228,451 | $ 788,198 | $ 4,197 |
The Company and Significant Acc
The Company and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 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 25 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. Conversion of Class B Common Stock On May 21, 2015, following approval of our Board of Directors (the “Board”) and stockholders, we amended our Certificate of Incorporation to eliminate our dual-class common stock structure by converting all outstanding shares of our Class B common stock into shares of Class A common stock on a one-for-one basis and renaming Class A common stock as common stock (collectively, the “Conversion”). As a result of the Conversion, we have retrospectively presented Class A and Class B common stock as common stock in our consolidated financial statements and related notes for all periods presented, including within earnings per share. This retrospective presentation had no impact on previously reported amounts of earnings per share as Class A and Class B common stock had equal rights to dividends as declared by our Board. Spin-Off Before April 14, 2014, we were a majority-owned subsidiary of Safeway Inc. (“Safeway”). On April 14, 2014, Safeway distributed its remaining 37.8 million shares of our Class B common stock to Safeway stockholders (the “Spin-Off”). As a result of the Spin-Off, we became a stand-alone entity separate from Safeway. See Note 1 — Income Taxes and Note 14 — Related Party Transactions for disclosures regarding this relationship. Basis of Presentation These consolidated financial statements include Blackhawk Network Holdings, Inc., a Delaware corporation, and its wholly-owned or majority-owned domestic and foreign subsidiaries, including Blackhawk Network, Inc., an Arizona corporation and the primary operating subsidiary of Blackhawk Network Holdings, Inc., and are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany transactions and balances among us and our subsidiaries have been eliminated in consolidation. For investment in entities which we have the ability to exercise significant influence, but not control, we use the equity method of accounting. Under the equity method, investments are recorded at cost and adjusted by our share of undistributed earnings or losses of such entities. The share of earnings or losses in investments accounted for under the equity method are reflected as Interest income and other income (expense), net in our consolidated statements of income. We utilize a three months lag in reporting equity income from our investments, adjusted for known amounts and events, when the investee’s financial information is not available timely or when the investee’s reporting period differs from our reporting period. For investments in which we do not have the ability to exercise significant influence over the investee’s operations, we use the cost method of accounting and recognize distributions as earned or received. We evaluate all our equity method and cost method investments quarterly to determine if other-than-temporary impairment indicators are present and whether an impairment charge is necessary. There were no such indicators during 2016 and 2015. The 2014 consolidated financial statements have been prepared as if we existed on a stand-alone basis prior to the Spin-Off, but may not necessarily reflect the financial position or cash flows that would have been achieved if we had existed on a stand-alone basis prior to the Spin-Off. Before the Spin-Off, our consolidated financial statements included an allocation of expenses arising from certain shared services and infrastructure provided by Safeway. These expenses primarily related to facilities rental and tax services and were allocated using actual costs or estimates based on the portion of services used by us. Management believes that the allocation methodology was reasonable and considered the charges to be a reasonable reflection of the cost of benefits received. Following the Spin-Off until the end of 2015, Safeway continued to rent facilities to us and provide certain tax services (related to tax periods through the Spin-Off) based on similar pricing terms. We also provide certain marketing, distribution and program management services to Safeway for which we receive program fees or expense reimbursements. Generally, such amounts are recorded as revenue in Program and other fees or Marketing revenue when rendered to Safeway as a content provider or as a reduction to expense in Processing and services when rendered to Safeway as a distribution partner. We evaluated subsequent events through the date that we filed this Annual Report on Form 10-K with the SEC. Use of Estimates The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and related notes. We generally base our estimates and assumptions on a combination of historical factors, current circumstances, and the experience and judgment of management. Significant estimates and assumptions include, among other things, estimates of fair value for goodwill, intangible assets and acquisition liabilities (including subsequent evaluation of goodwill and intangible assets for impairment); valuation assumptions for stock-based compensation and income taxes; contingent liabilities; allowances for doubtful accounts and reserves for sales adjustments and returns; useful lives of assets; and card redemption patterns and lives. Actual results could differ from our estimates. Fiscal Year We use a 52 -week or 53 -week convention ending on the Saturday closest to December 31. The fiscal years presented in our consolidated financial statements consist of the 52 -week period ended on December 31, 2016 (year-end 2016 or 2016 ), the 52 -week period ended on January 2, 2016 (year-end 2015 or 2015 ) and the 53 -week period ended on January 3, 2015 (year-end 2014 or 2014 ). 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 “See Note 15 - Selected Quarterly Financial Data (Unaudited) .” Recently Adopted or Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers (Topic 606), which along with amendments issued in 2015 and 2016, will replace nearly all current U.S. GAAP guidance on this topic with a comprehensive revenue measurement and recognition standard and expanded disclosure requirements. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This new guidance is to be applied retrospectively either to each reporting period presented (full retrospective method) or with the cumulative effect of initially applying the guidance at the date of initial application for reporting periods beginning after December 15, 2017. Early adoption is not permitted. We currently anticipate adopting this standard using the full retrospective method in the first quarter of fiscal 2018, and we are currently evaluating the impact of this guidance on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 changes current lease accounting standard by requiring the recognition of lease assets and lease liabilities for all leases, including those currently classified as operating leases. This new guidance is to be applied under a modified retrospective application to the earliest reporting period presented for reporting periods beginning after December 15, 2018. Early adoption is permitted. While management is evaluating the comprehensive impact of this guidance, this new guidance would require us to capitalize, at the appropriate discount rate, our operating lease commitments as disclosed in Note 11 — Commitments and Contingencies . 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 2016-06, 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 in conjunction with our issuance of the Convertible Senior Notes during our third quarter of 2016 (see Note 4—Financing ). Adoption did not result in significant changes to our existing accounting policies. 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 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. The retroactive adjustment to our consolidated statement of cash flows is an increase of $6.8 million and $2.7 million in cash flows provided by operating activities for 2015 and 2014 respectively, with a corresponding decrease in cash flows provided by financing activities. In August 2016, the FASB issued 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 November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires companies to explain the changes in the combined total of restricted and unrestricted cash balances in the statement of cash flows. ASU 2016-18 should be applied using a retrospective transition method, for fiscal years beginning after December 15, 2017, and early adoption is permitted. We plan to adopt this guidance for our 2018 fiscal year. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment , which simplifies the existing two-step guidance for goodwill impairment testing by eliminating the second step resulting in a write-down to goodwill equal to the initial amount of impairment determined in step one. The ASU is to be applied prospectively for reporting periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. We will be early-adopting this standard in the first quarter of 2017, however, it has no impact on our financial statements unless we determine in the future that goodwill is impaired at one of our reporting units. Financial Instruments and Fair Value Measurements We estimate the fair value of our monetary assets and liabilities noted below using appropriate valuation methodologies. Considerable judgment is required to develop estimates of fair value, and the estimates presented are not necessarily indicative of the amounts that we could realize in a current market exchange. Additionally, the fair values are estimated at year-end and current estimates of fair value may differ from the amounts presented. The fair value of Cash and cash equivalents, Settlement receivables, Accounts receivable, Restricted cash, certain Other assets, Settlement payables, Consumer and customer deposits, Accounts payable and accrued operating expenses and certain Other current liabilities approximate their carrying values due to the short-term settlement requirements and limited interest rate risk related to these instruments. Certain amounts of other receivables included in Other assets are due to be collected shortly after one year and the counter-party has limited credit risk, so the carrying amount approximates fair value. We follow applicable guidance that establishes a fair value measurement framework, provides a single definition of fair value and requires disclosure summarizing fair value measurements. Such guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement is determined based on the assumptions that market participants would use in pricing an asset or liability. Fair value guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable input be used when available. Observable inputs are those that the market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is measured in three levels based on the reliability of inputs: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 Inputs other than quoted prices included in Level 1 that are either directly or indirectly observable; Level 3 Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the inputs that market participants would use in pricing. Cash and Cash Equivalents Cash and cash equivalents consist of unrestricted cash balances and short-term, liquid investments with a maturity date of three months or less at the time of purchase. Overnight Cash Advances to Safeway Prior to the Spin-Off, on a daily basis, pursuant to an unsecured, intercompany interest-bearing note, Safeway borrowed available excess cash from us. Amounts borrowed by Safeway were available to us on the following business day, as necessary, to meet operating requirements (see Note 14 — Related Party Transactions ). In conjunction with our Credit Agreement, we terminated this agreement (see Note 4 — Financing ). Restricted Cash During 2016 , restricted cash represents funds held in an employee benefit trust related to Grass Roots, which we acquired during the fourth quarter of 2016, and funds held in an escrow account related to another acquisition (see Note 2 — Business Acquisitions ). Settlement Receivables Settlement receivables represent amounts due from retail distribution partners for consumer funds collected at the point of sale related to the purchase of prepaid products, amounts due from certain business clients for funds loaded onto incentive products and prepayments to certain content providers during the holiday selling season. The settlement receivable balances are net of commissions and fees retained by retail distribution partners. Accounts Receivable Accounts receivable relate primarily to fees and interchange due from the issuing banks of our proprietary Visa gift and open loop incentive cards; amounts due from content providers for marketing and card production sales; amounts due from retail distribution partners for the sale of telecom handsets and fulfillment services; and amounts due from business clients for rebate processing fees. Allowances for Doubtful Accounts and Reserves for Sales Adjustments We present Settlement receivables and Accounts receivable net of allowances for doubtful accounts and sales adjustments (the allowances) and record reserves for sales returns and other adjustments within Other current liabilities on our consolidated balance sheets. Allowances for sales adjustments and returns reserves include discounts offered to our partners and clients, sales returns for defective, damaged or lost product and refunds for certain fees. These allowances and reserves represent our best estimate of the losses and billing credits inherent in our outstanding receivables and estimates for future returns or adjustments at the balance sheet dates. We estimate allowances for sales adjustment and returns reserves based on historical trends, customer-specific circumstances, vendor-specific return policies, seasonality and lag patterns. We estimate allowances for doubtful accounts based on historical collection trends, the age of outstanding accounts receivable, customer-specific circumstances, and existing economic conditions. If events or changes in circumstances indicate that specific receivable balances may be impaired, we give further consideration to the collectability of those balances and the allowance is adjusted accordingly. For Settlement receivables , the allowances were $2.6 million and $5.0 million at year-end 2016 and 2015 , respectively. For Accounts receivable , the allowances were $6.0 million and $3.1 million at year-end 2016 and 2015 , respectively. We record additions to the allowances for bad debt expense in General and administrative expense, for sales adjustments related to Settlement receivables in Partner distribution expense and for sales adjustments for Accounts receivable as a reduction of revenue. Property, Equipment and Technology We state property, equipment and technology at historical cost or acquisition-date fair value for assets acquired in a business acquisition, net of accumulated depreciation and amortization. We recognize depreciation for equipment and technology on a straight-line method over the estimated useful asset lives of three to five years and amortize leasehold improvements on a straight-line basis over the shorter of their estimated useful lives or the remaining term of the lease. Technology consists of capitalized costs or the acquisition-date fair value for both purchased and internally developed software. Software purchased or licensed for internal use is primarily enterprise-level business software that we customize to meet specific operational requirements. Software developed for internal use is generally used to deliver processing, transactional, order management, on-line and digital services to our content providers, distribution partners, business clients and consumers. We capitalize application and development charges and amortize them over an estimated useful life of generally five years. We evaluate long-lived assets for impairment annually or more frequently when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such an event occurs, we then determine the expected future undiscounted cash flows from the asset. If the sum of the expected future undiscounted cash flows are less than the carrying amount of the asset, we recognize an impairment loss. We measure the loss as the amount by which the carrying amount exceeds its fair value calculated using the present value of the expected future undiscounted cash flows. In 2016, we identified an impairment charge of $5.5 million related to a previously acquired asset as a result of our platform integration efforts. This amount is presented within Transition and acquisition expense. We did not identify any indicators of impairment during 2015 and 2014 . Business Acquisitions We use our best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. Our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair value of assets acquired and liabilities assumed, with the corresponding offset to goodwill, to reflect new information obtained about facts and circumstances that existed as of the acquisition date. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, we record any subsequent adjustments to our consolidated statements of income. Goodwill Goodwill represents the excess cost over the estimated fair value of the net assets acquired in a business combination. This excess is not amortized, but rather capitalized and evaluated for impairment at the reporting unit level at least annually. Goodwill impairment tests require judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units and determination of the fair value of each reporting unit. We conduct an evaluation of goodwill for impairment annually on the first day of the fourth quarter, or sooner if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is below its carrying amount. Testing for impairment is a two-step process. In the first step, we compare the fair value of the reporting unit to its carrying value. If the fair value of the reporting unit is less than its carrying value, we perform a second step to determine the implied fair value of goodwill for that reporting unit. If the carrying value of goodwill exceeds the implied fair value of goodwill such excess represents the amount of goodwill impairment. For certain reporting units, we may apply a qualitative test prior to performing the two-step test where we assess events and circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of the events and circumstances, we conclude that it is more likely than not that the fair value of the reporting unit is greater than its book value, we conclude that there is no goodwill impairment and do not proceed with the two-step process described above. Based on our annual evaluations, we have concluded that goodwill has not been impaired for any reporting periods. Intangible Assets Intangible assets consist of acquired retail distribution partner, content provider and other customer relationships; patents, domain and trade names and other intangibles; as well as retail distribution partner relationships resulting from the issuance of equity awards (see Note 2 — Business Acquisitions , Note 7 — Goodwill and Other Intangible Assets and Note 9 — Equity Awards Issued to Retail Distribution Partners ). Intangible assets are amortized on a straight-line or accelerated basis, based on our assessment of the pattern of economic benefits, over their expected useful lives, which range from one to 15 years. For acquisitions, we classify acquired software technology as Property, equipment and technology, net . We evaluate intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such an event occurs, we then determine the expected future undiscounted cash flows from the asset. If the sum of the expected future undiscounted cash flows are less than the carrying amount of the asset, we recognize an impairment loss. We measure the loss as the amount by which the carrying amount exceeds its fair value calculated using the present value of the expected future undiscounted cash flows. We have not identified any indicators of impairment during 2016 , 2015 and 2014 . Program Development Costs We pay for program development costs to or on behalf of some of our retail distribution partners. These costs include, but are not limited to, card displays, marketing allowances and technology platform integration. In the event of early termination of a contract, payments are refundable on a pro rata basis from the retail distribution partners to us. These costs are deferred as Other current assets or Other assets and amortized over the shorter of their estimated useful lives or the contractual term to Partner distribution expense , Sales and marketing or Processing and services expense depending on the nature of the payment . Deferred Commissions Deferred commissions are the incremental costs that are directly associated with the acquisition of non-cancellable contracts with our business clients, content providers or distribution partners and consist of sales commissions paid to our direct sales force. The deferred commission amounts are recoverable through the future revenue streams under the non-cancellable contracts. We defer and amortize the commissions over the term of the related customer contracts in Sales and marketing in our consolidated statements of income. Settlement Payables Settlement payables represent amounts owed to content providers or issuing banks for funds loaded onto cards but not yet remitted to these partners. Payable amounts are net of commissions or fees due to us from content providers and generated at the time of card activation or value load at distribution partners. Settlement of settlement payables is funded through our Cash and cash equivalents , the collection of Settlement receivables, net and use of our revolving credit facility. Consumer and Customer Deposits Consumer and customer deposits represent amounts redeemable on prepaid products that we issue, including our proprietary REloadit cards, aggregated category gift cards and certain other cards, outstanding consumer rebate checks and amounts received from incentive business clients before the issuance of prepaid products. Financing Costs Credit Agreement — We incur debt issuance costs and pay certain costs to the group of banks (collectively, the financing costs) in conjunction with entering into and subsequently amending our credit agreement, which includes a note payable and revolving credit facility (see Note 4 — Financing ). We allocate the financing costs between the note payable and revolving credit facility based on their relative fair values and present the deferred financing costs allocated to the note payable as a reduction of its carrying value and present deferred financing costs allocated to the revolving credit facility within Other assets on our consolidated balance sheets. We amortize these deferred financing costs on a straight-line basis over the term of the credit agreement as the difference between the straight-line method and effective interest method is immaterial to our consolidated financial statements. Convertible Senior Notes — 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. See Note 4 — Financing . Treasury Stock Prior to 2014, we used the cost method when we repurchased our own common stock as treasury shares and presented treasury stock as a reduction of Stockholders’ equity . During 2014, our Board adopted a resolution to retire previously acquired treasury shares and future purchases of our common stock. Accordingly, we reclassified Treasury stock into Additional paid-in capital and reflect subsequent repurchases as a reduction of Additional paid-in capital . Foreign Currency Translation The functional currencies of our foreign subsidiaries are the local currencies. We translate assets and liabilities of our foreign subsidiaries into U.S. dollars using exchange rates at the end of each of our interim four-week periods, and translate revenues and expenses at average daily rates during each four-week period. Translation adjustments are reported within comprehensive income in our consolidated statements of comprehensive income and statements of stockholders’ equity. Gains and losses on foreign currency transactions are included in our consolidated statements of income. Intercompany Foreign Currency Transactions For intercompany balances that we consider permanent investments (that is, we do not anticipate or require settlement for the foreseeable future), we exclude foreign currency transaction gains and losses from the determination of net income. For other intercompany balances, we include foreign currency transaction gains and losses in Interest income and other income (expense), net . Comprehensive Income Comprehensive income includes net income plus other comprehensive income (loss) resulting from changes in foreign currency translation, which includes foreign currency transaction gains and losses for intercompany balances that we consider permanent investments |
Business Acquisitions
Business Acquisitions | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Business Acquisitions | Business Acquisitions 2016 Acquisitions Grass Roots On October 6, 2016, we acquired all of the outstanding common stock of The Grass Roots Group Holdings Limited and its subsidiaries (collectively, “Grass Roots”) for total purchase consideration of £93.9 million , or $119.3 million based on the exchange rate on the acquisition date. Grass Roots is a leading provider of employee and customer engagement solutions, and the acquisition broadens the global capabilities of our incentives and rewards businesses. The acquisition was funded using a combination of cash on hand and borrowings under our Credit Agreement. The purchase consideration included £87.2 million , or $110.8 million in cash and an additional £6.7 million , or $8.5 million related to the Grass Roots Employee Benefit Trust (“GREBT”), which we include in our consolidated financial statements. At closing, we paid $0.6 million for transaction expenses. 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 $ 38,957 Settlement receivables, net 24,290 Accounts receivables, net 10,367 Identifiable technology and intangible assets 64,431 Goodwill 54,219 Consumer and customer deposits (35,636 ) Accounts payable and accrued operating expenses (32,753 ) Deferred revenue (7,215 ) Deferred income taxes, net (9,123 ) Other tangible assets, net 3,256 Purchase consideration excluding GREBT 110,793 Restricted cash (GREBT) 8,541 Total purchase consideration including GREBT $ 119,334 Deferred income taxes, net include $2.3 million of deferred tax assets for net operating loss carryforwards, $12.1 million of deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets and $0.7 million for other deferred tax assets, net. Goodwill primarily represents the expected value from increased scale and synergies as a result of the integration of both businesses. We do not expect to deduct goodwill for income 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 Technology $ 1,586 1 to 3 years Customer relationships 57,239 10 years Customer backlog 2,911 1 year Trade name 2,695 10 years Total identifiable technology and intangible assets $ 64,431 Technology primarily represents internal-use software used for the order, fulfillment and management of customer orders. Customer relationships represent the estimated fair value of the underlying relationships and agreements with Grass Roots’ business clients. Customer backlog represents the estimated fair value of firm orders for products or services that are in place as of the acquisition date. Trade name represents the estimated fair value of the Grass Roots’ portfolio of trade names. We applied the cost approach when valuing the technology, and the income approach when valuing the trade name. We applied a combination of income and cost approaches when valuing the customer relationships. Significant assumptions include income forecasts and estimated customer attrition rates. We discounted the cash flows at various rates from 8% to 15% , reflecting the different risk profiles of the assets. Acquisition-related expenses totaled $2.6 million , which we report in Transition and acquisition expense in our income statement. The following table presents revenue and net income for Grass Roots from its acquisition date through year-end 2016 included in our consolidated statements of income (in thousands): Total revenues $ 24,210 Net income (loss) attributable to Blackhawk Network Holdings, Inc. $ (5 ) The net loss includes pre-tax charges of $5.0 million for the amortization of intangibles acquired. Asset held for sale Subsequent to year-end, management approved a plan to sell all assets and liabilities related to Grass Roots’ Meetings & Events (“M&E”) business. It is probable that such sale will occur within one year. As a result, beginning from the time the plan was approved, each of the relevant asset and liability balances will be accounted for as held for sale and measured at the lower of its carrying value or fair value less cost to sell. Based on the purchase price allocation performed in the fourth quarter, we believe that the carrying value of all the relevant assets and liabilities does not exceed fair value less cost to sell. The following table presents the aggregate carrying amounts of the major classes of assets and liabilities related to the M&E business to be disposed of as of year-end (in thousands): Cash $ 6,213 Accounts receivable 10,615 Other current assets 9,390 Property and equipment 974 Goodwill 11,151 Intangible assets 5,506 Deferred income taxes 902 Total assets $ 44,751 Settlement payables $ 3,972 Accounts payable and accrued operating expenses 2,924 Consumer and customer deposits 1,695 Other current liabilities 1,694 Deferred revenue 10,745 Total liabilities $ 21,030 Spafinder and Samba During the fourth quarter of 2016, we acquired outstanding capital stock of Spafinder Wellness UK, Ltd. and certain assets of Spafinder Wellness, Inc. and its subsidiaries (collectively, “Spafinder”). We also acquired certain assets and capital stock from Samba Days Experience Group Ltd. and certain of its subsidiaries (collectively, “Samba”). The purchase consideration for both acquisitions totaled $16.2 million , including $5.8 million cash consideration, $5.4 million in notes and accrued interest forgiven, $1.4 million of contingent consideration, $1.8 million relating to our previous minority interest in Samba and $1.8 million relating to working capital adjustments. The contingent consideration relates to an investment acquired from Spafinder, which contains certain liquidation restrictions. Upon a qualifying liquidity event, we will be required to pay to Spafinder a portion of the proceeds. We recognized a gain of $1.0 million in Interest income and other income (expense), net related to our previous minority interest in Samba. The fair value of our previous minority interest as of the acquisition date was $1.8 million . Similar to Didix, these companies provide leisure-themed prepaid gift cards that consumers may redeem at many merchants within a category, including health and wellness, dining or cinema. These products are currently offered directly to business clients or indirectly to consumers through retail distribution partners in the U.S., Canada and the UK. 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 $ 1,032 Settlement receivables, net 2,182 Settlement payables (2,273 ) Consumer and customer deposits (24,297 ) Other tangible assets, net 5,888 Identifiable intangible assets 21,271 Goodwill 13,427 Deferred income taxes (1,009 ) Total purchase consideration $ 16,221 Deferred income taxes include $0.1 million of deferred tax assets for net operating loss carryforwards and $1.1 million of deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets. Goodwill primarily represents the expected value from increased scale and synergies as a result of integrating the businesses. We expect to deduct goodwill and identifiable technology and intangible assets for tax purposes, a portion of which will commence upon settlement of contingent consideration and contingent liabilities. The following table presents the components of identifiable intangible assets and the estimated useful lives (in thousands): Fair Value Useful Life Customer relationships $ 19,083 10 years Trade name 2,188 10 years Total identifiable intangible assets $ 21,271 We valued customer relationships and trade name using the income approach. Significant assumptions include income forecasts and estimated client attrition rates. We discounted the cash flows at various rates from 18% to 22% based on the different risk profiles of the assets and expected timing of cash flows. Acquisition-related expenses totaled $0.9 million , which we report in Transition and acquisition expense in our income statement. GiftCards 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 summarizes the final purchase price allocation (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 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 Customer backlog 10,780 3 years Domain name 10,520 10 years Technology 3,590 5 years Total identifiable technology and intangible assets $ 52,460 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 IMShopping, Inc. and its subsidiary (collectively, “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 888extramoney.com LLC (“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 $78.8 million , consisting of $58.5 million in cash and $20.3 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 earn-out 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 ) Identifiable technology and intangible assets 45,540 Deferred income taxes 1,926 Goodwill 37,865 Total purchase consideration $ 78,813 At closing, we repaid the assumed debt, which we present in financing activities in our consolidated statements of cash flows. Deferred income taxes include $3.9 million of deferred tax assets for net operating loss carryforwards, $2.3 million of deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets, and $0.3 million for other deferred tax assets, net. Goodwill primarily represents the value of cash flows from future customers. We expect to deduct approximately $1.4 million of the total $10.5 million goodwill from our acquisition of NimbleCommerce for tax purposes. For Extrameasures, we expect to deduct goodwill and identifiable technology and intangible assets for tax purposes, a portion of which will commence upon settlement of contingent consideration and 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 Customer 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. We have not presented separate results of operations since closing for GiftCards and NimbleCommerce because their integration with our existing operations make it impractical to do so. In addition, results of operations for Extrameasures and Spafinder are immaterial, both individually and in the aggregate. Pro forma financial information The following table summarizes the combined pro forma results of operations of us, Grass Roots, GiftCards, Extrameasures, Spafinder and Samba as though we had been combined as of the beginning of fiscal 2015 (in thousands, except per share amounts): 2016 (Unaudited) 2015 (Unaudited) Total revenues $ 2,031,871 $ 2,030,066 Net income attributable to Blackhawk Network Holdings, Inc. $ 22,745 $ 23,381 Pro forma EPS—Basic $ 0.41 $ 0.43 Pro forma EPS—Diluted $ 0.40 $ 0.42 The pro forma financial information includes adjustments to reclassify acquisition-related costs including employee compensation 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. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2015. 2015 Acquisitions Achievers On June 30, 2015, we acquired Achievers Corp. and its subsidiaries (collectively, “Achievers”), a leading provider of employee recognition and rewards solutions designed to help companies increase employee engagement primarily in the U.S. and Canada, for purchase consideration of $103.5 million in cash through a merger. The acquisition has allowed us to deliver expanded capabilities and products in the employee rewards market. We accounted for this acquisition as a business combination and have included its results of operations in our consolidated financial statements starting on the acquisition date. The following table summarizes the final purchase price allocation (in thousands): Cash $ 24,367 Accounts payables and accrued operating expenses (11,580 ) Deferred revenue (48,735 ) Deferred income taxes (14,019 ) Identifiable technology and intangible assets 94,800 Goodwill 58,659 Total purchase consideration $ 103,492 Deferred income taxes include $24.8 million of deferred tax assets for net operating loss carryforwards, partially offset by a reserve of $5.1 million , $30.5 million of deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets and $3.2 million for other deferred tax liabilities, net. Goodwill includes the estimated value of the future cash flows from new customers and the value of the assembled workforce. We do not expect to deduct goodwill for income tax purposes. The following table presents the components of the identifiable technology and intangible assets and their estimated useful lives at the acquisition date (dollars in thousands): Fair Value Useful Life Customer relationships $ 73,210 15 years Technology 17,000 6 years Customer backlog 4,590 4 years Total identifiable technology and intangible assets $ 94,800 Customer relationships represent the estimated fair value of the underlying relationships and agreements with Achievers’ business clients. Backlog represents the estimated fair value for committed spending from these clients. Technology represents the fair value of Achievers’ employee recognition and reward platform. We valued customer relationships, backlog, and technology using the income approach. Significant assumptions include forecasts of revenues, costs of revenue and development costs and the estimated attrition rates for clients of 8% . We discounted the cash flows at various rates from 12.0% to 16.0% , reflecting the different risk profiles of the assets. We valued deferred revenue using expected costs to fulfill the obligation plus a reasonable profit margin. Acquisition-related costs totaled $1.6 million which we present in Transition and acquisition expense. Additionally, we incurred $3.2 million of compensation costs for certain payments made to Achievers’ employees from the sellers’ consideration under the terms of the merger agreement but which we reflect in our post-combination financial statements in Transition and acquisition expense. The following table presents revenue and net income for Achievers from its acquisition date through year-end 2015 included in our consolidated statements of income (in thousands): Total revenues $ 29,223 Net income (loss) attributable to Blackhawk Network Holdings, Inc. $ (9,676 ) The net loss excludes pre-tax revenue of $5.0 million resulting from the step down in bases of deferred revenue from its book value to its fair value (which were also excluded from total revenues). The net loss includes pre-tax charges of $3.2 million for the employee compensation charges described above and $3.8 million for the amortization of customer relationships and backlog (included in Amortization of acquisition intangibles ). Collectively, these contributed an after-tax net loss of $7.9 million . The following pro forma financial information summarizes the combined results of operations of us and Achievers as though we had been combined as of the beginning of fiscal 2014 (in thousands except per share amounts): 2015 (Unaudited) 2014 (Unaudited) Total revenues $ 1,830,848 $ 1,487,695 Net income attributable to Blackhawk Network Holdings, Inc. $ 41,752 $ 15,412 Pro forma EPS—Basic $ 0.77 $ 0.29 Pro forma EPS—Diluted $ 0.74 $ 0.28 The pro forma financial information includes adjustments to reclassify acquisition-related costs and acquisition-related employee compensation costs (as discussed above) from 2015 to 2014, to amortize the identifiable technology and intangible assets starting at the beginning of 2014, to reflect the impact on revenue resulting from the step down in basis of deferred revenue from its book value to its fair value as of the beginning of 2014 and to reflect incremental interest expense that we would have incurred under our Credit Agreement. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2014. Didix On September 14, 2015, we acquired the outstanding stock of Didix Gifting & Promotions B.V. and its subsidiaries (collectively, “Didix”) for total purchase consideration of €36.5 million in cash, which totaled $41.2 million based on the foreign currency rate at the acquisition date. Didix provides prepaid gift cards that consumers may redeem at many merchants within a category such as dining or cinema (“Didix network cards”). Didix currently offers its products to consumers through retail distribution partners in the Netherlands, Belgium, Germany and the UK. Didix also sells its products to business clients and distributes third-party gift cards through retail distribution partners in the Netherlands. We accounted for this acquisition as a business combination and have included its results of operations in our consolidated financial statements starting on the acquisition date. The following table summarizes the final purchase price allocation (in thousands): Cash $ 4,733 Tangible assets, net 2,093 Cardholder liability (6,167 ) Deferred income taxes (6,723 ) Identifiable intangible and technology assets 26,892 Goodwill 20,385 Total purchase consideration $ 41,213 Deferred income taxes are primarily for nondeductible amortization of identifiable technology and intangible assets. Goodwill includes the estimated value of the future cash flows from new customers, the value of Didix relationship with us as its distributor and the value of the assembled workforce. We do not expect to deduct goodwill for income tax purposes. The following table presents the components of the identifiable technology and intangible assets and their estimated useful lives at the acquisition date (dollars in thousands): Fair Value Useful Life Content provider relationships $ 17,382 10 years Distribution relationships 4,614 5 years Trade name 4,106 10 years Technology 790 4 years Total identifiable technology and intangible assets $ 26,892 Customer relationships represent the estimated fair value of the underlying relationships and agreements with the merchants included in Didix network cards, other content providers and business clients. Distribution partner relationships represent the estimated fair value of the underlying relationships and agreements with Didix’ third-party distributors. Trade name represents the estimated fair value of the branding and name recognition of Didix network cards. Technology represents the estimated fair value of Didix’ settlement systems. We valued the cardholder liability net of expected breakage amounts and commissions retained by Didix. We valued customer and distribution partner relationships and trade name, using the income approach. Significant assumptions include forecasts of revenues, costs of revenue, estimated attrition rates and time to build the networks. We discounted the cash flows at various rates from 14% to 17% , reflecting the different risk profiles of the assets. We valued technology using the cost approach. We do not present revenues and earnings from closing and pro forma financial information, as amounts are not material to our consolidated financial statements. 2014 Acquisitions Parago, Inc. On October 23, 2014 , we acquired 100% of the outstanding common stock of Parago, Inc. and its subsidiaries (Parago), a leader in providing global incentive and engagement solutions, for $262.3 million in cash. This acquisition has allowed us to deliver expanded capabilities and products in the consumer and corporate incentives markets. We financed the purchase using cash on hand and approximately $200 million in new borrowings under an expansion of our Credit Agreement (see Note 4 — Financing ). We accounted for this acquisition as a business combination and have included its results of operations in our consolidated financial statements starting on the acquisition date. The following table summarizes the final purchase price allocation (in thousands): Cash $ 39,450 Settlement receivables, net 6,478 Consumer and customer deposits (39,396 ) Debt assumed (34,509 ) Other tangible assets, net 7,324 Deferred income taxes (14,619 ) Identifiable technology and intangible assets 126,430 Goodwill 171,187 Total purchase consideration $ 262,345 Deferred income taxes include $23.0 million of deferred tax assets for net operating loss carryforwards and $37.6 million of deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets, net. Goodwill represents the value of the future cash flows from new customers and the value of the assembled workforce. Goodwill is not expected to be deductible for income tax purposes. We repaid all of Parago’s outstanding debt of $34.5 million on the acquisition date and present such payment as Repayment of debt assumed in business acquisitions in our consolidated statements of cash flows. The following table summarizes the components of the identifiable technology and intangible assets and their estimated useful lives at the acquisition date (dollars in thousands): Fair Value Useful Life Customer relationships $ 94,460 15 years Customer backlog 4,430 1 year Technology 26,930 1 to 5 years Trade name 610 3 years Total identifiable technology and intangible assets $ 126,430 Customer relationships represent the estimated fair value of the underlying relationships and agreements with Parago’s business clients. Backlog represents the estimated fair value resulting from cards issued before the acquisition date, resulting from revenues, including interchange and account service fees. Technology consists of Parago’s software used for rebate processing and employee reward programs. Trade name represents the fair value of Parago’s brand and name recognition. We valued customer relationships, backlog, trade name and the rebate processing and consumer incentive platform technology using the income approach and employee reward platforms 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 customers, ranging from 3.5% to 11% . We discounted the cash flows at various rates from 10.5% to 14.5% , reflecting the different risk profiles of the assets. Acquisition related costs totaled $1.2 million and are included in Transition and acquisition expense. The following table summarizes revenue and earnings for Parago from its acquisition date through year-end 2014 (in thousands): Total revenues $ 17,711 Net income attributable to Blackhawk Network Holdings, Inc. $ (1,090 ) The following pro forma financial information summarizes the combined results of operations of us and Parago as though we had been combined as of the beginning of fiscal 2013 (in thousands, except per share amounts): 2014 (Unaudited) Total revenues $ 1,529,072 Net income attributable to Blackhawk Network Holdings, Inc. $ 44,765 Pro forma EPS—Basic $ 0.85 Pro forma EPS—Diluted $ 0.82 The pro forma financial information includes adjustments to reclassify acquisition related costs from 2014 to 2013 and to amortize the identifiable technology and intangible assets starting at the beginning of 2013. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2013. Other 2014 Acquisitions During 2014, we acquired CardLab, Inc. and its subsidiaries (“CardLab”), a leading online provider of customizable prepaid incentive and rewards cards, and Incentec Solutions, Inc. (“Incentec”), which provides cloud-based software solutions in the incentive and reward industry, for total purchase consideration of $33.7 million . These acquisitions have enhanced our product and service offerings in our incentives business. We accounted for these acquisitions as business combinations and have included their results of operations in our consolidated financial statements starting on the acquisition dates. The following table summarizes the components of the purchase consideration based on their fair values at the acquisition dates (in thousands): Cash paid at closing $ 18,956 Stock consideration 1,595 Contingent consideration 13,100 Total purchase consideration $ 33,651 Stock consideration consisted of 61,840 shares of our common stock. Contingent consideration resulting from our acquisition of CardLab consists of three cash payments: i) up to $2.5 million based on CardLab’s 2014 financial results, ii) $0 , $1.25 million or $2.5 million dependent upon the contract execution and subsequent launch of a certain incentive program by certain specified dates and iii) up to $46.5 million based on CardLab’s 2015 financial results for certain incentive programs. We estimated the fair value of the contingent consideration based on our estimates of the probability of achieving these targets and discount rates ranging from 15.0% to 19.0% , reflecting the risk profiles of meeting these targets (see Note 5 — Fair Value Measurements ) and present such amounts in Other current liabilities or Other liabilities in our consolidated balance sheets. The selling shareholders of CardLab are disputing the amount of contingent consideration due to them; we believe these claims are without merit, and that payments as a result of these claims are not probable. We placed $5.0 million in an escrow account for the contingent consideration related to the 2014 financial results and the execution and launch of the incentive program and present such amounts as Restricted cash in our consolidated balance sheets. In 2015, we paid $1.8 million contingent consideration for achieving relevant targets and the measurement period has concluded in 2016 with no further amounts due. The following table summarizes the final purchase price allocation (in thousands): Tangible liabilities, net $ (1,059 ) Debt assumed (7,475 ) Deferred taxes 2,258 Identifiable technology and intangible assets 10,623 Goodwill 29,304 Total purchase consideration $ 33,651 Deferred taxes include $5.9 million of deferred tax assets for net operating loss carryforwards, $3.9 million of deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets and $0.3 million of other deferred tax assets, net. Goodwill represents the value of the future cash flows from new customers and the launch of new incentive programs, our prior relationship with Incentec and the value of the assembled workforce. Goodwill is not expected to be deductible for income tax purposes. During the fourth quarter of 2014, we recorded an adjustment to the initial purchase price allocation and reduced our contingent consideration liability by $11.0 million , goodwill by $10.4 million and identifiable intangible and technology assets by $0.6 million . We repaid all of CardLab’s outstanding debt of $7.5 million on the acquisition date and present such payment as Repayment of debt assumed in business acquisitions in our consolidated statements of cash flows. The following table summarizes the components of the identifiable technology and intangible assets and their estimated useful lives at the acquisition date (dollars in thousands): Fa |
Investment in Unconsolidated En
Investment in Unconsolidated Entities | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Investment in Unconsolidated Entities | Investment in Unconsolidated Entities In November 2016, w e acquired a 51.2% interest in an entity in Australia, to offer new products and to create solutions for our business clients. Our consideration for this investment consisted of a cash payment of A$8 million , or $6 million based on the exchange rate at that time. I n September 2015, w e acquired a 26.5% interest in an entity in China, established to distribute prepaid products in China. Our consideration for this investment consisted of a cash payment of $5 million . We determined that these investments are variable interest entities but we are not the primary beneficiary of these entities as we do not have the power to individually direct their activities. Accordingly, we account for these investments under the equity method of accounting. Other Unconsolidated Entities As of year-end 2015 , we had two other equity method investments which are content providers in our retail distribution network. However, during 2016 , we acquired the remaining equity in these content providers and now consolidate these entities in our financial statements (see Note 2 — Business Acquisitions —Spafinder and Samba ). We also have cost method investments, including an investment previously owned by Spafinder, which we acquired in the fourth quarter of 2016. We present these investments within Other assets on our consolidated balance sheets. We report our share of equity income (loss) in Other income (expense), net in our consolidated statements of income. The following table summarizes our equity and cost method investments as of year-end 2016 and 2015 (dollars in thousands): 2016 2015 Carrying Value Ownership Percentage Carrying Value Ownership Percentage Equity method investments Investment in China entity $ 4,576 26.5% $ 5,473 26.5% Investment in Australia entity 6,392 51.2% NA NA Other equity method investments — — 791 25-50% Total equity method investments 10,968 6,264 Cost method investments 7,954 250 Total unconsolidated entities $ 18,922 $ 6,514 |
Financing
Financing | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Financing | Financing On March 28, 2014, we entered into a credit agreement with a group of banks (the “Credit Agreement”). As of year-end 2014, the Credit Agreement, as amended, included a $375 million term loan and a revolving credit facility of $250 million with up to an additional $100 million during the year-end holiday period for specific settlement related requirements. The revolving credit facility included a $100 million subfacility for the issuance of letters of credit. On June 19, 2015, we further amended the Credit Agreement to increase amounts available under our revolving credit facility by $50 million to $300 million . Additionally, the amendment modified certain financial covenants under the Credit Agreement. On December 18, 2015, we entered into another amendment to the Credit Agreement to include an option to increase the term loan by $100 million to a total commitment of $464 million (as we had repaid $11 million in 2015), increased non-holiday amounts available under our revolving credit facility from $300 million to $400 million , and increased the letter of credit sublimit from $100 million to $200 million . The $400 million revolver capacity became available throughout the year with no limitations as to the year-end holiday period for specific settlement related requirements, as originally described. Borrowings under the Credit Agreement were secured by a pledge of the assets of Blackhawk Network Holdings, Inc.; substantially all of the assets of certain of its U.S. subsidiaries, including Blackhawk Network, Inc., the primary U.S. operating subsidiary; and some of the shares in certain foreign subsidiaries. On January 25, 2016, in conjunction with our acquisition of GiftCards we exercised the option to draw down the incremental $100 million on our term loan. On July 27, 2016, in conjunction with the issuance of the Convertible Senior Notes, as described below, we entered into an Amended and Restated 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 Restated 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. As of year-end 2016 , we had no amounts outstanding under our revolving credit facility, other than $75.4 million in outstanding letters of credit under the subfacility, with $324.6 million available under our revolving credit facility. Excluding letters of credit, for 2016 , the average amount outstanding under the revolving credit facility was $86.3 million , and the largest amount outstanding was $223.3 million . We pay interest for our loans (the term loan and amounts outstanding under the revolving credit facility) based on whether we elect to borrow the funds as a LIBOR rate loan or non-LIBOR rate loan. For LIBOR rate loans, we pay interest at the LIBOR rate plus the Applicable Margin (as defined in the Restated Credit Agreement), which may range from 1.25% to 2.25% , based on our Consolidated Total Leverage Ratio (as defined in the Restated Credit Agreement). For non-LIBOR rate loans, we pay interest at a rate equal to (i) the highest of (A) the rate of interest announced, from time to time, by Wells Fargo Bank, National Association as its “prime rate,” (B) the Federal Funds Rate plus 0.50% and (C) one-month LIBOR plus 1.00% , plus (ii) the Applicable Margin, which may range from 0.25% to 1.25% , based on our Consolidated Total Leverage Ratio. We pay a letter of credit commission on outstanding letters of credit at the Applicable Margin, which may range from 1.25% to 2.25% , based on our Consolidated Total Leverage Ratio. However, for letters of credit secured by cash, we pay a commission of 0.75% . We pay a commitment fee on the average daily unused portion of the revolving credit facility at the Applicable Margin for that fee, which may range from 0.25% to 0.45% , based on our Consolidated Total Leverage Ratio. We may also pay other fees, as referenced in the Restated Credit Agreement, as amended. During 2016 and 2015 , the average interest rates for borrowings were 2.97% and 2.66% , respectively. Interest cost under the Credit Agreement and the Restated Credit Agreement, totaled $14.6 million in 2016 , including $12.9 million from borrowings and $1.7 million for amortization of deferred financing costs; total interest cost under borrowing totaled $13.7 million for 2015 , including $12.5 million from borrowings and $1.2 million for amortization of deferred financing costs. The Restated Credit Agreement contains various loan covenants that restrict our ability to take certain actions and contains financial covenants that require us periodically to meet certain financial tests, which limit our ability to declare and pay cash dividends. 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. 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 of $63.4 million 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). Interest expense for the Notes totaled $8.0 million in 2016, including $3.2 million coupon interest and $4.8 million for the amortization of debt issuance costs and debt discount. The following table presents the amounts due by maturity date of our term loan and Notes as of year-end 2016 (in thousands): As of December 31, 2016 2017 $ 10,000 2018 7,500 2019 7,500 2020 15,000 2021 110,000 Thereafter 500,000 Total amount due 650,000 Unamortized discount and debt issuance fees (73,134 ) Note payable, net $ 576,866 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 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 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. 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 . Impact to Earnings per Share The Notes will have no impact to diluted earnings per share until the average price of our common stock exceeds the conversion price because the principal amount of the Notes is intended to be settled in cash upon conversion. Upon conversion, there will be no economic dilution from the Notes, as exercise of the Note Hedges eliminates any dilution from the Notes that would have otherwise occurred when the price of our common stock exceeds the conversion price. The Note Hedges are required to be excluded from the calculation of diluted earnings per share, as they would be anti-dilutive under the treasury stock method. The warrants will be included in diluted EPS only when the average market price of its common stock exceeds the exercise price of $61.20 per share. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements We measure certain assets and liabilities at fair value on a recurring basis (see Note 1 — Fair Value Measurements ). The table below summarizes the fair values of these assets and liabilities as of year-end 2016 and 2015 (in thousands): 2016 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents Money market mutual funds $ 300,015 $ — $ — $ 300,015 Liabilities Contingent consideration $ — $ — $ 23,752 $ 23,752 2015 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents Money market mutual funds $ 370,070 $ — $ — $ 370,070 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 2016 and 2015 , there were no transfers between Levels. 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. 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 December 31, 2016 , using a discounted cash flow model and Level 2 inputs, we estimate the fair value of our term loan to be approximately $150.0 million . Convertible notes payable —As of December 31, 2016 , the total estimated fair value of the convertible notes was approximately $513.8 million . The fair value was determined based on its closing trading price as of the last day of trading for the period and is considered to be a Level 2 measurement due to its limited trading activity. Contingent Consideration The changes in fair value of contingent consideration for 2016 and 2015 are as follows (in thousands): 2016 2015 Balance – beginning of year $ — $ 7,567 Issuance of contingent consideration for acquisition of Extrameasures 20,300 — Issuance of contingent consideration for acquisition of Spafinder 1,352 Change in fair value of contingent consideration 2,100 (7,567 ) Settlements — — Balance – end of year $ 23,752 $ — 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 consolidated statements of cash flows. A significant increase (decrease) in our estimates of the amounts payable for and probabilities 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. The issuance and increase in fair value of contingent consideration during 2016 was related to our acquisitions of Extrameasures and Spafinder (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 year-end 2016 , we estimated the fair value of the remaining contingent consideration using a discounted cash flow model based on our estimates of the amounts payable for and probability of achieving the relevant targets and a discount rate of 16.7% on Extrameasures, and of 19.5% on Spafinder. The decrease in fair value of contingent consideration during 2015 was related to our acquisition of CardLab and resulted from the projected failure of financial targets being met relating to the launch of incentive programs during the contingent earn-out measurement period. Such measurement period concluded during 2016 with no amounts due. |
Consolidated Financial Statemen
Consolidated Financial Statement Details | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidated Financial Statement Details | Consolidated Financial Statement Details Allowances The table below summarizes the changes in the allowances for doubtful accounts and sales allowances for Settlement receivables and Accounts receivable for 2016 , 2015 and 2014 (in thousands): 2016 2015 2014 Beginning balance $ 8,046 $ 5,547 $ 3,134 Provision 4,544 4,656 3,452 Charges against allowances, net of recoveries (3,933 ) (2,157 ) (1,039 ) Ending balance $ 8,657 $ 8,046 $ 5,547 Other Current Assets Other current assets as of year-end 2016 and 2015 consisted of the following (in thousands): 2016 2015 Inventory $ 43,950 $ 36,528 Deferred expenses 22,148 18,182 Income tax receivables 13,599 14,831 Other 51,678 33,778 Total other current assets $ 131,375 $ 103,319 Inventory includes i) card stock (manufacturing and transportation costs of our Visa gift cards, open loop incentive cards and cards for certain other content providers prior to card activation), ii) acquisition costs of Cardpool cards, iii) telecom handsets at our distribution warehouses and iv) prepaid PIN’s for certain telecom electronic products. Deferred expenses represent compensation paid to retail distribution partners and certain business clients, card stock costs and up-front transaction processing costs for our Visa gift and open loop incentive cards that, upon activation, are amortized based on the same historical redemption pattern as the related revenue (see Note 1—Operating Expenses ). Other includes mainly prepaid expenses. Property, Equipment and Technology Property, equipment and technology as of year-end 2016 and 2015 consisted of the following (in thousands): Useful Lives in Years 2016 2015 Leasehold improvements 5 $ 9,018 $ 7,915 Computers and related equipment 3 - 5 45,910 39,574 Technology 5 291,124 242,593 Total property, equipment and technology 346,052 290,082 Less accumulated depreciation and amortization (173,671 ) (130,725 ) Property, equipment and technology, net $ 172,381 $ 159,357 Depreciation and amortization expense related to property, equipment and technology totaled $48.4 million , $41.0 million and $28.5 million for 2016 , 2015 and 2014 , respectively, and is included in Processing and services , Costs of products sold , or General and administrative expenses. Capitalized interest related to property and technology totaled $0.8 million , $0.5 million , and $0.2 million for 2016 , 2015 and 2014 , respectively. Other Assets Other assets as of year-end 2016 and 2015 consisted of the following (in thousands): 2016 2015 Deferred program and contract costs $ 48,066 $ 50,717 Other receivables 2,713 2,281 Income taxes receivable 2,358 6,155 Deferred financing costs 2,688 2,100 Other 30,031 20,511 Total other assets $ 85,856 $ 81,764 Deferred program and contract costs include long-term program development costs, deferred sales commissions and certain costs we incur to fulfill a customer contract. Amortization expense related to these costs totaled $29.0 million , $29.0 million and $24.5 million and for 2016 , 2015 and 2014 , respectively. Other Current Liabilities Other current liabilities as of year-end 2016 and 2015 consisted of the following (in thousands): 2016 2015 Payroll and related liabilities $ 24,944 $ 34,530 Income taxes payable 4,199 3,216 Acquisition liability 6,672 — Other payables and accrued liabilities 15,361 19,596 Total other current liabilities $ 51,176 $ 57,342 Acquisition liability represents the current portion of the estimated fair value of our Extrameasures and Spafinder contingent consideration liability (see Note 5 — Fair Value Measurements ). Other Liabilities Other liabilities as of year-end 2016 and 2015 consisted of the following (in thousands): 2016 2015 Acquisition liability $ 17,080 $ — Income taxes payable 6,957 4,249 Deferred income and other liabilities 15,616 10,451 Total other liabilities $ 39,653 $ 14,700 The acquisition liability represents the long-term portion of the estimated fair value of our Extrameasures contingent consideration liability (see Note 5 — Fair Value Measurements ). |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets We have assigned goodwill to our U.S. Retail, International and Incentives & Rewards segments. To date, we have not recorded any impairment charges against or disposed of any goodwill. 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 operating segment, which we had reported in Incentives & Rewards reportable segment, into two operating segments: e-commerce Retail, which we now report in U.S. 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 2016 is as follows (in thousands): 2016 U.S. Retail International Incentives & Rewards Total Balance, beginning of year $ 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 10,505 — — 10,505 Acquisition of Extrameasures — — 27,360 27,360 Acquisition of Grass Roots — 54,219 — 54,219 Acquisition of Samba — 4,074 — 4,074 Acquisition of Spafinder 9,353 — — 9,353 Measurement period adjustments for 2015 acquisitions — — (1,235 ) (1,235 ) Foreign currency translation adjustments — (3,244 ) (829 ) (4,073 ) Balance, end of year $ 99,685 $ 104,205 $ 366,508 $ 570,398 A summary of changes in goodwill during 2015 is as follows (in thousands): 2015 U.S. Retail International Incentives & Rewards Total Balance, beginning of year $ 42,729 $ 32,150 $ 256,386 $ 331,265 Acquisition of Didix — 20,385 — 20,385 Acquisition of Achievers — — 59,893 59,893 Measurement period adjustments for 2014 acquisitions — — (2,716 ) (2,716 ) Foreign currency translation adjustments — (3,379 ) (2,959 ) (6,338 ) Balance, end of year $ 42,729 $ 49,156 $ 310,604 $ 402,489 Intangible assets as of year-end 2016 are as follows (dollars in thousands): Weighted-Average Remaining Life in Years Gross Accumulated Amortization Net Distribution partner relationships 6 $ 62,012 $ (27,421 ) $ 34,591 Customer relationships, including backlog 10 385,653 (90,218 ) 295,435 Patents 7 6,944 (4,547 ) 2,397 Domain names, trade names and other intangibles 10 21,238 (3,476 ) 17,762 Total intangible assets $ 475,847 $ (125,662 ) $ 350,185 Intangible assets as of year-end 2015 are as follows (dollars in thousands): Weighted-Average Remaining Life in Years Gross Accumulated Amortization Net Distribution partner relationships 10 $ 63,084 $ (18,953 ) $ 44,131 Customer relationships, including backlog 13 231,419 (40,990 ) 190,429 Patents 3 5,315 (3,440 ) 1,875 Domain names, trade names and other intangibles 9 5,981 (1,518 ) 4,463 Total intangible assets $ 305,799 $ (64,901 ) $ 240,898 The following table presents total intangible amortization expense according to the income statement line in our consolidated statements of income for 2016, 2015 and 2014 (in thousands): 2016 2015 2014 Partner distribution expense $ 4,863 $ 4,695 $ 4,544 Processing and services 122 121 122 Amortization of acquisition intangibles 57,060 27,550 19,705 Total intangible amortization expense $ 62,045 $ 32,366 $ 24,371 The following table presents future intangible asset amortization as of year-end 2016 according to the income statement line (in thousands): Fiscal Year Partner distribution expense Processing and services Amortization of acquisition intangibles Total 2017 $ 4,861 $ 141 $ 57,499 $ 62,501 2018 2,415 50 45,466 47,931 2019 538 22 39,689 40,249 2020 538 14 36,069 36,621 2021 83 6 33,337 33,426 Thereafter — 70 129,387 129,457 Total amortization $ 8,435 $ 303 $ 341,447 $ 350,185 |
Equity Incentive Plans and Stoc
Equity Incentive Plans and Stock Based Compensation | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Equity Incentive Plans and Stock Based Compensation | Equity Incentive Plans and Stock Based Compensation Stock Compensation Plans 2006 Restricted Stock Plans — In February 2006, the Board approved the 2006 Restricted Stock and Restricted Stock Unit Plan (as amended, the “2006 Plan”) to permit the issuance of up to 1,250,000 shares of our common stock. In March 2013, the Board increased the shares available for grant under the 2006 Plan by 250,000 shares to an aggregate of 1,500,000 shares. Under the 2006 Plan, we may grant restricted stock awards or units to various Blackhawk employees. Also in February 2006, Safeway’s Board of Directors approved a restricted stock program whereby Safeway awards issued and outstanding Blackhawk stock originally owned by Safeway to various Safeway employees (the “Safeway Restricted Stock Plan”). Shares or units issued under these plans vest over four or five years provided that the employee remains employed by us or Safeway. Awards are no longer granted under this 2006 Plan. 2007 Stock Option and Stock Appreciation Right Plan — In February 2007, the Board approved the 2007 Stock Option Plan and Stock Appreciation Right Plan (as amended, the “2007 Plan”) to permit the issuance of 2,500,000 shares of our common stock. Under the 2007 Plan, we may grant nonqualified options and stock appreciation rights. Options and stock appreciation rights generally vest over four or five years . In March 2010 and March 2013, our Board of Directors voted to increase the pool of authorized shares of common stock available for grants under the 2007 Blackhawk Plan by 1,500,000 and 500,000 shares, respectively, to an aggregate of 4,500,000 shares. Awards are no longer granted under this 2007 Plan. 2013 Equity Incentive Plan —In March 2013, the Board adopted and our stockholders later approved the 2013 Equity Incentive Plan (the “2013 Plan”) to permit the issuance of up to 3,000,000 shares of our common stock. In May 2015, following approval of our Board of Directors and stockholders, we increased the shares available for issuance by 4,000,000 . Under the terms of the 2013 Plan, we may award stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock units and other incentive awards to our employees, consultants, officers and directors. Additionally, after April 2013, the remaining shares reserved for issuance under the 2006 Plan and 2007 Plan , including those that later become available for future issuance as the result of the cancellation of awards, are available for issuance under the 2013 Plan as shares of common stock. As of year-end 2016 , 3,105,000 shares are available for grants under this plan, which includes the additional shares from the 2006 Plan and the 2007 Plan. 2013 Employee Stock Purchase Plan — In December 2013, the Board approved the 2013 Employee Stock Purchase Plan (the “ESPP”) to permit the issuance of up to 2,000,000 shares of common stock. Employees, with certain restrictions, may purchase shares at a 15% discount to the lesser of the fair market value of common stock at the beginning and end of the offering period, which is generally six months. Shares available for issuance may increase, each year starting in 2015, up to 1% of the common stock outstanding at the date of the adoption of the ESPP. Stock Option and Stock Appreciation Rights We determine the fair value of our stock option awards and stock appreciation rights using a Black-Scholes option pricing model. The assumptions used to value the option grants for 2016 , 2015 and 2014 are as follows: 2016 2015 2014 Expected term (in years) 5 5 5 Expected volatility 34.8% - 34.9% 36.6% - 37.3% 32.6%–33.5% Risk-free rate 1.1% - 1.9% 1.4% - 1.7% 1.5%–1.7% Expected dividend yield 0% 0% 0% The expected term of the awards was determined using the “simplified method” outlined in Securities and Exchange Commission Staff Accounting Bulletin No. 110, Share-Based Payment . We estimated expected volatility based on information on the historical volatility of our common stock and volatility for comparable publicly traded companies over the expected term of the option. The risk-free interest rate was based on the yield curve in effect at the time the options were granted, using U.S. constant maturities over the expected life of the option. Expected dividend yield is based on our dividend policy at the time the options were granted. A summary of our stock options and stock appreciation rights activity under all Plans for 2016 is as follows: Stock Options and Appreciation Rights (in shares) Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding, year-end 2015 2,937,730 $ 23.68 3.9 $ 60,313 2016 activity: Granted 600,150 $ 37.82 Canceled (147,683 ) $ 34.18 Exercised (324,904 ) $ 17.80 Outstanding, year-end 2016 3,065,293 $ 26.57 3.6 $ 35,381 Exercisable, year-end 2016 1,643,221 $ 20.76 2.3 $ 27,999 Vested and expected to vest, year-end 2016 3,065,293 $ 26.57 3.6 $ 35,381 The weighted average grant-date fair values of stock options and stock appreciation rights granted during 2016 , 2015 and 2014 were $11.98 , $13.26 and $8.56 per share, respectively. We recognized stock-based compensation expense for options and appreciation rights of $7.2 million , $7.7 million and $5.5 million in 2016 , 2015 and 2014 , respectively. Stock-based compensation is reported in the operating expense line item corresponding to the applicable employee compensation expense. As of year-end 2016 , the unamortized stock-based expense for options and appreciation rights totaled $8.0 million and is expected to be recognized over the remaining weighted average period of 1.8 years. The total intrinsic value of options exercised and options surrendered upon cashless exercise totaled $5.6 million , $21.7 million and $9.8 million during 2016 , 2015 and 2014 , respectively. Restricted Stock and Restricted Stock Units We determine the fair value for restricted stock and restricted stock unit awards ratably based on the fair value of the stock at the grant date. Restricted stock compensation expense under all plans totaled $23.4 million , $17.2 million and $8.0 million in 2016 , 2015 and 2014 , respectively, and is reported in the operating expense line item corresponding to the applicable employee compensation expense. The fair values of restricted stock awards that vested during 2016 , 2015 and 2014 totaled $18.4 million , $13.8 million and $4.4 million , respectively. As of year-end 2016 , unrecognized compensation expense related to nonvested restricted stock and restricted stock unit awards totaled $49.0 million , and is expected to be recognized over the weighted average period of 2.5 years. The following table summarizes restricted stock and restricted stock unit awards during 2016 : Restricted Stock and Restricted Stock Unit Awards Weighted Average Grant-Date Fair Value Nonvested, year-end 2015 1,631,333 $ 33.10 2016 activity: Granted 1,210,540 $ 37.08 Vested (514,786 ) $ 31.66 Forfeited (345,433 ) $ 35.55 Nonvested, year-end 2016 1,981,654 $ 35.45 Performance Stock Units We grant performance stock unit awards where the number of shares issued is dependent upon both employee service and our financial performance. We recognize compensation expense for performance stock unit awards ratably over the vesting period based on the fair value of the stock at the grant date and based on the number of shares issuable for which we believe that it is probable that the performance condition will be achieved. Performance stock unit compensation expense totaled $2.4 million , $4.0 million and $1.1 million during 2016 , 2015 and 2014 , respectively, and is reported in the operating expense line item corresponding to the applicable employee compensation expense. No performance stock units vested during 2015 and 2014 . As of year-end 2016 , unrecognized compensation expense related to nonvested performance stock unit awards totaled $3.2 million and is expected to be recognized over the weighted average period of 0.7 year. The changes in performance stock unit awards for 2016 are as follows: Performance Stock Unit Awards Weighted Average Grant-Date Fair Value Nonvested, year-end 2015 341,445 $ 31.21 2016 activity: Granted 172,300 $ 38.85 Vested (7,155 ) $ 26.73 Forfeited (178,484 ) $ 35.34 Nonvested, year-end 2016 328,106 $ 33.07 Employee Stock Purchase Plan During 2016 , 2015 and 2014, we issued 193,092 , 124,324 and 110,865 shares, respectively, of our common stock under our ESPP and recognized $1.7 million , $1.2 million and $0.8 million of expense, respectively. As of year-end 2016 , there were 1,571,700 shares reserved for future issuances under the ESPP. The assumptions used to value our ESPP for 2016 , 2015 and 2014 are as follows: 2016 2015 2014 Expected term (in years) 0.5 0.5 0.5 Expected volatility 30.12% - 36.72% 32.40% - 34.96% 30.30%–32.33% Risk-free rate 0.4% - 0.5% 0.4% - 0.5% 0.1%–0.3% Expected dividend yield 0% 0% 0% Total Employee Stock-Based Compensation The following table presents total stock-based compensation expense according to the income statement line in the accompanying consolidated statements of income for 2016 , 2015 and 2014 (in thousands): 2016 2015 2014 Processing and services $ 5,831 $ 6,594 $ 3,597 Sales and marketing 10,856 8,536 5,153 Cost of products sold 102 37 43 General and administrative 15,803 14,963 6,597 Total stock-based compensation expense $ 32,592 $ 30,130 $ 15,390 During 2016, the amount of stock-based compensation capitalized was $2.1 million . Dividend On December 14, 2012, our Board of Directors declared a dividend of $1.369 per common share for stockholders of record as of December 18, 2012. For holders of unvested restricted stock awards, we will pay the dividend if and when the shares vest. Additionally, the Board declared a dividend equivalent of $1.369 per common share for restricted stock units to be paid when the award vests and the shares are issued, and a reduction of the exercise price of $1.369 per share for stock option and stock appreciation rights. |
Equity Awards Issued to Retail
Equity Awards Issued to Retail Distribution Partners | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Equity Awards Issued To Retail Distribution Partners | Equity Awards Issued to Retail Distribution Partners Warrants Issued to Distribution Partners In April 2013, in conjunction with extending the marketing and distribution services agreement with a retail distribution partner, we issued a fully vested warrant to purchase 1,500,000 shares of our common stock at an exercise price of $20.00 per share with no service or performance conditions. As a result of the Initial Public Offering (the “Offering”), the warrant became exercisable on October 16, 2013, which was 181 days after our Offering. We measured the fair value of the warrant using a Black-Scholes option pricing model as of the date of the Offering as $14.9 million . We recorded the full value of the warrant in Additional paid-in capital with an offset to Intangible assets and amortize the asset over the term of the related marketing and distribution services agreements of approximately five years to Partner distribution expense . Additionally, on April 30, 2013, pursuant to the retail distribution partner’s anti-dilutive rights, we issued a warrant to purchase 15,306 shares at an exercise price of $20.00 per share. We recorded the fair value of the warrant of $0.1 million in Additional paid-in capital with an offset to Partner distribution expense . In November 2015, the partner net exercised all of its warrants, resulting in the issuance of 859,757 shares. In November 2010, in conjunction with signing a marketing and distribution services agreement with a second retail distribution partner, we entered into a warrant agreement whereby we would issue the distribution partner a warrant to purchase up to 1.1 million shares of our common stock at $16.30 per share upon the achievement of certain performance milestones. The partner achieved such milestones in December 2010, and we subsequently issued the warrant. The warrant was vested as to 181,500 shares upon issuance, as to 288,494 shares in December 2013 and as to 383,748 shares in January 2015 as the result of the achievement of certain milestones. The warrant became exercisable on April 1, 2014. We concluded that a performance commitment date was not achieved until the warrant became exercisable on April 1, 2014, due to the underlying performance requirements associated with the marketing and distribution services agreement. Consequently, we remeasured the fair value of the warrant at each reporting period using the Black-Scholes option pricing model and amortized it to Partner distribution expense , with a corresponding increase to Additional paid-in capital until performance was completed. We recognized expense of $1.3 million for 2014. In April 2015, in conjunction with extending our marketing and distribution services agreement, we increased the shares issuable under the warrant from 383,748 to 550,000 at an exercise price of $16.30 per share. We capitalized the fair value of the incremental 166,252 shares issuable of $3.1 million as an intangible asset with an offset to Additional paid-in capital and amortize the intangible asset over the term of the extended marketing and distribution services agreement. In April 2015, the retail distribution partner net exercised the warrant, resulting in the issuance of 301,662 shares our common stock. In April 2013, in conjunction with extending marketing and distribution services agreements with a third retail distribution partner, we issued a fully vested warrant to purchase 750,000 shares of our common stock at an exercise price of $20.00 per share with no service or performance conditions. As a result of the Offering, these warrants became exercisable on October 16, 2013, which was 181 days after our Offering. We measured the fair value of the warrants using a Black-Scholes option pricing model as of the date of the Offering as $7.3 million , recorded the full value of the warrant in Additional paid-in capital with an offset to Intangible assets and amortize the asset over the term of the related marketing and distribution services agreements of approximately five years to Partner distribution expense . In November 2014, the partner net exercised the warrant, resulting in the issuance of 315,972 shares of our common stock. Total Distribution Partner Stock-Based Compensation The following table presents the components of distribution partner stock-based compensation expense included in Partner distribution expense (in thousands): 2016 2015 2014 Mark-to-market expense $ — $ — $ 1,312 Amortization of intangible assets 4,863 4,695 4,544 Total distribution partner stock-based compensation expense $ 4,863 $ 4,695 $ 5,856 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We are party to various tax sharing agreements with Safeway, which are important to understanding our income taxes. See Note 1—Income Taxes for additional information. The components of income before income tax expense (benefit) for 2016, 2015 and 2014 are as follows (in thousands): 2016 2015 2014 Domestic $ (3,533 ) $ 72,298 $ 68,661 Foreign 4,469 307 4,254 Income before income tax expense (benefit) $ 936 $ 72,605 $ 72,915 The components of income tax expense (benefit) for the years ended 2016, 2015 and 2014 are as follows (in thousands): 2016 2015 2014 Current: Federal $ (1,215 ) $ (6,403 ) $ 32,944 State 949 (942 ) 4,374 Foreign 5,063 4,331 1,997 Total current 4,797 (3,014 ) 39,315 Deferred: Federal (3,186 ) 28,650 (10,080 ) State (1,275 ) 6,003 (372 ) Foreign (4,438 ) (4,843 ) (1,373 ) Total deferred (8,899 ) 29,810 (11,825 ) Income tax expense (benefit) $ (4,102 ) $ 26,796 $ 27,490 A reconciliation of the provision for income taxes at the U.S. federal statutory income tax rate to our income taxes for 2016, 2015 and 2014 is as follows (dollars in thousands): 2016 2015 2014 Amount Rate Amount Rate Amount Rate Income tax expense at federal statutory rate $ 327 35.0 % $ 25,412 35.0 % $ 25,520 35.0 % State income taxes net of federal benefit 439 46.9 % 3,469 4.8 % 2,965 4.0 % Foreign rate differential (939 ) (100.3 )% (773 ) (1.1 )% (865 ) (1.1 )% Mark to market on redeemable common stock — — % — — % 88 0.1 % Change in fair value of contingent consideration — — % (2,978 ) (4.1 )% (1,479 ) (2.0 )% Compensation subject to certain limits 894 95.5 % 1,180 1.6 % 737 1.0 % Stock-based compensation (956 ) (102.1 )% 316 0.4 % 224 0.3 % Acquisition related (2,945 ) (314.6 )% 758 1.0 % 702 1.0 % R&D credits (1,440 ) (153.9 )% (1,130 ) (1.5 )% (604 ) (0.8 )% Other 518 55.2 % 542 0.8 % 202 0.2 % Total income tax expense (benefit) /effective tax rate $ (4,102 ) (438.3 )% $ 26,796 36.9 % $ 27,490 37.7 % The components of our deferred tax assets (liabilities) at year-end 2016 and 2015 were as follows (in thousands): 2016 2015 Deferred tax assets: Depreciation and amortization $ 217,497 $ 239,555 Net operating loss carryforwards 49,473 42,290 Accrued expenses 4,932 8,705 Non-deductible reserves 9,450 9,509 Deferred revenue 29,803 11,031 Stock-based compensation 21,497 12,815 Convertible debt 4,636 — Other 8,622 3,689 Deferred tax assets 345,910 327,594 Valuation allowance (8,283 ) (3,712 ) Total deferred tax assets 337,627 323,882 Deferred tax liabilities: Prepaids (3,212 ) (2,976 ) Total deferred tax liabilities (3,212 ) (2,976 ) Net deferred tax assets $ 334,415 $ 320,906 Balance sheet presentation: Long-term deferred tax assets 362,302 339,558 Long-term deferred tax liabilities (27,887 ) (18,652 ) Net deferred tax assets $ 334,415 $ 320,906 At year-end 2016 , we had net operating loss (“NOL”) carryforwards for federal income tax purposes of approximately $107.4 million , resulting from our acquisitions of NimbleCommerce in 2016, Achievers in 2015, and of Parago, CardLab and Incentec in 2014, which, if not utilized, will begin to expire in 2018 . The utilization of such NOL carryforwards are subject to limitations pursuant to Internal Revenue Code Section 382. We have California state NOL carryforwards of approximately $21.4 million , resulting from our acquisition of Nimble Commerce in 2016, Achievers in 2015 and of Parago in 2014, which, if not utilized, begin to expire in 2028 . A full valuation allowance is recorded against the California state NOL carryforwards. These NOL carryforwards expire at various dates from 2028 to 2034 . Additionally, we have NOL carryforwards in certain foreign jurisdictions of approximately $58.3 million , of which $4.8 million expire at various dates from 2017 to 2036 and the remaining balance carries forward indefinitely. At year-end 2016 and 2015 , we maintained a valuation allowance with respect to certain of our deferred tax assets relating primarily to US and foreign capital losses and operating losses in certain states and various non-U.S. jurisdictions that we believe are not likely to be realized. The total change in valuation allowance for the year ended 2016 was a $4.6 million increase. We operate under a tax holiday in El Salvador, which is currently effective indefinitely under qualified service operations. The impact of this tax holiday was immaterial for the years ended 2016 , 2015 , and 2014. At year-end 2016 , certain undistributed earnings of our foreign operations totaling $43.9 million are considered permanently reinvested. No deferred tax liability has been recognized for the remittance of such earnings to the United States, since our intention is to utilize those earnings in the foreign operations for an indefinite period of time, or to repatriate such earnings only when tax efficient to do so. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable; however, unrecognized foreign tax credits may be available to reduce some portion of the U.S. income tax liability. The following table presents the aggregate changes in the balance of gross unrecognized tax benefit (in thousands): 2016 2015 2014 Gross unrecognized tax benefits, beginning balance $ 12,680 $ 3,808 $ 3,057 Increase for tax position from prior fiscal years and current year acquisitions 977 8,633 — Decrease for tax position from prior fiscal years (388 ) (446 ) (38 ) Increases for tax positions taken during current fiscal year 760 938 789 Lapses of statutes of limitations (41 ) (161 ) — Foreign exchange rate difference (111 ) (92 ) — Gross unrecognized tax benefits, ending balance $ 13,877 $ 12,680 $ 3,808 As of year-end 2016 and 2015 , the balance of unrecognized tax benefits included tax positions of $11.3 million and $10.4 million , respectively, which would reduce our effective income tax rate if recognized in future periods. We accrue interest and penalties related to unrecognized tax benefits as income tax expense. Income tax expense (benefit) included interest and penalties on unrecognized tax benefits of $0.4 million, $(0.1) million and $0.2 million for 2016, 2015 and 2014, respectively . Accrued interest and penalties totaled $1.6 million and $1.2 million at year-end 2016 and 2015, respectively . We do not anticipate that unrecognized tax benefits will significantly change in the next 12 months. Before the Spin-Off, we filed income tax returns as part of Safeway’s consolidated group with federal and certain state and local tax authorities within the United States and filed our own income tax returns with certain state and local tax authorities. After the Spin-Off, we file our own income tax returns with federal and certain state and local tax authorities within the United States. Both prior to and after the Spin-Off, our foreign subsidiaries operate and file income tax returns in various foreign jurisdictions. The IRS examination of Safeway’s federal income tax returns for 2006 is complete and with limited exceptions we are no longer subject to federal income tax examinations for fiscal years before 2007, and are no longer subject to state and local income tax examinations for fiscal years before 2004. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Lease commitments Our principal executive offices are located in Pleasanton, California. In February 2016, we entered into a lease for the entire building. The lease expires in 2027 with an option to extend the lease by five years . We also lease other offices, data centers and warehouse space within and outside the U.S. under operating leases expiring at various dates through 2025 . We have no obligations under capital leases. Rental expense under operating leases was $17.2 million , $10.5 million and $8.9 million for 2016 , 2015 and 2014 , respectively. Future minimum operating lease payments as of year-end 2016 are as follows (in thousands): Fiscal Year Operating Leases 2017 $ 17,832 2018 14,857 2019 11,972 2020 11,430 2021 10,300 Thereafter 37,601 Total minimum lease payments $ 103,992 Distribution Partner Commitments Our sales and marketing teams manage our relationships with our distribution partners and develop retail marketing programs and communication strategies to reach our consumers. We provide or fund product display fixtures and provide or coordinate merchandising visits intended to maintain in-stock conditions on the displays. We also manage or participate in the design of effective in-store marketing programs funded jointly by our distribution partners. Future commitments to our distribution partners as of year-end 2016 are as follows (in thousands): Fiscal Year Distribution Partner Commitments 2017 $ 43,459 2018 28,875 2019 22,793 2020 4,117 2021 1,393 Distribution partner commitments (uncertainty in timing of future payments) 13,594 Total $ 114,231 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 and distribution partners, 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 limited 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, with the exception of the items note below under Legal Matters, we 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. The complaint seeks various remedies, including reform of the merger agreement with respect to the acquisition of CardLab, Inc., imposition of a constructive trust on escrow funds, and monetary, injunctive and other equitable relief. 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 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 and Enterpris
Segment Reporting and Enterprise-Wide Disclosures | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Segment Reporting and Entity-Wide Disclosures | Segment Reporting and Enterprise-Wide Disclosures Segments Our three reportable segments are U.S. Retail, International 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 U.S. 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 U.S. operations, account management and marketing personnel who primarily support our U.S. 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 U.S. Retail and International segments, iii) U.S. 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 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): 2016 U.S. Retail International Incentives & Rewards Corporate and Unallocated Consolidated Total operating revenues $ 1,125,757 $ 484,881 $ 289,140 $ — $ 1,899,778 Partner distribution expense 595,893 316,571 20,678 — 933,142 Operating revenue net of distribution partner expense 529,864 168,310 268,462 — 966,636 Other operating expenses 311,311 132,242 230,911 268,923 943,387 Segment profit (loss) / Operating income $ 218,553 $ 36,068 $ 37,551 $ (268,923 ) 23,249 Other income (expense) (22,313 ) Income before income tax expense $ 936 Significant noncash charges $ 6,822 $ 2,358 $ 17,496 2015 U.S. Retail International Incentives & Rewards Corporate and Unallocated Consolidated Total operating revenues $ 1,165,828 $ 423,285 $ 211,965 $ — $ 1,801,078 Partner distribution expense 577,661 279,435 16,947 — 874,043 Operating revenue net of distribution partner expense 588,167 143,850 195,018 — 927,035 Other operating expenses 324,928 121,579 180,900 211,882 839,289 Segment profit (loss) / Operating income $ 263,239 $ 22,271 $ 14,118 $ (211,882 ) 87,746 Other income (expense) (15,141 ) Income before income tax expense $ 72,605 Significant noncash charges $ 5,446 $ 1,454 $ 13,862 2014 U.S. Retail International Incentives & Rewards Corporate and Unallocated Consolidated Total operating revenues $ 1,027,936 $ 339,444 $ 77,583 $ — $ 1,444,963 Partner distribution expense 526,752 226,867 8,626 — 762,245 Operating revenue net of distribution partner expense 501,184 112,577 68,957 — 682,718 Other operating expenses 282,587 94,339 59,679 167,367 603,972 Segment profit (loss) / Operating income $ 218,597 $ 18,238 $ 9,278 $ (167,367 ) 78,746 Other income (expense) (5,831 ) Income before income tax expense $ 72,915 Significant noncash charges $ 5,431 $ 2,110 $ 3,812 Products We group our products as: • Retail— Revenues resulting from the sale of prepaid products to consumers at our retail distribution partners and online and the sale of telecom handsets to retail distribution partners for resale to consumers. • Incentives— Revenues resulting from the sale of prepaid products, software and services to our business clients. • Other— Revenues from our secondary card market and card production. The following table summarizes operating revenues according to product for 2016 , 2015 and 2014 (dollars in thousands): 2016 2015 2014 Revenue Percent of Total Revenue Revenue Percent of Total Revenue Revenue Percent of Total Revenue Retail $ 1,383,499 72.8 % $ 1,453,129 80.7 % $ 1,263,235 87.4 % Incentives 289,140 15.2 % 211,964 11.8 % 77,583 5.4 % Other 227,139 12.0 % 135,985 7.5 % 104,145 7.2 % Total $ 1,899,778 100.0 % $ 1,801,078 100.0 % $ 1,444,963 100.0 % Geography The following table presents revenue by geographic area generally based on the location of the card activation or value load for 2016 , 2015 and 2014 (dollars in thousands): 2016 2015 2014 Revenue Percent of Total Revenue Revenue Percent of Total Revenue Revenue Percent of Total Revenue United States $ 1,382,188 72.8 % $ 1,352,872 75.1 % $ 1,097,791 76.0 % International 517,590 27.2 % 448,206 24.9 % 347,172 24.0 % Total $ 1,899,778 100.0 % $ 1,801,078 100.0 % $ 1,444,963 100.0 % The following table presents our long-lived Property, equipment and technology, net by geographic area based on the locations of the assets as of year-end 2016 , 2015 and 2014 (dollars in thousands): 2016 2015 2014 Long-Lived Assets Percent of Total Long-Lived Assets Long-Lived Assets Percent of Total Long-Lived Assets Long-Lived Assets Percent of Total Long-Lived Assets United States $ 149,042 86.5 % $ 136,646 85.7 % $ 125,331 96.4 % International 23,339 13.5 % 22,711 14.3 % 4,677 3.6 % Total $ 172,381 100.0 % $ 159,357 100.0 % $ 130,008 100.0 % Major Customers and Significant Concentrations Our distribution partners represent a significant concentration of risk for us as we are dependent on our distribution partners for the sale of prepaid cards to end consumers. Revenue generated from card activations and other product sales at our three largest distribution partners totaled 12% , 7% and 5% of our total operating revenues for 2016 ; 12% , 5% and 9% for 2015 ; and 14% , 7% and 11% for 2014 . Outstanding receivables from such distribution partners, consisting primarily of Settlement receivables , totaled $26.9 million , $14.5 million and $28.0 million at year-end 2016 , respectively, and $25.6 million , $14.4 million and $36.6 million at year-end 2015 , respectively. We generate a significant portion of our total revenues from our relationships with the issuing banks of our Visa gift and open loop incentive cards, including program management, interchange and other fees paid by the issuing banks; purchase fees paid by consumers; and incentive card fees paid by business clients. These revenues generated by our relationship with one of our issuing banks totaled 13% , 15% and 12% of our total operating revenues for 2016 , 2015 and 2014 , respectively. Outstanding receivables from this issuing bank totaled $91.3 million and $97.6 million at year-end 2016 and 2015 , respectively. One content provider accounted for 13% , 14% and 14% of our total operating revenues for 2016 , 2015 and 2014 , respectively. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share We compute basic earnings per share (“EPS”) by dividing net income available to common stockholders by the weighted average common shares outstanding during the period and compute diluted EPS by dividing earnings available to common stockholders by the weighted average shares outstanding during the period and the impact of securities that if exercised, would have a dilutive effect on EPS. We compute EPS under the two-class method, which is a method of computing EPS when an entity has both common stock and participating securities. We consider nonvested stock as a participating security if it contains rights to receive nonforfeitable dividends at the same rate as common stock. Under the two-class method, we exclude the income and distributions attributable to participating securities from the calculation of basic and diluted EPS and exclude the participating securities from the weighted average shares outstanding. 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): 2016 2015 2014 Basic Diluted Basic Diluted Basic Diluted Net income attributable to Blackhawk Network Holdings, Inc. $ 4,658 $ 4,658 $ 45,609 $ 45,609 $ 45,547 $ 45,547 Distributed and undistributed earnings allocated to participating securities (28 ) (28 ) (151 ) (147 ) (232 ) (226 ) Net income attributable to common stockholders $ 4,630 $ 4,630 $ 45,458 $ 45,462 $ 45,315 $ 45,321 Weighted-average common shares outstanding 55,734 55,734 54,294 54,294 52,531 52,531 Common share equivalents 1,526 2,019 1,778 Weighted-average shares outstanding 57,260 56,313 54,309 Earnings per share $ 0.08 $ 0.08 $ 0.84 $ 0.81 $ 0.86 $ 0.83 The weighted-average common shares outstanding for diluted EPS excluded approximately 1,663,000 , 500,000 and 500,000 potential common stock outstanding for 2016, 2015 and 2014, respectively , because the effect would have been anti-dilutive. Potential common stock outstanding results in fewer common share equivalents as a result of the treasury stock method. |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Related-Party Transactions Relationship with Safeway and Albertsons Revenues and Expenses As discussed in Note 1 , until April 14, 2014, Safeway was our Parent. Following the Spin-Off, several members of our Board remained members of Safeway’s board of directors, including one Board member who was Safeway’s CEO. Following Safeway’s acquisition by AB Acquisition LLC in January 2015 (the “Acquisition”), Safeway’s CEO became the CEO of the combined entity (“Albertsons/Safeway”) and remained the CEO through April 2015. Accordingly, we consider Safeway as a related party through the Acquisition and consider Albertsons/Safeway as a related party from the Acquisition through April 2015. The following table presents such related party revenues and expenses for Safeway through the Acquisition and for Albertsons/Safeway from the Acquisition through April 2015. Although we are no longer a related party with Albertsons/Safeway, we continue to recognize revenues and expenses related to our agreements. Our distribution and other agreements with Albertsons/Safeway are on equivalent terms with our other partners. 2015 2014 OPERATING REVENUES: Commissions and fees $ 72 $ 710 Program and other fees 471 2,426 Product sales 1,323 4,031 Total operating revenues 1,866 7,167 OPERATING EXPENSES: Partner distribution expense 17,069 61,283 Processing and services (288 ) (625 ) General and administrative 607 1,856 Total operating expenses 17,388 62,514 OTHER INCOME (EXPENSE): Interest expense — (50 ) Distribution Commissions and Revenue Safeway and Albertsons/Safeway is one of our significant retail distribution partners. Our partner distribution expense related to Safeway and Albertsons/Safeway as a related party totaled $17.1 million (through April 2015) and $61.3 million for 2015 and 2014 , respectively. Safeway and Albertsons/Safeway reimburse us for certain costs which we record as a reduction of Processing and services expense. We also earn revenue from Safeway and Albertsons/Safeway for the sale of telecom handsets and the management of Safeway’s gift card program. Such revenues totaled $1.9 million (through April 2015) and $7.2 million , for 2015 and 2014 , respectively. General Corporate Expenses and Facilities Rental Safeway and Albertsons/Safeway provide certain corporate services to us, primarily related to facilities rent and tax services. Safeway and Albertsons/Safeway charges us for actual or estimated costs to provide these services. Such costs totaled $0.6 million (through April 2015) and $1.9 million in 2015 and 2014 , respectively, which we include in General and administrative . Management of all companies believes that the allocation methodology is reasonable and considers the charges to be a reasonable reflection of the cost of services provided. These charges may not, however, reflect the actual expense that we would have incurred as an independent company for the periods presented. Other related party transactions With respect to certain of our other equity method investees, we recognized $0.3 million of revenue in each of 2016 and 2015 , which we report in Commissions and fees in our consolidated statements of income, related to our distribution of their products. Amounts were immaterial in 2014. Beginning June 6, 2016, our President and Chief Executive Officer serves as a member of the board of directors of Electronic Arts Inc. (“EA”). We do not have any significant transactions with EA and the terms of our agreements with EA are on equivalent terms with our other partners. Certain members of our Board are also members of the board of directors of our distribution partners, content providers or business clients. The terms of these agreements are on equivalent terms with our other partners. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Selected Quarterly Financial Data (Unaudited) | Selected Quarterly Financial Data (Unaudited) Our fiscal quarters consist of three 12-week quarters and one 16-week or 17-week fiscal fourth quarter. Selected summarized quarterly financial information for 2016 and 2015 is as follows. Q4'16 Q3'16 Q2'16 Q1'16 Q4'15 Q3'15 Q2'15 Q1'15 (in thousands, except per share data) Operating revenues $ 780,550 $ 361,560 $ 391,206 $ 366,462 $ 756,434 $ 352,665 $ 372,248 $ 319,731 Operating income (loss) $ 51,363 $ (10,093 ) $ (14,977 ) $ (3,044 ) $ 68,875 $ (2,250 ) $ 10,206 $ 10,915 Net income (loss) attributable to Blackhawk Network Holdings, Inc. $ 24,650 $ (5,102 ) $ (11,337 ) $ (3,553 ) $ 41,614 $ (3,615 ) $ 2,904 $ 4,706 Earnings (loss) per share: Basic $ 0.44 $ (0.09 ) $ (0.20 ) $ (0.06 ) $ 0.75 $ (0.07 ) $ 0.05 $ 0.09 Diluted $ 0.43 $ (0.09 ) $ (0.20 ) $ (0.06 ) $ 0.73 $ (0.07 ) $ 0.05 $ 0.08 |
The Company and Significant A23
The Company and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 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 25 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. |
Spin-Off | Spin-Off Before April 14, 2014, we were a majority-owned subsidiary of Safeway Inc. (“Safeway”). On April 14, 2014, Safeway distributed its remaining 37.8 million shares of our Class B common stock to Safeway stockholders (the “Spin-Off”). As a result of the Spin-Off, we became a stand-alone entity separate from Safeway. See Note 1 — Income Taxes and Note 14 — Related Party Transactions for disclosures regarding this relationship. |
Basis of Presentation | Basis of Presentation These consolidated financial statements include Blackhawk Network Holdings, Inc., a Delaware corporation, and its wholly-owned or majority-owned domestic and foreign subsidiaries, including Blackhawk Network, Inc., an Arizona corporation and the primary operating subsidiary of Blackhawk Network Holdings, Inc., and are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany transactions and balances among us and our subsidiaries have been eliminated in consolidation. For investment in entities which we have the ability to exercise significant influence, but not control, we use the equity method of accounting. Under the equity method, investments are recorded at cost and adjusted by our share of undistributed earnings or losses of such entities. The share of earnings or losses in investments accounted for under the equity method are reflected as Interest income and other income (expense), net in our consolidated statements of income. We utilize a three months lag in reporting equity income from our investments, adjusted for known amounts and events, when the investee’s financial information is not available timely or when the investee’s reporting period differs from our reporting period. For investments in which we do not have the ability to exercise significant influence over the investee’s operations, we use the cost method of accounting and recognize distributions as earned or received. We evaluate all our equity method and cost method investments quarterly to determine if other-than-temporary impairment indicators are present and whether an impairment charge is necessary. There were no such indicators during 2016 and 2015. The 2014 consolidated financial statements have been prepared as if we existed on a stand-alone basis prior to the Spin-Off, but may not necessarily reflect the financial position or cash flows that would have been achieved if we had existed on a stand-alone basis prior to the Spin-Off. Before the Spin-Off, our consolidated financial statements included an allocation of expenses arising from certain shared services and infrastructure provided by Safeway. These expenses primarily related to facilities rental and tax services and were allocated using actual costs or estimates based on the portion of services used by us. Management believes that the allocation methodology was reasonable and considered the charges to be a reasonable reflection of the cost of benefits received. Following the Spin-Off until the end of 2015, Safeway continued to rent facilities to us and provide certain tax services (related to tax periods through the Spin-Off) based on similar pricing terms. We also provide certain marketing, distribution and program management services to Safeway for which we receive program fees or expense reimbursements. Generally, such amounts are recorded as revenue in Program and other fees or Marketing revenue when rendered to Safeway as a content provider or as a reduction to expense in Processing and services when rendered to Safeway as a distribution partner. We evaluated subsequent events through the date that we filed this Annual Report on Form 10-K with the SEC. |
Use of Estimates | Use of Estimates The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and related notes. We generally base our estimates and assumptions on a combination of historical factors, current circumstances, and the experience and judgment of management. Significant estimates and assumptions include, among other things, estimates of fair value for goodwill, intangible assets and acquisition liabilities (including subsequent evaluation of goodwill and intangible assets for impairment); valuation assumptions for stock-based compensation and income taxes; contingent liabilities; allowances for doubtful accounts and reserves for sales adjustments and returns; useful lives of assets; and card redemption patterns and lives. Actual results could differ from our estimates. |
Fiscal Year | Fiscal Year We use a 52 -week or 53 -week convention ending on the Saturday closest to December 31. The fiscal years presented in our consolidated financial statements consist of the 52 -week period ended on December 31, 2016 (year-end 2016 or 2016 ), the 52 -week period ended on January 2, 2016 (year-end 2015 or 2015 ) and the 53 -week period ended on January 3, 2015 (year-end 2014 or 2014 ). |
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 “See Note 15 - Selected Quarterly Financial Data (Unaudited) .” |
Recent Adopted or Issued Accounting Pronouncements | Recently Adopted or Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers (Topic 606), which along with amendments issued in 2015 and 2016, will replace nearly all current U.S. GAAP guidance on this topic with a comprehensive revenue measurement and recognition standard and expanded disclosure requirements. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This new guidance is to be applied retrospectively either to each reporting period presented (full retrospective method) or with the cumulative effect of initially applying the guidance at the date of initial application for reporting periods beginning after December 15, 2017. Early adoption is not permitted. We currently anticipate adopting this standard using the full retrospective method in the first quarter of fiscal 2018, and we are currently evaluating the impact of this guidance on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 changes current lease accounting standard by requiring the recognition of lease assets and lease liabilities for all leases, including those currently classified as operating leases. This new guidance is to be applied under a modified retrospective application to the earliest reporting period presented for reporting periods beginning after December 15, 2018. Early adoption is permitted. While management is evaluating the comprehensive impact of this guidance, this new guidance would require us to capitalize, at the appropriate discount rate, our operating lease commitments as disclosed in Note 11 — Commitments and Contingencies . 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 2016-06, 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 in conjunction with our issuance of the Convertible Senior Notes during our third quarter of 2016 (see Note 4—Financing ). Adoption did not result in significant changes to our existing accounting policies. 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 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. The retroactive adjustment to our consolidated statement of cash flows is an increase of $6.8 million and $2.7 million in cash flows provided by operating activities for 2015 and 2014 respectively, with a corresponding decrease in cash flows provided by financing activities. In August 2016, the FASB issued 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 November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires companies to explain the changes in the combined total of restricted and unrestricted cash balances in the statement of cash flows. ASU 2016-18 should be applied using a retrospective transition method, for fiscal years beginning after December 15, 2017, and early adoption is permitted. We plan to adopt this guidance for our 2018 fiscal year. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment , which simplifies the existing two-step guidance for goodwill impairment testing by eliminating the second step resulting in a write-down to goodwill equal to the initial amount of impairment determined in step one. The ASU is to be applied prospectively for reporting periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. We will be early-adopting this standard in the first quarter of 2017, however, it has no impact on our financial statements unless we determine in the future that goodwill is impaired at one of our reporting units. |
Financial Instruments and Fair Value Measurements | Financial Instruments and Fair Value Measurements We estimate the fair value of our monetary assets and liabilities noted below using appropriate valuation methodologies. Considerable judgment is required to develop estimates of fair value, and the estimates presented are not necessarily indicative of the amounts that we could realize in a current market exchange. Additionally, the fair values are estimated at year-end and current estimates of fair value may differ from the amounts presented. The fair value of Cash and cash equivalents, Settlement receivables, Accounts receivable, Restricted cash, certain Other assets, Settlement payables, Consumer and customer deposits, Accounts payable and accrued operating expenses and certain Other current liabilities approximate their carrying values due to the short-term settlement requirements and limited interest rate risk related to these instruments. Certain amounts of other receivables included in Other assets are due to be collected shortly after one year and the counter-party has limited credit risk, so the carrying amount approximates fair value. We follow applicable guidance that establishes a fair value measurement framework, provides a single definition of fair value and requires disclosure summarizing fair value measurements. Such guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement is determined based on the assumptions that market participants would use in pricing an asset or liability. Fair value guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable input be used when available. Observable inputs are those that the market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is measured in three levels based on the reliability of inputs: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 Inputs other than quoted prices included in Level 1 that are either directly or indirectly observable; Level 3 Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the inputs that market participants would use in pricing. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of unrestricted cash balances and short-term, liquid investments with a maturity date of three months or less at the time of purchase. |
Overnight Cash Advances to Safeway | Overnight Cash Advances to Safeway Prior to the Spin-Off, on a daily basis, pursuant to an unsecured, intercompany interest-bearing note, Safeway borrowed available excess cash from us. Amounts borrowed by Safeway were available to us on the following business day, as necessary, to meet operating requirements (see Note 14 — Related Party Transactions ). In conjunction with our Credit Agreement, we terminated this agreement (see Note 4 — Financing ). |
Restricted Cash | Restricted Cash During 2016 , restricted cash represents funds held in an employee benefit trust related to Grass Roots, which we acquired during the fourth quarter of 2016, and funds held in an escrow account related to another acquisition (see Note 2 — Business Acquisitions ). |
Settlement Receivable | Settlement Receivables Settlement receivables represent amounts due from retail distribution partners for consumer funds collected at the point of sale related to the purchase of prepaid products, amounts due from certain business clients for funds loaded onto incentive products and prepayments to certain content providers during the holiday selling season. The settlement receivable balances are net of commissions and fees retained by retail distribution partners. |
Accounts Receivables | Accounts Receivable Accounts receivable relate primarily to fees and interchange due from the issuing banks of our proprietary Visa gift and open loop incentive cards; amounts due from content providers for marketing and card production sales; amounts due from retail distribution partners for the sale of telecom handsets and fulfillment services; and amounts due from business clients for rebate processing fees. |
Allowance for Doubtful Accounts and Reserves for Sales Adjustments | Allowances for Doubtful Accounts and Reserves for Sales Adjustments We present Settlement receivables and Accounts receivable net of allowances for doubtful accounts and sales adjustments (the allowances) and record reserves for sales returns and other adjustments within Other current liabilities on our consolidated balance sheets. Allowances for sales adjustments and returns reserves include discounts offered to our partners and clients, sales returns for defective, damaged or lost product and refunds for certain fees. These allowances and reserves represent our best estimate of the losses and billing credits inherent in our outstanding receivables and estimates for future returns or adjustments at the balance sheet dates. We estimate allowances for sales adjustment and returns reserves based on historical trends, customer-specific circumstances, vendor-specific return policies, seasonality and lag patterns. We estimate allowances for doubtful accounts based on historical collection trends, the age of outstanding accounts receivable, customer-specific circumstances, and existing economic conditions. If events or changes in circumstances indicate that specific receivable balances may be impaired, we give further consideration to the collectability of those balances and the allowance is adjusted accordingly. For Settlement receivables , the allowances were $2.6 million and $5.0 million at year-end 2016 and 2015 , respectively. For Accounts receivable , the allowances were $6.0 million and $3.1 million at year-end 2016 and 2015 , respectively. We record additions to the allowances for bad debt expense in General and administrative expense, for sales adjustments related to Settlement receivables in Partner distribution expense and for sales adjustments for Accounts receivable as a reduction of revenue. |
Property, Equipment and Technology | Property, Equipment and Technology We state property, equipment and technology at historical cost or acquisition-date fair value for assets acquired in a business acquisition, net of accumulated depreciation and amortization. We recognize depreciation for equipment and technology on a straight-line method over the estimated useful asset lives of three to five years and amortize leasehold improvements on a straight-line basis over the shorter of their estimated useful lives or the remaining term of the lease. Technology consists of capitalized costs or the acquisition-date fair value for both purchased and internally developed software. Software purchased or licensed for internal use is primarily enterprise-level business software that we customize to meet specific operational requirements. Software developed for internal use is generally used to deliver processing, transactional, order management, on-line and digital services to our content providers, distribution partners, business clients and consumers. We capitalize application and development charges and amortize them over an estimated useful life of generally five years. We evaluate long-lived assets for impairment annually or more frequently when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such an event occurs, we then determine the expected future undiscounted cash flows from the asset. If the sum of the expected future undiscounted cash flows are less than the carrying amount of the asset, we recognize an impairment loss. We measure the loss as the amount by which the carrying amount exceeds its fair value calculated using the present value of the expected future undiscounted cash flows. In 2016, we identified an impairment charge of $5.5 million related to a previously acquired asset as a result of our platform integration efforts. This amount is presented within Transition and acquisition expense. We did not identify any indicators of impairment during 2015 and 2014 . |
Business Acquisitions | Business Acquisitions We use our best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. Our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair value of assets acquired and liabilities assumed, with the corresponding offset to goodwill, to reflect new information obtained about facts and circumstances that existed as of the acquisition date. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, we record any subsequent adjustments to our consolidated statements of income. |
Goodwill and Intangible Assets | Goodwill Goodwill represents the excess cost over the estimated fair value of the net assets acquired in a business combination. This excess is not amortized, but rather capitalized and evaluated for impairment at the reporting unit level at least annually. Goodwill impairment tests require judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units and determination of the fair value of each reporting unit. We conduct an evaluation of goodwill for impairment annually on the first day of the fourth quarter, or sooner if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is below its carrying amount. Testing for impairment is a two-step process. In the first step, we compare the fair value of the reporting unit to its carrying value. If the fair value of the reporting unit is less than its carrying value, we perform a second step to determine the implied fair value of goodwill for that reporting unit. If the carrying value of goodwill exceeds the implied fair value of goodwill such excess represents the amount of goodwill impairment. For certain reporting units, we may apply a qualitative test prior to performing the two-step test where we assess events and circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of the events and circumstances, we conclude that it is more likely than not that the fair value of the reporting unit is greater than its book value, we conclude that there is no goodwill impairment and do not proceed with the two-step process described above. Based on our annual evaluations, we have concluded that goodwill has not been impaired for any reporting periods. Intangible Assets Intangible assets consist of acquired retail distribution partner, content provider and other customer relationships; patents, domain and trade names and other intangibles; as well as retail distribution partner relationships resulting from the issuance of equity awards (see Note 2 — Business Acquisitions , Note 7 — Goodwill and Other Intangible Assets and Note 9 — Equity Awards Issued to Retail Distribution Partners ). Intangible assets are amortized on a straight-line or accelerated basis, based on our assessment of the pattern of economic benefits, over their expected useful lives, which range from one to 15 years. For acquisitions, we classify acquired software technology as Property, equipment and technology, net . We evaluate intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such an event occurs, we then determine the expected future undiscounted cash flows from the asset. If the sum of the expected future undiscounted cash flows are less than the carrying amount of the asset, we recognize an impairment loss. We measure the loss as the amount by which the carrying amount exceeds its fair value calculated using the present value of the expected future undiscounted cash flows. We have not identified any indicators of impairment during 2016 , 2015 and 2014 . |
Program Development Costs | Program Development Costs We pay for program development costs to or on behalf of some of our retail distribution partners. These costs include, but are not limited to, card displays, marketing allowances and technology platform integration. In the event of early termination of a contract, payments are refundable on a pro rata basis from the retail distribution partners to us. These costs are deferred as Other current assets or Other assets and amortized over the shorter of their estimated useful lives or the contractual term to Partner distribution expense , Sales and marketing or Processing and services expense depending on the nature of the payment . |
Deferred Commissions | Deferred Commissions Deferred commissions are the incremental costs that are directly associated with the acquisition of non-cancellable contracts with our business clients, content providers or distribution partners and consist of sales commissions paid to our direct sales force. The deferred commission amounts are recoverable through the future revenue streams under the non-cancellable contracts. We defer and amortize the commissions over the term of the related customer contracts in Sales and marketing in our consolidated statements of income. |
Settlement Payables | Settlement Payables Settlement payables represent amounts owed to content providers or issuing banks for funds loaded onto cards but not yet remitted to these partners. Payable amounts are net of commissions or fees due to us from content providers and generated at the time of card activation or value load at distribution partners. Settlement of settlement payables is funded through our Cash and cash equivalents , the collection of Settlement receivables, net and use of our revolving credit facility. |
Consumer and Customer Deposits | Consumer and Customer Deposits Consumer and customer deposits represent amounts redeemable on prepaid products that we issue, including our proprietary REloadit cards, aggregated category gift cards and certain other cards, outstanding consumer rebate checks and amounts received from incentive business clients before the issuance of prepaid products. |
Financing Costs | Financing Costs Credit Agreement — We incur debt issuance costs and pay certain costs to the group of banks (collectively, the financing costs) in conjunction with entering into and subsequently amending our credit agreement, which includes a note payable and revolving credit facility (see Note 4 — Financing ). We allocate the financing costs between the note payable and revolving credit facility based on their relative fair values and present the deferred financing costs allocated to the note payable as a reduction of its carrying value and present deferred financing costs allocated to the revolving credit facility within Other assets on our consolidated balance sheets. We amortize these deferred financing costs on a straight-line basis over the term of the credit agreement as the difference between the straight-line method and effective interest method is immaterial to our consolidated financial statements. Convertible Senior Notes — 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. |
Treasury Stock | Treasury Stock Prior to 2014, we used the cost method when we repurchased our own common stock as treasury shares and presented treasury stock as a reduction of Stockholders’ equity . During 2014, our Board adopted a resolution to retire previously acquired treasury shares and future purchases of our common stock. Accordingly, we reclassified Treasury stock into Additional paid-in capital and reflect subsequent repurchases as a reduction of Additional paid-in capital . |
Foreign Currency Translation | Foreign Currency Translation The functional currencies of our foreign subsidiaries are the local currencies. We translate assets and liabilities of our foreign subsidiaries into U.S. dollars using exchange rates at the end of each of our interim four-week periods, and translate revenues and expenses at average daily rates during each four-week period. Translation adjustments are reported within comprehensive income in our consolidated statements of comprehensive income and statements of stockholders’ equity. Gains and losses on foreign currency transactions are included in our consolidated statements of income. |
Intercompany Foreign Currency Transactions | Intercompany Foreign Currency Transactions For intercompany balances that we consider permanent investments (that is, we do not anticipate or require settlement for the foreseeable future), we exclude foreign currency transaction gains and losses from the determination of net income. For other intercompany balances, we include foreign currency transaction gains and losses in Interest income and other income (expense), net . |
Comprehensive Income | Comprehensive Income Comprehensive income includes net income plus other comprehensive income (loss) resulting from changes in foreign currency translation, which includes foreign currency transaction gains and losses for intercompany balances that we consider permanent investments. |
Income Taxes | Income Taxes Tax Sharing Agreements with Safeway Before the Spin-Off, we were included in Safeway’s “consolidated group” for U.S. federal income tax purposes, as well as in certain consolidated, combined or unitary groups for state and local income tax purposes. We were also party to a federal and state and local tax sharing agreement with Safeway (“TSA”). Under the TSA, the amount of federal tax liability paid by us is based on the approximate liability that would be incurred if we filed our own consolidated tax return separate from the Safeway consolidated group. Through 2012, the state tax liability paid by us was partly based on our share of taxable income and the total actual state tax liability of the Safeway consolidated group which will generally be less than the state income tax liability that we would incur if we filed our own consolidated state tax returns. Effective December 30, 2012, we and Safeway amended and restated our tax sharing agreement (Amended TSA). Under the Amended TSA, the state tax liability paid by us is based on the incremental liability paid by Safeway resulting from including us in its consolidated tax group, which will generally be greater than the state income tax liability that we would incur if we filed our own consolidated tax returns. In April 2014, we and Safeway executed the second Amended and Restated Tax Sharing Agreement (the “SARTSA”), which superseded the previous tax sharing agreements with respect to the matters addressed by the SARTSA. On January 30, 2015, Safeway announced that it had been acquired by AB Acquisition LLC (the “Merger”). As a result of the Merger, the Spin-Off is taxable to Safeway and Safeway’s stockholders. Since the Spin-Off is taxable, under the SARTSA, we and Safeway filed a consolidated federal tax return and certain state and local tax returns through the date of the Spin-Off, and we and Safeway made an election that resulted in a step-up in the tax basis of our assets (the Section 336(e) Election). The actual benefit that we will realize depends on, among other things, whether we generate adequate taxable income over time to fully utilize deductions associated with any increased tax basis resulting from the Section 336(e) Election. Under the SARTSA, any corporate-level income tax incurred as a result of the Spin-Off is borne by Safeway, except that, pursuant to a separate letter agreement, we will bear any incremental taxes that result from certain elections requested by us with respect to certain of our foreign subsidiaries in connection with the Spin-Off, which permits us to reduce the earnings of our foreign subsidiaries for the amortization of the step up in tax basis of their assets if and when we repatriate earnings of those subsidiaries. We are not able to quantify the amount of such incremental taxes at this time, but we believe any amounts due will be immaterial to our consolidated financial statements. For any states in which we are required under state law to remit Spin-Off taxes (because Safeway does not file combined returns with us in those states), Safeway is responsible for funding the amount of such taxes; however, the SARTSA permits Safeway to determine how such taxes will be remitted to the applicable state taxing authority. To date, Safeway has determined to fund these amounts to us in exchange for promissory notes. As of year-end 2014, Safeway had funded approximately $27.7 million to us in exchange for promissory notes for Spin-Off taxes we directly remitted to certain state taxing authorities. Pursuant to the terms of the SARTSA, Safeway contributed the notes to us as Additional paid-in capital when the Merger was completed in 2015, with the exception of approximately $19.4 million in overpayments for which we will file for refunds from such states and remit such refunds to Safeway. During 2016 and 2015, we received $1.2 million and $14.3 million , respectively, from such refunds and remitted all of 2015 refunds and $0.9 million of 2016 refunds to Safeway. As of December 31, 2016, we have approximately in $3.9 million overpayments still outstanding with such states that will ultimately be remitted to Safeway. Income Tax Expense Income tax expense reflects the amount of taxes payable for the current year, the effect of deferred tax liabilities and deferred tax assets, accrued interest on tax deficiencies and accrued penalties on tax deficiencies. Deferred income taxes represent future net tax effects resulting from temporary differences between the balances presented in our consolidated financial statements and the tax basis of assets, liabilities, and income statement transactions using tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is established if it is more likely than not that a deferred tax asset will not be realized. In determining the allowance, we consider projected realization of tax benefits based on expected future taxable income, available tax planning strategies and our overall deferred tax position. These estimates are complex and involve management judgment. Actual payments and tax liabilities may not match these estimates. Before the Spin-Off, our income tax expense and related current and deferred income taxes were calculated on a hypothetical stand-alone income tax return basis for both federal and state purposes. After the Spin-Off, income tax expense and related deferred income taxes are calculated on a stand-alone basis. Differences arose as a result of computing our federal and state tax payments pursuant to the TSA or Amended TSA versus the liability that resulted from the stand-alone provision calculation. These differences, to the extent we deemed them to be permanent, are recorded in equity as Additional paid-in capital in our consolidated balance sheets. We are subject to periodic audits by the Internal Revenue Service (IRS) and by various foreign, state and local taxing authorities, either stand-alone or as part of Safeway’s consolidated tax group for federal and certain state and local tax returns for periods before the Spin-Off. These audits may challenge certain of our positions applicable, such as the timing and amount of income and deductions and the allocation of taxable income to various tax jurisdictions. We evaluate our tax positions and establish liabilities in accordance with the applicable accounting literature related to uncertainty in income taxes. This accounting literature provides guidance for the financial statement recognition and measurement of tax positions taken or expected to be taken in tax return filings. For financial statement benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by the applicable taxing authority. The amount recognized is measured as the largest amount of benefit that is more likely than not to be realized upon the settlement. |
Revenue Recognition and Presentation | Revenue Recognition and Presentation Our operating revenues consist of Commissions and fees ; Program and other fees; Marketing revenue and Product sales . We recognize revenue when the price is fixed or determinable, persuasive evidence of the arrangement exists, the service is performed or the product is delivered and collectability of the resulting receivable is reasonably assured. Under certain arrangements, we have concluded that we have entered into a multiple element arrangement with multiple units of accounting. We allocate the arrangement consideration to each unit of accounting based on their relative fair values and recognize revenue for each unit of accounting when we deliver the goods or services. Commissions and Fees —Commissions and fees consist of content provider commissions, consumer purchase fees, reload fees, rebate processing fees, client purchase fees, merchant commissions and other transaction-based commissions. We present total commissions and fees as revenues and the portion of commissions and fees paid to distribution partners as Partner distribution expense in operating expenses . Content Provider Commissions —We earn the majority of our revenues from commissions paid by content providers for the marketing and distribution of their prepaid cards, which we refer to as closed loop cards. For closed loop cards and prepaid telecom cards, commissions are based on a contractual percentage of the transaction dollar volume of cards activated during a defined period. After a closed loop or telecom card is activated, we have no further service obligations and recognize the commissions as revenue at the time of card activation. Consumer Purchase Fees —We earn a portion of our revenue from fees related to open loop gift cards, including our Visa gift cards, American Express and MasterCard branded gift cards and non-proprietary GPR cards, including Green Dot and NetSpend branded cards. The consumer pays a purchase fee upon activation of open loop cards or at the time initial value is loaded onto the GPR cards. These purchase fees vary based on the type of card purchased and the dollar amount of the load transaction. We serve as the program manager for issuing banks for our Visa gift and have ongoing customer service obligations after card activation. We defer the Visa gift purchase fees in Other current liabilities , and recognize revenue ratably in proportion to the historical redemption patterns of the card portfolio over the estimated life of the card (currently 12 months), which results in the recognition of approximately 90% of the purchase fee within the first four months of card activation. For the American Express and MasterCard network-branded gift cards and the Green Dot and NetSpend branded GPR cards, we receive a contractual percentage of the consumer purchase fee, which we recognize as revenue at the time of card activation as we have no future service obligations. Reload Fees —We earn fees when consumers reload funds onto their GPR cards through our REloadit network. We recognize revenue when we process the reload. Rebate Processing Fees —We earn fees for processing and validating consumer rebate submissions from certain of our business clients. These fees cover rebate processing (online and mail-in), rebate validation, customer service and prepaid product fulfillment. For rebates fulfilled by checks, we recognize revenue when we remit the check to the end consumer. For rebates fulfilled with open loop incentive cards, for which we serve as program manager for issuing banks, we recognize revenue ratably in proportion to historical redemption patterns (currently nine months). Client Purchase Fees —We receive fees from our business clients for the sale of open loop incentive cards. Incentive cards include Visa and MasterCard branded cards for which we serve as program manager for issuing banks. We defer initial cards fees for open loop incentive cards ratably over the estimated card life for single use cards (currently 12 months) and recognize fees for reloading cards when the reload is processed. We may grant price discounts to certain business clients for the purchase of incentive cards, which we present as a reduction of Commissions and fees revenue. If these discounts exceed the revenues received from the business client, we present the net amounts in Operating expenses in Partner distribution expense . Merchant Commissions —Certain open loop incentive cards are redeemable only at certain merchants utilizing our restricted authorization network technology. We receive commissions from such merchants based on a contractual percentage of the amount redeemed on such restricted access cards as well as for redemptions for non-restricted cards for certain incentive programs. We recognize revenue when the cardholders make purchases and the funds are redeemed. As a result of several acquisitions (see Note 2 — Business Acquisitions ), we issue closed loop category-specific (e.g. restaurants, spas or cinemas) gift cards that are redeemable only at participating merchants. Upon redemption, we remit the amount redeemed by the consumer, net of our commissions. We recognize the fixed portion of our commission revenue ratably in proportion to historic redemption patterns and the remaining commission upon redemption. Transaction-Based and Other Fees —We receive transaction-based fees from certain telecom partners related to the use of our proprietary network. These fees vary with usage or volumes and are recognized at the time our network is accessed. We also receive fees for certain services related to certain closed loop card programs such as balance tracking, customer service calls, and financial settlement. We recognize revenue when we perform the services. Program and Other Fees —Program and other fees consist of program management fees, interchange fees, account service fees, breakage revenue, fund expiration fees, incentives and rewards platform and program fees and other fees. Program Management Fees —We receive program management fees from certain issuing banks related to our proprietary Visa gift card and open loop incentive cards. These fees are based on a contractually stated or determinable percentage of transaction dollar volume and represent a portion of our compensation for the overall management and customer support of the Visa gift and open loop incentive card programs. We defer these fees in Other current liabilities and recognize the revenue over the estimated life of the card in proportion to historical redemption patterns. Interchange Fees —We earn payment network fees related to the cardholders’ usage of the Visa gift and open loop incentive cards. Merchants are charged by the issuing banks at varying rates established by Visa, MasterCard, and Discover. These fees are contractually passed through to us by the issuing banks net of any fees paid to Visa or MasterCard, or Discover. We recognize revenue when cardholders make purchases and the funds are redeemed. Account Service Fees —We earn monthly fees for certain Visa gift and open loop incentive cards, which the issuing banks charge only after a certain amount of time has transpired since card activation. The issuing banks collect these consumer-paid service fees by reducing card balances and remit them to us. We recognize these fees as revenue at the time the card balance is reduced. For certain cards, we earn these fees only to the extent that the fees exceed program management fees previously paid to us for such cards. Breakage Revenue —We refer to the portion of the dollar value of prepaid-stored value cards that consumers do not ultimately redeem as breakage. In certain card programs where we hold the cardholder funds, 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. In addition, we sponsor business loyalty programs where we are entitled to breakage on unused customer balances (e.g., Achievers). 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. Fund Expiration Fees —We receive fees from issuing banks for certain Visa gift and open loop incentive cards, based on a contractual percentage of the unredeemed funds when the funds expire. We recognize revenue when the funds expire. For certain Visa gift and open loop incentive cards, we earn these fees only to the extent that the fees exceed program management fees previously paid to us for such cards. Incentive and Reward Platform and Program Fees —We receive fees from certain business clients for the use of our incentive platforms, which allow them to manage and administer their employee and sales channel reward programs, as well our program management services of certain employee reward programs. These fees cover various services, including licensing, hosting and web portal support, account management and customer service, and promotion and content management. We recognize these revenues as we provide these services. Other Fees —In some instances, we may receive a portion of other fees, such as account service, interchange or referral fees for open loop cards and GPR cards other than our Visa gift cards. We also receive fees related to certain closed loop card programs. Typically, these fees are recognized when earned and determinable. We also recognize the net amount retained for incentive rewards where the employee selects an open loop card as the reward. For one open loop content provider, we received a fee, under deferred payment terms, based on a percentage of transaction dollar volume and paid the content provider a fee (a portion of which is also under deferred payment terms) for meeting certain activation targets. We recognized the net amount of these fees upon activation. Marketing Revenue —We receive funds from content providers to promote their prepaid cards throughout our distribution partner network. We recognize revenue ratably over the period of the related marketing campaign, which is typically a fiscal quarter. Product Sales —Product sales consist of revenue from secondary card market sales, incentive merchandise rewards, card production sales, and telecom handset sales. Secondary Card Market Sales —We generate revenue through our wholly-owned subsidiary, Cardpool, by acquiring previously owned closed loop gift cards at a discount from transaction dollar volume and then selling them at a mark-up to cost (but still at a discount to transaction dollar volume) to online consumers. We recognize revenue when the cards or e-codes are delivered to the purchaser. Incentive Merchandise Rewards —For certain incentive programs, the participant may redeem points for merchandise, closed loop cards and other rewards. We recognize revenue when we deliver the product to the participant. For certain programs, we are entitled to unredeemed funds (breakage) if the participant does not redeem the rewards, and we recognize our estimate of breakage based on redemption patterns. Card Production Sales —We provide card design, development and third-party production services for certain content providers that are separate from the standard services provided to content partners. Physical card production is outsourced to a third party, and we charge the content provider actual cost plus a margin for managing this process. We recognize revenue when cards are shipped or delivered pursuant to the contractual terms. Telecom Handset Sales —We earn revenue from the sale of telecom handsets to our distribution partners to facilitate and supplement the sale of the prepaid telecom content providers’ airtime cards. Revenue is generally recognized upon handset shipment to or receipt by the distribution partner based upon the shipping terms, net of estimated returns. We may grant price discounts to distribution partners to increase sales of the distribution partners’ remaining inventory, which we recognize as a reduction of revenue. |
Operating Expenses | Operating Expenses Partner Distribution Expense —Partner distribution expense represents the amounts paid to our retail distribution partners and certain business clients. We compensate our retail distribution partners by paying them a negotiated commission amount which is generally a function of the transaction dollar volume commission received from content providers or a percentage of the consumer purchase fee associated with open loop cards. We may provide additional compensation to certain of our retail distribution partners and compensate certain of our business partners for distributing our proprietary Visa gift and open loop incentive cards, for which we earn revenues included in Program and other fees. We recognize these expenses upon card activation, except for Visa gift and open loop incentive cards where we capitalize these expenses and amortize them based on the same redemption pattern as the related revenue. Partner distribution expense also includes certain program development payments to our distribution partners, as well as mark-to-market charges and intangible amortization expense resulting from equity instruments issued to certain distribution partners. Processing and Services —Processing and services costs are the direct costs of generating Commissions and fees and Program and other fees and include costs of development, integration, maintenance, depreciation and amortization of technology platforms and related hardware; card distribution, fulfillment, merchandising and fixture display amortization; card production for the Visa gift and open loop incentive cards as well as certain other content providers’ cards; rebate processing costs; customer support services; third-party processing; data hosting and data center facilities costs; merchant service fees; and compensation and other departmental costs for technology risk, and operations personnel. Generally, these costs are expensed as incurred. However, for the Visa gift and open loop incentive cards, card production costs and upfront transaction processing fees are capitalized and expensed based on the same redemption pattern as the related revenue. We also incur significant costs to develop new technology platforms and to add functionality to our existing technology platforms. We capitalize those costs, once technological feasibility is reached, in Property, equipment and technology, net, and amortize them to processing and services expense over the project’s estimated useful life, which is typically five years. We also include amortization expense from acquired technology from business combinations in processing and services expense. Sales and Marketing —We incur costs, both discretionary and contractual, in the form of marketing allowances, direct advertising campaigns, general marketing and trade promotions to promote content providers’ prepaid cards and our Visa gift cards at our retail distribution partner locations. Sales and marketing expenses consist of program marketing and advertising costs; retail distribution partner program development expenses; compensation and other departmental costs for marketing, sales and account management personnel; and international facilities costs. Costs of Products Sold —Costs of products sold consist of the direct costs of card production efforts; the costs to acquire previously issued prepaid cards for resale in our online exchange business; the personnel costs and other direct costs of providing exchange services; costs of telecom handsets; incentive merchandise rewards costs; and other costs for miscellaneous products. We may receive pricing concessions from our telecom handset vendors to increase sales of remaining inventory at distribution partners, which we recognize as a reduction of expense and pass onto the distribution partners as a reduction of revenue. General and Administrative —General and administrative expenses include compensation and other departmental costs for executive, financing and accounting, legal, human resources and other administrative staff; related professional service fees; facilities costs; and bad debt expense. Transition and acquisition —Transition and acquisition expense includes acquisition-related costs, such as legal, tax, audit and valuation services and post-acquisition integration costs related to severance, technology and exit and disposal activities. Amortization of acquisition intangibles —Amortization of acquisition intangibles includes amortization expense for intangible assets, primarily customer and distribution partner relationships, recognized in a business combination. Change in fair value of contingent consideration —Change in fair value of contingent consideration includes the mark-to-market expense or benefit resulting from changes in the post-acquisition estimates of the fair value of our contingent consideration liabilities related to our acquisitions. See Note 5 — Fair Value Measurements . |
Stock-Based Employee Compensation | Stock-Based Employee Compensation We account for stock-based awards to employees, including grants of stock options, stock appreciation rights, restricted stock, restricted stock units and performance stock units as compensation based on the fair value of the award at the grant date and amortize the grant date fair value to expense over the requisite service period, which is generally the vesting period. Forfeitures are recognized as and when they occur. Certain awards contain a retirement provision that permits the employee, after the employee has met certain age or tenure requirements to be considered retirement eligible, to continue to receive the benefits of the award according to its original vesting schedule upon retirement from us, provided that the employee has provided at least one year of service from the grant date. For grant recipients who are or will have become retirement eligible prior to the end of the vesting period of the award, we recognize expense over the greater of one year from the grant date and the period until the employee becomes retirement eligible. We determine the fair value of restricted stock, restricted stock units and performance stock units as the grant date fair value of our stock and determine the fair value of stock options and stock appreciation rights using a Black-Scholes option pricing model. The Black-Scholes option pricing model incorporates certain assumptions, such as the risk-free interest rate, expected volatility, expected dividend yield and the expected life of options in order to arrive at a fair value estimate. Stock-based employee compensation expense is classified in the Operating expenses line items corresponding to the applicable employee compensation expenses (see Note 8 — Equity Incentive Plans and Stock Based Compensation ). |
Reclassifications | Reclassifications In our consolidated statements of income (loss), we have reclassified costs related to our risk management function, previously reported within General and Administrative, to Processing and Services. We have also reclassified Marketing revenue to a separate line item, previously reported in Program, interchange, marketing and other f ees and have renamed such line as Program and other fees . These reclassifications have been made to the prior years’ financial statements to conform to the current year. These reclassifications do not have a material impact on our consolidated financial statements. |
Earnings Per Share | We compute basic earnings per share (“EPS”) by dividing net income available to common stockholders by the weighted average common shares outstanding during the period and compute diluted EPS by dividing earnings available to common stockholders by the weighted average shares outstanding during the period and the impact of securities that if exercised, would have a dilutive effect on EPS. We compute EPS under the two-class method, which is a method of computing EPS when an entity has both common stock and participating securities. We consider nonvested stock as a participating security if it contains rights to receive nonforfeitable dividends at the same rate as common stock. Under the two-class method, we exclude the income and distributions attributable to participating securities from the calculation of basic and diluted EPS and exclude the participating securities from the weighted average shares outstanding. |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Summary of Initial Purchase Price Allocation | The following table summarizes the final purchase price allocation (in thousands): Cash $ 4,733 Tangible assets, net 2,093 Cardholder liability (6,167 ) Deferred income taxes (6,723 ) Identifiable intangible and technology assets 26,892 Goodwill 20,385 Total purchase consideration $ 41,213 The following table summarizes the final purchase price allocation (in thousands): Cash $ 39,450 Settlement receivables, net 6,478 Consumer and customer deposits (39,396 ) Debt assumed (34,509 ) Other tangible assets, net 7,324 Deferred income taxes (14,619 ) Identifiable technology and intangible assets 126,430 Goodwill 171,187 Total purchase consideration $ 262,345 The following table summarizes the final purchase price allocation (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 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 $ 38,957 Settlement receivables, net 24,290 Accounts receivables, net 10,367 Identifiable technology and intangible assets 64,431 Goodwill 54,219 Consumer and customer deposits (35,636 ) Accounts payable and accrued operating expenses (32,753 ) Deferred revenue (7,215 ) Deferred income taxes, net (9,123 ) Other tangible assets, net 3,256 Purchase consideration excluding GREBT 110,793 Restricted cash (GREBT) 8,541 Total purchase consideration including GREBT $ 119,334 The following table summarizes the final purchase price allocation (in thousands): Cash $ 24,367 Accounts payables and accrued operating expenses (11,580 ) Deferred revenue (48,735 ) Deferred income taxes (14,019 ) Identifiable technology and intangible assets 94,800 Goodwill 58,659 Total purchase consideration $ 103,492 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 ) Identifiable technology and intangible assets 45,540 Deferred income taxes 1,926 Goodwill 37,865 Total purchase consideration $ 78,813 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 $ 1,032 Settlement receivables, net 2,182 Settlement payables (2,273 ) Consumer and customer deposits (24,297 ) Other tangible assets, net 5,888 Identifiable intangible assets 21,271 Goodwill 13,427 Deferred income taxes (1,009 ) Total purchase consideration $ 16,221 The following table summarizes the final purchase price allocation (in thousands): Tangible liabilities, net $ (1,059 ) Debt assumed (7,475 ) Deferred taxes 2,258 Identifiable technology and intangible assets 10,623 Goodwill 29,304 Total purchase consideration $ 33,651 |
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 Customer backlog 1,610 3 years Technology 4,700 5 years Total identifiable technology and intangible assets $ 45,540 The following table summarizes the components of the identifiable technology and intangible assets and their estimated useful lives at the acquisition date (dollars in thousands): Fair Value Useful Life Customer relationships $ 1,260 5 years Customer backlog 1,490 4 months Technology 7,790 5 years Trade name 83 3 years Total identifiable technology and intangible assets $ 10,623 The following table presents the components of identifiable intangible assets and the estimated useful lives (in thousands): Fair Value Useful Life Customer relationships $ 19,083 10 years Trade name 2,188 10 years Total identifiable intangible assets $ 21,271 The following table presents the components of the identifiable technology and intangible assets and the estimated useful lives (in thousands): Fair Value Useful Life Technology $ 1,586 1 to 3 years Customer relationships 57,239 10 years Customer backlog 2,911 1 year Trade name 2,695 10 years Total identifiable technology and intangible assets $ 64,431 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 Customer backlog 10,780 3 years Domain name 10,520 10 years Technology 3,590 5 years Total identifiable technology and intangible assets $ 52,460 The following table presents the components of the identifiable technology and intangible assets and their estimated useful lives at the acquisition date (dollars in thousands): Fair Value Useful Life Customer relationships $ 73,210 15 years Technology 17,000 6 years Customer backlog 4,590 4 years Total identifiable technology and intangible assets $ 94,800 The following table summarizes the components of the identifiable technology and intangible assets and their estimated useful lives at the acquisition date (dollars in thousands): Fair Value Useful Life Customer relationships $ 94,460 15 years Customer backlog 4,430 1 year Technology 26,930 1 to 5 years Trade name 610 3 years Total identifiable technology and intangible assets $ 126,430 The following table presents the components of the identifiable technology and intangible assets and their estimated useful lives at the acquisition date (dollars in thousands): Fair Value Useful Life Content provider relationships $ 17,382 10 years Distribution relationships 4,614 5 years Trade name 4,106 10 years Technology 790 4 years Total identifiable technology and intangible assets $ 26,892 The following table presents the components of identifiable intangible assets and the estimated useful lives (in thousands): Fair Value Useful Life Customer relationships $ 19,083 10 years Trade name 2,188 10 years Total identifiable intangible assets $ 21,271 |
Summary of Unaudited Pro Forma Financial Information | The following pro forma financial information summarizes the combined results of operations of us and Parago as though we had been combined as of the beginning of fiscal 2013 (in thousands, except per share amounts): 2014 (Unaudited) Total revenues $ 1,529,072 Net income attributable to Blackhawk Network Holdings, Inc. $ 44,765 Pro forma EPS—Basic $ 0.85 Pro forma EPS—Diluted $ 0.82 The following table presents revenue and net income for Grass Roots from its acquisition date through year-end 2016 included in our consolidated statements of income (in thousands): Total revenues $ 24,210 Net income (loss) attributable to Blackhawk Network Holdings, Inc. $ (5 ) The following table summarizes the combined pro forma results of operations of us, Grass Roots, GiftCards, Extrameasures, Spafinder and Samba as though we had been combined as of the beginning of fiscal 2015 (in thousands, except per share amounts): 2016 (Unaudited) 2015 (Unaudited) Total revenues $ 2,031,871 $ 2,030,066 Net income attributable to Blackhawk Network Holdings, Inc. $ 22,745 $ 23,381 Pro forma EPS—Basic $ 0.41 $ 0.43 Pro forma EPS—Diluted $ 0.40 $ 0.42 The following pro forma financial information summarizes the combined results of operations of us and Achievers as though we had been combined as of the beginning of fiscal 2014 (in thousands except per share amounts): 2015 (Unaudited) 2014 (Unaudited) Total revenues $ 1,830,848 $ 1,487,695 Net income attributable to Blackhawk Network Holdings, Inc. $ 41,752 $ 15,412 Pro forma EPS—Basic $ 0.77 $ 0.29 Pro forma EPS—Diluted $ 0.74 $ 0.28 The following table presents revenue and net income for Achievers from its acquisition date through year-end 2015 included in our consolidated statements of income (in thousands): Total revenues $ 29,223 Net income (loss) attributable to Blackhawk Network Holdings, Inc. $ (9,676 ) The following table summarizes revenue and earnings for Parago from its acquisition date through year-end 2014 (in thousands): Total revenues $ 17,711 Net income attributable to Blackhawk Network Holdings, Inc. $ (1,090 ) |
Summary of Assets Held for Sale Related to Acquisition | The following table presents the aggregate carrying amounts of the major classes of assets and liabilities related to the M&E business to be disposed of as of year-end (in thousands): Cash $ 6,213 Accounts receivable 10,615 Other current assets 9,390 Property and equipment 974 Goodwill 11,151 Intangible assets 5,506 Deferred income taxes 902 Total assets $ 44,751 Settlement payables $ 3,972 Accounts payable and accrued operating expenses 2,924 Consumer and customer deposits 1,695 Other current liabilities 1,694 Deferred revenue 10,745 Total liabilities $ 21,030 |
Schedule of Total Purchase Consideration | The following table summarizes the components of the purchase consideration based on their fair values at the acquisition dates (in thousands): Cash paid at closing $ 18,956 Stock consideration 1,595 Contingent consideration 13,100 Total purchase consideration $ 33,651 |
Investment in Unconsolidated 25
Investment in Unconsolidated Entities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Equity Method Investments | The following table summarizes our equity and cost method investments as of year-end 2016 and 2015 (dollars in thousands): 2016 2015 Carrying Value Ownership Percentage Carrying Value Ownership Percentage Equity method investments Investment in China entity $ 4,576 26.5% $ 5,473 26.5% Investment in Australia entity 6,392 51.2% NA NA Other equity method investments — — 791 25-50% Total equity method investments 10,968 6,264 Cost method investments 7,954 250 Total unconsolidated entities $ 18,922 $ 6,514 |
Schedule of Cost Method Investments | The following table summarizes our equity and cost method investments as of year-end 2016 and 2015 (dollars in thousands): 2016 2015 Carrying Value Ownership Percentage Carrying Value Ownership Percentage Equity method investments Investment in China entity $ 4,576 26.5% $ 5,473 26.5% Investment in Australia entity 6,392 51.2% NA NA Other equity method investments — — 791 25-50% Total equity method investments 10,968 6,264 Cost method investments 7,954 250 Total unconsolidated entities $ 18,922 $ 6,514 |
Financing (Tables)
Financing (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Annual Maturities of Notes Payable | The following table presents the amounts due by maturity date of our term loan and Notes as of year-end 2016 (in thousands): As of December 31, 2016 2017 $ 10,000 2018 7,500 2019 7,500 2020 15,000 2021 110,000 Thereafter 500,000 Total amount due 650,000 Unamortized discount and debt issuance fees (73,134 ) Note payable, net $ 576,866 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 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 year-end 2016 and 2015 (in thousands): 2016 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents Money market mutual funds $ 300,015 $ — $ — $ 300,015 Liabilities Contingent consideration $ — $ — $ 23,752 $ 23,752 2015 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents Money market mutual funds $ 370,070 $ — $ — $ 370,070 Liabilities Contingent consideration $ — $ — $ — $ — |
Summary of Changes in Fair Value of Contingent Consideration Classified as Level 3 | The changes in fair value of contingent consideration for 2016 and 2015 are as follows (in thousands): 2016 2015 Balance – beginning of year $ — $ 7,567 Issuance of contingent consideration for acquisition of Extrameasures 20,300 — Issuance of contingent consideration for acquisition of Spafinder 1,352 Change in fair value of contingent consideration 2,100 (7,567 ) Settlements — — Balance – end of year $ 23,752 $ — |
Consolidated Financial Statem28
Consolidated Financial Statement Details (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Changes in the Allowances for Doubtful Accounts and Sales Allowances | The table below summarizes the changes in the allowances for doubtful accounts and sales allowances for Settlement receivables and Accounts receivable for 2016 , 2015 and 2014 (in thousands): 2016 2015 2014 Beginning balance $ 8,046 $ 5,547 $ 3,134 Provision 4,544 4,656 3,452 Charges against allowances, net of recoveries (3,933 ) (2,157 ) (1,039 ) Ending balance $ 8,657 $ 8,046 $ 5,547 |
Schedule of Other Current Assets | Other current assets as of year-end 2016 and 2015 consisted of the following (in thousands): 2016 2015 Inventory $ 43,950 $ 36,528 Deferred expenses 22,148 18,182 Income tax receivables 13,599 14,831 Other 51,678 33,778 Total other current assets $ 131,375 $ 103,319 |
Schedule of Property, Equipment and Technology | Property, equipment and technology as of year-end 2016 and 2015 consisted of the following (in thousands): Useful Lives in Years 2016 2015 Leasehold improvements 5 $ 9,018 $ 7,915 Computers and related equipment 3 - 5 45,910 39,574 Technology 5 291,124 242,593 Total property, equipment and technology 346,052 290,082 Less accumulated depreciation and amortization (173,671 ) (130,725 ) Property, equipment and technology, net $ 172,381 $ 159,357 |
Schedule of Other Assets | Other assets as of year-end 2016 and 2015 consisted of the following (in thousands): 2016 2015 Deferred program and contract costs $ 48,066 $ 50,717 Other receivables 2,713 2,281 Income taxes receivable 2,358 6,155 Deferred financing costs 2,688 2,100 Other 30,031 20,511 Total other assets $ 85,856 $ 81,764 |
Schedule of Other Current Liabilities | Other current liabilities as of year-end 2016 and 2015 consisted of the following (in thousands): 2016 2015 Payroll and related liabilities $ 24,944 $ 34,530 Income taxes payable 4,199 3,216 Acquisition liability 6,672 — Other payables and accrued liabilities 15,361 19,596 Total other current liabilities $ 51,176 $ 57,342 |
Schedule of Other Liabilities | Other liabilities as of year-end 2016 and 2015 consisted of the following (in thousands): 2016 2015 Acquisition liability $ 17,080 $ — Income taxes payable 6,957 4,249 Deferred income and other liabilities 15,616 10,451 Total other liabilities $ 39,653 $ 14,700 |
Goodwill and Other Intangible29
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Changes in Goodwill | A summary of changes in goodwill during 2016 is as follows (in thousands): 2016 U.S. Retail International Incentives & Rewards Total Balance, beginning of year $ 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 10,505 — — 10,505 Acquisition of Extrameasures — — 27,360 27,360 Acquisition of Grass Roots — 54,219 — 54,219 Acquisition of Samba — 4,074 — 4,074 Acquisition of Spafinder 9,353 — — 9,353 Measurement period adjustments for 2015 acquisitions — — (1,235 ) (1,235 ) Foreign currency translation adjustments — (3,244 ) (829 ) (4,073 ) Balance, end of year $ 99,685 $ 104,205 $ 366,508 $ 570,398 A summary of changes in goodwill during 2015 is as follows (in thousands): 2015 U.S. Retail International Incentives & Rewards Total Balance, beginning of year $ 42,729 $ 32,150 $ 256,386 $ 331,265 Acquisition of Didix — 20,385 — 20,385 Acquisition of Achievers — — 59,893 59,893 Measurement period adjustments for 2014 acquisitions — — (2,716 ) (2,716 ) Foreign currency translation adjustments — (3,379 ) (2,959 ) (6,338 ) Balance, end of year $ 42,729 $ 49,156 $ 310,604 $ 402,489 |
Summary of Intangible Assets | Intangible assets as of year-end 2016 are as follows (dollars in thousands): Weighted-Average Remaining Life in Years Gross Accumulated Amortization Net Distribution partner relationships 6 $ 62,012 $ (27,421 ) $ 34,591 Customer relationships, including backlog 10 385,653 (90,218 ) 295,435 Patents 7 6,944 (4,547 ) 2,397 Domain names, trade names and other intangibles 10 21,238 (3,476 ) 17,762 Total intangible assets $ 475,847 $ (125,662 ) $ 350,185 Intangible assets as of year-end 2015 are as follows (dollars in thousands): Weighted-Average Remaining Life in Years Gross Accumulated Amortization Net Distribution partner relationships 10 $ 63,084 $ (18,953 ) $ 44,131 Customer relationships, including backlog 13 231,419 (40,990 ) 190,429 Patents 3 5,315 (3,440 ) 1,875 Domain names, trade names and other intangibles 9 5,981 (1,518 ) 4,463 Total intangible assets $ 305,799 $ (64,901 ) $ 240,898 |
Summary of Intangible Amortization Expense | The following table presents total intangible amortization expense according to the income statement line in our consolidated statements of income for 2016, 2015 and 2014 (in thousands): 2016 2015 2014 Partner distribution expense $ 4,863 $ 4,695 $ 4,544 Processing and services 122 121 122 Amortization of acquisition intangibles 57,060 27,550 19,705 Total intangible amortization expense $ 62,045 $ 32,366 $ 24,371 |
Schedule of Future Intangible Assets Amortization | following table presents future intangible asset amortization as of year-end 2016 according to the income statement line (in thousands): Fiscal Year Partner distribution expense Processing and services Amortization of acquisition intangibles Total 2017 $ 4,861 $ 141 $ 57,499 $ 62,501 2018 2,415 50 45,466 47,931 2019 538 22 39,689 40,249 2020 538 14 36,069 36,621 2021 83 6 33,337 33,426 Thereafter — 70 129,387 129,457 Total amortization $ 8,435 $ 303 $ 341,447 $ 350,185 |
Equity Incentive Plans and St30
Equity Incentive Plans and Stock Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Assumptions used to Value Option Grants | The assumptions used to value our ESPP for 2016 , 2015 and 2014 are as follows: 2016 2015 2014 Expected term (in years) 0.5 0.5 0.5 Expected volatility 30.12% - 36.72% 32.40% - 34.96% 30.30%–32.33% Risk-free rate 0.4% - 0.5% 0.4% - 0.5% 0.1%–0.3% Expected dividend yield 0% 0% 0% We determine the fair value of our stock option awards and stock appreciation rights using a Black-Scholes option pricing model. The assumptions used to value the option grants for 2016 , 2015 and 2014 are as follows: 2016 2015 2014 Expected term (in years) 5 5 5 Expected volatility 34.8% - 34.9% 36.6% - 37.3% 32.6%–33.5% Risk-free rate 1.1% - 1.9% 1.4% - 1.7% 1.5%–1.7% Expected dividend yield 0% 0% 0% |
Summary of Stock Option and Stock Appreciation Rights Activity | A summary of our stock options and stock appreciation rights activity under all Plans for 2016 is as follows: Stock Options and Appreciation Rights (in shares) Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Outstanding, year-end 2015 2,937,730 $ 23.68 3.9 $ 60,313 2016 activity: Granted 600,150 $ 37.82 Canceled (147,683 ) $ 34.18 Exercised (324,904 ) $ 17.80 Outstanding, year-end 2016 3,065,293 $ 26.57 3.6 $ 35,381 Exercisable, year-end 2016 1,643,221 $ 20.76 2.3 $ 27,999 Vested and expected to vest, year-end 2016 3,065,293 $ 26.57 3.6 $ 35,381 |
Changes in Restricted Stock and Restricted Stock Units | The following table summarizes restricted stock and restricted stock unit awards during 2016 : Restricted Stock and Restricted Stock Unit Awards Weighted Average Grant-Date Fair Value Nonvested, year-end 2015 1,631,333 $ 33.10 2016 activity: Granted 1,210,540 $ 37.08 Vested (514,786 ) $ 31.66 Forfeited (345,433 ) $ 35.55 Nonvested, year-end 2016 1,981,654 $ 35.45 |
Changes in Performance Stock Unit Awards | The changes in performance stock unit awards for 2016 are as follows: Performance Stock Unit Awards Weighted Average Grant-Date Fair Value Nonvested, year-end 2015 341,445 $ 31.21 2016 activity: Granted 172,300 $ 38.85 Vested (7,155 ) $ 26.73 Forfeited (178,484 ) $ 35.34 Nonvested, year-end 2016 328,106 $ 33.07 |
Summary of Stock-Based Compensation Expense | The following table presents total stock-based compensation expense according to the income statement line in the accompanying consolidated statements of income for 2016 , 2015 and 2014 (in thousands): 2016 2015 2014 Processing and services $ 5,831 $ 6,594 $ 3,597 Sales and marketing 10,856 8,536 5,153 Cost of products sold 102 37 43 General and administrative 15,803 14,963 6,597 Total stock-based compensation expense $ 32,592 $ 30,130 $ 15,390 |
Equity Awards Issued to Retai31
Equity Awards Issued to Retail Distribution Partners (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Components Of Distribution Partner Stock Based Compensation Expense Table | The following table presents the components of distribution partner stock-based compensation expense included in Partner distribution expense (in thousands): 2016 2015 2014 Mark-to-market expense $ — $ — $ 1,312 Amortization of intangible assets 4,863 4,695 4,544 Total distribution partner stock-based compensation expense $ 4,863 $ 4,695 $ 5,856 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Components of Income before Income Tax Expense | The components of income before income tax expense (benefit) for 2016, 2015 and 2014 are as follows (in thousands): 2016 2015 2014 Domestic $ (3,533 ) $ 72,298 $ 68,661 Foreign 4,469 307 4,254 Income before income tax expense (benefit) $ 936 $ 72,605 $ 72,915 |
Components of Income Tax Expense | The components of income tax expense (benefit) for the years ended 2016, 2015 and 2014 are as follows (in thousands): 2016 2015 2014 Current: Federal $ (1,215 ) $ (6,403 ) $ 32,944 State 949 (942 ) 4,374 Foreign 5,063 4,331 1,997 Total current 4,797 (3,014 ) 39,315 Deferred: Federal (3,186 ) 28,650 (10,080 ) State (1,275 ) 6,003 (372 ) Foreign (4,438 ) (4,843 ) (1,373 ) Total deferred (8,899 ) 29,810 (11,825 ) Income tax expense (benefit) $ (4,102 ) $ 26,796 $ 27,490 |
Reconciliation of the Provision for Income Taxes to the US Federal Statutory Tax Rate | A reconciliation of the provision for income taxes at the U.S. federal statutory income tax rate to our income taxes for 2016, 2015 and 2014 is as follows (dollars in thousands): 2016 2015 2014 Amount Rate Amount Rate Amount Rate Income tax expense at federal statutory rate $ 327 35.0 % $ 25,412 35.0 % $ 25,520 35.0 % State income taxes net of federal benefit 439 46.9 % 3,469 4.8 % 2,965 4.0 % Foreign rate differential (939 ) (100.3 )% (773 ) (1.1 )% (865 ) (1.1 )% Mark to market on redeemable common stock — — % — — % 88 0.1 % Change in fair value of contingent consideration — — % (2,978 ) (4.1 )% (1,479 ) (2.0 )% Compensation subject to certain limits 894 95.5 % 1,180 1.6 % 737 1.0 % Stock-based compensation (956 ) (102.1 )% 316 0.4 % 224 0.3 % Acquisition related (2,945 ) (314.6 )% 758 1.0 % 702 1.0 % R&D credits (1,440 ) (153.9 )% (1,130 ) (1.5 )% (604 ) (0.8 )% Other 518 55.2 % 542 0.8 % 202 0.2 % Total income tax expense (benefit) /effective tax rate $ (4,102 ) (438.3 )% $ 26,796 36.9 % $ 27,490 37.7 % |
Components of Deferred Tax Assets (Liabilities) | The components of our deferred tax assets (liabilities) at year-end 2016 and 2015 were as follows (in thousands): 2016 2015 Deferred tax assets: Depreciation and amortization $ 217,497 $ 239,555 Net operating loss carryforwards 49,473 42,290 Accrued expenses 4,932 8,705 Non-deductible reserves 9,450 9,509 Deferred revenue 29,803 11,031 Stock-based compensation 21,497 12,815 Convertible debt 4,636 — Other 8,622 3,689 Deferred tax assets 345,910 327,594 Valuation allowance (8,283 ) (3,712 ) Total deferred tax assets 337,627 323,882 Deferred tax liabilities: Prepaids (3,212 ) (2,976 ) Total deferred tax liabilities (3,212 ) (2,976 ) Net deferred tax assets $ 334,415 $ 320,906 Balance sheet presentation: Long-term deferred tax assets 362,302 339,558 Long-term deferred tax liabilities (27,887 ) (18,652 ) Net deferred tax assets $ 334,415 $ 320,906 |
Aggregate Changes in the Balance of Unrecognized Tax Benefits | The following table presents the aggregate changes in the balance of gross unrecognized tax benefit (in thousands): 2016 2015 2014 Gross unrecognized tax benefits, beginning balance $ 12,680 $ 3,808 $ 3,057 Increase for tax position from prior fiscal years and current year acquisitions 977 8,633 — Decrease for tax position from prior fiscal years (388 ) (446 ) (38 ) Increases for tax positions taken during current fiscal year 760 938 789 Lapses of statutes of limitations (41 ) (161 ) — Foreign exchange rate difference (111 ) (92 ) — Gross unrecognized tax benefits, ending balance $ 13,877 $ 12,680 $ 3,808 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Operating Lease Payments | Future minimum operating lease payments as of year-end 2016 are as follows (in thousands): Fiscal Year Operating Leases 2017 $ 17,832 2018 14,857 2019 11,972 2020 11,430 2021 10,300 Thereafter 37,601 Total minimum lease payments $ 103,992 |
Schedule of Future Distribution Partners Commitments | Future commitments to our distribution partners as of year-end 2016 are as follows (in thousands): Fiscal Year Distribution Partner Commitments 2017 $ 43,459 2018 28,875 2019 22,793 2020 4,117 2021 1,393 Distribution partner commitments (uncertainty in timing of future payments) 13,594 Total $ 114,231 |
Segment Reporting and Enterpr34
Segment Reporting and Enterprise-Wide Disclosures (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by 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): 2016 U.S. Retail International Incentives & Rewards Corporate and Unallocated Consolidated Total operating revenues $ 1,125,757 $ 484,881 $ 289,140 $ — $ 1,899,778 Partner distribution expense 595,893 316,571 20,678 — 933,142 Operating revenue net of distribution partner expense 529,864 168,310 268,462 — 966,636 Other operating expenses 311,311 132,242 230,911 268,923 943,387 Segment profit (loss) / Operating income $ 218,553 $ 36,068 $ 37,551 $ (268,923 ) 23,249 Other income (expense) (22,313 ) Income before income tax expense $ 936 Significant noncash charges $ 6,822 $ 2,358 $ 17,496 2015 U.S. Retail International Incentives & Rewards Corporate and Unallocated Consolidated Total operating revenues $ 1,165,828 $ 423,285 $ 211,965 $ — $ 1,801,078 Partner distribution expense 577,661 279,435 16,947 — 874,043 Operating revenue net of distribution partner expense 588,167 143,850 195,018 — 927,035 Other operating expenses 324,928 121,579 180,900 211,882 839,289 Segment profit (loss) / Operating income $ 263,239 $ 22,271 $ 14,118 $ (211,882 ) 87,746 Other income (expense) (15,141 ) Income before income tax expense $ 72,605 Significant noncash charges $ 5,446 $ 1,454 $ 13,862 2014 U.S. Retail International Incentives & Rewards Corporate and Unallocated Consolidated Total operating revenues $ 1,027,936 $ 339,444 $ 77,583 $ — $ 1,444,963 Partner distribution expense 526,752 226,867 8,626 — 762,245 Operating revenue net of distribution partner expense 501,184 112,577 68,957 — 682,718 Other operating expenses 282,587 94,339 59,679 167,367 603,972 Segment profit (loss) / Operating income $ 218,597 $ 18,238 $ 9,278 $ (167,367 ) 78,746 Other income (expense) (5,831 ) Income before income tax expense $ 72,915 Significant noncash charges $ 5,431 $ 2,110 $ 3,812 |
Schedule of Revenue by Products | The following table summarizes operating revenues according to product for 2016 , 2015 and 2014 (dollars in thousands): 2016 2015 2014 Revenue Percent of Total Revenue Revenue Percent of Total Revenue Revenue Percent of Total Revenue Retail $ 1,383,499 72.8 % $ 1,453,129 80.7 % $ 1,263,235 87.4 % Incentives 289,140 15.2 % 211,964 11.8 % 77,583 5.4 % Other 227,139 12.0 % 135,985 7.5 % 104,145 7.2 % Total $ 1,899,778 100.0 % $ 1,801,078 100.0 % $ 1,444,963 100.0 % |
Schedule of Revenue and Long-Lived Assets by Geographical Area | The following table presents revenue by geographic area generally based on the location of the card activation or value load for 2016 , 2015 and 2014 (dollars in thousands): 2016 2015 2014 Revenue Percent of Total Revenue Revenue Percent of Total Revenue Revenue Percent of Total Revenue United States $ 1,382,188 72.8 % $ 1,352,872 75.1 % $ 1,097,791 76.0 % International 517,590 27.2 % 448,206 24.9 % 347,172 24.0 % Total $ 1,899,778 100.0 % $ 1,801,078 100.0 % $ 1,444,963 100.0 % The following table presents our long-lived Property, equipment and technology, net by geographic area based on the locations of the assets as of year-end 2016 , 2015 and 2014 (dollars in thousands): 2016 2015 2014 Long-Lived Assets Percent of Total Long-Lived Assets Long-Lived Assets Percent of Total Long-Lived Assets Long-Lived Assets Percent of Total Long-Lived Assets United States $ 149,042 86.5 % $ 136,646 85.7 % $ 125,331 96.4 % International 23,339 13.5 % 22,711 14.3 % 4,677 3.6 % Total $ 172,381 100.0 % $ 159,357 100.0 % $ 130,008 100.0 % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 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): 2016 2015 2014 Basic Diluted Basic Diluted Basic Diluted Net income attributable to Blackhawk Network Holdings, Inc. $ 4,658 $ 4,658 $ 45,609 $ 45,609 $ 45,547 $ 45,547 Distributed and undistributed earnings allocated to participating securities (28 ) (28 ) (151 ) (147 ) (232 ) (226 ) Net income attributable to common stockholders $ 4,630 $ 4,630 $ 45,458 $ 45,462 $ 45,315 $ 45,321 Weighted-average common shares outstanding 55,734 55,734 54,294 54,294 52,531 52,531 Common share equivalents 1,526 2,019 1,778 Weighted-average shares outstanding 57,260 56,313 54,309 Earnings per share $ 0.08 $ 0.08 $ 0.84 $ 0.81 $ 0.86 $ 0.83 |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Revenue and Expenses | The following table presents such related party revenues and expenses for Safeway through the Acquisition and for Albertsons/Safeway from the Acquisition through April 2015. Although we are no longer a related party with Albertsons/Safeway, we continue to recognize revenues and expenses related to our agreements. Our distribution and other agreements with Albertsons/Safeway are on equivalent terms with our other partners. 2015 2014 OPERATING REVENUES: Commissions and fees $ 72 $ 710 Program and other fees 471 2,426 Product sales 1,323 4,031 Total operating revenues 1,866 7,167 OPERATING EXPENSES: Partner distribution expense 17,069 61,283 Processing and services (288 ) (625 ) General and administrative 607 1,856 Total operating expenses 17,388 62,514 OTHER INCOME (EXPENSE): Interest expense — (50 ) |
Selected Quarterly Financial 37
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | Selected summarized quarterly financial information for 2016 and 2015 is as follows. Q4'16 Q3'16 Q2'16 Q1'16 Q4'15 Q3'15 Q2'15 Q1'15 (in thousands, except per share data) Operating revenues $ 780,550 $ 361,560 $ 391,206 $ 366,462 $ 756,434 $ 352,665 $ 372,248 $ 319,731 Operating income (loss) $ 51,363 $ (10,093 ) $ (14,977 ) $ (3,044 ) $ 68,875 $ (2,250 ) $ 10,206 $ 10,915 Net income (loss) attributable to Blackhawk Network Holdings, Inc. $ 24,650 $ (5,102 ) $ (11,337 ) $ (3,553 ) $ 41,614 $ (3,615 ) $ 2,904 $ 4,706 Earnings (loss) per share: Basic $ 0.44 $ (0.09 ) $ (0.20 ) $ (0.06 ) $ 0.75 $ (0.07 ) $ 0.05 $ 0.09 Diluted $ 0.43 $ (0.09 ) $ (0.20 ) $ (0.06 ) $ 0.73 $ (0.07 ) $ 0.05 $ 0.08 |
The Company and Significant A38
The Company and Significant Accounting Policies (Detail) $ in Thousands, shares in Millions | May 21, 2015 | Dec. 31, 2016USD ($)country | Jan. 02, 2016USD ($) | Jan. 03, 2015USD ($) | Apr. 30, 2015USD ($) | Apr. 14, 2014shares |
Accounting Policies | ||||||
Common stock conversion ratio | 1 | |||||
Lag for reporting equity income from investments with different reporting periods (in months) | 3 months | |||||
Fiscal period duration | 364 days | 364 days | 371 days | |||
Cumulative adjustment upon modified retrospective adoption of ASUs | $ 16,521 | |||||
Allowance for sales adjustments | $ 2,600 | 5,000 | ||||
Allowance for doubtful accounts | 6,000 | 3,100 | ||||
Notes payable to Safeway | 3,163 | 4,129 | $ 27,700 | |||
Expected refunds to remit to third party | $ 19,400 | |||||
Noncash income taxes paid (received), funded by promissory notes | (1,200) | (14,300) | ||||
Income tax overpayment outstanding | $ (3,900) | |||||
Estimated life of gift card | 12 months | |||||
Percentage of purchase fee recognized | 90.00% | |||||
Recognition period of purchase fee | 4 months | |||||
Rebate processing fees, historical redemption pattern | 9 months | |||||
Estimated life of single-use incentive card | 12 months | |||||
Minimum service period for retirement eligible employees | 1 year | |||||
Impairment of Long-Lived Assets Held-for-use | $ 5,500 | |||||
Application and Development Charges | ||||||
Accounting Policies | ||||||
Estimated useful life of property, equipment and technology | 5 years | |||||
Minimum | ||||||
Accounting Policies | ||||||
Estimated useful life of property, equipment and technology | 3 years | |||||
Amortization period of intangible assets | 1 year | |||||
Maximum | ||||||
Accounting Policies | ||||||
Estimated useful life of property, equipment and technology | 5 years | |||||
Amortization period of intangible assets | 15 years | |||||
Retained Earnings | ||||||
Accounting Policies | ||||||
Cumulative adjustment upon modified retrospective adoption of ASUs | 15,871 | |||||
New Accounting Pronouncement, Early Adoption, Effect | Accounting Standards Update 201609 | ||||||
Accounting Policies | ||||||
Retroacative adjustment to net cash provided by operating activities, ASU 2016-09 | 6,800 | 2,700 | ||||
Retroactive adjustment to net cash used in financing activities, ASU 2016-09 | 6,800 | $ 2,700 | ||||
New Accounting Pronouncement, Early Adoption, Effect | Retained Earnings | Accounting Standards Update 201604 | ||||||
Accounting Policies | ||||||
Cumulative adjustment upon modified retrospective adoption of ASUs | 6,100 | |||||
New Accounting Pronouncement, Early Adoption, Effect | Retained Earnings | Accounting Standards Update 201609, Forfeiture Rate Component | ||||||
Accounting Policies | ||||||
Cumulative adjustment upon modified retrospective adoption of ASUs | (300) | |||||
New Accounting Pronouncement, Early Adoption, Effect | Retained Earnings | Accounting Standards Update 201609, Tax Benefits Of Warrants | ||||||
Accounting Policies | ||||||
Cumulative adjustment upon modified retrospective adoption of ASUs | 10,100 | |||||
Safeway Inc. | Class B Common Stock | Spinoff | ||||||
Accounting Policies | ||||||
Tax free distribution, shares | shares | 37.8 | |||||
United States | ||||||
Accounting Policies | ||||||
Number of countries in which entity operates | country | 1 | |||||
Foreign Countries | ||||||
Accounting Policies | ||||||
Number of countries in which entity operates | country | 25 | |||||
Safeway [Member] | ||||||
Accounting Policies | ||||||
Noncash income taxes paid (received), funded by promissory notes | $ 890 | $ 14,300 |
Business Acquisitions (Detail)
Business Acquisitions (Detail) € in Millions, £ in Millions | Oct. 06, 2016USD ($) | Oct. 06, 2016GBP (£) | Jan. 05, 2016USD ($) | Sep. 14, 2015USD ($) | Sep. 14, 2015EUR (€) | Jun. 30, 2015USD ($) | Oct. 23, 2014USD ($) | Jan. 03, 2015USD ($) | Dec. 31, 2016USD ($) | Jun. 18, 2016USD ($)payment | Dec. 31, 2016USD ($) | Jun. 18, 2016USD ($) | Jan. 02, 2016USD ($) | Dec. 31, 2016USD ($) | Jan. 02, 2016USD ($) | Jan. 03, 2015USD ($)paymentshares | Oct. 06, 2016GBP (£) |
Business Acquisition | |||||||||||||||||
Deferred tax assets for net operating loss carryforwards | $ 49,473,000 | $ 49,473,000 | $ 42,290,000 | $ 49,473,000 | $ 42,290,000 | ||||||||||||
Other deferred tax assets, net | 8,622,000 | 8,622,000 | 3,689,000 | 8,622,000 | 3,689,000 | ||||||||||||
Acquisition related costs | 11,465,000 | 7,639,000 | $ 2,134,000 | ||||||||||||||
Previous minority interest in Samba, fair value | 4,197,000 | 4,197,000 | 4,325,000 | 4,197,000 | 4,325,000 | ||||||||||||
Goodwill | 570,398,000 | 570,398,000 | 402,489,000 | 570,398,000 | 402,489,000 | ||||||||||||
Amortization of intangibles | 62,045,000 | 32,366,000 | 24,371,000 | ||||||||||||||
Contingent consideration paid for achieving relevant targets | (2,100,000) | 7,567,000 | 3,722,000 | ||||||||||||||
Operating Segments | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Goodwill | $ 331,265,000 | 570,398,000 | 570,398,000 | 402,489,000 | 570,398,000 | 402,489,000 | 331,265,000 | ||||||||||
Adjustment in purchase price adjustment - goodwill | 1,235,000 | 2,716,000 | |||||||||||||||
Operating Segments | US Retail | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Goodwill | 42,729,000 | 99,685,000 | 99,685,000 | 42,729,000 | 99,685,000 | 42,729,000 | 42,729,000 | ||||||||||
Adjustment in purchase price adjustment - goodwill | 0 | 0 | |||||||||||||||
Grass Roots, Inc. | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Total purchase consideration | $ 119,300,000 | £ 93.9 | |||||||||||||||
Cash consideration | 110,800,000 | £ 87.2 | |||||||||||||||
Restricted cash (GREBT) | 8,541,000 | £ 6.7 | |||||||||||||||
Transaction expenses paid | 600,000 | ||||||||||||||||
Deferred tax assets for net operating loss carryforwards | 2,300,000 | ||||||||||||||||
Deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets | 12,100,000 | ||||||||||||||||
Other deferred tax assets, net | 700,000 | ||||||||||||||||
Acquisition related costs | 2,600,000 | ||||||||||||||||
Goodwill | $ 54,219,000 | ||||||||||||||||
Amortization of intangibles | 5,000,000 | ||||||||||||||||
Grass Roots, Inc. | Finite-Lived Intangible Assets | Minimum | Income Approach Valuation Technique | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 8.00% | 8.00% | |||||||||||||||
Grass Roots, Inc. | Finite-Lived Intangible Assets | Maximum | Income Approach Valuation Technique | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 15.00% | 15.00% | |||||||||||||||
Spafinder and Samba | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Total purchase consideration | 16,200,000 | ||||||||||||||||
Cash consideration | 5,800,000 | ||||||||||||||||
Deferred tax assets for net operating loss carryforwards | 100,000 | 100,000 | 100,000 | ||||||||||||||
Deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets | 1,100,000 | 1,100,000 | 1,100,000 | ||||||||||||||
Acquisition related costs | 900,000 | ||||||||||||||||
Consideration transferred, notes receivable and accrued interest forgiven | 5,400,000 | ||||||||||||||||
Contingent consideration transferred | 1,400,000 | ||||||||||||||||
Consideration transferred, working capital adjustments | 1,800,000 | ||||||||||||||||
Goodwill | 13,427,000 | $ 13,427,000 | 13,427,000 | ||||||||||||||
Spafinder and Samba | Finite-Lived Intangible Assets | Minimum | Income Approach Valuation Technique | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 18.00% | ||||||||||||||||
Spafinder and Samba | Finite-Lived Intangible Assets | Maximum | Income Approach Valuation Technique | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 22.00% | ||||||||||||||||
Samba | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Consideration transferred, relating to previous minority interest in Samba | $ 1,800,000 | ||||||||||||||||
Previous minority interest in Samba, fair value | $ 1,800,000 | 1,800,000 | 1,800,000 | ||||||||||||||
Samba | Interest Income And Other Income (Expense) | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Recognized gain related to previous minority interest in Samba | $ 1,000,000 | ||||||||||||||||
Omni Prepaid | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Cash consideration | $ 103,900,000 | ||||||||||||||||
Acquisition related costs | 400,000 | ||||||||||||||||
Goodwill | 67,706,000 | ||||||||||||||||
Debt assumed in a business combination | $ 5,807,000 | ||||||||||||||||
Omni Prepaid | Finite-Lived Intangible Assets | Minimum | Income Approach Valuation Technique | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 6.00% | ||||||||||||||||
Omni Prepaid | Finite-Lived Intangible Assets | Maximum | Income Approach Valuation Technique | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 11.00% | ||||||||||||||||
NimbleCommerce and Extrameasures | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Total purchase consideration | $ 78,800,000 | ||||||||||||||||
Cash consideration | 58,500,000 | ||||||||||||||||
Deferred tax assets for net operating loss carryforwards | $ 3,900,000 | 3,900,000 | |||||||||||||||
Deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets | 2,300,000 | 2,300,000 | |||||||||||||||
Other deferred tax assets, net | 300,000 | 300,000 | |||||||||||||||
Acquisition related costs | $ 900,000 | ||||||||||||||||
Contingent consideration transferred | 20,300,000 | ||||||||||||||||
Goodwill | 37,865,000 | 37,865,000 | |||||||||||||||
Debt assumed in a business combination | 3,157,000 | $ 3,157,000 | |||||||||||||||
NimbleCommerce and Extrameasures | Finite-Lived Intangible Assets | Minimum | Income Approach Valuation Technique | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 9.00% | ||||||||||||||||
NimbleCommerce and Extrameasures | Finite-Lived Intangible Assets | Maximum | Income Approach Valuation Technique | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 16.00% | ||||||||||||||||
NimbleCommerce | Operating Segments | US Retail | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Goodwill, expected tax deductible amount | 1,400,000 | $ 1,400,000 | |||||||||||||||
Goodwill | $ 10,500,000 | 10,500,000 | |||||||||||||||
Extrameasures | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 16.70% | ||||||||||||||||
Consideration transferred, number of payments | payment | 3 | ||||||||||||||||
Contingent cash consideration, highest level | $ 15,000,000 | $ 15,000,000 | |||||||||||||||
Consideration earnout percentage for employees | 10.00% | ||||||||||||||||
Extrameasures | Income Approach Valuation Technique | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 17.00% | ||||||||||||||||
Achievers Corp. | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Cash consideration | $ 103,500,000 | ||||||||||||||||
Acquisition related costs | 1,600,000 | ||||||||||||||||
Goodwill | 58,659,000 | ||||||||||||||||
Deferred tax assets for net operating loss carryforwards | 24,800,000 | ||||||||||||||||
Deferred tax assets, valuation allowance | 5,100,000 | ||||||||||||||||
Deferred tax liabilities for nondeductible amortization | 30,500,000 | ||||||||||||||||
Other deferred tax liabilities, net | $ 3,200,000 | ||||||||||||||||
Employee compensation expense deducted from seller's consideration | 3,200,000 | ||||||||||||||||
Pre-tax revenue resulting from step down bases | 5,000,000 | ||||||||||||||||
Amortization of intangibles | 3,800,000 | ||||||||||||||||
After-tax net loss | $ (7,900,000) | ||||||||||||||||
Achievers Corp. | Income Approach Valuation Technique | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Expected client attrition rate | 8.00% | ||||||||||||||||
Achievers Corp. | Minimum | Income Approach Valuation Technique | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 12.00% | ||||||||||||||||
Achievers Corp. | Maximum | Income Approach Valuation Technique | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 16.00% | ||||||||||||||||
Didix | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Cash consideration | $ 41,200,000 | € 36.5 | |||||||||||||||
Goodwill | $ 20,385,000 | ||||||||||||||||
Didix | Minimum | Income Approach Valuation Technique | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 14.00% | 14.00% | |||||||||||||||
Didix | Maximum | Income Approach Valuation Technique | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 17.00% | 17.00% | |||||||||||||||
Parago, Inc. | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Cash consideration | $ 262,300,000 | ||||||||||||||||
Deferred tax assets for net operating loss carryforwards | 23,000,000 | ||||||||||||||||
Deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets | 37,600,000 | ||||||||||||||||
Acquisition related costs | 1,200,000 | ||||||||||||||||
Goodwill | $ 171,187,000 | ||||||||||||||||
Percentage of outstanding common stock acquired | 100.00% | ||||||||||||||||
Debt assumed in a business combination | $ 34,509,000 | ||||||||||||||||
Parago, Inc. | 2014 Credit Agreement | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Increase in borrowings | $ 200,000,000 | ||||||||||||||||
Parago, Inc. | Minimum | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 10.50% | ||||||||||||||||
Expected client attrition rate | 3.50% | ||||||||||||||||
Parago, Inc. | Maximum | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 14.50% | ||||||||||||||||
Expected client attrition rate | 11.00% | ||||||||||||||||
CardLab, Inc. and Incentec Solutions, Inc. | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Total purchase consideration | 33,651,000 | ||||||||||||||||
Cash consideration | 18,956,000 | ||||||||||||||||
Deferred tax assets for net operating loss carryforwards | 5,900,000 | 5,900,000 | |||||||||||||||
Deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets | 3,900,000 | 3,900,000 | |||||||||||||||
Other deferred tax assets, net | 300,000 | 300,000 | |||||||||||||||
Acquisition related costs | $ 600,000 | ||||||||||||||||
Consideration transferred, number of payments | payment | 3 | ||||||||||||||||
Goodwill | 29,304,000 | $ 29,304,000 | |||||||||||||||
Debt assumed in a business combination | 7,475,000 | $ 7,475,000 | |||||||||||||||
Stock consideration, number of shares | shares | 61,840 | ||||||||||||||||
Escrow deposit for contingent consideration | 5,000,000 | $ 5,000,000 | |||||||||||||||
Contingent consideration paid for achieving relevant targets | $ 1,800,000 | ||||||||||||||||
Adjustment in purchase price adjustment - contingent consideration | 11,000,000 | ||||||||||||||||
Adjustment in purchase price adjustment - goodwill | 10,400,000 | ||||||||||||||||
Adjustment in purchase price adjustment - identifiable intangible and technology | 600,000 | ||||||||||||||||
CardLab, Inc. and Incentec Solutions, Inc. | Based on CardLab's 2014 Financial Results | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Contingent cash consideration, highest level | 2,500,000 | 2,500,000 | |||||||||||||||
CardLab, Inc. and Incentec Solutions, Inc. | Based on Execution of Contract and Launch of Incentive Programs | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Contingent cash consideration, highest level | 2,500,000 | 2,500,000 | |||||||||||||||
Contingent cash consideration, lowest level | 0 | 0 | |||||||||||||||
Contingent cash consideration, mid level | 1,250,000 | 1,250,000 | |||||||||||||||
CardLab, Inc. and Incentec Solutions, Inc. | Based on CardLab's 2015 Financial Results for Incentive Programs | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Contingent cash consideration, highest level | $ 46,500,000 | $ 46,500,000 | |||||||||||||||
CardLab, Inc. and Incentec Solutions, Inc. | Minimum | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 15.00% | ||||||||||||||||
CardLab, Inc. and Incentec Solutions, Inc. | Maximum | |||||||||||||||||
Business Acquisition | |||||||||||||||||
Discount rate | 19.00% |
Business Acquisitions - Summary
Business Acquisitions - Summary of Initial Purchase Price Allocation (Details) $ in Thousands, £ in Millions | Dec. 31, 2016USD ($) | Oct. 06, 2016USD ($) | Oct. 06, 2016GBP (£) | Jun. 18, 2016USD ($) | Jan. 05, 2016USD ($) | Jan. 02, 2016USD ($) | Sep. 14, 2015USD ($) | Jun. 30, 2015USD ($) | Jan. 03, 2015USD ($) | Oct. 23, 2014USD ($) |
Business Acquisition | ||||||||||
Goodwill | $ 570,398 | $ 402,489 | ||||||||
Grass Roots, Inc. | ||||||||||
Business Acquisition | ||||||||||
Cash | $ 38,957 | |||||||||
Settlement receivables, net | 24,290 | |||||||||
Accounts receivables, net | 10,367 | |||||||||
Identifiable technology and intangible assets | 64,431 | |||||||||
Goodwill | 54,219 | |||||||||
Consumer and customer deposits | (35,636) | |||||||||
Accounts payable and accrued operating expenses | (32,753) | |||||||||
Deferred income taxes, net | (9,123) | |||||||||
Other tangible assets, net | 3,256 | |||||||||
Deferred revenue | (7,215) | |||||||||
Purchase consideration excluding GREBT | 110,793 | |||||||||
Restricted cash (GREBT) | 8,541 | £ 6.7 | ||||||||
Total purchase consideration | $ 119,334 | |||||||||
Spafinder and Samba | ||||||||||
Business Acquisition | ||||||||||
Cash | 1,032 | |||||||||
Settlement receivables, net | 2,182 | |||||||||
Settlement payables | (2,273) | |||||||||
Identifiable technology and intangible assets | 21,271 | |||||||||
Goodwill | 13,427 | |||||||||
Consumer and customer deposits | (24,297) | |||||||||
Deferred income taxes, net | (1,009) | |||||||||
Other tangible assets, net | 5,888 | |||||||||
Total purchase consideration | $ 16,221 | |||||||||
Omni Prepaid | ||||||||||
Business Acquisition | ||||||||||
Cash | $ 3,985 | |||||||||
Identifiable technology and intangible assets | 52,460 | |||||||||
Goodwill | 67,706 | |||||||||
Consumer and customer deposits | (5,429) | |||||||||
Accounts payable and accrued operating expenses | (9,860) | |||||||||
Other tangible assets, net | 893 | |||||||||
Debt | (5,807) | |||||||||
Total purchase consideration | $ 103,948 | |||||||||
NimbleCommerce and Extrameasures | ||||||||||
Business Acquisition | ||||||||||
Cash | $ 14,191 | |||||||||
Settlement receivables, net | 4,884 | |||||||||
Settlement payables | (3,272) | |||||||||
Identifiable technology and intangible assets | 45,540 | |||||||||
Goodwill | 37,865 | |||||||||
Consumer and customer deposits | (18,009) | |||||||||
Other tangible liabilities, net | (1,155) | |||||||||
Deferred income taxes | 1,926 | |||||||||
Debt | (3,157) | |||||||||
Total purchase consideration | $ 78,813 | |||||||||
Achievers Corp. | ||||||||||
Business Acquisition | ||||||||||
Cash | $ 24,367 | |||||||||
Identifiable technology and intangible assets | 94,800 | |||||||||
Goodwill | 58,659 | |||||||||
Accounts payable and accrued operating expenses | (11,580) | |||||||||
Deferred income taxes | (14,019) | |||||||||
Deferred revenue | (48,735) | |||||||||
Total purchase consideration | $ 103,492 | |||||||||
Didix | ||||||||||
Business Acquisition | ||||||||||
Cash | $ 4,733 | |||||||||
Identifiable technology and intangible assets | 26,892 | |||||||||
Goodwill | 20,385 | |||||||||
Other tangible assets, net | 2,093 | |||||||||
Deferred income taxes | (6,723) | |||||||||
Cardholder liability | (6,167) | |||||||||
Total purchase consideration | $ 41,213 | |||||||||
Parago, Inc. | ||||||||||
Business Acquisition | ||||||||||
Cash | $ 39,450 | |||||||||
Settlement receivables, net | 6,478 | |||||||||
Identifiable technology and intangible assets | 126,430 | |||||||||
Goodwill | 171,187 | |||||||||
Consumer and customer deposits | (39,396) | |||||||||
Other tangible assets, net | 7,324 | |||||||||
Deferred income taxes | (14,619) | |||||||||
Debt | (34,509) | |||||||||
Total purchase consideration | $ 262,345 | |||||||||
CardLab, Inc. and Incentec Solutions, Inc. | ||||||||||
Business Acquisition | ||||||||||
Identifiable technology and intangible assets | $ 10,623 | |||||||||
Goodwill | 29,304 | |||||||||
Other tangible liabilities, net | (1,059) | |||||||||
Deferred taxes | 2,258 | |||||||||
Debt | (7,475) | |||||||||
Total purchase consideration | $ 33,651 |
Business Acquisitions - Summa41
Business Acquisitions - Summary of Identifiable Technology and Intangible Assets at Date of Acquisition (Details) - USD ($) $ in Thousands | Oct. 06, 2016 | Jan. 05, 2016 | Sep. 14, 2015 | Jun. 30, 2015 | Oct. 23, 2014 | Dec. 31, 2016 | Jun. 18, 2016 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 |
Customer relationships | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | 13 years | ||||||||
Grass Roots, Inc. | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 64,431 | |||||||||
Grass Roots, Inc. | Technology | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 1,586 | |||||||||
Grass Roots, Inc. | Technology | Maximum | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 3 years | |||||||||
Grass Roots, Inc. | Technology | Minimum | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 1 year | |||||||||
Grass Roots, Inc. | Customer relationships | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 57,239 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | |||||||||
Grass Roots, Inc. | Customer backlog | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 2,911 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 1 year | |||||||||
Grass Roots, Inc. | Trade name | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 2,695 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | |||||||||
Spafinder and Samba | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 21,271 | $ 21,271 | ||||||||
Spafinder and Samba | Customer relationships | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 19,083 | 19,083 | ||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | |||||||||
Spafinder and Samba | Trade name | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 2,188 | $ 2,188 | ||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | |||||||||
Omni Prepaid | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 52,460 | |||||||||
Omni Prepaid | Technology | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 3,590 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years | |||||||||
Omni Prepaid | Customer relationships | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 27,570 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | |||||||||
Omni Prepaid | Customer backlog | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 10,780 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 3 years | |||||||||
Omni Prepaid | Trade name | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 10,520 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | |||||||||
NimbleCommerce and Extrameasures | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 45,540 | |||||||||
NimbleCommerce and Extrameasures | Technology | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 4,700 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years | |||||||||
NimbleCommerce and Extrameasures | Customer relationships | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 39,230 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | |||||||||
NimbleCommerce and Extrameasures | Customer backlog | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 1,610 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 3 years | |||||||||
Achievers Corp. | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 94,800 | |||||||||
Achievers Corp. | Technology | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 17,000 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 6 years | |||||||||
Achievers Corp. | Customer relationships | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 73,210 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years | |||||||||
Achievers Corp. | Customer backlog | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 4,590 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 4 years | |||||||||
Didix | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 26,892 | |||||||||
Didix | Technology | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 790 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 4 years | |||||||||
Didix | Trade name | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 4,106 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | |||||||||
Didix | Content provider relationships | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 17,382 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | |||||||||
Didix | Distribution relationships | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 4,614 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years | |||||||||
Parago, Inc. | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 126,430 | |||||||||
Parago, Inc. | Technology | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 26,930 | |||||||||
Parago, Inc. | Technology | Maximum | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years | |||||||||
Parago, Inc. | Technology | Minimum | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 1 year | |||||||||
Parago, Inc. | Customer relationships | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 94,460 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years | |||||||||
Parago, Inc. | Customer backlog | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 4,430 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 1 year | |||||||||
Parago, Inc. | Trade name | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 610 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 3 years | |||||||||
CardLab, Inc. and Incentec Solutions, Inc. | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 10,623 | |||||||||
CardLab, Inc. and Incentec Solutions, Inc. | Technology | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 7,790 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years | |||||||||
CardLab, Inc. and Incentec Solutions, Inc. | Customer relationships | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 1,260 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years | |||||||||
CardLab, Inc. and Incentec Solutions, Inc. | Customer backlog | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 1,490 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 4 months | |||||||||
CardLab, Inc. and Incentec Solutions, Inc. | Trade name | ||||||||||
Acquired Finite-Lived Intangible Assets | ||||||||||
Identifiable technology and intangible assets | $ 83 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 3 years |
Business Acquisitions - Summa42
Business Acquisitions - Summary of Acquiree Revenues and Earnings Since Acquisition (Detail) - USD ($) $ in Thousands | 2 Months Ended | 3 Months Ended | 6 Months Ended |
Jan. 03, 2015 | Dec. 31, 2016 | Jan. 02, 2016 | |
Grass Roots, Inc. | |||
Business Acquisition | |||
Total revenues | $ 24,210 | ||
Net income (loss) attributable to Blackhawk Network Holdings, Inc. | $ (5) | ||
Achievers Corp. | |||
Business Acquisition | |||
Total revenues | $ 29,223 | ||
Net income (loss) attributable to Blackhawk Network Holdings, Inc. | $ (9,676) | ||
Parago, Inc. | |||
Business Acquisition | |||
Total revenues | $ 17,711 | ||
Net income (loss) attributable to Blackhawk Network Holdings, Inc. | $ (1,090) |
Business Acquisitions - Summa43
Business Acquisitions - Summary of Assets Held for Sale Related to Acquisition (Details) - Assets Held-for-sale Related to Acquisition, Disposal Group, Not Discontinued Operations - Grass Roots, Inc. $ in Thousands | Dec. 31, 2016USD ($) |
Business Acquisition | |
Cash | $ 6,213 |
Accounts receivable | 10,615 |
Other current assets | 9,390 |
Property and equipment | 974 |
Goodwill | 11,151 |
Intangible assets | 5,506 |
Deferred income taxes | 902 |
Total assets | 44,751 |
Settlement payables | 3,972 |
Accounts payable and accrued operating expenses | 2,924 |
Consumer and customer deposits | 1,695 |
Other current liabilities | 1,694 |
Deferred revenue | 10,745 |
Total liabilities | $ 21,030 |
Business Acquisitions - Summa44
Business Acquisitions - Summary of Unaudited Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Grass Roots, GiftCards, Extrameasures, Spafinder and Samba | |||
Business Acquisition | |||
Total revenues | $ 2,031,871 | $ 2,030,066 | |
Net income attributable to Blackhawk Network Holdings, Inc. | $ 22,745 | $ 23,381 | |
Pro forma EPS—Basic (in usd per share) | $ 0.41 | $ 0.43 | |
Pro forma EPS—Diluted (in usd per share) | $ 0.40 | $ 0.42 | |
Achievers Corp. | |||
Business Acquisition | |||
Total revenues | $ 1,830,848 | $ 1,487,695 | |
Net income attributable to Blackhawk Network Holdings, Inc. | $ 41,752 | $ 15,412 | |
Pro forma EPS—Basic (in usd per share) | $ 0.77 | $ 0.29 | |
Pro forma EPS—Diluted (in usd per share) | $ 0.74 | $ 0.28 | |
Parago, Inc. | |||
Business Acquisition | |||
Total revenues | $ 1,529,072 | ||
Net income attributable to Blackhawk Network Holdings, Inc. | $ 44,765 | ||
Pro forma EPS—Basic (in usd per share) | $ 0.85 | ||
Pro forma EPS—Diluted (in usd per share) | $ 0.82 |
Business Acquisitions - Schedul
Business Acquisitions - Schedule of Total Purchase Consideration (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Business Acquisition | |||
Stock consideration | $ 0 | $ 0 | $ 1,595 |
Financing of business acquisition with contingent consideration | $ 21,652 | $ 0 | 13,100 |
CardLab, Inc. and Incentec Solutions, Inc. | |||
Business Acquisition | |||
Cash paid at closing | 18,956 | ||
Stock consideration | 1,595 | ||
Financing of business acquisition with contingent consideration | 13,100 | ||
Total purchase consideration | $ 33,651 |
Investment in Unconsolidated 46
Investment in Unconsolidated Entities - Schedule of Equity and Cost Method investments (Details) $ in Thousands, AUD in Millions | 1 Months Ended | 12 Months Ended | ||||
Nov. 30, 2016USD ($) | Nov. 30, 2016AUD | Sep. 30, 2015USD ($) | Dec. 31, 2016USD ($) | Jan. 02, 2016USD ($)investment | Jan. 03, 2015USD ($) | |
Schedule of Equity Method Investments | ||||||
Cash payment consideration | $ 10,541 | $ 5,877 | $ 0 | |||
Number of other equity method investments | investment | 2 | |||||
Carrying value | 10,968 | $ 6,264 | ||||
Cost method investments | 7,954 | 250 | ||||
Total unconsolidated entities | $ 18,922 | $ 6,514 | ||||
Australia Investment | ||||||
Schedule of Equity Method Investments | ||||||
Ownership percentage | 51.20% | 51.20% | 51.20% | |||
Cash payment consideration | $ 6,000 | AUD 8 | ||||
Carrying value | $ 6,392 | |||||
Chinese Entity | ||||||
Schedule of Equity Method Investments | ||||||
Ownership percentage | 26.50% | 26.50% | 26.50% | |||
Cash payment consideration | $ 5,000 | |||||
Carrying value | $ 4,576 | $ 5,473 | ||||
Other Equity Method Investments | ||||||
Schedule of Equity Method Investments | ||||||
Carrying value | $ 0 | $ 791 | ||||
Other Equity Method Investments | Minimum | ||||||
Schedule of Equity Method Investments | ||||||
Ownership percentage | 0.00% | 25.00% | ||||
Other Equity Method Investments | Maximum | ||||||
Schedule of Equity Method Investments | ||||||
Ownership percentage | 0.00% | 50.00% |
Financing (Detail)
Financing (Detail) - USD ($) | Jul. 27, 2016 | Jan. 25, 2016 | Mar. 28, 2014 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | Jul. 26, 2016 | Dec. 18, 2015 | Jun. 19, 2015 |
Debt Instrument | |||||||||
Proceeds from issuance of note payable | $ 100,000,000 | $ 250,000,000 | $ 0 | $ 375,000,000 | |||||
Term loan, repayments | 463,750,000 | 11,250,000 | 0 | ||||||
Term loan, balance outstanding | 576,866,000 | ||||||||
Interest Expense | 21,864,000 | 13,171,000 | 5,647,000 | ||||||
Amortization of deferred financing costs | 1,700,000 | 1,200,000 | |||||||
London Interbank Offered Rate (LIBOR) | Minimum | |||||||||
Debt Instrument | |||||||||
Basis spread on variable rate | 1.25% | ||||||||
London Interbank Offered Rate (LIBOR) | Maximum | |||||||||
Debt Instrument | |||||||||
Basis spread on variable rate | 2.25% | ||||||||
Federal Funds Rate | |||||||||
Debt Instrument | |||||||||
Basis spread on variable rate | 0.50% | ||||||||
One-month LIBOR Base Rate | |||||||||
Debt Instrument | |||||||||
Basis spread on variable rate | 1.00% | ||||||||
One-month LIBOR Base Rate | Minimum | |||||||||
Debt Instrument | |||||||||
Basis spread on variable rate | 0.25% | ||||||||
One-month LIBOR Base Rate | Maximum | |||||||||
Debt Instrument | |||||||||
Basis spread on variable rate | 1.25% | ||||||||
Term Loan | |||||||||
Debt Instrument | |||||||||
Term loan, repayments | $ 276,000,000 | ||||||||
Term loan, balance outstanding | 150,000,000 | $ 426,000,000 | |||||||
Term loan, incremental borrowing capacity | 150,000,000 | ||||||||
Interest expense for term loan | 12,900,000 | $ 12,500,000 | |||||||
Line of Credit | Revolving Credit Facility | |||||||||
Debt Instrument | |||||||||
Amount outstanding under revolving credit facility | 0 | ||||||||
Remaining borrowing capacity under revolving credit facility | 324,600,000 | ||||||||
Average outstanding amount during period | 86,300,000 | ||||||||
Maximum amount outstanding during period | $ 223,300,000 | ||||||||
Line of Credit | Revolving Credit Facility | Minimum | |||||||||
Debt Instrument | |||||||||
Interest rate during period | 2.97% | 2.66% | |||||||
Commitment fee percentage | 0.25% | ||||||||
Line of Credit | Revolving Credit Facility | Maximum | |||||||||
Debt Instrument | |||||||||
Commitment fee percentage | 0.45% | ||||||||
Line of Credit | Letter of Credit | |||||||||
Debt Instrument | |||||||||
Amount outstanding under revolving credit facility | $ 75,400,000 | ||||||||
Line of Credit | Letter of Credit | Maximum | |||||||||
Debt Instrument | |||||||||
Basis spread on variable rate | 2.25% | ||||||||
Line of Credit | Letter of Credit, Secured with Cash | |||||||||
Debt Instrument | |||||||||
Stated interest rate percentage | 0.75% | ||||||||
2014 Credit Agreement | Term Loan | |||||||||
Debt Instrument | |||||||||
Face amount of debt instrument | 375,000,000 | ||||||||
Term loan, repayments | $ 11,000,000 | ||||||||
2014 Credit Agreement | Line of Credit | Revolving Credit Facility | |||||||||
Debt Instrument | |||||||||
Maximum borrowing capacity | 250,000,000 | ||||||||
Borrowing capacity increase limit during year-end | 100,000,000 | ||||||||
2014 Credit Agreement | Line of Credit | Letter of Credit | |||||||||
Debt Instrument | |||||||||
Maximum borrowing capacity | $ 100,000,000 | $ 100,000,000 | |||||||
June 2015 Amended Credit Agreement | Revolving Credit Facility | |||||||||
Debt Instrument | |||||||||
Maximum borrowing capacity | 300,000,000 | $ 300,000,000 | |||||||
Increased borrowing capacity under revolving credit facility | $ 50,000,000 | ||||||||
December 2015 Amended Credit Agreement | Revolving Credit Facility | |||||||||
Debt Instrument | |||||||||
Maximum borrowing capacity | 400,000,000 | ||||||||
December 2015 Amended Credit Agreement | Term Loan | |||||||||
Debt Instrument | |||||||||
Borrowing capacity increase limit on term loan | 100,000,000 | ||||||||
Total commitment | 464,000,000 | ||||||||
December 2015 Amended Credit Agreement | Line of Credit | Letter of Credit | |||||||||
Debt Instrument | |||||||||
Maximum borrowing capacity | $ 200,000,000 | ||||||||
December 2015 Amended Credit Agreement | Line of Credit | Letter of Credit | Minimum | |||||||||
Debt Instrument | |||||||||
Basis spread on variable rate | 1.25% | ||||||||
Credit Agreement and Restated Credit Agreement [Member] | |||||||||
Debt Instrument | |||||||||
Interest Expense | $ 14,600,000 | $ 13,700,000 | |||||||
Restated Credit Agreement | |||||||||
Debt Instrument | |||||||||
Maximum borrowing capacity | 700,000,000 | ||||||||
Term loan, incremental borrowing capacity | 300,000,000 | ||||||||
Restated Credit Agreement | Revolving Credit Facility | |||||||||
Debt Instrument | |||||||||
Revolving credit facility, current borrowing capacity | 400,000,000 | ||||||||
Restated Credit Agreement | Term Loan | |||||||||
Debt Instrument | |||||||||
Term loan, maximum borrowing capacity | $ 300,000,000 |
Financing - Convertible Senior
Financing - Convertible Senior Notes (Details) $ / shares in Units, $ in Thousands | Jul. 27, 2016USD ($)day$ / shares | Dec. 31, 2016USD ($) | Jan. 02, 2016USD ($) | Jan. 03, 2015USD ($) |
Debt Instrument | ||||
Amortization of deferred financing costs and debt discount | $ 6,506 | $ 1,187 | $ 533 | |
Convertible Debt | ||||
Debt Instrument | ||||
Face amount of debt instrument | $ 500,000 | |||
Stated interest rate percentage | 1.50% | |||
Initial conversion rate per $1,000 principal amount of notes | 0.0200673 | |||
Conversion price (in usd per share) | $ / shares | $ 49.83 | |||
Debt instrument, initial debt component of the notes | $ 436,600 | |||
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% | |||
Interest expense for the notes | 8,000 | |||
Interest expense from coupon | 3,200 | |||
Amortization of deferred financing costs and debt discount | $ 4,800 | |||
Convertible Debt | Convertible Senior Notes, Equity Component | ||||
Debt Instrument | ||||
Debt instrument, debt discount | $ 63,400 | |||
Debt issuance costs | 1,800 | |||
Convertible Debt | Convertible Senior Notes, Debt Component | ||||
Debt Instrument | ||||
Debt issuance costs | $ 12,300 | |||
Convertible Debt | Debt Instrument, Redemption, Period One | ||||
Debt Instrument | ||||
Trading days threshold | day | 20 | |||
Consecutive trading days threshold | 30 days | |||
Redemption price | 130.00% | |||
Convertible Debt | Debt Instrument, Redemption, Period Two | ||||
Debt Instrument | ||||
Consecutive trading days threshold | 5 days | |||
Redemption price | 98.00% | |||
Number of business days | day | 5 |
Financing - Schedule of Annual
Financing - Schedule of Annual Maturities of Notes Payable (Detail) $ in Thousands | Dec. 31, 2016USD ($) |
Debt Disclosure [Abstract] | |
2,017 | $ 10,000 |
2,018 | 7,500 |
2,019 | 7,500 |
2,020 | 15,000 |
2,021 | 110,000 |
Thereafter | 500,000 |
Total amount due | 650,000 |
Unamortized discount and debt issuance fees | (73,134) |
Note payable, net | $ 576,866 |
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 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 |
Debt Instrument | ||||||
Aggregate payment for note hedges | $ 75,750 | $ 0 | $ 0 | |||
Proceeds from warrants | 47,000 | $ 0 | $ 0 | |||
Deferred tax asset, related to note hedges and warrants | $ 5,200 | |||||
Additional Paid-In Capital | ||||||
Debt Instrument | ||||||
Aggregate payment for note hedges | $ 75,750 | |||||
Adjustments to additional paid in capital, deferred tax assets, convertible notes | $ 5,200 | |||||
Call Option Warrants | ||||||
Debt Instrument | ||||||
Proceeds from warrants | $ 47,000 | $ 47,000 | ||||
Shares issuable under warrants (in share) | 10 | 10 | ||||
Exercise price (in usd per share) | $ 61.20 | $ 61.20 | ||||
Call Option | ||||||
Debt Instrument | ||||||
Aggregate payment for note hedges | $ 75,800 | $ 75,800 |
Financing - Shares Repurchased
Financing - Shares Repurchased (Details) - USD ($) $ in Thousands, shares in Millions | Jul. 27, 2016 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
Stock repurchased during period (in shares) | 1 | |
Stock repurchased during period | $ 34,800 | $ 34,843 |
Financing - Impact to Earnings
Financing - Impact to Earnings per Share (Details) - $ / shares | Jul. 27, 2016 | Jul. 22, 2016 | Jul. 21, 2016 |
Call Option Warrants | |||
Debt Instrument | |||
Exercise price of warrant | $ 61.20 | $ 61.20 | |
Convertible Debt | |||
Debt Instrument | |||
Conversion price (in usd per share) | $ 49.83 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Fair Value of Assets, Liabilities and Equity Instruments on Recurring Basis (Detail) - Recurring Basis - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Cash and cash equivalents | ||
Money market mutual funds | $ 300,015 | $ 370,070 |
Liabilities | ||
Contingent consideration | 23,752 | 0 |
Level 1 | ||
Cash and cash equivalents | ||
Money market mutual funds | 300,015 | 370,070 |
Liabilities | ||
Contingent consideration | 0 | 0 |
Level 2 | ||
Cash and cash equivalents | ||
Money market mutual funds | 0 | 0 |
Liabilities | ||
Contingent consideration | 0 | 0 |
Level 3 | ||
Cash and cash equivalents | ||
Money market mutual funds | 0 | 0 |
Liabilities | ||
Contingent consideration | $ 23,752 | $ 0 |
Fair Value Measurements (Detail
Fair Value Measurements (Detail) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Extrameasures | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | |
Fair value inputs, discount rate percentage | 16.70% |
Spafinder | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | |
Fair value inputs, discount rate percentage | 19.50% |
Level 2 | Term Loan | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | |
Fair value of debt instrument | $ 150 |
Level 2 | Convertible Notes Payable | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | |
Fair value of debt instrument | $ 513.8 |
Fair Value Measurements - Sum55
Fair Value Measurements - Summary of Changes in Fair Value of Contingent Consideration Classified as Level 3 (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Balance – beginning of year | $ 0 | $ 7,567 |
Change in fair value of contingent consideration | 2,100 | (7,567) |
Settlements | 0 | 0 |
Balance – end of year | 23,752 | 0 |
Extrameasures | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Issuance of contingent consideration for acquisition | 20,300 | 0 |
Spafinder | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Issuance of contingent consideration for acquisition | $ 1,352 |
Consolidated Financial Statem56
Consolidated Financial Statement Details - Summary of Changes in Allowances for Doubtful Accounts and Sales Allowances (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Allowance for Doubtful Accounts and Sales Allowances | |||
Beginning balance | $ 8,046 | $ 5,547 | $ 3,134 |
Provision | 4,544 | 4,656 | 3,452 |
Charges against allowances, net of recoveries | (3,933) | (2,157) | (1,039) |
Ending balance | $ 8,657 | $ 8,046 | $ 5,547 |
Consolidated Financial Statem57
Consolidated Financial Statement Details - Schedule of Other Current Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Inventory | $ 43,950 | $ 36,528 |
Deferred expenses | 22,148 | 18,182 |
Income tax receivables | 13,599 | 14,831 |
Other | 51,678 | 33,778 |
Total other current assets | $ 131,375 | $ 103,319 |
Consolidated Financial Statem58
Consolidated Financial Statement Details - Schedule of Property, Equipment and Technology (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Property, Plant and Equipment | |||
Total property, equipment and technology | $ 346,052 | $ 290,082 | |
Less accumulated depreciation and amortization | (173,671) | (130,725) | |
Property, equipment and technology, net | 172,381 | 159,357 | |
Depreciation and amortization of property, equipment and technology | 48,379 | 40,983 | $ 28,548 |
Capitalized interest related to property and technology | $ 800 | 500 | $ 200 |
Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life of property, equipment and technology | 3 years | ||
Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life of property, equipment and technology | 5 years | ||
Leasehold Improvements | |||
Property, Plant and Equipment | |||
Estimated useful life of property, equipment and technology | 5 years | ||
Total property, equipment and technology | $ 9,018 | 7,915 | |
Computers and Related Equipment | |||
Property, Plant and Equipment | |||
Total property, equipment and technology | $ 45,910 | 39,574 | |
Computers and Related Equipment | Minimum | |||
Property, Plant and Equipment | |||
Estimated useful life of property, equipment and technology | 3 years | ||
Computers and Related Equipment | Maximum | |||
Property, Plant and Equipment | |||
Estimated useful life of property, equipment and technology | 5 years | ||
Technology | |||
Property, Plant and Equipment | |||
Estimated useful life of property, equipment and technology | 5 years | ||
Total property, equipment and technology | $ 291,124 | $ 242,593 |
Consolidated Financial Statem59
Consolidated Financial Statement Details - Schedule of Other Assets (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Deferred program and contract costs | $ 48,066 | $ 50,717 | |
Other receivables | 2,713 | 2,281 | |
Income taxes receivable | 2,358 | 6,155 | |
Deferred financing costs | 2,688 | 2,100 | |
Other | 30,031 | 20,511 | |
Total other assets | 85,856 | 81,764 | |
Amortization of deferred program and contract costs | $ 29,015 | $ 28,991 | $ 24,451 |
Consolidated Financial Statem60
Consolidated Financial Statement Details - Schedule of Other Current Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Payroll and related liabilities | $ 24,944 | $ 34,530 |
Income taxes payable | 4,199 | 3,216 |
Acquisition liability | 6,672 | 0 |
Other payables and accrued liabilities | 15,361 | 19,596 |
Total other current liabilities | $ 51,176 | $ 57,342 |
Consolidated Financial Statem61
Consolidated Financial Statement Details - Schedule of Other Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Acquisition liability | $ 17,080 | $ 0 |
Income taxes payable | 6,957 | 4,249 |
Deferred income and other liabilities | 15,616 | 10,451 |
Total other liabilities | $ 39,653 | $ 14,700 |
Goodwill and Other Intangible62
Goodwill and Other Intangible Assets - Summary of Changes in Goodwill (Detail) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 26, 2016USD ($)segment | Dec. 31, 2016USD ($) | Jan. 02, 2016USD ($) | |
Goodwill | |||
Balance, beginning of year | $ 402,489 | $ 402,489 | |
Balance, end of year | 570,398 | $ 402,489 | |
Operating Segments | |||
Goodwill | |||
Balance, beginning of year | 402,489 | 402,489 | 331,265 |
Re-allocation of e-commerce goodwill | 0 | ||
Measurement period adjustments for acquisitions | (1,235) | (2,716) | |
Foreign currency translation adjustments | (4,073) | (6,338) | |
Balance, end of year | 570,398 | 402,489 | |
Operating Segments | GiftCards | |||
Goodwill | |||
Goodwill acquired during period | 67,706 | ||
Operating Segments | NimbleCommerce | |||
Goodwill | |||
Goodwill acquired during period | 10,505 | ||
Operating Segments | Extrameasures | |||
Goodwill | |||
Goodwill acquired during period | 27,360 | ||
Operating Segments | Grass Roots, Inc. | |||
Goodwill | |||
Goodwill acquired during period | 54,219 | ||
Operating Segments | Samba | |||
Goodwill | |||
Goodwill acquired during period | 4,074 | ||
Operating Segments | Spafinder | |||
Goodwill | |||
Goodwill acquired during period | 9,353 | ||
Operating Segments | Didix | |||
Goodwill | |||
Goodwill acquired during period | 20,385 | ||
Operating Segments | Achievers Corp. | |||
Goodwill | |||
Goodwill acquired during period | 59,893 | ||
Operating Segments | US Retail | |||
Goodwill | |||
Balance, beginning of year | 42,729 | 42,729 | 42,729 |
Re-allocation of e-commerce goodwill | 2,671 | ||
Measurement period adjustments for acquisitions | 0 | 0 | |
Foreign currency translation adjustments | 0 | 0 | |
Balance, end of year | 99,685 | 42,729 | |
Operating Segments | US Retail | GiftCards | |||
Goodwill | |||
Goodwill acquired during period | 34,427 | ||
Operating Segments | US Retail | NimbleCommerce | |||
Goodwill | |||
Goodwill acquired during period | 10,505 | ||
Operating Segments | US Retail | Extrameasures | |||
Goodwill | |||
Goodwill acquired during period | 0 | ||
Operating Segments | US Retail | Grass Roots, Inc. | |||
Goodwill | |||
Goodwill acquired during period | 0 | ||
Operating Segments | US Retail | Samba | |||
Goodwill | |||
Goodwill acquired during period | 0 | ||
Operating Segments | US Retail | Spafinder | |||
Goodwill | |||
Goodwill acquired during period | 9,353 | ||
Operating Segments | US Retail | Didix | |||
Goodwill | |||
Goodwill acquired during period | 0 | ||
Operating Segments | US Retail | Achievers Corp. | |||
Goodwill | |||
Goodwill acquired during period | 0 | ||
Operating Segments | International | |||
Goodwill | |||
Balance, beginning of year | 49,156 | 49,156 | 32,150 |
Re-allocation of e-commerce goodwill | 0 | ||
Measurement period adjustments for acquisitions | 0 | 0 | |
Foreign currency translation adjustments | (3,244) | (3,379) | |
Balance, end of year | 104,205 | 49,156 | |
Operating Segments | International | GiftCards | |||
Goodwill | |||
Goodwill acquired during period | 0 | ||
Operating Segments | International | NimbleCommerce | |||
Goodwill | |||
Goodwill acquired during period | 0 | ||
Operating Segments | International | Extrameasures | |||
Goodwill | |||
Goodwill acquired during period | 0 | ||
Operating Segments | International | Grass Roots, Inc. | |||
Goodwill | |||
Goodwill acquired during period | 54,219 | ||
Operating Segments | International | Samba | |||
Goodwill | |||
Goodwill acquired during period | 4,074 | ||
Operating Segments | International | Spafinder | |||
Goodwill | |||
Goodwill acquired during period | 0 | ||
Operating Segments | International | Didix | |||
Goodwill | |||
Goodwill acquired during period | 20,385 | ||
Operating Segments | International | Achievers Corp. | |||
Goodwill | |||
Goodwill acquired during period | 0 | ||
Operating Segments | Incentives & Rewards | |||
Goodwill | |||
Balance, beginning of year | $ 310,604 | 310,604 | 256,386 |
Re-allocation of e-commerce goodwill | (2,671) | ||
Measurement period adjustments for acquisitions | (1,235) | (2,716) | |
Foreign currency translation adjustments | (829) | (2,959) | |
Balance, end of year | 366,508 | 310,604 | |
Operating Segments | Incentives & Rewards | GiftCards | |||
Goodwill | |||
Goodwill acquired during period | 33,279 | ||
Operating Segments | Incentives & Rewards | NimbleCommerce | |||
Goodwill | |||
Goodwill acquired during period | 0 | ||
Operating Segments | Incentives & Rewards | Extrameasures | |||
Goodwill | |||
Goodwill acquired during period | 27,360 | ||
Operating Segments | Incentives & Rewards | Grass Roots, Inc. | |||
Goodwill | |||
Goodwill acquired during period | 0 | ||
Operating Segments | Incentives & Rewards | Samba | |||
Goodwill | |||
Goodwill acquired during period | 0 | ||
Operating Segments | Incentives & Rewards | Spafinder | |||
Goodwill | |||
Goodwill acquired during period | $ 0 | ||
Operating Segments | Incentives & Rewards | Didix | |||
Goodwill | |||
Goodwill acquired during period | 0 | ||
Operating Segments | Incentives & Rewards | Achievers Corp. | |||
Goodwill | |||
Goodwill acquired during period | $ 59,893 | ||
ECommerce | |||
Goodwill | |||
Number of operating segments | segment | 2 |
Goodwill and Other Intangible63
Goodwill and Other Intangible Assets - Summary of Intangible Assets (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Finite-Lived Intangible Assets | ||
Intangible assets, gross | $ 475,847 | $ 305,799 |
Accumulated amortization | (125,662) | (64,901) |
Total amortization | $ 350,185 | $ 240,898 |
Distribution Partner Relationships | ||
Finite-Lived Intangible Assets | ||
Weighted average remaining life (in years) | 6 years | 10 years |
Intangible assets, gross | $ 62,012 | $ 63,084 |
Accumulated amortization | (27,421) | (18,953) |
Total amortization | $ 34,591 | $ 44,131 |
Customer Relationships, Including Backlog | ||
Finite-Lived Intangible Assets | ||
Weighted average remaining life (in years) | 10 years | 13 years |
Intangible assets, gross | $ 385,653 | $ 231,419 |
Accumulated amortization | (90,218) | (40,990) |
Total amortization | $ 295,435 | $ 190,429 |
Patents | ||
Finite-Lived Intangible Assets | ||
Weighted average remaining life (in years) | 7 years | 3 years |
Intangible assets, gross | $ 6,944 | $ 5,315 |
Accumulated amortization | (4,547) | (3,440) |
Total amortization | $ 2,397 | $ 1,875 |
Domain Names, Trade Names and Other Intangibles | ||
Finite-Lived Intangible Assets | ||
Weighted average remaining life (in years) | 10 years | 9 years |
Intangible assets, gross | $ 21,238 | $ 5,981 |
Accumulated amortization | (3,476) | (1,518) |
Total amortization | $ 17,762 | $ 4,463 |
Goodwill and Other Intangible64
Goodwill and Other Intangible Assets - Summary of Intangible Amortization Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Finite-Lived Intangible Assets | |||
Amortization of acquisition intangibles | $ 62,045 | $ 32,366 | $ 24,371 |
Partner Distribution Expense | |||
Finite-Lived Intangible Assets | |||
Amortization of acquisition intangibles | 4,863 | 4,695 | 4,544 |
Processing and Services | |||
Finite-Lived Intangible Assets | |||
Amortization of acquisition intangibles | 122 | 121 | 122 |
Amortization of Acquisition Intangibles | |||
Finite-Lived Intangible Assets | |||
Amortization of acquisition intangibles | $ 57,060 | $ 27,550 | $ 19,705 |
Goodwill and Other Intangible65
Goodwill and Other Intangible Assets - Summary of Future Intangible Asset Amortization (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Finite-Lived Intangible Assets | ||
2,017 | $ 62,501 | |
2,018 | 47,931 | |
2,019 | 40,249 | |
2,020 | 36,621 | |
2,021 | 33,426 | |
Thereafter | 129,457 | |
Total amortization | 350,185 | $ 240,898 |
Partner Distribution Expense | ||
Finite-Lived Intangible Assets | ||
2,017 | 4,861 | |
2,018 | 2,415 | |
2,019 | 538 | |
2,020 | 538 | |
2,021 | 83 | |
Thereafter | 0 | |
Total amortization | 8,435 | |
Processing and Services | ||
Finite-Lived Intangible Assets | ||
2,017 | 141 | |
2,018 | 50 | |
2,019 | 22 | |
2,020 | 14 | |
2,021 | 6 | |
Thereafter | 70 | |
Total amortization | 303 | |
Amortization of Acquisition Intangibles | ||
Finite-Lived Intangible Assets | ||
2,017 | 57,499 | |
2,018 | 45,466 | |
2,019 | 39,689 | |
2,020 | 36,069 | |
2,021 | 33,337 | |
Thereafter | 129,387 | |
Total amortization | $ 341,447 |
Equity Incentive Plans and St66
Equity Incentive Plans and Stock Based Compensation (Detail) - USD ($) | Dec. 14, 2012 | May 31, 2015 | Mar. 31, 2013 | Mar. 31, 2010 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | Dec. 28, 2013 | Feb. 28, 2007 | Feb. 28, 2006 |
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Stock-based compensation expense | $ 32,592,000 | $ 30,130,000 | $ 15,390,000 | |||||||
Dividends declared, common stock (in usd per share) | $ 1.369 | |||||||||
Stock Options and Stock Appreciation Rights | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Weighted average grant-date fair value of stock options and stock appreciation rights | $ 11.98 | $ 13.26 | $ 8.56 | |||||||
Stock-based compensation expense | $ 7,200,000 | $ 7,700,000 | $ 5,500,000 | |||||||
Unamortized stock-based expense | $ 8,000,000 | |||||||||
Unrecognized compensation expense recognition weighted average period | 1 year 8 months 31 days | |||||||||
Intrinsic value of the options exercised | $ 5,600,000 | 21,700,000 | 9,800,000 | |||||||
Restricted Stock and Restricted Stock Units Awards | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Stock-based compensation expense | 23,400,000 | 17,200,000 | 8,000,000 | |||||||
Unamortized stock-based expense | $ 49,000,000 | |||||||||
Unrecognized compensation expense recognition weighted average period | 2 years 6 months | |||||||||
Fair value of restricted stock awards , vested | $ 18,400,000 | 13,800,000 | 4,400,000 | |||||||
Performance Stock Units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Stock-based compensation expense | 2,400,000 | 4,000,000 | 1,100,000 | |||||||
Unamortized stock-based expense | $ 3,200,000 | |||||||||
Unrecognized compensation expense recognition weighted average period | 8 months | |||||||||
Fair value of restricted stock awards , vested | 0 | 0 | ||||||||
2013 Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Common stock approved for issuance | 3,000,000 | |||||||||
Increase in authorized shares of common stock available for grants | 4,000,000 | |||||||||
Shares available for grant | 3,105,000 | |||||||||
2013 Employee Stock Purchase Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Common stock approved for issuance | 2,000,000 | |||||||||
Employee stock purchase plan, percentage of discount for purchase of shares | 15.00% | |||||||||
Percentage of shares available for issuance | 1.00% | |||||||||
2013 Employee Stock Purchase Plan | Employee Stock | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Shares available for grant | 1,571,700 | |||||||||
Stock-based compensation expense | $ 1,700,000 | $ 1,200,000 | $ 800,000 | |||||||
Shares purchased under employee stock purchase plan | 193,092 | 124,324 | 110,865 | |||||||
2007 Stock and Stock Appreciation Right Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Common stock approved for issuance | 4,500,000 | 2,500,000 | ||||||||
Increase in authorized shares of common stock available for grants | 500,000 | 1,500,000 | ||||||||
2006 Restricted Stock Plans | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Common stock approved for issuance | 1,500,000 | 1,250,000 | ||||||||
Increase in authorized shares of common stock available for grants | 250,000 | |||||||||
Minimum | 2007 Stock and Stock Appreciation Right Plan | Stock Options and Stock Appreciation Rights | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Award vesting period (in years) | 4 years | |||||||||
Minimum | 2006 Restricted Stock Plans | Restricted Stock and Restricted Stock Units Awards | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Award vesting period (in years) | 4 years | |||||||||
Maximum | 2007 Stock and Stock Appreciation Right Plan | Stock Options and Stock Appreciation Rights | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Award vesting period (in years) | 5 years | |||||||||
Maximum | 2006 Restricted Stock Plans | Restricted Stock and Restricted Stock Units Awards | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Award vesting period (in years) | 5 years |
Equity Incentive Plans and St67
Equity Incentive Plans and Stock Based Compensation - Assumptions Used to Value Option Grants (Detail) | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
2013 Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Expected term (in years) | 6 months 6 days | 6 months 6 days | 6 months 6 days |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
2013 Employee Stock Purchase Plan | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Expected volatility | 30.12% | 32.40% | 30.30% |
Risk-free rate | 0.40% | 0.40% | 0.10% |
2013 Employee Stock Purchase Plan | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Expected volatility | 36.72% | 34.96% | 32.33% |
Risk-free rate | 0.50% | 0.50% | 0.30% |
Stock Options and Stock Appreciation Rights | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Expected term (in years) | 5 years | 5 years | 5 years |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Stock Options and Stock Appreciation Rights | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Expected volatility | 34.80% | 36.60% | 32.60% |
Risk-free rate | 1.10% | 1.40% | 1.50% |
Stock Options and Stock Appreciation Rights | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Expected volatility | 34.90% | 37.30% | 33.50% |
Risk-free rate | 1.90% | 1.70% | 1.70% |
Equity Incentive Plans and St68
Equity Incentive Plans and Stock Based Compensation - Summary of Stock Option and Stock Appreciation Right Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Jan. 02, 2016 | |
Stock Options and Appreciation Rights (in shares) | ||
Balance at beginning of the period (in shares) | 2,937,730 | |
Granted (in shares) | 600,150 | |
Canceled (in shares) | (147,683) | |
Exercised (in shares) | (324,904) | |
Balance at end of the period (in shares) | 3,065,293 | 2,937,730 |
Exercisable at period end (in shares) | 1,643,221 | |
Vested and expected to vest at period end (in shares) | 3,065,293 | |
Weighted Average Exercise Price | ||
Balance at beginning of the period (in usd per share) | $ 23.68 | |
Granted (in usd per share) | 37.82 | |
Canceled (in usd per share) | 34.18 | |
Exercised (in usd per share) | 17.80 | |
Balance at end of the period (in usd per share) | 26.57 | $ 23.68 |
Exercisable at period end (in usd per share) | 20.76 | |
Vested and expected to vest at period end (in usd per share) | $ 26.57 | |
Weighted Average Remaining Contractual Life (in years) | ||
Outstanding at end of the period (in years) | 3 years 7 months 9 days | 3 years 10 months 24 days |
Exercisable at period end (in years) | 2 years 3 months 19 days | |
Vested and expected to vest at period end (in years) | 3 years 7 months 9 days | |
Aggregate Intrinsic Value (in thousands) | ||
Oustanding at end of the period (in usd) | $ 35,381 | $ 60,313 |
Exercisable at period end (in usd) | 27,999 | |
Vested and expected to vest at period end (in usd) | $ 35,381 |
Equity Incentive Plans and St69
Equity Incentive Plans and Stock Based Compensation - Restricted Stock and Restricted Stock Awards (Detail) - Restricted Stock And Restricted Stock Unit | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Restricted Stock and Restricted Stock Unit Awards | |
Balance at beginning of the period (in shares) | shares | 1,631,333 |
Granted (in shares) | shares | 1,210,540 |
Vested (in shares) | shares | (514,786) |
Forfeited (in shares) | shares | (345,433) |
Balance at end of the period (in shares) | shares | 1,981,654 |
Weighted Average Grant-Date Fair Value | |
Balance at beginning of the period (in usd per unit) | $ / shares | $ 33.10 |
Granted (in usd per share) | $ / shares | 37.08 |
Vested (in usd per share) | $ / shares | 31.66 |
Forfeited (in usd per share) | $ / shares | 35.55 |
Balance at end of the period (in usd per unit) | $ / shares | $ 35.45 |
Equity Incentive Plans and St70
Equity Incentive Plans and Stock Based Compensation - Changes in Performance Stock Unit Awards (Detail) - Performance Stock Units | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Performance Stock Unit Awards | |
Balance at beginning of the period (in shares) | shares | 341,445 |
Granted (in shares) | shares | 172,300 |
Vested (in shares) | shares | (7,155) |
Forfeited (in shares) | shares | (178,484) |
Balance at end of the period (in shares) | shares | 328,106 |
Weighted Average Grant-Date Fair Value | |
Balance at beginning of the period (in usd per unit) | $ / shares | $ 31.21 |
Granted (in usd per share) | $ / shares | 38.85 |
Vested (in usd per share) | $ / shares | 26.73 |
Forfeited (in usd per share) | $ / shares | 35.34 |
Balance at end of the period (in usd per unit) | $ / shares | $ 33.07 |
Equity Incentive Plans and St71
Equity Incentive Plans and Stock Based Compensation - Summary of Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||
Total stock-based compensation expense | $ 32,592 | $ 30,130 | $ 15,390 |
Stock-based compensation capitalized | 2,100 | ||
Processing and Services | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||
Total stock-based compensation expense | 5,831 | 6,594 | 3,597 |
Sales and Marketing | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||
Total stock-based compensation expense | 10,856 | 8,536 | 5,153 |
Cost of Products Sold | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||
Total stock-based compensation expense | 102 | 37 | 43 |
General and Administrative | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||
Total stock-based compensation expense | $ 15,803 | $ 14,963 | $ 6,597 |
Equity Awards Issued to Retai72
Equity Awards Issued to Retail Distribution Partners - Warrants Issued to Distribution Partners (Detail) - USD ($) $ / shares in Units, $ in Thousands | Apr. 30, 2013 | Apr. 24, 2013 | Nov. 30, 2015 | Apr. 30, 2015 | Nov. 30, 2014 | Apr. 30, 2013 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | Mar. 31, 2015 | Jan. 31, 2015 | Dec. 28, 2013 | Nov. 30, 2010 |
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Recognized expense for shares issued | $ 0 | $ 0 | $ 1,312 | ||||||||||
Intangible assets recognized for the issuance of fully vested warrants | $ 0 | $ 3,147 | $ 0 | ||||||||||
Common Stock | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Exercise of warrant (in shares) | 1,161,000 | 316,000 | |||||||||||
Distribution Partner One | Warrant One | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Fair value of the warrants | $ 14,900 | ||||||||||||
Amortization period of intangible assets | 5 years | ||||||||||||
Distribution Partner One | Warrant Two | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Fair value of the warrants | $ 100 | ||||||||||||
Distribution Partner One | Common Stock | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Exercise of warrant (in shares) | 859,757 | ||||||||||||
Distribution Partner One | Common Stock | Warrant One | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Warrant issued to partner | 1,500,000 | 1,500,000 | |||||||||||
Exercise price of warrant | $ 20 | $ 20 | |||||||||||
Exercise period of warrant | 181 days | ||||||||||||
Distribution Partner One | Common Stock | Warrant Two | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Warrant issued to partner | 15,306 | 15,306 | |||||||||||
Exercise price of warrant | $ 20 | $ 20 | |||||||||||
Distribution Partner Two | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Recognized expense for shares issued | $ 1,300 | ||||||||||||
Intangible assets recognized for the issuance of fully vested warrants | $ 3,100 | ||||||||||||
Distribution Partner Two | Common Stock | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Warrant issued to partner | 550,000 | 383,748 | 1,100,000 | ||||||||||
Exercise price of warrant | $ 16.30 | $ 16.30 | |||||||||||
Number of incremental securities called by warrants | 166,252 | ||||||||||||
Exercise of warrant (in shares) | 301,662 | ||||||||||||
Distribution Partner Two | Common Stock | Vested Minimum Issuable | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Warrant issued to partner | 383,748 | 288,494 | 181,500 | ||||||||||
Distribution Partner Three | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Intangible assets recognized for the issuance of fully vested warrants | $ 7,300 | ||||||||||||
Distribution Partner Three | Common Stock | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||||
Warrant issued to partner | 750,000 | 750,000 | |||||||||||
Exercise price of warrant | $ 20 | $ 20 | |||||||||||
Exercise period of warrant | 181 days | ||||||||||||
Exercise of warrant (in shares) | 315,972 |
Equity Awards Issued to Retai73
Equity Awards Issued to Retail Distribution Partners - Components of Distribution Partner Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award | |||
Total distribution partner stock-based compensation expense | $ 0 | $ 0 | $ 1,312 |
Partner Distribution Expense | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Total distribution partner stock-based compensation expense | 4,863 | 4,695 | 5,856 |
Mark To Market Adjustments | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Total distribution partner stock-based compensation expense | 0 | 0 | 1,312 |
Amortization Of Intangible Assets | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Total distribution partner stock-based compensation expense | $ 4,863 | $ 4,695 | $ 4,544 |
Income Taxes - Components of In
Income Taxes - Components of Income before Income Tax Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ (3,533) | $ 72,298 | $ 68,661 |
Foreign | 4,469 | 307 | 4,254 |
Income before income tax expense (benefit) | $ 936 | $ 72,605 | $ 72,915 |
Income Taxes - Components of 75
Income Taxes - Components of Income Tax Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Current: | |||
Federal | $ (1,215) | $ (6,403) | $ 32,944 |
State | 949 | (942) | 4,374 |
Foreign | 5,063 | 4,331 | 1,997 |
Total current | 4,797 | (3,014) | 39,315 |
Deferred: | |||
Federal | (3,186) | 28,650 | (10,080) |
State | (1,275) | 6,003 | (372) |
Foreign | (4,438) | (4,843) | (1,373) |
Total deferred | (8,899) | 29,810 | (11,825) |
Income tax expense (benefit) | $ (4,102) | $ 26,796 | $ 27,490 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Provision for Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Amount | |||
Income tax expense at federal statutory rate | $ 327 | $ 25,412 | $ 25,520 |
State income taxes net of federal benefit | 439 | 3,469 | 2,965 |
Foreign rate differential | (939) | (773) | (865) |
Mark to market on redeemable common stock | 0 | 0 | 88 |
Change in fair value of contingent consideration | 0 | (2,978) | (1,479) |
Compensation subject to certain limits | 894 | 1,180 | 737 |
Stock-based compensation | (956) | 316 | 224 |
Acquisition related | (2,945) | 758 | 702 |
R&D credits | (1,440) | (1,130) | (604) |
Other | 518 | 542 | 202 |
Income tax expense (benefit) | $ (4,102) | $ 26,796 | $ 27,490 |
Rate | |||
Income tax expense at federal statutory rate | 35.00% | 35.00% | 35.00% |
State income taxes net of federal benefit | 46.90% | 4.80% | 4.00% |
Foreign rate differential | (100.30%) | (1.10%) | (1.10%) |
Mark to market on redeemable common stock | 0.00% | 0.00% | 0.10% |
Change in fair value of contingent consideration | 0.00% | (4.10%) | (2.00%) |
Compensation subject to certain limits | 95.50% | 1.60% | 1.00% |
Stock-based compensation | (102.10%) | 0.40% | 0.30% |
Acquisition related | (314.60%) | 1.00% | 1.00% |
R&D credits | (153.90%) | (1.50%) | (0.80%) |
Other | 55.20% | 0.80% | 0.20% |
Total effective tax rate | (438.30%) | 36.90% | 37.70% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets (Liabilities) (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Jan. 02, 2016 |
Deferred tax assets: | ||
Depreciation and amortization | $ 217,497 | $ 239,555 |
Net operating loss carryforwards | 49,473 | 42,290 |
Accrued expenses | 4,932 | 8,705 |
Non-deductible reserves | 9,450 | 9,509 |
Deferred revenue | 29,803 | 11,031 |
Stock-based compensation | 21,497 | 12,815 |
Convertible debt | 4,636 | 0 |
Other | 8,622 | 3,689 |
Deferred tax assets | 345,910 | 327,594 |
Valuation allowance | (8,283) | (3,712) |
Total deferred tax assets | 337,627 | 323,882 |
Deferred tax liabilities: | ||
Prepaids | (3,212) | (2,976) |
Total deferred tax liabilities | (3,212) | (2,976) |
Net deferred tax assets | 334,415 | 320,906 |
Balance sheet presentation: | ||
Long-term deferred tax assets | 362,302 | 339,558 |
Long-term deferred tax liabilities | (27,887) | (18,652) |
Net deferred tax assets | $ 334,415 | $ 320,906 |
Income Taxes (Detail)
Income Taxes (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Operating Loss Carryforwards | |||
Change in DTA valuation allowance | $ 4.6 | ||
Undistributed earnings from foreign operations | 43.9 | ||
Unrecognized tax benefits | 11.3 | $ 10.4 | |
Interest and penalties on unrecognized tax benefits | 0.4 | (0.1) | $ 0.2 |
Accrued interest and penalties | $ 1.6 | $ 1.2 | |
Internal Revenue Service (IRS) [Member] | |||
Operating Loss Carryforwards | |||
Net operating loss carryforwards expire beginning year | 2,018 | ||
Net operating loss carryforwards | $ 107.4 | ||
State Jurisdiction | |||
Operating Loss Carryforwards | |||
Net operating loss carryforwards expire beginning year | 2,028 | ||
Net operating loss carryforwards | $ 21.4 | ||
Net operating loss carryforwards expire ending year | 2,034 | ||
Net operating loss carryforwards expire year | 2,028 | ||
Foreign Tax Authority | |||
Operating Loss Carryforwards | |||
Net operating loss carryforwards expire beginning year | 2,017 | ||
Net operating loss carryforwards | $ 58.3 | ||
Net operating loss carryforwards expire ending year | 2,036 | ||
Net operating loss carryforwards subject to expiration | $ 4.8 |
Income Taxes - Summary of Unrec
Income Taxes - Summary of Unrecognized Tax Benefit (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Reconciliation of Unrecognized Tax Benefits | |||
Gross unrecognized tax benefits, beginning balance | $ 12,680 | $ 3,808 | $ 3,057 |
Increase for tax position from prior fiscal years and current year acquisitions | 977 | 8,633 | 0 |
Decrease for tax position from prior fiscal years | (388) | (446) | (38) |
Increases for tax positions taken during current fiscal year | 760 | 938 | 789 |
Lapses of statutes of limitations | (41) | (161) | 0 |
Foreign exchange rate difference | (111) | (92) | 0 |
Gross unrecognized tax benefits, ending balance | $ 13,877 | $ 12,680 | $ 3,808 |
Commitments and Contingencies80
Commitments and Contingencies (Detail) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 26, 2016 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Option to extend lease period | 5 years | |||
Capital lease obligations | $ 0 | |||
Rental expense for noncancelable operating leases | 17,200,000 | $ 10,500,000 | $ 8,900,000 | |
Foreign Tax Authority | ||||
Loss Contingencies | ||||
Estimate of possible tax liability | $ 5,000,000 | $ 12,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Operating Lease Payments (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 17,832 |
2,018 | 14,857 |
2,019 | 11,972 |
2,020 | 11,430 |
2,021 | 10,300 |
Thereafter | 37,601 |
Total minimum lease payments | $ 103,992 |
Commitments and Contingencies82
Commitments and Contingencies - Schedule of Future Distribution Partners Commitments (Details) - Future Distribution Partner Commitments $ in Thousands | Dec. 31, 2016USD ($) |
Other Commitments | |
2,017 | $ 43,459 |
2,018 | 28,875 |
2,019 | 22,793 |
2,020 | 4,117 |
2,021 | 1,393 |
Distribution partner commitments (uncertainty in timing of future payments) | 13,594 |
Total | $ 114,231 |
Segment Reporting and Enterpr83
Segment Reporting and Enterprise-Wide Disclosures (Detail) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 26, 2016segment | Dec. 31, 2016USD ($)segment | Jan. 02, 2016USD ($) | Jan. 03, 2015 | |
Segment Reporting Information | ||||
Number of reportable segments | segment | 3 | |||
Settlement Assets, Current | $ 641,691 | $ 626,077 | ||
Sales | ||||
Segment Reporting Information | ||||
Percent of total revenue | 100.00% | 100.00% | 100.00% | |
Distribution Partner One | Sales | ||||
Segment Reporting Information | ||||
Percent of total revenue | 12.00% | 12.00% | 14.00% | |
Settlement Assets, Current | $ 26,900 | $ 25,600 | ||
Distribution Partner Two | Sales | ||||
Segment Reporting Information | ||||
Percent of total revenue | 7.00% | 5.00% | 7.00% | |
Settlement Assets, Current | $ 14,500 | $ 14,400 | ||
Distribution Partner Three | Sales | ||||
Segment Reporting Information | ||||
Percent of total revenue | 5.00% | 9.00% | 11.00% | |
Settlement Assets, Current | $ 28,000 | $ 36,600 | ||
Banks | Sales | ||||
Segment Reporting Information | ||||
Percent of total revenue | 13.00% | 15.00% | 12.00% | |
Outstanding receivables | $ 91,300 | $ 97,600 | ||
Content Provider | Sales | ||||
Segment Reporting Information | ||||
Percent of total revenue | 13.00% | 14.00% | 14.00% | |
ECommerce | ||||
Segment Reporting Information | ||||
Number of operating segments | segment | 2 |
Segment Reporting and Enterpr84
Segment Reporting and Enterprise-Wide Disclosures - Schedule of Segment Revenue (Detail) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 12 Months Ended | ||||||||
Sep. 10, 2016 | Jun. 18, 2016 | Mar. 26, 2016 | Sep. 12, 2015 | Jun. 20, 2015 | Mar. 28, 2015 | Dec. 31, 2016 | Jan. 02, 2016 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Segment Reporting Information | |||||||||||
Total operating revenues | $ 361,560 | $ 391,206 | $ 366,462 | $ 352,665 | $ 372,248 | $ 319,731 | $ 780,550 | $ 756,434 | $ 1,899,778 | $ 1,801,078 | $ 1,444,963 |
Partner distribution expense | 933,142 | 874,043 | 762,245 | ||||||||
Operating revenue net of distribution partner expense | 966,636 | 927,035 | 682,718 | ||||||||
Other operating expenses | 943,387 | 839,289 | 603,972 | ||||||||
OPERATING INCOME | $ (10,093) | $ (14,977) | $ (3,044) | $ (2,250) | $ 10,206 | $ 10,915 | $ 51,363 | $ 68,875 | 23,249 | 87,746 | 78,746 |
Other income (expense) | (22,313) | (15,141) | (5,831) | ||||||||
Income before income tax expense (benefit) | 936 | 72,605 | 72,915 | ||||||||
Operating Segments | US Retail | |||||||||||
Segment Reporting Information | |||||||||||
Total operating revenues | 1,125,757 | 1,165,828 | 1,027,936 | ||||||||
Partner distribution expense | 595,893 | 577,661 | 526,752 | ||||||||
Operating revenue net of distribution partner expense | 529,864 | 588,167 | 501,184 | ||||||||
Other operating expenses | 311,311 | 324,928 | 282,587 | ||||||||
OPERATING INCOME | 218,553 | 263,239 | 218,597 | ||||||||
Significant noncash charges | 6,822 | 5,446 | 5,431 | ||||||||
Operating Segments | International | |||||||||||
Segment Reporting Information | |||||||||||
Total operating revenues | 484,881 | 423,285 | 339,444 | ||||||||
Partner distribution expense | 316,571 | 279,435 | 226,867 | ||||||||
Operating revenue net of distribution partner expense | 168,310 | 143,850 | 112,577 | ||||||||
Other operating expenses | 132,242 | 121,579 | 94,339 | ||||||||
OPERATING INCOME | 36,068 | 22,271 | 18,238 | ||||||||
Significant noncash charges | 2,358 | 1,454 | 2,110 | ||||||||
Operating Segments | Incentives & Rewards | |||||||||||
Segment Reporting Information | |||||||||||
Total operating revenues | 289,140 | 211,965 | 77,583 | ||||||||
Partner distribution expense | 20,678 | 16,947 | 8,626 | ||||||||
Operating revenue net of distribution partner expense | 268,462 | 195,018 | 68,957 | ||||||||
Other operating expenses | 230,911 | 180,900 | 59,679 | ||||||||
OPERATING INCOME | 37,551 | 14,118 | 9,278 | ||||||||
Significant noncash charges | 17,496 | 13,862 | 3,812 | ||||||||
Corporate and Unallocated | |||||||||||
Segment Reporting Information | |||||||||||
Total operating revenues | 0 | 0 | 0 | ||||||||
Partner distribution expense | 0 | 0 | 0 | ||||||||
Operating revenue net of distribution partner expense | 0 | 0 | 0 | ||||||||
Other operating expenses | 268,923 | 211,882 | 167,367 | ||||||||
OPERATING INCOME | $ (268,923) | $ (211,882) | $ (167,367) |
Segment Reporting and Enterpr85
Segment Reporting and Enterprise-Wide Disclosures - Schedule of Revenue by Product (Details) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 12 Months Ended | ||||||||
Sep. 10, 2016 | Jun. 18, 2016 | Mar. 26, 2016 | Sep. 12, 2015 | Jun. 20, 2015 | Mar. 28, 2015 | Dec. 31, 2016 | Jan. 02, 2016 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Segment Reporting Information | |||||||||||
Operating revenues | $ 361,560 | $ 391,206 | $ 366,462 | $ 352,665 | $ 372,248 | $ 319,731 | $ 780,550 | $ 756,434 | $ 1,899,778 | $ 1,801,078 | $ 1,444,963 |
Retail | |||||||||||
Segment Reporting Information | |||||||||||
Operating revenues | 1,383,499 | 1,453,129 | 1,263,235 | ||||||||
Incentives | |||||||||||
Segment Reporting Information | |||||||||||
Operating revenues | 289,140 | 211,964 | 77,583 | ||||||||
Other | |||||||||||
Segment Reporting Information | |||||||||||
Operating revenues | $ 227,139 | $ 135,985 | $ 104,145 | ||||||||
Sales | |||||||||||
Segment Reporting Information | |||||||||||
Percent of total revenue | 100.00% | 100.00% | 100.00% | ||||||||
Sales | Retail | |||||||||||
Segment Reporting Information | |||||||||||
Percent of total revenue | 72.80% | 80.70% | 87.40% | ||||||||
Sales | Incentives | |||||||||||
Segment Reporting Information | |||||||||||
Percent of total revenue | 15.20% | 11.80% | 5.40% | ||||||||
Sales | Other | |||||||||||
Segment Reporting Information | |||||||||||
Percent of total revenue | 12.00% | 7.50% | 7.20% |
Segment Reporting and Enterpr86
Segment Reporting and Enterprise-Wide Disclosures - Schedule of Revenue and Long-Lived Assets by Geographic Location (Detail) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 12 Months Ended | ||||||||
Sep. 10, 2016 | Jun. 18, 2016 | Mar. 26, 2016 | Sep. 12, 2015 | Jun. 20, 2015 | Mar. 28, 2015 | Dec. 31, 2016 | Jan. 02, 2016 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Segment Reporting Information | |||||||||||
Operating revenues | $ 361,560 | $ 391,206 | $ 366,462 | $ 352,665 | $ 372,248 | $ 319,731 | $ 780,550 | $ 756,434 | $ 1,899,778 | $ 1,801,078 | $ 1,444,963 |
Long-lived assets | $ 172,381 | $ 159,357 | $ 172,381 | $ 159,357 | $ 130,008 | ||||||
Percent of total long-lived assets | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | ||||||
Sales | |||||||||||
Segment Reporting Information | |||||||||||
Percent of total revenue | 100.00% | 100.00% | 100.00% | ||||||||
United States | |||||||||||
Segment Reporting Information | |||||||||||
Operating revenues | $ 1,382,188 | $ 1,352,872 | $ 1,097,791 | ||||||||
Long-lived assets | $ 149,042 | $ 136,646 | $ 149,042 | $ 136,646 | $ 125,331 | ||||||
Percent of total long-lived assets | 86.50% | 85.70% | 86.50% | 85.70% | 96.40% | ||||||
United States | Sales | |||||||||||
Segment Reporting Information | |||||||||||
Percent of total revenue | 72.80% | 75.10% | 76.00% | ||||||||
Non-US [Member] | |||||||||||
Segment Reporting Information | |||||||||||
Operating revenues | $ 517,590 | $ 448,206 | $ 347,172 | ||||||||
Long-lived assets | $ 23,339 | $ 22,711 | $ 23,339 | $ 22,711 | $ 4,677 | ||||||
Percent of total long-lived assets | 13.50% | 14.30% | 13.50% | 14.30% | 3.60% | ||||||
Non-US [Member] | Sales | |||||||||||
Segment Reporting Information | |||||||||||
Percent of total revenue | 27.20% | 24.90% | 24.00% |
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 | 4 Months Ended | 12 Months Ended | ||||||||
Sep. 10, 2016 | Jun. 18, 2016 | Mar. 26, 2016 | Sep. 12, 2015 | Jun. 20, 2015 | Mar. 28, 2015 | Dec. 31, 2016 | Jan. 02, 2016 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Earnings Per Share [Abstract] | |||||||||||
Net income attributable to Blackhawk Network Holdings, Inc. | $ (5,102) | $ (11,337) | $ (3,553) | $ (3,615) | $ 2,904 | $ 4,706 | $ 24,650 | $ 41,614 | $ 4,658 | $ 45,609 | $ 45,547 |
Basic | |||||||||||
Distributed and undistributed earnings allocated to participating securities | (28) | (151) | (232) | ||||||||
Net income attributable to common stockholders | $ 4,630 | $ 45,458 | $ 45,315 | ||||||||
Weighted-average common shares outstanding | 55,734 | 54,294 | 52,531 | ||||||||
Basic earnings per share (in usd per share) | $ (0.09) | $ (0.20) | $ (0.06) | $ (0.07) | $ 0.05 | $ 0.09 | $ 0.44 | $ 0.75 | $ 0.08 | $ 0.84 | $ 0.86 |
Diluted | |||||||||||
Distributed and undistributed earnings allocated to participating securities | $ (28) | $ (147) | $ (226) | ||||||||
Net income attributable to common stockholders | $ 4,630 | $ 45,462 | $ 45,321 | ||||||||
Weighted-average common shares outstanding | 55,734 | 54,294 | 52,531 | ||||||||
Common share equivalents | 1,526 | 2,019 | 1,778 | ||||||||
Weighted-average shares outstanding | 57,260 | 56,313 | 54,309 | ||||||||
Diluted earnings per share (in usd per share) | $ (0.09) | $ (0.20) | $ (0.06) | $ (0.07) | $ 0.05 | $ 0.08 | $ 0.43 | $ 0.73 | $ 0.08 | $ 0.81 | $ 0.83 |
Antidilutive securities excluded from computation of earnings per share | 1,663 | 500 | 500 |
Related-Party Transactions - Sc
Related-Party Transactions - Schedule of Related Party Revenues and Expenses (Detail) - USD ($) $ in Thousands | 4 Months Ended | 12 Months Ended | ||
Apr. 30, 2015 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
OPERATING REVENUES: | ||||
Commissions and fees | $ 1,315,755 | $ 1,259,801 | $ 1,107,782 | |
Program and other fees | 336,317 | 268,661 | 155,489 | |
Product sales | 153,408 | 167,745 | 116,924 | |
OPERATING EXPENSES: | ||||
Partner distribution expense | 933,142 | 874,043 | 762,245 | |
Processing and services | 355,268 | 304,232 | 221,501 | |
General and administrative | 99,428 | 92,172 | 64,029 | |
OTHER INCOME (EXPENSE): | ||||
Interest expense | $ (21,864) | (13,171) | (5,647) | |
Related Party through Influence | ||||
OPERATING REVENUES: | ||||
Commissions and fees | 72 | 710 | ||
Program and other fees | 471 | 2,426 | ||
Product sales | 1,323 | 4,031 | ||
Total operating revenues | $ 1,900 | 1,866 | 7,167 | |
OPERATING EXPENSES: | ||||
Partner distribution expense | 17,100 | 17,069 | 61,283 | |
Processing and services | (288) | (625) | ||
General and administrative | $ 600 | 607 | 1,856 | |
Total operating expenses | 17,388 | 62,514 | ||
OTHER INCOME (EXPENSE): | ||||
Interest expense | $ 0 | $ (50) |
Related-Party Transactions (Det
Related-Party Transactions (Detail) - USD ($) $ in Thousands | 4 Months Ended | 12 Months Ended | ||
Apr. 30, 2015 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Related Party Transaction | ||||
Partner distribution expense | $ 933,142 | $ 874,043 | $ 762,245 | |
General and administrative | 99,428 | 92,172 | 64,029 | |
Revenue from certain equity method investments | $ 300 | 300 | ||
Related Party through Influence | ||||
Related Party Transaction | ||||
Partner distribution expense | $ 17,100 | 17,069 | 61,283 | |
Revenue from related parties | 1,900 | 1,866 | 7,167 | |
General and administrative | $ 600 | $ 607 | $ 1,856 |
Selected Quarterly Financial 90
Selected Quarterly Financial Data (Unaudited) - Summary of Quarterly Financial Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 4 Months Ended | 12 Months Ended | ||||||||
Sep. 10, 2016 | Jun. 18, 2016 | Mar. 26, 2016 | Sep. 12, 2015 | Jun. 20, 2015 | Mar. 28, 2015 | Dec. 31, 2016 | Jan. 02, 2016 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Operating revenues | $ 361,560 | $ 391,206 | $ 366,462 | $ 352,665 | $ 372,248 | $ 319,731 | $ 780,550 | $ 756,434 | $ 1,899,778 | $ 1,801,078 | $ 1,444,963 |
Operating income (loss) | (10,093) | (14,977) | (3,044) | (2,250) | 10,206 | 10,915 | 51,363 | 68,875 | 23,249 | 87,746 | 78,746 |
Net income attributable to Blackhawk Network Holdings, Inc. | $ (5,102) | $ (11,337) | $ (3,553) | $ (3,615) | $ 2,904 | $ 4,706 | $ 24,650 | $ 41,614 | $ 4,658 | $ 45,609 | $ 45,547 |
EARNINGS PER SHARE: | |||||||||||
Basic (in usd per share) | $ (0.09) | $ (0.20) | $ (0.06) | $ (0.07) | $ 0.05 | $ 0.09 | $ 0.44 | $ 0.75 | $ 0.08 | $ 0.84 | $ 0.86 |
Diluted (in usd per share) | $ (0.09) | $ (0.20) | $ (0.06) | $ (0.07) | $ 0.05 | $ 0.08 | $ 0.43 | $ 0.73 | $ 0.08 | $ 0.81 | $ 0.83 |