Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 30, 2017 | Feb. 20, 2018 | Jun. 17, 2017 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 30, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | BLACKHAWK NETWORK HOLDINGS, INC | ||
Entity Central Index Key | 1,411,488 | ||
Current Fiscal Year End Date | --12-30 | ||
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 | 56,579,000 | ||
Entity Public Float | $ 2.3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 30, 2017 | Dec. 31, 2016 | |
Statement of Financial Position [Abstract] | ||
Weighted average shares outstanding—basic (in shares) | 56,287 | 55,734 |
Current assets: | ||
Cash and cash equivalents | $ 1,096,195 | $ 1,008,125 |
Restricted cash | 135,345 | 10,793 |
Settlement receivables, net | 1,038,347 | 641,691 |
Accounts receivable, net | 184,994 | 262,672 |
Other current assets | 165,374 | 131,375 |
Total current assets | 2,620,255 | 2,054,656 |
Property, equipment and technology, net | 172,607 | 172,381 |
Intangible assets, net | 431,681 | 350,185 |
Goodwill | 563,405 | 570,398 |
Deferred income taxes | 236,496 | 362,302 |
Other assets | 115,236 | 85,856 |
TOTAL ASSETS | 4,139,680 | 3,595,778 |
Current liabilities: | ||
Settlement payables | 2,074,673 | 1,626,827 |
Consumer and customer deposits | 252,822 | 173,344 |
Accounts payable and accrued operating expenses | 156,182 | 153,885 |
Deferred revenue | 179,684 | 150,582 |
Note payable, current portion | 10,662 | 9,856 |
Notes payable to Safeway | 3,941 | 3,163 |
Other current liabilities | 102,823 | 51,176 |
Total current liabilities | 2,780,787 | 2,168,833 |
Deferred income taxes | 28,083 | 27,887 |
Note payable | 202,441 | 137,984 |
Convertible notes payable | 441,655 | 429,026 |
Other liabilities | 16,747 | 39,653 |
Total liabilities | 3,469,713 | 2,803,383 |
Commitments and contingencies | ||
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; 55,767 and 55,667 shares outstanding, respectively | 56 | 56 |
Additional paid-in capital | 649,546 | 608,568 |
Treasury stock, at cost: 1,176 and no shares, respectively | (40,023) | 0 |
Accumulated other comprehensive loss | (16,049) | (48,877) |
Retained earnings | 72,571 | 228,451 |
Total Blackhawk Network Holdings, Inc. equity | 666,101 | 788,198 |
Non-controlling interests | 3,866 | 4,197 |
Total stockholders’ equity | 669,967 | 792,395 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 4,139,680 | $ 3,595,778 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 30, 2017 | Dec. 31, 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 | 55,767,000 | 55,667,000 |
Treasury stock, shares | 1,176,000 | 0 |
Consolidated Statements of Inco
Consolidated Statements of Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
OPERATING REVENUES: | |||
Commissions and fees | $ 1,468,867 | $ 1,315,755 | $ 1,259,801 |
Program and other fees | 477,884 | 336,317 | 268,661 |
Marketing | 102,841 | 94,298 | 104,871 |
Product sales | 182,014 | 153,408 | 167,745 |
Total operating revenues | 2,231,606 | 1,899,778 | 1,801,078 |
OPERATING EXPENSES: | |||
Partner distribution expense | 1,040,306 | 933,142 | 874,043 |
Processing and services | 448,657 | 355,268 | 304,232 |
Sales and marketing | 329,983 | 274,799 | 260,638 |
Costs of products sold | 170,493 | 143,267 | 154,625 |
General and administrative | 113,621 | 99,428 | 92,172 |
Transition and acquisition | 7,797 | 11,465 | 7,639 |
Amortization of acquisition intangibles | 62,794 | 57,060 | 27,550 |
Change in fair value of contingent consideration | (14,937) | 2,100 | (7,567) |
Goodwill impairment | 77,500 | 0 | 0 |
Total operating expenses | 2,236,214 | 1,876,529 | 1,713,332 |
OPERATING INCOME (LOSS) | (4,608) | 23,249 | 87,746 |
OTHER INCOME (EXPENSE): | |||
Interest income and other income (expense), net | (390) | (449) | (1,970) |
Interest expense | (32,092) | (21,864) | (13,171) |
Income before income tax expense (benefit) | (37,090) | 936 | 72,605 |
INCOME TAX EXPENSE (BENEFIT) | 117,800 | (4,102) | 26,796 |
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS | (154,890) | 5,038 | 45,809 |
Income attributable to non-controlling interests, net of tax | (878) | (380) | (200) |
NET INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC. | $ (155,768) | $ 4,658 | $ 45,609 |
EARNINGS (LOSS) PER SHARE: | |||
Basic (in usd per share) | $ (2.77) | $ 0.08 | $ 0.84 |
Diluted (in usd per share) | $ (2.77) | $ 0.08 | $ 0.81 |
Weighted average shares outstanding—basic (in shares) | 56,287 | 55,734 | 54,294 |
Weighted average shares outstanding—diluted (in shares) | 56,287 | 57,260 | 56,313 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Statement of Comprehensive Income [Abstract] | |||
NET INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS | $ (154,890) | $ 5,038 | $ 45,809 |
Other comprehensive income (loss): | |||
Currency translation adjustments | 31,962 | (9,034) | (21,413) |
COMPREHENSIVE INCOME (LOSS) BEFORE ALLOCATION TO NON-CONTROLLING INTERESTS | (122,928) | (3,996) | 24,396 |
Comprehensive loss (income) attributable to non-controlling interests (net of tax) | (12) | (28) | 488 |
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO BLACKHAWK NETWORK HOLDINGS, INC. | $ (122,940) | $ (4,024) | $ 24,884 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
OPERATING ACTIVITIES: | |||
Net income (loss) before allocation to non-controlling interests | $ (154,890) | $ 5,038 | $ 45,809 |
Adjustments to reconcile net income to net cash used in operating activities: | |||
Depreciation and amortization of property, equipment and technology | 55,419 | 48,379 | 40,983 |
Goodwill impairment | 77,500 | 0 | 0 |
Amortization of intangibles | 67,912 | 62,045 | 32,366 |
Amortization of deferred program and contract costs | 30,584 | 29,015 | 28,991 |
Amortization of deferred financing costs and debt discount | 13,837 | 6,506 | 1,187 |
Employee stock-based compensation expense | 32,708 | 32,592 | 30,130 |
Change in fair value of contingent consideration | (14,937) | 2,100 | (7,567) |
Loss on property, equipment and technology disposal / write-down | 6,802 | 9,838 | 1,761 |
Deferred income taxes | 110,276 | (8,899) | 29,810 |
Other | (1,805) | 5,093 | 4,800 |
Changes in operating assets and liabilities: | |||
Settlement receivables | (350,138) | 6,076 | (111,678) |
Settlement payables | 411,248 | 19,907 | 231,662 |
Accounts receivable, current and long-term | 44,857 | (13,012) | (57,171) |
Other current assets | (14,914) | (13,891) | (17,210) |
Other assets | (40,490) | (24,690) | (20,434) |
Restricted cash related to operating activities | (56,279) | 0 | 0 |
Consumer and customer deposits | 46,931 | 13,772 | (54,402) |
Accounts payable and accrued operating expenses | 8,703 | (14,835) | (2,988) |
Deferred revenue | 31,458 | 33,362 | 14,363 |
Other current and long-term liabilities | 35,422 | (21,707) | 16,877 |
Income taxes, net | 5,297 | 8,542 | (2,609) |
Net cash provided by operating activities | 345,501 | 185,231 | 204,680 |
INVESTING ACTIVITIES: | |||
Expenditures for property, equipment and technology | (64,599) | (52,332) | (52,738) |
Business acquisitions, net of cash acquired | (168,995) | (220,605) | (115,481) |
Proceeds from divestiture of business | 13,779 | 0 | 0 |
Investments in unconsolidated entities | (6,201) | (10,541) | (5,877) |
Change in restricted cash | (59,838) | (7,691) | 1,811 |
Other | (3,244) | 1,408 | (98) |
Net cash used in investing activities | (289,098) | (289,761) | (172,383) |
FINANCING ACTIVITIES: | |||
Proceeds from issuance of note payable | 75,000 | 250,000 | 0 |
Proceeds from issuance of note payable | (10,000) | (463,750) | (11,250) |
Payments of financing costs | (1,025) | (16,544) | (2,063) |
Borrowings under revolving bank line of credit | 3,011,270 | 2,985,490 | 2,473,529 |
Repayments on revolving bank line of credit | (3,011,270) | (2,985,490) | (2,473,529) |
Payments for acquisition liability | (5,503) | 0 | (1,811) |
Repayments on notes payable to Safeway | (253) | (890) | (14,285) |
Repayment of debt assumed in business acquisitions | (8,585) | (8,964) | 0 |
Proceeds from convertible debt | 0 | 500,000 | 0 |
Payments for note hedges | 0 | (75,750) | 0 |
Proceeds from warrants | 0 | 47,000 | 0 |
Proceeds from issuance of common stock from exercise of employee stock options and employee stock purchase plans | 16,782 | 10,302 | 13,817 |
Other stock-based compensation related | (10,551) | (2,284) | (1,729) |
Repurchase of common stock | (40,023) | (34,843) | 0 |
Other | (343) | (156) | (1,494) |
Net cash provided by (used in) financing activities | 15,499 | 204,121 | (18,815) |
Effect of exchange rate changes on cash and cash equivalents | 16,168 | (6,042) | (10,521) |
Increase in cash and cash equivalents | 88,070 | 93,549 | 2,961 |
Cash and cash equivalents—beginning of year | 1,008,125 | 914,576 | 911,615 |
Cash and cash equivalents—end of year | 1,096,195 | 1,008,125 | 914,576 |
Cash payments during the year for: | |||
Interest paid (net of amounts capitalized) | 18,008 | 12,756 | 11,691 |
Income taxes paid (refunded) | 2,587 | (2,854) | 13,880 |
Spin-Off income taxes paid (refunds received), funded by (remitted to) Safeway | (253) | (890) | (14,285) |
Noncash investing and financing activities: | |||
Net deferred tax assets recognized for tax basis step-up with offset to Additional paid-in capital (see Note 10—Income Taxes) | 0 | 0 | 363,889 |
Note payable to Safeway contributed to Additional paid-in capital (see Note 10—Income Taxes) | 0 | 0 | 8,229 |
Financing of business acquisition with contingent consideration | 1,640 | 21,652 | 0 |
Forgiveness of notes receivable and accrued interest as part of business acquisition and divestiture | 973 | 5,445 | 0 |
Intangible assets recognized for the issuance of fully vested warrants | 20,000 | 0 | 3,147 |
Conversion of income tax payable and deferred taxes to (from) additional paid-in capital | $ (91) | $ 0 | $ (882) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Total Blackhawk Network Holdings, Inc. Equity | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Income (loss) | Retained Earnings | Non-Controlling Interests |
Beginning balance (in shares) at Jan. 03, 2015 | 53,505,000 | |||||||
Beginning balance at Jan. 03, 2015 | $ 287,779 | $ 280,939 | $ 54 | $ 137,916 | $ (19,470) | $ 162,439 | $ 6,840 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Comprehensive income | 24,396 | 24,884 | (20,725) | 45,609 | (488) | |||
Stock-based employee compensation expense | 30,130 | 30,130 | 30,130 | |||||
Exercise of options (in shares) | 783,000 | |||||||
Exercise of options | 9,959 | 9,959 | $ 1 | 9,958 | ||||
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 strategic 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 | 729,773 | $ 56 | 561,939 | (40,195) | 207,973 | 4,325 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative adjustment upon modified retrospective adoption of ASUs | 16,521 | 16,521 | 650 | 15,871 | ||||
BALANCE —After adoption of recent accounting pronouncements | 750,619 | 746,294 | $ 56 | 562,589 | (40,195) | 223,844 | 4,325 | |
Comprehensive income | (3,996) | (4,024) | (8,682) | 4,658 | 28 | |||
Stock-based employee compensation expense | 34,685 | 34,685 | 34,685 | |||||
Exercise of options (in shares) | 299,000 | |||||||
Exercise of options | 5,018 | 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 strategic partners | $ 47,000 | 47,000 | 47,000 | |||||
Repurchase of common stock (in shares) | (1,000,000) | (996,000) | ||||||
Repurchases 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 | 788,198 | $ 56 | 608,568 | $ 0 | (48,877) | 228,451 | 4,197 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Comprehensive income | (122,928) | (122,940) | 32,828 | (155,768) | 12 | |||
Stock-based employee compensation expense | $ 34,726 | 34,726 | 34,726 | |||||
Exercise of options (in shares) | 621,697 | |||||||
Exercise of options | $ 11,311 | 11,311 | 465 | 11,311 | ||||
Surrender of stock-based equity awards for taxes | (10,439) | (10,439) | $ (10) | (10,439) | ||||
Issuance of common stock upon vesting of restricted stock units, net of forfeitures (in shares) | 631,000 | |||||||
Issuance of common stock upon vesting of restricted stock units, net of forfeitures | 1 | 1 | $ 1 | |||||
Shares purchased under employee stock purchase plan | 5,471 | 5,471 | 190 | 5,471 | ||||
Reclassification of income taxes payable and deferred taxes to additional paid-in capital | (91) | (91) | (91) | |||||
Purchase of convertible note hedges | 0 | |||||||
Repurchase of common stock | (40,024) | (40,024) | $ (1) | (40,023) | ||||
Dividends paid | (455) | (112) | (112) | (343) | ||||
Ending balance (in shares) at Dec. 30, 2017 | 55,767,000 | |||||||
Ending balance at Dec. 30, 2017 | $ 669,967 | $ 666,101 | $ 56 | $ 649,546 | $ (40,023) | $ (16,049) | $ 72,571 | $ 3,866 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Repurchase of common stock (in shares) | (1,176,000) |
The Company and Significant Acc
The Company and Significant Accounting Policies | 12 Months Ended |
Dec. 30, 2017 | |
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 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 2017 and 2016 . 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). 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. 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 30, 2017 (year-end 2017 or 2017 ), the 52 -week period ended on December 31, 2016 (year-end 2016 or 2016 ) and the 52 -week period ended on January 2, 2016 (year-end 2015 or 2015 ). 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 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, replaces nearly all current U.S. GAAP guidance on this topic with a comprehensive revenue measurement and recognition standard and expanded disclosure requirements. This new guidance provides a five-step analysis in determining when and how revenue is recognized. Under the new guidance, 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 new guidance requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We finalized our assessment of this new guidance in the fourth quarter of 2017 and adopted it using the full retrospective method in the first quarter of fiscal 2018 . We have identified the following areas that are affected by the adoption of this new standard: Revenue Content Provider Commissions —Under the new guidance, we will continue to recognize content provider commissions as revenue at the time of card activation, as our performance obligation to the content provider is complete. However, the actual revenue recognition treatment required under the new guidance may be dependent on contract-specific terms and, therefore, may vary in some instances. Consumer Purchase Fees and Program Management Fees —Under the new guidance, we consider the transaction price for our open loop gift cards, including our Visa gift card, to include consumer purchase fees and program management fees. Under the new guidance, we have identified three performance obligations - distribution-and-activation, redemption service and customer care. Revenue from consumer purchase fees and program management fees, included within Commissions and fees and Program and other fees , respectively, related to our Visa gift cards will predominantly be recognized as revenue at the time of card activation when our distribution-and-activation obligation is complete. The remainder will be recognized over the estimated period of card redemption as redemption service and customer care obligations are performed. Under current GAAP, we defer these revenues and recognize them based on the redemption pattern of the card. Interchange revenue will be recognized over the period of card redemption as we provide information required for card redemption, similar to our current revenue recognition. Additionally, revenue from program management fees related to our proprietary Visa gift cards issued by MetaBank will be based on a blended rate over the appropriate periods as required by the contract-specific terms compared to a contractually stated rate under the current accounting policy. Although we expect the blended rate to be lower than the contract rate initially, the economics of the arrangement will be the same over the term of the contract period. Under current GAAP, we defer consumer purchase fees and program management fees related to our Visa gift cards in Deferred revenue and recognize revenue ratably in proportion to the historical redemption patterns of the card portfolio over the estimated life of the card. Rebate Processing Fees —While we expect the recognition of revenue for rebates fulfilled by checks or closed loop cards to remain unchanged under the new guidance, the new guidance will require us to recognize revenue for rebates fulfilled with open loop incentive cards when we fulfill the cards to the end consumer versus ratably in proportion to historical redemption patterns as our performance obligation for rebate processing is complete at time of fulfillment. Incentive Merchandise Rewards —The adoption of the new guidance is expected to classify certain incentive merchandise rewards costs as a reduction to revenue versus a cost of products sold. Under the new accounting guidance, these costs will only be recorded as a cost of product sold if it is determined that we control the goods or services before they are transferred to the customer. In doing so, we will evaluate (i) if we are primarily responsible for fulfilling the promise to provide the good or service; (ii) if we have inventory risk before the good or service has been transferred to customer or after transfer of control to the customer; and (iii) if we have discretion in establishing the price for the good or service. Operating Expenses Partner Distribution Expense —Under the new guidance, partner distribution expense for Visa gift and other open loop incentive cards will be recognized at the time of card activation when our distribution-and-activation obligation is complete. Under current GAAP, we defer these expenses and amortize them based on the redemption pattern of the card. Processing and Services —Under the new guidance, card production and upfront transaction processing fees for the Visa gift card and open loop incentive cards will be recognized at the time of card activation when our distribution-and-activation obligation is complete. Under current GAAP, these costs are deferred and expensed based on the same redemption pattern as the related revenue. Sales and Marketing —The accounting for the recognition of costs related to obtaining customer contracts under the new guidance is different from our current capitalization policy. The adoption of the new guidance will result in additional capitalized commissions which will be amortized over a longer term than our current policy. As part of our assessment and implementation plan, we evaluated and made changes to our policies, procedures and internal controls. Additionally, we evaluated the impact of this new guidance on the purchase accounting or intangibles assets from our recent acquisitions; this resulted in a reclassification of certain backlog assets to contract asset, with no impact to our consolidated net income. Expected Impact to Reported Results The expected impact of the new revenue guidance on select consolidated balance sheet line items as of year-end 2017 , 2016 and 2015 is shown below (in thousands). 2017 As Reported Impact of Adoption As Adjusted Assets: Other current assets $ 165,374 $ (21,892 ) $ 143,482 Intangible assets, net $ 431,681 $ (703 ) $ 430,978 Deferred income taxes $ 236,496 $ (699 ) $ 235,797 Other assets $ 115,236 $ 6,434 $ 121,670 Total assets $ 4,139,680 $ (16,860 ) $ 4,122,820 Liabilities: Consumer and customer deposits $ 252,822 $ 73,863 $ 326,685 Deferred revenue $ 179,684 $ (125,510 ) $ 54,174 Other current liabilities $ 102,823 $ 6,434 $ 109,257 Deferred income taxes, long-term $ 28,083 $ 1,002 $ 29,085 Other liabilities $ 16,747 $ 22,130 $ 38,877 Total liabilities $ 3,469,713 $ (22,081 ) $ 3,447,632 Stockholders’ equity: Accumulated other comprehensive loss $ (16,049 ) $ (72 ) $ (16,121 ) Retained earnings $ 72,571 $ 5,293 $ 77,864 Total stockholder’s equity $ 669,967 $ 5,221 $ 675,188 2016 As Reported Impact of Adoption As Adjusted Assets: Other current assets $ 131,375 $ (16,496 ) $ 114,879 Intangible assets, net $ 350,185 $ (2,637 ) $ 347,548 Deferred income taxes $ 362,302 $ (1,704 ) $ 360,598 Other assets $ 85,856 $ 5,641 $ 91,497 Total assets $ 3,595,778 $ (15,196 ) $ 3,580,582 Liabilities: Consumer and customer deposits $ 173,344 $ 58,653 $ 231,997 Deferred revenue $ 150,582 $ (100,617 ) $ 49,965 Other current liabilities $ 51,176 $ 7,258 $ 58,434 Deferred income taxes, long-term $ 27,887 $ 622 $ 28,509 Other liabilities $ 39,653 $ 13,849 $ 53,502 Total liabilities $ 2,803,383 $ (20,235 ) $ 2,783,148 Stockholders’ equity: Accumulated other comprehensive loss $ (48,877 ) $ (108 ) $ (48,985 ) Retained earnings $ 228,451 $ 5,147 $ 233,598 Total stockholder’s equity $ 792,395 $ 5,039 $ 797,434 2015 As Reported Impact of Adoption As Adjusted Assets: Other current assets $ 103,319 $ (17,002 ) $ 86,317 Intangible assets, net $ 240,898 $ (649 ) $ 240,249 Deferred income taxes $ 339,558 $ (7,264 ) $ 332,294 Other assets $ 81,764 $ 2,065 $ 83,829 Total assets $ 3,112,956 $ (22,850 ) $ 3,090,106 Liabilities: Consumer and customer deposits $ 84,761 $ 55,515 $ 140,276 Deferred revenue $ 113,458 $ (95,569 ) $ 17,889 Other current liabilities $ 57,342 $ — $ 57,342 Deferred income taxes, long-term $ 18,652 $ 419 $ 19,071 Other liabilities $ 14,700 $ 3,136 $ 17,836 Total liabilities $ 2,378,858 $ (36,499 ) $ 2,342,359 Stockholders’ equity: Accumulated other comprehensive loss $ (40,195 ) $ (94 ) $ (40,289 ) Retained earnings $ 207,973 $ 13,743 $ 221,716 Total stockholder’s equity $ 734,098 $ 13,649 $ 747,747 The expected impact of the new revenue guidance on select consolidated statements of income (loss) line items for 2017 , 2016 and 2015 is shown below (in thousands, except per share amounts). 2017 As Reported Impact of Adoption As Adjusted Operating revenues: Commissions and fees $ 1,468,867 $ 4,346 $ 1,473,213 Program and other fees $ 477,884 $ 7,214 $ 485,098 Product sales $ 182,014 $ (55,404 ) $ 126,610 Total operating revenues $ 2,231,606 $ (43,844 ) $ 2,187,762 Operating expenses: Partner distribution expense $ 1,040,306 $ 4,574 $ 1,044,880 Processing and services $ 448,657 $ 1,379 $ 450,036 Sales and marketing $ 329,983 $ (1,650 ) $ 328,333 Costs of products sold $ 170,493 $ (45,732 ) $ 124,761 Amortization of acquisition intangibles $ 62,794 $ (1,934 ) $ 60,860 Total operating expenses $ 2,236,214 $ (43,363 ) $ 2,192,851 Income tax expense (benefit) $ 117,800 $ (627 ) $ 117,173 Net loss attributable to Blackhawk Network Holdings, Inc. $ (155,768 ) $ 146 $ (155,622 ) Diluted loss per share $ (2.77 ) $ 0.01 $ (2.76 ) 2016 As Reported Impact of Adoption As Adjusted Operating revenues: Commissions and fees $ 1,315,755 $ (7,357 ) $ 1,308,398 Program and other fees $ 336,317 $ (12,905 ) $ 323,412 Product sales $ 153,408 $ (46,734 ) $ 106,674 Total operating revenues $ 1,899,778 $ (66,996 ) $ 1,832,782 Operating expenses: Partner distribution expense $ 933,142 $ (1,148 ) $ 931,994 Processing and services $ 355,268 $ 1,776 $ 357,044 Sales and marketing $ 274,799 $ (2,717 ) $ 272,082 Costs of products sold $ 143,267 $ (41,233 ) $ 102,034 Amortization of acquisition intangibles $ 57,060 $ (9,723 ) $ 47,337 Total operating expenses $ 1,876,529 $ (53,045 ) $ 1,823,484 Income tax expense (benefit) $ (4,102 ) $ (5,356 ) $ (9,458 ) Net income (loss) attributable to Blackhawk Network Holdings, Inc. $ 4,658 $ (8,595 ) $ (3,937 ) Diluted earnings per share $ 0.08 $ (0.15 ) $ (0.07 ) 2015 As Reported Impact of Adoption As Adjusted Operating revenues: Commissions and fees $ 1,259,801 $ (76 ) $ 1,259,725 Program and other fees $ 268,661 $ 1,896 $ 270,557 Product sales $ 167,745 $ (19,884 ) $ 147,861 Total operating revenues $ 1,801,078 $ (18,064 ) $ 1,783,014 Operating expenses: Partner distribution expense $ 874,043 $ 1,466 $ 875,509 Processing and services $ 304,232 $ 809 $ 305,041 Sales and marketing $ 260,638 $ (2,068 ) $ 258,570 Costs of products sold $ 154,625 $ (17,602 ) $ 137,023 Amortization of acquisition intangibles $ 27,550 $ (3,384 ) $ 24,166 Total operating expenses $ 1,713,332 $ (20,779 ) $ 1,692,553 Income tax expense (benefit) $ 26,796 $ 808 $ 27,604 Net income attributable to Blackhawk Network Holdings, Inc. $ 45,609 $ 1,907 $ 47,516 Diluted earnings per share $ 0.81 $ 0.03 $ 0.84 Adoption of the new revenue recognition standard is expected to affect the operating results of all three of our reporting segments; however, adoption is not expected to impact cash provided by or used in operating, investing or financing activities on our consolidated statements of cash flows. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 changes the 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. We plan to adopt this guidance for our 2019 fiscal year. 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 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. The new guidance will not impact financial results, but will result in a change in the presentation of restricted cash and restricted cash equivalents within the statement of cash flows. The Company adopted this guidance in the first quarter of 2018 using the retrospective approach. Recently Adopted Accounting Pronouncement 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 early adopted this standard in the first quarter of 2017. See Note 7 — Goodwill and Other Intangible Assets for information on goodwill impairment charges recorded during 2017. 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. Restricted Cash Restricted cash includes cash balances that are legally or contractually restricted to use. Changes in restricted cash balances which represent customer deposits are included in operating activities in our consolidated statements of cash flows; all other changes are included in investing activities. 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 $1.9 million and $2.6 million at year-end 2017 and 2016 , respectively. For Accounts receivable , the allowances were $6.6 million and $6.0 million at year-end 2017 and 2016 , 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, online 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. During 2017 and 2016, as a result of our platform integration efforts, we recorded impairment charges of $4.6 million and $5.5 million , respectively, related to previously acquired assets. This amount is presented within Transition and acquisition expense. We did not identify any indicators of impairment during 2015 . 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. If we conclude that it is more likely than not that the fair value is less than its carrying value, we perform a qualitative impairment test of goodwill, in which we compare the fair value of the reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, we record an impairment loss equal to that difference, without consideration of the value of unrecorded intangible assets. See Note 7 — Goodwill and Other Intangible Assets for information related to goodwill impairment charges recognized during 2017. 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 strategic partner relationships resulting from the issuance of equity awards (see Note 2 — Business Acquisitions and Divestiture , Note 7 — Goodwill and Other Intangible Assets and Note 9 — Equity Awards Issued to Strategic 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 c |
Business Acquisitions and Dives
Business Acquisitions and Divestiture | 12 Months Ended |
Dec. 30, 2017 | |
Business Combinations [Abstract] | |
Business Acquisitions and Divestiture | Business Acquisitions and Divestiture 2017 Acquisitions CashStar On August 29, 2017, we acquired CashStar, Inc. and its subsidiaries (collectively “CashStar”), for $166.0 million in cash. CashStar provides a digital commerce platform to our card partners for the sale, marketing and distribution of digital and physical gift cards. This acquisition strengthens our position in the emerging digital gift card market and establishes our Company as a leading provider in the first-party digital gift card market. We financed the purchase using cash on hand and approximately $110 million of borrowings under our Credit Agreement (See Note 4 — Financing ). We accounted for this acquisition as a business combination. The following table presents our initial estimates of the purchase price allocation. We may make adjustments to these amounts through the measurement period as we finalize information regarding our forecasts, valuation assumptions and income taxes (in thousands): Cash and cash equivalents $ 17,200 Restricted cash 5,527 Settlement receivables, net 1,912 Identifiable technology and intangible assets 105,290 Goodwill 81,850 Other tangible assets, net 97 Settlement payables (14,939 ) Consumer and customer deposits (4,600 ) Accounts payable and accrued operating expenses (4,705 ) Debt assumed (8,285 ) Deferred income taxes (13,379 ) Total purchase consideration $ 165,968 Deferred income taxes include $39.4 million of deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets, $23.8 million of deferred tax assets for net operating loss carryforwards, and $2.2 million for other deferred tax assets, net. At closing, we repaid the assumed debt, which we present in financing activities in our consolidated statements of cash flows. We also paid $3.2 million of CashStar's transaction expenses included above within accounts payable and accrued operating expenses, which we present in operating activities in our consolidated statements of cash flows. 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. 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 $ 103,000 10 years Technology 2,290 1.5 years Total identifiable technology and intangible assets $ 105,290 Customer relationships represent the estimated fair value of the underlying relationships and agreements with CashStar's business clients. Technology consists of CashStar's internally-developed software. Pro forma financial information The following table summarizes the combined pro forma results of operations of us and CashStar as though we have been combined as of the beginning of fiscal 2016 (in thousands, except per share amounts): 2017 (Unaudited) 2016 (Unaudited) Total revenues $ 2,259,191 $ 1,939,859 Net loss attributable to Blackhawk Network Holdings, Inc. $ (163,561 ) $ (7,544 ) Pro forma EPS—Basic $ (2.91 ) $ (0.14 ) Pro forma EPS—Diluted $ (2.91 ) $ (0.14 ) The pro forma financial information includes adjustments to reclassify acquisition-related costs from 2017 to 2016, to amortize technology and intangible assets starting at the beginning of 2016, 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 2016, and to increase interest expense assuming the related financing had been applied to the beginning of 2016. 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 2016. We have not presented separate results of operations since closing of us and the acquisition, as results of operations for the acquisition are immaterial. Acquisition-related expenses totaled $0.8 million , which we report in Transition and acquisition expense. Other Acquisitions During the first quarter of 2017, we completed an acquisition of a rebates and incentives business. During the third quarter of 2017, we acquired certain assets of a full-service recognition and reward provider with operations primarily in Australia. The purchase consideration for these acquisitions totaled approximately $30.1 million , which includes $27.6 million cash on hand and approximately $1.6 million related to contingent consideration, which is a cash payment of up to $2 million based on the performance of the acquired business through December 31, 2017, and $0.9 million relating to working capital adjustments. In aggregate, $8.3 million cash was acquired, and based on our estimates of the purchase price allocation, $15.5 million was attributed to intangible assets, $11.9 million was attributed to goodwill, and $5.5 million was attributed to net tangible liabilities acquired, net of deferred tax assets of $1.2 million . For the intangible assets acquired, customer relationships have an average useful life ranging from 7 to 10 years. We expect to deduct $9.9 million of goodwill and $7.8 million of identifiable technology and intangible assets for tax purposes, a portion of which will commence upon settlement of contingent consideration and contingent liabilities. We have not presented separate results of operations since closing or combined pro forma financial information of us and the other acquired businesses since the beginning of fiscal 2016, as results of operations for these acquisitions are immaterial. Acquisition-related expenses totaled $0.6 million , which we report in Transition and acquisition expense. 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 £94.6 million , or $120.2 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 £87.8 million , or $111.7 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 summarizes the final purchase price allocation (in thousands): Cash and cash equivalents $ 38,957 Settlement receivables, net 24,290 Accounts receivables, net 10,692 Identifiable technology and intangible assets 64,825 Goodwill 52,901 Consumer and customer deposits (35,636 ) Accounts payable and accrued operating expenses (30,984 ) Deferred revenue (7,215 ) Deferred income taxes, net (9,274 ) Other tangible assets, net 3,096 Purchase consideration excluding GREBT 111,652 Restricted cash (GREBT) 8,541 Total purchase consideration including GREBT $ 120,193 Deferred income taxes, net include $2.2 million of deferred tax assets for net operating loss carryforwards, $12.0 million of deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets, and $0.8 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 57,633 10 years Customer backlog 2,911 1 year Trade name 2,695 10 years Total identifiable technology and intangible assets $ 64,825 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. Sale of Grass Roots’ Meetings & Events (“M&E”) Business During the first quarter of 2017, management approved a plan to sell all assets and liabilities related to Grass Roots’ M&E business. Beginning from the time the plan was approved, each of the relevant asset and liability balances were accounted for as held for sale and measured at the lower of its carrying value or fair value less cost to sell. During the fourth quarter of 2017, the Company completed the sale of the M&E business for a total consideration of £33.4 million , or $45.2 million , consisting of £29.6 million , or $40.0 million based on the exchange rate on the disposition date, in cash, and £3.8 million , or $5.2 million , in the estimated fair value of contingent consideration. Contingent consideration consists of two cash payments of up to £2.4 million (or $3.2 million ) and £3.3 million (or $4.5 million ) each, based on the financial performance of M&E for each of the two annual periods ending December 31, 2017 and December 31, 2018 respectively. As a result, we recorded a pre-tax loss of $0.8 million , which was included in Interest income and other income (expense), net in the Company’s consolidated statements of income. The M&E business was included in the International segment. During 2017, the M&E business recorded pre-tax income of $5.1 million during the period it was accounted for as an asset held for sale. The following table summarizes the selected final balance sheet amounts at the time of sale (in thousands): Cash and cash equivalents $ 24,976 Settlement receivables, net 1,743 Accounts receivable, net 15,141 Other current assets 2,617 Property, equipment and technology, net 863 Intangible assets, net 3,772 Goodwill 28,843 Deferred income taxes 1,388 Total assets $ 79,343 Settlement payables $ (8,589 ) Consumer and customer deposits (1,855 ) Accounts payable and accrued operating expenses (8,468 ) Deferred revenue (3,739 ) Other current liabilities (12,248 ) Total liabilities $ (34,899 ) 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 summarizes the final purchase price allocation (in thousands): Cash and cash equivalents $ 1,032 Settlement receivables, net 2,182 Settlement payables (2,273 ) Consumer and customer deposits (26,080 ) Other tangible assets, net 5,549 Identifiable intangible assets 21,271 Goodwill 15,549 Deferred income taxes (1,009 ) Total purchase consideration $ 16,221 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 and cash equivalents $ 3,985 Consumer and customer deposits (5,429 ) Accounts payable and accrued operating expenses (9,860 ) Other tangible assets, net 893 Debt (5,807 ) Identifiable technology and intangible assets 52,460 Goodwill 67,706 Total purchase consideration $ 103,948 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% ( see Note 5—Fair Value Measurements). The following table summarizes the final purchase price allocation (in thousands): Cash and cash equivalents $ 14,191 Settlement receivables 4,884 Settlement payables (3,272 ) Consumer and customer deposits (18,009 ) Other tangible liabilities, net (1,155 ) Debt (3,157 ) Identifiable technology and intangible assets 45,540 Deferred income taxes 1,926 Goodwill 37,865 Total purchase consideration $ 78,813 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 and cash equivalents $ 24,367 Accounts payables and accrued operating expenses (11,580 ) Deferred revenue (48,735 ) Deferred income taxes (14,019 ) Identifiable technology and intangible assets 94,800 Goodwill 58,659 Total purchase consideration $ 103,492 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 Achievers 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 . Pro forma financial information 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) Total revenues $ 1,830,848 Net income attributable to Blackhawk Network Holdings, Inc. $ 41,752 Pro forma EPS—Basic $ 0.77 Pro forma EPS—Diluted $ 0.74 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 Original 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 and cash equivalents $ 4,733 Tangible assets, net 2,093 Cardholder liability (6,167 ) Deferred income taxes (6,723 ) Identifiable intangible and technology assets 26,892 Goodwill 20,385 Total purchase consideration $ 41,213 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. |
Investment in Unconsolidated En
Investment in Unconsolidated Entities | 12 Months Ended |
Dec. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Investment in Unconsolidated Entities | Investment in Unconsolidated Entities During 2017, we invested an additional $5.0 million in our entity in China, increasing our ownership to 42.0% . 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 AUD 8 million , or $6 million based on the exchange rate at that time. 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 We 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 2017 and 2016 (dollars in thousands): 2017 2016 Carrying Value Ownership Percentage Carrying Value Ownership Percentage Equity method investments Investment in China entity $ 8,831 42.0% $ 4,576 26.5% Investment in Australia entity 6,823 51.2% 6,392 51.2% Other equity method investments 330 42.5% — —% Total equity method investments 15,984 10,968 Cost method investments 7,954 7,954 Total unconsolidated entities $ 23,938 $ 18,922 |
Financing
Financing | 12 Months Ended |
Dec. 30, 2017 | |
Debt Disclosure [Abstract] | |
Financing | Financing On March 28, 2014, we entered into a credit agreement with a group of banks (the “Original Credit Agreement”). Borrowings under the Original 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 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 “Credit Agreement”). We repaid all amounts outstanding under our previous 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 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”). We drew $50 million on the term loan on April 20, 2017 and $25 million on November 22, 2017. As of year-end 2017, the term loan has $215 million outstanding with a delayed draw option for up to an additional $75 million . The 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 Credit Agreement extended the term of the Credit Agreement to July 2021 and made certain modifications to the financial and other covenants to add operating flexibility, including modification of the leverage covenant and removal of the net worth covenant and the dollar limitation on acquisitions. On April 25, 2017, we entered into an amendment to the Credit Agreement to extend the term loan commitments provided by the lenders under our Credit Agreement to January 12, 2018 and made certain modifications to the financial and other covenants to add operating flexibility, including modification of the leverage covenant and increasing the dollar limitation on dividends, stock repurchases and other restricted payments under certain conditions. On August 28, 2017, we entered into the second amendment to the Credit Agreement which, among other things, modified the definition of Consolidated EBITDA. As a result, we can access an increased portion of the available lending commitments to fund permitted acquisitions and for other corporate purposes under the Restated Credit Agreement. As of year-end 2017 , we had no amounts outstanding under our revolving credit facility, other than $122.2 million in outstanding letters of credit under the subfacility, with $277.8 million available under our revolving credit facility. Excluding letters of credit, for 2017 , the average amount outstanding under the revolving credit facility was $60.4 million , and the largest amount outstanding was $262.6 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 Credit Agreement), which may range from 1.25% to 2.25% , based on our Consolidated Total Leverage Ratio (as defined in the 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 Credit Agreement, as amended. During 2017 and 2016 , the average interest rates for borrowings were 3.82% and 2.97% , respectively. Interest cost under the Original Credit Agreement and the Credit Agreement, totaled $12.9 million in 2017 , including $11.7 million from borrowings and $1.2 million for amortization of deferred financing costs; total interest cost totaled $14.6 million for 2016 , including $12.9 million from borrowings and $1.7 million for amortization of deferred financing costs; total interest cost totaled $13.7 million for 2015 , including $12.5 million from borrowings and $1.2 million for amortization of deferred financing costs. The 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 $20.1 million in 2017 , including $7.5 million coupon interest and $12.6 million for the amortization of debt issuance costs and debt discount. 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. Subsequent to year-end, on January 11, 2018, we borrowed an additional $75.0 million of term loan under the Credit Agreement. The terms of the new term loan are substantially similar to the outstanding term loan. The following table presents the amounts due by maturity date of our term loan and Notes as of year-end 2017 and as of the date we drew the additional $75.0 million (in thousands): As of As of December 30, 2017 January 11, 2018 2018 $ 11,250 $ 15,000 2019 11,250 15,000 2020 22,500 30,000 2021 170,000 230,000 2022 500,000 500,000 Total amount due 715,000 790,000 Unamortized discount and debt issuance fees (60,242 ) (59,734 ) Note payable, net $ 654,758 $ 730,266 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 during 2016. For more information regarding the shares repurchased in 2017, see Note 13 — Earnings per Share . 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. 30, 2017 | |
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 2017 and 2016 (in thousands): 2017 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents Money market mutual funds $ 694,075 $ — $ — $ 694,075 Contingent asset $ — $ — $ 6,131 $ 6,131 Liabilities Warrants $ — $ 20,000 $ — $ 20,000 Contingent consideration $ — $ — $ 3,886 $ 3,886 2016 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents Money market mutual funds $ 300,015 $ — $ — $ 300,015 Contingent asset $ — $ — $ — $ — Liabilities Warrants $ — $ — $ — $ — Contingent consideration $ — $ — $ 23,752 $ 23,752 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. The fair value of the strategic partner warrants is based upon the stock price of the Company, adjusted for the minimum purchase price in the warrant. 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 asset and 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. In 2017 and 2016 , there were no transfers between Levels. Term loan —As of December 30, 2017 , using a discounted cash flow model and Level 2 inputs, we estimate the fair value of our term loan to be approximately $215.0 million . Convertible notes payable —As of December 30, 2017 , the total estimated fair value of the convertible notes was approximately $510.0 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 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 could materially increase (decrease) the estimated fair value of contingent consideration. For long-term contingent consideration (amounts due more than a year), a significant decrease (increase) in the discount rate could also materially increase (decrease) the estimated fair value of contingent consideration. Contingent Asset —In conjunction with the sale of our M&E business (see Note 2 — Business Acquisitions and Divestiture ), we recorded $6.1 million of contingent earn-out assets, of which $3.2 million was included in Other current assets and $2.9 million was included in Other assets . We estimated the fair value of the contingent consideration using a Monte Carlo simulation model based on our projections of M&E’s revenues and expenses for 2018, using a discount rate of 2.5% . Contingent Liability The changes in fair value of contingent consideration liabilities for 2017 and 2016 are as follows (in thousands): 2017 2016 Balance – beginning of year $ 23,752 $ — Addition from acquisition of Extrameasures — 20,300 Addition from acquisition of Spafinder — 1,352 Addition from other acquisition (see Note 2—Business Acquisitions and Divestiture ) 1,640 — Divestiture of M&E business 934 — Change in fair value of contingent consideration (14,937 ) 2,100 Settlements (7,503 ) — Balance – end of year $ 3,886 $ 23,752 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 and Divestiture ). 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. In 2017, we recorded an addition of $1.6 million related to an acquisition during the year. In conjunction with the sale of our M&E business, we recorded $0.9 million of contingent liabilities related to the retention of certain employees in the M&E business after the sale. During 2017, we paid out $5.5 million related to Extrameasures for achieving relevant targets during the first earn-out year. In addition, related to our other acquisition in 2017, the relevant targets were also achieved, resulting in a $2.0 million earn-out payable, which was included in Other current liabilities . The significant decrease in fair value during 2017 reflects decreases in our projections of the payment of portions of the earn-out, partially offset by the increase due to the passage of time. As of year-end 2017, there were no long-term contingent liabilities. |
Consolidated Financial Statemen
Consolidated Financial Statement Details | 12 Months Ended |
Dec. 30, 2017 | |
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 2017 , 2016 and 2015 (in thousands): 2017 2016 2015 Beginning balance $ 8,657 $ 8,046 $ 5,547 Provision 1,617 4,544 4,656 Charges against allowances, net of recoveries (1,855 ) (3,933 ) (2,157 ) Ending balance $ 8,419 $ 8,657 $ 8,046 Other Current Assets Other current assets as of year-end 2017 and 2016 consisted of the following (in thousands): 2017 2016 Inventory $ 37,007 $ 43,950 Deferred expenses 29,172 22,148 Income tax receivables 10,823 13,599 Assets held for sale 23,462 — Other 64,910 51,678 Total other current assets $ 165,374 $ 131,375 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 2017 and 2016 consisted of the following (dollars in thousands): Useful Lives in Years 2017 2016 Leasehold improvements 5 $ 13,754 $ 9,018 Computers and related equipment 3 - 5 50,944 45,910 Technology 5 331,192 291,124 Total property, equipment and technology 395,890 346,052 Less accumulated depreciation and amortization (223,283 ) (173,671 ) Property, equipment and technology, net $ 172,607 $ 172,381 Depreciation and amortization expense related to property, equipment and technology totaled $55.4 million , $48.4 million and $41.0 million for 2017 , 2016 and 2015 , 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 $1.0 million , $0.8 million , and $0.5 million for 2017 , 2016 and 2015 , respectively. Other Assets Other assets as of year-end 2017 and 2016 consisted of the following (in thousands): 2017 2016 Deferred program and contract costs $ 53,565 $ 48,066 Investments (see Note 3—Investment in Unconsolidated Entities ) 23,938 18,922 Other receivables 9,235 2,713 Income taxes receivable 2,321 2,358 Deferred financing costs 2,759 2,688 Other 23,418 11,109 Total other assets $ 115,236 $ 85,856 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 $30.6 million , $29.0 million and $29.0 million and for 2017 , 2016 and 2015 , respectively. Other Current Liabilities Other current liabilities as of year-end 2017 and 2016 consisted of the following (in thousands): 2017 2016 Payroll and related liabilities $ 43,022 $ 24,944 Income taxes payable 8,056 4,199 Acquisition liability 4,012 6,672 Warrant liability 20,000 — Other payables and accrued liabilities 25,292 15,361 Liability held for sale 2,441 — Total other current liabilities $ 102,823 $ 51,176 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 2017 and 2016 consisted of the following (in thousands): 2017 2016 Acquisition liability $ 1,874 $ 17,080 Income taxes payable 3,883 6,957 Deferred income and other liabilities 10,990 15,616 Total other liabilities $ 16,747 $ 39,653 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 ). Assets held for sale On October 9, 2017, the Board of Directors approved management’s plan to sell the Cardpool gift card exchange business. As we begin to actively market the Cardpool business, we may identify specific assets and liabilities to be retained by the Company. It is probable that such sale will occur within one year. As a result, beginning from the time the plan was approved, Cardpool’s assets and liabilities were accounted for as held for sale and measured at the lower of its carrying value or fair value less cost to sell. During 2017, the Company recorded impairment charges to reduce the carrying value of the Cardpool reporting unit to its estimated fair value. See Note 7 — Goodwill and Other Intangible Assets for additional information on these charges. The following table presents the aggregate carrying amounts of the major classes of assets and liabilities as of December 30, 2017 related to the Cardpool business (in thousands): December 30, 2017 Other current assets $ 5,513 Property, equipment and technology, net 8,527 Goodwill 8,991 Intangible assets, net 431 Total assets $ 23,462 Accounts payable and accrued operating expenses $ 1,745 Other current liabilities 450 Deferred revenue 246 Total liabilities $ 2,441 During the period it was accounted for as an asset held for sale in 2017, the Cardpool business recorded pre-tax loss of $24.5 million which includes $22.5 million goodwill impairment recorded during the fourth quarter of 2017. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 30, 2017 | |
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, Incentives & Rewards and International segments. During the first quarter of 2017 , as a result of changes in reporting financial results to our Chief Operating Decision Maker (“CODM”), we concluded that we would report the international incentives businesses within the International reportable segment (see Note 12 — Segment Reporting and Enterprise-Wide Disclosures ). Accordingly, we re-allocated a portion of the goodwill from the Incentives & Rewards segment to the International segment based on their relative fair values. As we continue to develop our e-commerce strategy, we also re-allocated a portion of the e-commerce goodwill from U.S. Retail to Incentives & Rewards to align with the way our business is managed. In 2016, we had performed our annual review of goodwill balances for impairment as of September 11, 2016. For the Cardpool reporting unit, we performed both a qualitative and quantitative assessment of goodwill impairment and determined that Cardpool had an elevated risk of goodwill impairment due to its exposure to lowered expectations of sales volume related to the card exchange business and lower operating margins. Based on this assessment, the fair value of the Cardpool reporting unit exceeded its carrying value by $3.4 million , or 6.9% . Subsequent to the annual goodwill impairment assessment performed in the fourth quarter of 2016, we continued to monitor the actual performance of Cardpool and determined the fair value of Cardpool was not less than its carrying value for the first and second quarter of fiscal 2017. During the third quarter of 2017, we determined that there were indicators present to suggest that it was more likely than not that the fair value of the Cardpool reporting unit was less than its carrying amount. The significant changes for the Cardpool reporting unit, subsequent to the annual goodwill impairment test performed in the fourth quarter of 2016, included a decline in forecasted operating revenues, operating income and cash flows. To test for impairment, we estimated the fair value of the Cardpool reporting unit under the income approach, discounting estimated future cash flows using a weighted-average cost of capital, based on a rate of return available from similar, alternative investments and reflecting the inherent risks associated with the estimated cash flows. To reduce the carrying value to its estimated fair value, we recorded an impairment charge of $9.0 million during the third quarter of 2017, reducing the carrying value of Cardpool goodwill to $31.5 million . On October 9, 2017, subsequent to the end of the third quarter of 2017, the Board of Directors approved management’s plan to sell the Cardpool gift card exchange business. During the fourth quarter of 2017 , Cardpool’s results were less than forecasted, and we performed both a qualitative and quantitative assessment of goodwill impairment. As a result of our sales efforts and assessment, we determined that the carrying value of the net assets of the Cardpool gift card exchange business to be sold was higher than the expected selling price less the costs to sell the business. Accordingly, we recorded an additional impairment charge of $22.5 million in the fourth quarter of 2017 , reducing the carrying value of Cardpool goodwill to $9.0 million . A 0.5% change in the discount rate used in the cash flow analysis would result in a change in the fair value of approximately $0.8 million , which would have resulted in a change to goodwill impairment. A 0.5% change in the growth rate assumed in the calculation of the terminal value of cash flows would result in a change in the fair value by $0.2 million , which would have resulted in a change to goodwill impairment. For reporting units other than Cardpool, we performed our annual review of goodwill balances for impairment as of September 10, 2017. For the Blackhawk Engagement Solutions U.S. (“BES”) reporting unit, we performed both a qualitative and quantitative assessment of goodwill impairment and determined that BES had an elevated risk of goodwill impairment due to lower expectations of sales volume, operating income and cash flows. In November 2017, prior to the completion of the goodwill impairment test as of September 10, 2017, management became aware of the loss or reduction of certain significant planned client programs for BES (events that were not known or knowable as of September 10, 2017); accordingly we performed the goodwill impairment test incorporating such information known in November 2017 and determined that the carrying value of the BES reporting unit exceeded its fair value by $46.0 million . The fair value was determined using a combination of the income approach, discounting estimated future cash flows using a weighted-average cost of capital, based on a rate of return available from similar, alternative investments and reflecting the inherent risks associated with the estimated cash flows, and the market approach, selecting enterprise value multiples of comparable publicly traded companies to derive a valuation. We believe that the income approach is the more reliable indication of value since it incorporates estimated revenues and earnings for the BES reporting unit that the market approach may not directly incorporate. Therefore, a weighting of 75% was assigned to the income approach and a weighting of 25% was assigned to the market approach. As a result of the valuation, we recorded an impairment charge of $46.0 million in the fourth quarter of 2017 , reducing the carrying value of the BES goodwill. A 0.5% change in the discount rate used in the cash flow analysis would result in a change in the fair value of approximately $12.6 million , which would have resulted in a change to goodwill impairment. A 0.5% change in the growth rate assumed in the calculation of the terminal value of cash flows would result in a change in the fair value by $5.3 million , which would have resulted in a change to goodwill impairment. As a result of this impairment charge, the net book value of the BES reporting unit was equal to its estimated fair value as of that date. The fair values of all other reporting units exceeded their carrying values by amounts that did not indicate a significant risk of goodwill impairment based on current projections and valuations. A summary of changes in goodwill during 2017 is as follows (in thousands): 2017 U.S. Retail Incentives & Rewards International Total Balance, beginning of period $ 99,685 $ 366,508 $ 104,205 $ 570,398 Goodwill impairment (31,500 ) (46,000 ) — (77,500 ) Re-allocation of international Incentives goodwill — (7,152 ) 7,152 — Re-allocation of e-commerce goodwill (10,505 ) 10,505 — — Acquisitions (see Note 2—Business Acquisitions and Divestiture ) 81,850 9,919 1,948 93,717 Measurement period adjustments for 2016 acquisitions 2,121 — (1,509 ) 612 Asset held for sale (see Note 6—Consolidated Financial Statement Details ) (8,991 ) — — (8,991 ) Divestiture of business (see Note 2—Business Acquisitions and Divestiture ) — — (28,843 ) (28,843 ) Foreign currency translation adjustments — 1,518 12,494 14,012 Balance, end of year $ 132,660 $ 335,298 $ 95,447 $ 563,405 Accumulated goodwill impairment charges were $77.5 million as of year-end 2017. A summary of changes in goodwill during 2016 is as follows (in thousands): 2016 U.S. Retail Incentives & Rewards International Total Balance, beginning of year $ 42,729 $ 310,604 $ 49,156 $ 402,489 Re-allocation of e-commerce goodwill 2,671 (2,671 ) — — Acquisition of GiftCards 34,427 33,279 — 67,706 Acquisition of NimbleCommerce 10,505 — — 10,505 Acquisition of Extrameasures — 27,360 — 27,360 Acquisition of Grass Roots — — 54,219 54,219 Acquisition of Samba — — 4,074 4,074 Acquisition of Spafinder 9,353 — — 9,353 Measurement period adjustments for 2015 acquisitions — (1,235 ) — (1,235 ) Foreign currency translation adjustments — (829 ) (3,244 ) (4,073 ) Balance, end of year $ 99,685 $ 366,508 $ 104,205 $ 570,398 The Company had no accumulated goodwill impairment charges as of year-end 2016 . Intangible assets as of year-end 2017 are as follows (dollars in thousands): Weighted-Average Remaining Life in Years Gross Accumulated Amortization Net Distribution partner and customer relationships, including backlog 9 $ 569,445 $ (157,618 ) $ 411,827 Patents 5 5,003 (4,584 ) 419 Domain names, trade names and other intangibles 8 24,699 (5,264 ) 19,435 Total intangible assets $ 599,147 $ (167,466 ) $ 431,681 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 and customer relationships, including backlog 10 $ 447,665 $ (117,639 ) $ 330,026 Patents 7 6,944 (4,547 ) 2,397 Domain names, trade names and other intangibles 10 21,238 (3,476 ) 17,762 Total intangible assets $ 475,847 $ (125,662 ) $ 350,185 Intangible amortization expense was $67.9 million , $62.0 million and $32.4 million for 2017, 2016 and 2015 , respectively. The following table presents future intangible asset amortization as of year-end 2017 (in thousands): Fiscal Year Total 2018 $ 65,278 2019 57,569 2020 53,629 2021 49,980 2022 47,097 Thereafter 158,128 Total amortization $ 431,681 |
Equity Incentive Plans and Stoc
Equity Incentive Plans and Stock Based Compensation | 12 Months Ended |
Dec. 30, 2017 | |
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 shares. In June 2017, on approval of our Board of Directors and stockholders, we further increased the shares available for issuance by 2,000,000 shares, limited the value of equity and cash awards made to non-employee directors in any calendar year to $750,000 , and prohibited payment of dividends and dividend equivalents on unearned and unvested awards. Under the terms of the 2013 Plan, we may issue stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance stock units and other incentive awards to our employees, consultants, officers and directors. As of year-end 2017 , 4,183,000 shares are available for grants under this plan, which includes the additional shares from the 2006 Plan and the 2007 Plan. These shares available for grants exclude shares related to certain performance stock units granted that may be potentially canceled due to non-achievement of the performance goals for the 2017 tranche. 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. We did not grant any stock option awards or stock appreciation rights during 2017 . The assumptions used to value the option grants for 2016 and 2015 are as follows: 2016 2015 Expected term (in years) 5 5 Expected volatility 34.8% - 34.9% 36.6% - 37.3% Risk-free rate 1.1% - 1.9% 1.4% - 1.7% Expected dividend yield 0% 0% 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 2017 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 2016 3,065,293 $ 26.57 3.6 $ 35,381 2017 activity: Granted — $ — Canceled (86,083 ) $ 35.37 Exercised (621,697 ) $ 19.75 Outstanding, year-end 2017 2,357,513 $ 28.04 2.8 $ 20,784 Exercisable, year-end 2017 1,633,701 $ 24.21 2.1 $ 19,757 The weighted average grant-date fair values of stock options and stock appreciation rights granted during 2016 and 2015 were $11.98 and $13.26 per share, respectively. We recognized stock-based compensation expense for options and appreciation rights of $3.5 million , $7.2 million and $7.7 million in 2017 , 2016 and 2015 , respectively. Stock-based compensation is reported in the operating expense line item corresponding to the applicable employee compensation expense. As of year-end 2017 , the unamortized stock-based expense for options and appreciation rights totaled $3.6 million and is expected to be recognized over the remaining weighted average period of 1.6 years. The total intrinsic value of options exercised and options surrendered upon cashless exercise totaled $12.3 million , $5.6 million and $21.7 million during 2017 , 2016 and 2015 , 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 $29.0 million , $23.4 million and $17.2 million in 2017 , 2016 and 2015 , 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 2017 , 2016 and 2015 totaled $26.1 million , $18.4 million and $13.8 million , respectively. As of year-end 2017 , unrecognized compensation expense related to nonvested restricted stock and restricted stock unit awards totaled $53.9 million , and is expected to be recognized over the weighted average period of 2.3 years. The following table summarizes restricted stock and restricted stock unit awards during 2017 : Restricted Stock and Restricted Stock Unit Awards Weighted Average Grant-Date Fair Value Nonvested, year-end 2016 1,981,654 $ 35.45 2017 activity: Granted 1,219,419 $ 38.44 Vested (686,160 ) $ 33.80 Forfeited (357,209 ) $ 37.13 Nonvested, year-end 2017 2,157,704 $ 37.39 Performance Stock 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 $0.6 million , $2.4 million and $4.0 million during 2017 , 2016 and 2015 , respectively, and is reported in the operating expense line item corresponding to the applicable employee compensation expense. No performance stock units vested during 2016 and 2015 . The fair values of performance stock awards that vested during 2017 totaled $5.1 million . As of year-end 2017 , unrecognized compensation expense related to nonvested performance stock unit awards totaled $5.6 million and is expected to be recognized over the weighted average period of 1.2 year. The changes in performance stock unit awards for 2017 are as follows: Performance Stock Unit Awards Weighted Average Grant-Date Fair Value Nonvested, year-end 2016 328,106 $ 33.07 2017 activity: Granted 208,925 $ 38.45 Vested (134,010 ) $ 26.73 Forfeited (135,608 ) $ 36.31 Nonvested, year-end 2017 267,413 $ 38.80 Employee Stock Purchase Plan During 2017 , 2016 and 2015 , we issued 189,727 , 193,092 and 124,324 shares, respectively, of our common stock under our ESPP and recognized $1.7 million , $1.7 million and $1.2 million of expense, respectively. As of year-end 2017 , there were 1,382,000 shares reserved for future issuances under the ESPP. The assumptions used to value our ESPP for 2017 , 2016 and 2015 are as follows: 2017 2016 2015 Expected term (in years) 0.5 0.5 0.5 Expected volatility 30.65% - 40.63% 30.12% - 36.72% 32.40% - 34.96% Risk-free rate 1.0% - 1.3% 0.4% - 0.5% 0.1% - 0.3% Expected dividend yield 0% 0% 0% 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 2017 , 2016 and 2015 (in thousands): 2017 2016 2015 Processing and services $ 7,301 $ 5,831 $ 6,594 Sales and marketing 11,320 10,856 8,536 Cost of products sold 54 102 37 General and administrative 14,033 15,803 14,963 Total stock-based compensation expense $ 32,708 $ 32,592 $ 30,130 During each of 2017 and 2016, the amount of stock-based compensation capitalized was $2.0 million . We early adopted ASU 2016-09 Compensation—Stock Compensation (Topic 718) 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 in cash flow provided by operating activities for 2015 with a corresponding decrease in cash flow provided by financing activities. 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, the dividend is paid 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. As of the fiscal year-end 2017, all these related equity awards have vested. |
Equity Awards Issued to Strateg
Equity Awards Issued to Strategic Partners | 12 Months Ended |
Dec. 30, 2017 | |
Equity [Abstract] | |
Equity Awards Issued to Strategic Partners | Equity Awards Issued to Strategic Partners Warrants Issued to Strategic Partners In April 2013, in conjunction with extending a service agreement with a strategic 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. The warrant became exercisable in October 2013. Additionally, pursuant to the strategic partner’s anti-dilutive rights, we issued a warrant to purchase 15,306 shares at an exercise price of $20.00 per share. We measured the fair value of the warrant using a Black-Scholes option pricing model and recorded in Additional paid-in capital with a corresponding increase to Intangible assets, which we amortized over the term of the agreement. In November 2015, the strategic partner net exercised all of its fully vested warrants, resulting in the issuance of 859,757 shares. In October 2017, in conjunction with signing an amendment to this service agreement, we issued a fully vested warrant with no service or performance conditions, to purchase up to $20.0 million of our common stock based on the market price of our stock when exercised, as defined in the agreement, subject to a $15.00 floor price and at an exercise price of $0.001 per share. We recorded the fair value of the warrant of $20.0 million within Other current liabilities with a corresponding increase to Intangible assets, which we amortized over the term of the related service agreement, as extended by the amendment. The warrant became exercisable on January 1, 2018. In January 2018, the strategic partner exercised the warrant, resulting in the issuance of 546,395 shares of our common stock. In March 2015, in conjunction with extending our services agreement with a second strategic partner, we increased the shares issuable under an existing warrant that was originally issued in November 2010, by 166,252 to 550,000 shares at an exercise price of $16.30 per share. We recorded the fair value of the incremental 166,252 shares issuable of $3.1 million in Additional paid-in capital with a corresponding increase to Intangible assets, which we amortized over the term of the extended agreement. In May 2015, the strategic partner net exercised the warrant, resulting in the issuance of 301,662 shares of our common stock. Total stock-based compensation expense included in Partner distribution expense were $4.9 million , $4.9 million and $4.7 million in 2017 , 2016 and 2015 , respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Recent Tax Legislation On December 22, 2017, the Tax Reform Act was signed into law by the President of the United States. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. federal corporate tax rate from 35% to 21% effective for our fiscal year ending December 29, 2018, while also implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted. The Tax Reform Act reduces the federal corporate tax rate to 21% effective for our fiscal year ending December 29, 2018. We recorded income tax expense for the remeasurement of the net deferred tax assets of $125.1 million to our income tax expense during the year ended December 30, 2017. The Deemed Repatriation Transition Tax (the “Transition Tax”) is a tax on previously untaxed accumulated earnings and profits (“E&P”) of certain of our foreign subsidiaries. To determine the amount of the Transition Tax, we must determine, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. We are able to make a reasonable estimate and recorded a provisional Transition Tax obligation of $1.1 million . The Tax Reform Act also includes a provision to tax global intangible low-taxed income (“GILTI”) of foreign subsidiaries. We will be subject to the GILTI provision effective for our fiscal year ending December 29, 2018 and are in the process of analyzing its effects, including how to account for the GILTI provision from an accounting policy standpoint. We recognized the income tax effects of the Tax Reform Act in our 2017 financial statements in accordance with Staff Accounting Bulletin No. 118 (“SAB 118”), which provides SEC staff guidance for the application of ASC Topic 740, Income Taxes, in the reporting period in which the 2017 Tax Reform Act was signed into law. The guidance addresses how a company recognizes provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Tax Reform Act. As such, the financial results reflect the income tax effects of the Tax Reform Act for which the accounting under ASC Topic 740 is complete and provisional amounts for those specific income tax effects of the Tax Reform Act for which the accounting under ASC Topic 740 is incomplete but a reasonable estimate could be determined. Pursuant to the SAB 118, we are allowed a measurement period of up to one year after the enactment date of the Tax Reform Act to finalize the recording of the related tax impacts. The provisional income tax expense is subject to revisions as we complete our analysis of the Tax Reform Act, collect and prepare necessary data, and interpret any additional guidance issued by the U.S. Treasury Department, IRS, FASB, and other standard-setting and regulatory bodies. Adjustments may materially impact our provision for income taxes and effective tax rate in the period in which the adjustments are made. Our accounting for the tax effects of the Tax Reform Act will be completed during the measurement period. 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 2017, 2016 and 2015 are as follows (in thousands): 2017 2016 2015 Domestic $ (49,833 ) $ (3,533 ) $ 72,298 Foreign 12,743 4,469 307 Income before income tax expense (benefit) $ (37,090 ) $ 936 $ 72,605 The components of income tax expense (benefit) for the years ended 2017, 2016 and 2015 are as follows (in thousands): 2017 2016 2015 Current: Federal $ 483 $ (1,215 ) $ (6,403 ) State (707 ) 949 (942 ) Foreign 7,748 5,063 4,331 Total current 7,524 4,797 (3,014 ) Deferred: Federal 118,974 (3,186 ) 28,650 State (4,772 ) (1,275 ) 6,003 Foreign (3,926 ) (4,438 ) (4,843 ) Total deferred 110,276 (8,899 ) 29,810 Income tax expense (benefit) $ 117,800 $ (4,102 ) $ 26,796 A reconciliation of the provision for income taxes at the U.S. federal statutory income tax rate to our income taxes for 2017, 2016 and 2015 is as follows (dollars in thousands): 2017 2016 2015 Amount Rate Amount Rate Amount Rate Income tax expense (benefit) at federal statutory rate $ (12,982 ) 35.0 % $ 327 35.0 % $ 25,412 35.0 % State income tax expense (benefit), net of federal impact (3,854 ) 10.4 % 439 46.9 % 3,469 4.8 % Foreign rate differential (761 ) 2.1 % (939 ) (100.3 )% (773 ) (1.1 )% Change in fair value of contingent consideration — — % — — % (2,978 ) (4.1 )% Compensation subject to certain limits 702 (1.9 )% 894 95.5 % 1,180 1.6 % Stock-based compensation (2,341 ) 6.3 % (956 ) (102.1 )% 316 0.4 % Change in valuation allowance 1,732 (4.7 )% — — % — — % Acquisition related 152 (0.4 )% (2,945 ) (314.6 )% 758 1.0 % R&D credits (948 ) 2.6 % (1,440 ) (153.9 )% (1,130 ) (1.5 )% Goodwill impairment 10,670 (28.8 )% — — % — — % U.S. Tax Reform Impact 126,198 (340.2 )% — — % — — % Other (768 ) 2.0 % 518 55.2 % 542 0.8 % Total income tax expense (benefit) /effective tax rate $ 117,800 (317.6 )% $ (4,102 ) (438.3 )% $ 26,796 36.9 % The components of our deferred tax assets (liabilities) at year-end 2017 and 2016 were as follows (in thousands): 2017 2016 Deferred tax assets: Depreciation and amortization $ 112,642 $ 217,497 Net operating loss carryforwards 38,070 49,473 Accrued expenses 7,019 4,932 Non-deductible reserves 6,829 9,450 Deferred revenue 32,198 29,803 Stock-based compensation 10,293 21,497 Convertible debt 2,416 4,636 Other 8,787 8,622 Deferred tax assets 218,254 345,910 Valuation allowance (8,641 ) (8,283 ) Total deferred tax assets 209,613 337,627 Deferred tax liabilities: Prepaids (1,200 ) (3,212 ) Total deferred tax liabilities (1,200 ) (3,212 ) Net deferred tax assets $ 208,413 $ 334,415 Balance sheet presentation: Long-term deferred tax assets 236,496 362,302 Long-term deferred tax liabilities (28,083 ) (27,887 ) Net deferred tax assets $ 208,413 $ 334,415 At year-end 2017 , we had net operating loss (“NOL”) carryforwards for federal income tax purposes of approximately $131.1 million , resulting from our acquisitions of CashStar in 2017, 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 $45.9 million , of which $3.9 million expire at various dates from 2018 to 2036 and the remaining balance carries forward indefinitely. At year-end 2017 and 2016 , we maintained a valuation allowance with respect to certain of our deferred tax assets relating primarily to U.S. 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 2017 was a $0.4 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 2017 , 2016 , and 2015. At year-end 2017 , we are currently evaluating outside basis differences with respect to our foreign operations due to the recently enacted Tax Reform Act. To the extent there are undistributed earnings of our foreign operations (approximately $38.2 million ) they are considered permanently reinvested. Accordingly, no deferred tax liability has been recognized, with exception of the Tax Reform Act’s Transition Tax, 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 income tax liability is not practicable; however, unrecognized foreign tax credits may be available to reduce some portion of the income tax liability. The following table presents the aggregate changes in the balance of gross unrecognized tax benefit (in thousands): 2017 2016 2015 Gross unrecognized tax benefits, beginning balance $ 13,877 $ 12,680 $ 3,808 Increase for tax position from prior fiscal years and current year acquisitions 6,004 977 8,633 Decrease for tax position from prior fiscal years (2,234 ) (388 ) (446 ) Settlements (177 ) — — Increases for tax positions taken during current fiscal year 601 760 938 Lapses of statutes of limitations (2,879 ) (41 ) (161 ) Foreign exchange rate difference 151 (111 ) (92 ) Gross unrecognized tax benefits, ending balance $ 15,343 $ 13,877 $ 12,680 Changes in the balance of gross unrecognized tax benefit due to lapses of statutes of limitations for 2017 are primarily related to unrecognized state tax benefits which are included on the “State income tax expense (benefit)” line of the effective tax rate reconciliation table above. As of year-end 2017 and 2016 , the balance of unrecognized tax benefits included tax positions of $14.0 million and $11.3 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 $(1.0) million, $0.4 million and $(0.1) million for 2017, 2016 and 2015, respectively . Accrued interest and penalties totaled $0.6 million and $1.6 million at year-end 2017 and 2016, 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 2011 is complete and with limited exceptions we are no longer subject to federal income tax examinations for fiscal years before 2012, and are no longer subject to state and local income tax examinations for fiscal years before 2012. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 30, 2017 | |
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 $21.1 million , $17.2 million and $10.5 million for 2017 , 2016 and 2015 , respectively. Future minimum operating lease payments as of year-end 2017 are as follows (in thousands): Fiscal Year Operating Leases 2018 $ 19,829 2019 16,099 2020 14,100 2021 13,838 2022 10,698 Thereafter 27,404 Total minimum lease payments $ 101,968 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 2017 are as follows (in thousands): Fiscal Year Distribution Partner Commitments 2018 $ 123,922 2019 47,771 2020 30,458 2021 26,751 2022 and after 26,574 Distribution partner commitments (uncertainty in timing of future payments) 6,232 Total $ 261,708 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, 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. 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 or other value added taxes typically on commissions or fees received from non-resident content providers. After the application of third party indemnities, our present exposure is approximately $4.3 million , primarily in a single jurisdiction. If we were to be assessed for this exposure, we believe it is probable that we will prevail. |
Segment Reporting and Enterpris
Segment Reporting and Enterprise-Wide Disclosures | 12 Months Ended |
Dec. 30, 2017 | |
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 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. 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 strategic 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): 2017 U.S. Retail Incentives & Rewards International Consolidated Total operating revenues $ 1,233,861 $ 338,311 $ 659,434 $ 2,231,606 Partner distribution expense 665,088 22,793 352,425 1,040,306 Operating revenue net of distribution partner expense 568,773 315,518 307,009 1,191,300 Other operating expenses 538,977 353,511 303,420 1,195,908 Segment profit (loss) / Operating income (loss) $ 29,796 $ (37,993 ) $ 3,589 (4,608 ) Other income (expense) (32,482 ) Income (loss) before income tax expense $ (37,090 ) Significant noncash charges $ 98,097 $ 94,597 $ 36,793 2016 U.S. Retail Incentives & Rewards International Consolidated Total operating revenues $ 1,125,757 $ 280,217 $ 493,804 $ 1,899,778 Partner distribution expense 595,893 20,419 316,830 933,142 Operating revenue net of distribution partner expense 529,864 259,798 176,974 966,636 Other operating expenses 467,203 287,882 188,302 943,387 Segment profit (loss) / Operating income $ 62,661 $ (28,084 ) $ (11,328 ) 23,249 Other income (expense) (22,313 ) Income before income tax expense $ 936 Significant noncash charges $ 53,751 $ 85,171 $ 27,029 2015 U.S. Retail Incentives & Rewards International Consolidated Total operating revenues $ 1,165,828 $ 197,060 $ 438,190 $ 1,801,078 Partner distribution expense 577,661 16,591 279,791 874,043 Operating revenue net of distribution partner expense 588,167 180,469 158,399 927,035 Other operating expenses 465,464 206,121 167,704 839,289 Segment profit (loss) / Operating income $ 122,703 $ (25,652 ) $ (9,305 ) 87,746 Other income (expense) (15,141 ) Income before income tax expense $ 72,605 Significant noncash charges $ 46,719 $ 45,678 $ 13,806 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 2017 , 2016 and 2015 (dollars in thousands): 2017 2016 2015 Revenue Percent of Total Revenue Revenue Percent of Total Revenue Revenue Percent of Total Revenue Retail $ 1,764,092 79.0 % $ 1,383,499 72.8 % $ 1,453,129 80.6 % Incentives 338,311 15.2 % 289,140 15.2 % 211,964 11.8 % Other 129,203 5.8 % 227,139 12.0 % 135,985 7.6 % Total $ 2,231,606 100.0 % $ 1,899,778 100.0 % $ 1,801,078 100.0 % Geography The following table presents revenue by geographic area generally based on the location of the card activation or value load for 2017 , 2016 and 2015 (dollars in thousands): 2017 2016 2015 Revenue Percent of Total Revenue Revenue Percent of Total Revenue Revenue Percent of Total Revenue United States $ 1,546,898 69.3 % $ 1,382,188 72.8 % $ 1,352,872 75.1 % International 684,708 30.7 % 517,590 27.2 % 448,206 24.9 % Total $ 2,231,606 100.0 % $ 1,899,778 100.0 % $ 1,801,078 100.0 % 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 2017 and 2016 (dollars in thousands): 2017 2016 Long-Lived Assets Percent of Total Long-Lived Assets Long-Lived Assets Percent of Total Long-Lived Assets United States $ 145,607 84.3 % $ 149,020 86.4 % Canada 18,054 10.5 % 16,002 9.3 % Other foreign countries 8,946 5.2 % 7,359 4.3 % Total $ 172,607 100.0 % $ 172,381 100.0 % 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 10% , 6% and 4% of our total operating revenues for 2017 ; 12% , 7% and 5% for 2016 ; and 12% , 5% and 9% for 2015 . Outstanding receivables from such distribution partners, consisting primarily of Settlement receivables , totaled $ 44.7 million , $23.8 million and $ 73.5 million at year-end 2017 , respectively, and $ 26.9 million , $ 14.5 million and $ 28.0 million at year-end 2016 , 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% , 13% and 15% of our total operating revenues for 2017 , 2016 and 2015 , respectively. Outstanding receivables from this issuing bank totaled $ 86.0 million and $ 91.3 million at year-end 2017 and 2016 , respectively. One content provider accounted for 11% , 13% and 14% of our total operating revenues for 2017 , 2016 and 2015 , respectively. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 30, 2017 | |
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): 2017 2016 2015 Basic Diluted Basic Diluted Basic Diluted Net income attributable to Blackhawk Network Holdings, Inc. $ (155,768 ) $ (155,768 ) $ 4,658 $ 4,658 $ 45,609 $ 45,609 Distributed and undistributed earnings allocated to participating securities — — (28 ) (28 ) (151 ) (147 ) Net income attributable to common stockholders $ (155,768 ) $ (155,768 ) $ 4,630 $ 4,630 $ 45,458 $ 45,462 Weighted-average common shares outstanding 56,287 56,287 55,734 55,734 54,294 54,294 Common share equivalents — 1,526 2,019 Weighted-average shares outstanding 56,287 57,260 56,313 Earnings (loss) per share $ (2.77 ) $ (2.77 ) $ 0.08 $ 0.08 $ 0.84 $ 0.81 The weighted-average common shares outstanding for diluted EPS excluded approximately 5,016,000 , 1,663,000 and 500,000 potential common stock outstanding for 2017, 2016 and 2015, 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. Share Repurchase In October 2016, the Company's Board of Directors approved a stock repurchase program that authorized the Company to purchase up to $100.0 million of the Company's outstanding common stock over a period of up to two years. Under the repurchase program, purchases of shares of common stock may be made from time to time in the open market, or in privately negotiated transactions, or as otherwise may be determined by the authorized officers of the Company, in compliance with applicable state and federal securities laws. In October 2017, we repurchased 1.2 million shares for $40.0 million . As of year-end 2017 , $60.0 million remained available for stock repurchases. For more information regarding the shares repurchased in 2016, see Note 4 — Financing . |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Dec. 30, 2017 | |
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, we were a subsidiary of Safeway. 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. 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. 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 (in thousands): 2015 OPERATING REVENUES: Commissions and fees $ 72 Program and other fees 471 Product sales 1,323 Total operating revenues $ 1,866 OPERATING EXPENSES: Partner distribution expense 17,069 Processing and services (288 ) General and administrative 607 Total operating expenses $ 17,388 Distribution Commissions and Revenue Safeway and Albertsons/Safeway is one of our significant retail distribution partners. Partner distribution expense related to Safeway and Albertsons/Safeway as a related party totaled $17.1 million (through April 2015) for 2015. 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) for 2015. 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) in 2015 , 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 investments, we recognized $0.3 million of revenue in each of 2017, 2016 and 2015, which we report in Commissions and fees in our consolidated statements of income, related to our distribution of their products. 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. 30, 2017 | |
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 2017 and 2016 is as follows. Q4'17 Q3'17 Q2'17 Q1'17 Q4'16 Q3'16 Q2'16 Q1'16 (in thousands, except per share data) Operating revenues $ 941,965 $ 419,259 $ 463,146 $ 407,236 $ 780,550 $ 361,560 $ 391,206 $ 366,462 Operating income (loss) (1) $ 29,525 $ (12,701 ) $ (4,401 ) $ (17,031 ) $ 51,363 $ (10,093 ) $ (14,977 ) $ (3,044 ) Net income (loss) attributable to Blackhawk Network Holdings, Inc. (2) $ (128,165 ) $ (7,766 ) $ (6,351 ) $ (13,486 ) $ 24,650 $ (5,102 ) $ (11,337 ) $ (3,553 ) Earnings (loss) per share: Basic $ (2.28 ) $ (0.14 ) $ (0.11 ) $ (0.24 ) $ 0.44 $ (0.09 ) $ (0.20 ) $ (0.06 ) Diluted $ (2.28 ) $ (0.14 ) $ (0.11 ) $ (0.24 ) $ 0.43 $ (0.09 ) $ (0.20 ) $ (0.06 ) (1) We recorded goodwill impairment charges of $9.0 million and $68.5 million in the third and fourth quarters of 2017 , respectively. See Note 7 — Goodwill and Other Intangible Assets for additional information on these charges. (2) As a result of the Tax Reform Act that was signed into law on December 22, 2017, we recorded income tax expense for the remeasurement of the net deferred tax assets of $125.1 million to our income tax expense during the fourth quarter of 2017. See Note 10 — Income Taxes for additional information on these charges. |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event Merger Agreement On January 16, 2018, we announced that we had entered into an agreement and plan of merger (the “Merger Agreement”), dated as of January 15, 2018, with BHN Holdings, Inc., a Delaware corporation (“Parent”), and BHN Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”). The Merger Agreement provides, among other things and subject to the terms and conditions set forth therein, that Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation and as a wholly owned subsidiary of Parent. Our Board of Directors has unanimously approved the Merger Agreement. Our stockholders will be asked to vote on the adoption of the Merger Agreement at a special stockholders meeting that will be held on a date to be announced. The closing of the Merger is subject to the adoption of the Merger Agreement by the affirmative vote of a majority of the outstanding shares of common stock of the Company entitled to vote at the special stockholders meeting. We currently expect the transaction, which is subject to stockholder and regulatory approvals, and other customary closing conditions, to close mid-2018. Under the terms of the Merger Agreement, Parent has agreed to acquire the Company in an all-cash transaction for a total consideration of approximately $3.5 billion , which includes repayment of our debt. Upon the terms and subject to the conditions of the merger agreement, each share of our common stock issued and outstanding immediately prior to the effective time of the Merger (other than shares of common stock owned by us, Parent, Merger Sub, any direct or indirect wholly owned subsidiary of us or of Parent and shares of common stock owned by our stockholders who have perfected and not withdrawn a demand for (or otherwise lost their right to) appraisal rights pursuant to Section 262 of the General Corporation Law of the State of Delaware) will at the effective time of the Merger be converted into the right to receive $45.25 in cash, without interest and subject to required withholding taxes, representing a premium of 24.0% over our closing share price of $36.50 on January 12, 2018 and a premium of 29.3% over the average closing share price during the 90 calendar days ended January 12, 2018. The Merger Agreement contains certain termination rights for the parties, including that, in general, either Parent or the Company may terminate the Merger Agreement if the Merger is not consummated by July 31, 2018 (subject to extension of up to three months in the aggregate under certain circumstances) or if stockholder approval is not obtained at a meeting of our stockholders at which a vote on the adoption of the Merger Agreement is taken. We may also terminate the Merger Agreement if Parent fails to consummate the Merger following satisfaction or waiver of the conditions to Parent’s and Merger Sub’s obligations to consummate the Merger and completion of a specified marketing period for Parent’s debt financing. Parent may also terminate the Merger Agreement if our Board of Directors makes a Change of Recommendation (as defined in the Merger Agreement) or fails to recommend against a publicly disclosed tender offer or exchange offer within a specified time period. Other termination rights are set forth in the Merger Agreement. The Merger Agreement provides that, upon termination of the Merger Agreement under specified circumstances, we will be required to pay Parent a termination fee of $109 million . The Merger Agreement further provides that Parent will be required to pay us a termination fee of $136.2 million if the Merger Agreement is terminated under specified circumstances. The Merger Agreement also provides for reimbursement of Parent’s expenses by us up to $6.8 million if the Merger Agreement is terminated under specified circumstances and a termination fee is payable by us, and reimbursement of Parent’s expenses by us up to $27.2 million if the Merger Agreement is terminated as a result of the failure to obtain the requisite affirmative vote adopting the Merger Agreement at a special stockholders meeting approval and no termination fee is otherwise payable. Parent has obtained equity and debt financing commitments for the transactions contemplated by the Merger Agreement. Silver Lake Partners V, L.P. (“Silver Lake”) and P2 Capital Master Fund I, L.P. (“P2 Capital”) have committed to capitalize the Parent to fund the transactions. Additionally, Silver Lake and P2 Capital have each entered into a limited guarantee, pursuant to which they have agreed to guarantee, on the terms and conditions set forth therein, their respective applicable percentage of the payment obligations of Parent with respect to (i) the termination fee of $136.2 million , if and when due pursuant to the Merger Agreement and (ii) certain reimbursement and indemnification obligations that may become payable by Parent pursuant to the Merger Agreement. In connection with the execution of the Merger Agreement, Parent entered into a voting and support agreement (the “Voting and Support Agreement”) with P2 Capital, P2 Capital Master Fund VI, L.P., a Delaware limited partnership, and P2 Capital Master Fund XII, L.P., a Delaware limited partnership (together, the “P2 Stockholders”) and P2 Capital Partners, LLC, a Delaware limited liability company (together, with the P2 Stockholders, the “P2 Parties”), pursuant to which the P2 Stockholders agreed, among other things, to vote the shares of Company common stock over which they have voting power (i) in favor of the adoption of the Merger Agreement, approval of the Merger and the transactions contemplated by the Merger Agreement and in favor of any other matter submitted to the Company’s stockholders necessary to consummate the Merger and (ii) against a change in the Board of Directors, against alternative acquisition proposals and against any other proposal or action that would constitute a breach of the Merger Agreement or prevent, frustrate, impede, interfere with, materially delay or adversely affect the Merger or other transactions contemplated by the Merger Agreement. In addition, each of the P2 Stockholders irrevocably granted to, and appointed, Parent and any duly appointed designee thereof as such P2 Stockholder’s proxy and attorney-in-fact, for and in the name, place and stead of such P2 Stockholder, to attend any meeting of the Company’s shareholders on behalf of such P2 Stockholder with respect to the matters set forth above in clauses (i) and (ii), to include such P2 Stockholder’s shares of Company common stock in any computation for purposes of establishing a quorum at any such meeting and to vote such P2 Stockholder’s shares of Company common stock in connection with any such meeting. The Voting and Support Agreement also contains certain restrictions on the transfer of shares of common stock by the P2 Stockholders and contains a waiver of appraisal rights. The Voting and Support Agreement will terminate upon the earlier of the consummation of the Merger, the valid termination of the Merger Agreement in accordance with its terms or the mutual written consent of the parties. |
The Company and Significant A24
The Company and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 30, 2017 | |
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 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 2017 and 2016 . 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). 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. |
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 30, 2017 (year-end 2017 or 2017 ), the 52 -week period ended on December 31, 2016 (year-end 2016 or 2016 ) and the 52 -week period ended on January 2, 2016 (year-end 2015 or 2015 ). |
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 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, replaces nearly all current U.S. GAAP guidance on this topic with a comprehensive revenue measurement and recognition standard and expanded disclosure requirements. This new guidance provides a five-step analysis in determining when and how revenue is recognized. Under the new guidance, 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 new guidance requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We finalized our assessment of this new guidance in the fourth quarter of 2017 and adopted it using the full retrospective method in the first quarter of fiscal 2018 . We have identified the following areas that are affected by the adoption of this new standard: Revenue Content Provider Commissions —Under the new guidance, we will continue to recognize content provider commissions as revenue at the time of card activation, as our performance obligation to the content provider is complete. However, the actual revenue recognition treatment required under the new guidance may be dependent on contract-specific terms and, therefore, may vary in some instances. Consumer Purchase Fees and Program Management Fees —Under the new guidance, we consider the transaction price for our open loop gift cards, including our Visa gift card, to include consumer purchase fees and program management fees. Under the new guidance, we have identified three performance obligations - distribution-and-activation, redemption service and customer care. Revenue from consumer purchase fees and program management fees, included within Commissions and fees and Program and other fees , respectively, related to our Visa gift cards will predominantly be recognized as revenue at the time of card activation when our distribution-and-activation obligation is complete. The remainder will be recognized over the estimated period of card redemption as redemption service and customer care obligations are performed. Under current GAAP, we defer these revenues and recognize them based on the redemption pattern of the card. Interchange revenue will be recognized over the period of card redemption as we provide information required for card redemption, similar to our current revenue recognition. Additionally, revenue from program management fees related to our proprietary Visa gift cards issued by MetaBank will be based on a blended rate over the appropriate periods as required by the contract-specific terms compared to a contractually stated rate under the current accounting policy. Although we expect the blended rate to be lower than the contract rate initially, the economics of the arrangement will be the same over the term of the contract period. Under current GAAP, we defer consumer purchase fees and program management fees related to our Visa gift cards in Deferred revenue and recognize revenue ratably in proportion to the historical redemption patterns of the card portfolio over the estimated life of the card. Rebate Processing Fees —While we expect the recognition of revenue for rebates fulfilled by checks or closed loop cards to remain unchanged under the new guidance, the new guidance will require us to recognize revenue for rebates fulfilled with open loop incentive cards when we fulfill the cards to the end consumer versus ratably in proportion to historical redemption patterns as our performance obligation for rebate processing is complete at time of fulfillment. Incentive Merchandise Rewards —The adoption of the new guidance is expected to classify certain incentive merchandise rewards costs as a reduction to revenue versus a cost of products sold. Under the new accounting guidance, these costs will only be recorded as a cost of product sold if it is determined that we control the goods or services before they are transferred to the customer. In doing so, we will evaluate (i) if we are primarily responsible for fulfilling the promise to provide the good or service; (ii) if we have inventory risk before the good or service has been transferred to customer or after transfer of control to the customer; and (iii) if we have discretion in establishing the price for the good or service. Operating Expenses Partner Distribution Expense —Under the new guidance, partner distribution expense for Visa gift and other open loop incentive cards will be recognized at the time of card activation when our distribution-and-activation obligation is complete. Under current GAAP, we defer these expenses and amortize them based on the redemption pattern of the card. Processing and Services —Under the new guidance, card production and upfront transaction processing fees for the Visa gift card and open loop incentive cards will be recognized at the time of card activation when our distribution-and-activation obligation is complete. Under current GAAP, these costs are deferred and expensed based on the same redemption pattern as the related revenue. Sales and Marketing —The accounting for the recognition of costs related to obtaining customer contracts under the new guidance is different from our current capitalization policy. The adoption of the new guidance will result in additional capitalized commissions which will be amortized over a longer term than our current policy. As part of our assessment and implementation plan, we evaluated and made changes to our policies, procedures and internal controls. Additionally, we evaluated the impact of this new guidance on the purchase accounting or intangibles assets from our recent acquisitions; this resulted in a reclassification of certain backlog assets to contract asset, with no impact to our consolidated net income. Expected Impact to Reported Results The expected impact of the new revenue guidance on select consolidated balance sheet line items as of year-end 2017 , 2016 and 2015 is shown below (in thousands). 2017 As Reported Impact of Adoption As Adjusted Assets: Other current assets $ 165,374 $ (21,892 ) $ 143,482 Intangible assets, net $ 431,681 $ (703 ) $ 430,978 Deferred income taxes $ 236,496 $ (699 ) $ 235,797 Other assets $ 115,236 $ 6,434 $ 121,670 Total assets $ 4,139,680 $ (16,860 ) $ 4,122,820 Liabilities: Consumer and customer deposits $ 252,822 $ 73,863 $ 326,685 Deferred revenue $ 179,684 $ (125,510 ) $ 54,174 Other current liabilities $ 102,823 $ 6,434 $ 109,257 Deferred income taxes, long-term $ 28,083 $ 1,002 $ 29,085 Other liabilities $ 16,747 $ 22,130 $ 38,877 Total liabilities $ 3,469,713 $ (22,081 ) $ 3,447,632 Stockholders’ equity: Accumulated other comprehensive loss $ (16,049 ) $ (72 ) $ (16,121 ) Retained earnings $ 72,571 $ 5,293 $ 77,864 Total stockholder’s equity $ 669,967 $ 5,221 $ 675,188 2016 As Reported Impact of Adoption As Adjusted Assets: Other current assets $ 131,375 $ (16,496 ) $ 114,879 Intangible assets, net $ 350,185 $ (2,637 ) $ 347,548 Deferred income taxes $ 362,302 $ (1,704 ) $ 360,598 Other assets $ 85,856 $ 5,641 $ 91,497 Total assets $ 3,595,778 $ (15,196 ) $ 3,580,582 Liabilities: Consumer and customer deposits $ 173,344 $ 58,653 $ 231,997 Deferred revenue $ 150,582 $ (100,617 ) $ 49,965 Other current liabilities $ 51,176 $ 7,258 $ 58,434 Deferred income taxes, long-term $ 27,887 $ 622 $ 28,509 Other liabilities $ 39,653 $ 13,849 $ 53,502 Total liabilities $ 2,803,383 $ (20,235 ) $ 2,783,148 Stockholders’ equity: Accumulated other comprehensive loss $ (48,877 ) $ (108 ) $ (48,985 ) Retained earnings $ 228,451 $ 5,147 $ 233,598 Total stockholder’s equity $ 792,395 $ 5,039 $ 797,434 2015 As Reported Impact of Adoption As Adjusted Assets: Other current assets $ 103,319 $ (17,002 ) $ 86,317 Intangible assets, net $ 240,898 $ (649 ) $ 240,249 Deferred income taxes $ 339,558 $ (7,264 ) $ 332,294 Other assets $ 81,764 $ 2,065 $ 83,829 Total assets $ 3,112,956 $ (22,850 ) $ 3,090,106 Liabilities: Consumer and customer deposits $ 84,761 $ 55,515 $ 140,276 Deferred revenue $ 113,458 $ (95,569 ) $ 17,889 Other current liabilities $ 57,342 $ — $ 57,342 Deferred income taxes, long-term $ 18,652 $ 419 $ 19,071 Other liabilities $ 14,700 $ 3,136 $ 17,836 Total liabilities $ 2,378,858 $ (36,499 ) $ 2,342,359 Stockholders’ equity: Accumulated other comprehensive loss $ (40,195 ) $ (94 ) $ (40,289 ) Retained earnings $ 207,973 $ 13,743 $ 221,716 Total stockholder’s equity $ 734,098 $ 13,649 $ 747,747 The expected impact of the new revenue guidance on select consolidated statements of income (loss) line items for 2017 , 2016 and 2015 is shown below (in thousands, except per share amounts). 2017 As Reported Impact of Adoption As Adjusted Operating revenues: Commissions and fees $ 1,468,867 $ 4,346 $ 1,473,213 Program and other fees $ 477,884 $ 7,214 $ 485,098 Product sales $ 182,014 $ (55,404 ) $ 126,610 Total operating revenues $ 2,231,606 $ (43,844 ) $ 2,187,762 Operating expenses: Partner distribution expense $ 1,040,306 $ 4,574 $ 1,044,880 Processing and services $ 448,657 $ 1,379 $ 450,036 Sales and marketing $ 329,983 $ (1,650 ) $ 328,333 Costs of products sold $ 170,493 $ (45,732 ) $ 124,761 Amortization of acquisition intangibles $ 62,794 $ (1,934 ) $ 60,860 Total operating expenses $ 2,236,214 $ (43,363 ) $ 2,192,851 Income tax expense (benefit) $ 117,800 $ (627 ) $ 117,173 Net loss attributable to Blackhawk Network Holdings, Inc. $ (155,768 ) $ 146 $ (155,622 ) Diluted loss per share $ (2.77 ) $ 0.01 $ (2.76 ) 2016 As Reported Impact of Adoption As Adjusted Operating revenues: Commissions and fees $ 1,315,755 $ (7,357 ) $ 1,308,398 Program and other fees $ 336,317 $ (12,905 ) $ 323,412 Product sales $ 153,408 $ (46,734 ) $ 106,674 Total operating revenues $ 1,899,778 $ (66,996 ) $ 1,832,782 Operating expenses: Partner distribution expense $ 933,142 $ (1,148 ) $ 931,994 Processing and services $ 355,268 $ 1,776 $ 357,044 Sales and marketing $ 274,799 $ (2,717 ) $ 272,082 Costs of products sold $ 143,267 $ (41,233 ) $ 102,034 Amortization of acquisition intangibles $ 57,060 $ (9,723 ) $ 47,337 Total operating expenses $ 1,876,529 $ (53,045 ) $ 1,823,484 Income tax expense (benefit) $ (4,102 ) $ (5,356 ) $ (9,458 ) Net income (loss) attributable to Blackhawk Network Holdings, Inc. $ 4,658 $ (8,595 ) $ (3,937 ) Diluted earnings per share $ 0.08 $ (0.15 ) $ (0.07 ) 2015 As Reported Impact of Adoption As Adjusted Operating revenues: Commissions and fees $ 1,259,801 $ (76 ) $ 1,259,725 Program and other fees $ 268,661 $ 1,896 $ 270,557 Product sales $ 167,745 $ (19,884 ) $ 147,861 Total operating revenues $ 1,801,078 $ (18,064 ) $ 1,783,014 Operating expenses: Partner distribution expense $ 874,043 $ 1,466 $ 875,509 Processing and services $ 304,232 $ 809 $ 305,041 Sales and marketing $ 260,638 $ (2,068 ) $ 258,570 Costs of products sold $ 154,625 $ (17,602 ) $ 137,023 Amortization of acquisition intangibles $ 27,550 $ (3,384 ) $ 24,166 Total operating expenses $ 1,713,332 $ (20,779 ) $ 1,692,553 Income tax expense (benefit) $ 26,796 $ 808 $ 27,604 Net income attributable to Blackhawk Network Holdings, Inc. $ 45,609 $ 1,907 $ 47,516 Diluted earnings per share $ 0.81 $ 0.03 $ 0.84 Adoption of the new revenue recognition standard is expected to affect the operating results of all three of our reporting segments; however, adoption is not expected to impact cash provided by or used in operating, investing or financing activities on our consolidated statements of cash flows. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 changes the 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. We plan to adopt this guidance for our 2019 fiscal year. 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 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. The new guidance will not impact financial results, but will result in a change in the presentation of restricted cash and restricted cash equivalents within the statement of cash flows. The Company adopted this guidance in the first quarter of 2018 using the retrospective approach. Recently Adopted Accounting Pronouncement 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 early adopted this standard in the first quarter of 2017. See Note 7 — Goodwill and Other Intangible Assets for information on goodwill impairment charges recorded during 2017. |
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. |
Restricted Cash | Restricted Cash Restricted cash includes cash balances that are legally or contractually restricted to use. Changes in restricted cash balances which represent customer deposits are included in operating activities in our consolidated statements of cash flows; all other changes are included in investing activities. |
Settlement Receivables | 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 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 | 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 $1.9 million and $2.6 million at year-end 2017 and 2016 , respectively. For Accounts receivable , the allowances were $6.6 million and $6.0 million at year-end 2017 and 2016 , 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, online 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. During 2017 and 2016, as a result of our platform integration efforts, we recorded impairment charges of $4.6 million and $5.5 million , respectively, related to previously acquired assets. This amount is presented within Transition and acquisition expense. We did not identify any indicators of impairment during 2015 . |
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. If we conclude that it is more likely than not that the fair value is less than its carrying value, we perform a qualitative impairment test of goodwill, in which we compare the fair value of the reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, we record an impairment loss equal to that difference, without consideration of the value of unrecorded intangible assets. See Note 7 — Goodwill and Other Intangible Assets for information related to goodwill impairment charges recognized during 2017. 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 strategic partner relationships resulting from the issuance of equity awards (see Note 2 — Business Acquisitions and Divestiture , Note 7 — Goodwill and Other Intangible Assets and Note 9 — Equity Awards Issued to Strategic 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 2017 , 2016 and 2015 . |
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 In October 2016, the Company's Board of Directors approved a stock repurchase program that authorized the Company to purchase up to $100.0 million of the Company's outstanding common stock over a period of up to two years . Under the repurchase program, purchases of shares of our common stock may be made from time to time in the open market, or in privately negotiated transactions, or as otherwise may be determined by the authorized officers of the Company, in compliance with applicable state and federal securities laws. In October 2017, an authorized committee of our board approved share repurchases under this program and adopted a resolution to hold these repurchased shares as treasury shares. 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 . In October 2017, we repurchased approximately 1.2 million shares for approximately $40.0 million . As of year-end 2017 , approximately $60.0 million remained available for stock repurchases. |
Warrant Liability | Warrant Liability In October 2017, in conjunction with extending an agreement with a strategic partner, we issued a fully vested warrant with no service or performance conditions to purchase up to $20.0 million of our common stock based on the market price of our stock when exercised, as defined in the agreement, subject to a $15.00 floor price and at an exercise price of $0.001 per share. In accordance with Accounting Standards Codification (“ASC”) 505-50 Equity based payments to non-employees , because the number of shares to be issued is predominantly based on a fixed monetary amount, we recorded the fair value of the warrant of $20.0 million within Other current liabilities with a corresponding increase to Intangible assets, which will be amortized over the term of the agreement. The warrant became exercisable on January 1, 2018. In January 2018, the strategic partner exercised the warrant, resulting in the issuance of 546,395 shares of our common stock. |
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 Recent Tax Legislation On December 22, 2017, the Tax Reform Act was signed into law by the President of the United States. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. federal corporate tax rate from 35% to 21% effective for our fiscal year ending December 29, 2018, while also implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted. We recognized the income tax effects of the Tax Reform Act in our 2017 financial statements in accordance with Staff Accounting Bulletin No. 118 (“SAB 118”), which provides SEC staff guidance for the application of ASC Topic 740, Income Taxes, in the reporting period in which the 2017 Tax Reform Act was signed into law. The guidance addresses how a company recognizes provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Tax Reform Act. As such, the financial results reflect the income tax effects of the Tax Reform Act for which the accounting under ASC Topic 740 is complete and provisional amounts for those specific income tax effects of the Tax Reform Act for which the accounting under ASC Topic 740 is incomplete but a reasonable estimate could be determined. Pursuant to the SAB 118, we are allowed a measurement period of up to one year after the enactment date of the Tax Reform Act to finalize the recording of the related tax impacts. The provisional income tax expense is subject to revisions as we complete our analysis of the Tax Reform Act, collect and prepare necessary data, and interpret any additional guidance issued by the U.S. Treasury Department, IRS, FASB, and other standard-setting and regulatory bodies. Adjustments may materially impact our provision for income taxes and effective tax rate in the period in which the adjustments are made. Our accounting for the tax effects of the Tax Reform Act will be completed during the measurement period. 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 “Safeway Merger”). As a result of the Safeway 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 Safeway 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 as of year-end 2017 remitted all refunds to Safeway. As of December 30, 2017, we have approximately $3.9 million in 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 and Divestiture ), 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. 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. We early adopted ASU 2016-04 Liabilities—Extinguishment of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Cards during our first quarter of 2016 on a modified retrospective basis. Accordingly, we recognized a cumulative adjustment benefit of $6.1 million , net of income taxes, to beginning Retained earnings as of January 3, 2016. 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 strategic 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 assets or liabilities related to our acquisitions or divestitures. 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. |
The Company and Significant A25
The Company and Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
Accounting Policies [Abstract] | |
Expected Impact to Reported Results | The expected impact of the new revenue guidance on select consolidated balance sheet line items as of year-end 2017 , 2016 and 2015 is shown below (in thousands). 2017 As Reported Impact of Adoption As Adjusted Assets: Other current assets $ 165,374 $ (21,892 ) $ 143,482 Intangible assets, net $ 431,681 $ (703 ) $ 430,978 Deferred income taxes $ 236,496 $ (699 ) $ 235,797 Other assets $ 115,236 $ 6,434 $ 121,670 Total assets $ 4,139,680 $ (16,860 ) $ 4,122,820 Liabilities: Consumer and customer deposits $ 252,822 $ 73,863 $ 326,685 Deferred revenue $ 179,684 $ (125,510 ) $ 54,174 Other current liabilities $ 102,823 $ 6,434 $ 109,257 Deferred income taxes, long-term $ 28,083 $ 1,002 $ 29,085 Other liabilities $ 16,747 $ 22,130 $ 38,877 Total liabilities $ 3,469,713 $ (22,081 ) $ 3,447,632 Stockholders’ equity: Accumulated other comprehensive loss $ (16,049 ) $ (72 ) $ (16,121 ) Retained earnings $ 72,571 $ 5,293 $ 77,864 Total stockholder’s equity $ 669,967 $ 5,221 $ 675,188 2016 As Reported Impact of Adoption As Adjusted Assets: Other current assets $ 131,375 $ (16,496 ) $ 114,879 Intangible assets, net $ 350,185 $ (2,637 ) $ 347,548 Deferred income taxes $ 362,302 $ (1,704 ) $ 360,598 Other assets $ 85,856 $ 5,641 $ 91,497 Total assets $ 3,595,778 $ (15,196 ) $ 3,580,582 Liabilities: Consumer and customer deposits $ 173,344 $ 58,653 $ 231,997 Deferred revenue $ 150,582 $ (100,617 ) $ 49,965 Other current liabilities $ 51,176 $ 7,258 $ 58,434 Deferred income taxes, long-term $ 27,887 $ 622 $ 28,509 Other liabilities $ 39,653 $ 13,849 $ 53,502 Total liabilities $ 2,803,383 $ (20,235 ) $ 2,783,148 Stockholders’ equity: Accumulated other comprehensive loss $ (48,877 ) $ (108 ) $ (48,985 ) Retained earnings $ 228,451 $ 5,147 $ 233,598 Total stockholder’s equity $ 792,395 $ 5,039 $ 797,434 2015 As Reported Impact of Adoption As Adjusted Assets: Other current assets $ 103,319 $ (17,002 ) $ 86,317 Intangible assets, net $ 240,898 $ (649 ) $ 240,249 Deferred income taxes $ 339,558 $ (7,264 ) $ 332,294 Other assets $ 81,764 $ 2,065 $ 83,829 Total assets $ 3,112,956 $ (22,850 ) $ 3,090,106 Liabilities: Consumer and customer deposits $ 84,761 $ 55,515 $ 140,276 Deferred revenue $ 113,458 $ (95,569 ) $ 17,889 Other current liabilities $ 57,342 $ — $ 57,342 Deferred income taxes, long-term $ 18,652 $ 419 $ 19,071 Other liabilities $ 14,700 $ 3,136 $ 17,836 Total liabilities $ 2,378,858 $ (36,499 ) $ 2,342,359 Stockholders’ equity: Accumulated other comprehensive loss $ (40,195 ) $ (94 ) $ (40,289 ) Retained earnings $ 207,973 $ 13,743 $ 221,716 Total stockholder’s equity $ 734,098 $ 13,649 $ 747,747 The expected impact of the new revenue guidance on select consolidated statements of income (loss) line items for 2017 , 2016 and 2015 is shown below (in thousands, except per share amounts). 2017 As Reported Impact of Adoption As Adjusted Operating revenues: Commissions and fees $ 1,468,867 $ 4,346 $ 1,473,213 Program and other fees $ 477,884 $ 7,214 $ 485,098 Product sales $ 182,014 $ (55,404 ) $ 126,610 Total operating revenues $ 2,231,606 $ (43,844 ) $ 2,187,762 Operating expenses: Partner distribution expense $ 1,040,306 $ 4,574 $ 1,044,880 Processing and services $ 448,657 $ 1,379 $ 450,036 Sales and marketing $ 329,983 $ (1,650 ) $ 328,333 Costs of products sold $ 170,493 $ (45,732 ) $ 124,761 Amortization of acquisition intangibles $ 62,794 $ (1,934 ) $ 60,860 Total operating expenses $ 2,236,214 $ (43,363 ) $ 2,192,851 Income tax expense (benefit) $ 117,800 $ (627 ) $ 117,173 Net loss attributable to Blackhawk Network Holdings, Inc. $ (155,768 ) $ 146 $ (155,622 ) Diluted loss per share $ (2.77 ) $ 0.01 $ (2.76 ) 2016 As Reported Impact of Adoption As Adjusted Operating revenues: Commissions and fees $ 1,315,755 $ (7,357 ) $ 1,308,398 Program and other fees $ 336,317 $ (12,905 ) $ 323,412 Product sales $ 153,408 $ (46,734 ) $ 106,674 Total operating revenues $ 1,899,778 $ (66,996 ) $ 1,832,782 Operating expenses: Partner distribution expense $ 933,142 $ (1,148 ) $ 931,994 Processing and services $ 355,268 $ 1,776 $ 357,044 Sales and marketing $ 274,799 $ (2,717 ) $ 272,082 Costs of products sold $ 143,267 $ (41,233 ) $ 102,034 Amortization of acquisition intangibles $ 57,060 $ (9,723 ) $ 47,337 Total operating expenses $ 1,876,529 $ (53,045 ) $ 1,823,484 Income tax expense (benefit) $ (4,102 ) $ (5,356 ) $ (9,458 ) Net income (loss) attributable to Blackhawk Network Holdings, Inc. $ 4,658 $ (8,595 ) $ (3,937 ) Diluted earnings per share $ 0.08 $ (0.15 ) $ (0.07 ) 2015 As Reported Impact of Adoption As Adjusted Operating revenues: Commissions and fees $ 1,259,801 $ (76 ) $ 1,259,725 Program and other fees $ 268,661 $ 1,896 $ 270,557 Product sales $ 167,745 $ (19,884 ) $ 147,861 Total operating revenues $ 1,801,078 $ (18,064 ) $ 1,783,014 Operating expenses: Partner distribution expense $ 874,043 $ 1,466 $ 875,509 Processing and services $ 304,232 $ 809 $ 305,041 Sales and marketing $ 260,638 $ (2,068 ) $ 258,570 Costs of products sold $ 154,625 $ (17,602 ) $ 137,023 Amortization of acquisition intangibles $ 27,550 $ (3,384 ) $ 24,166 Total operating expenses $ 1,713,332 $ (20,779 ) $ 1,692,553 Income tax expense (benefit) $ 26,796 $ 808 $ 27,604 Net income attributable to Blackhawk Network Holdings, Inc. $ 45,609 $ 1,907 $ 47,516 Diluted earnings per share $ 0.81 $ 0.03 $ 0.84 |
Business Acquisitions and Div26
Business Acquisitions and Divestiture (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
Business Combinations [Abstract] | |
Summary of Initial Purchase Price Allocation | The following table summarizes the final purchase price allocation (in thousands): Cash and cash equivalents $ 14,191 Settlement receivables 4,884 Settlement payables (3,272 ) Consumer and customer deposits (18,009 ) Other tangible liabilities, net (1,155 ) Debt (3,157 ) Identifiable technology and intangible assets 45,540 Deferred income taxes 1,926 Goodwill 37,865 Total purchase consideration $ 78,813 The following table summarizes the final purchase price allocation (in thousands): Cash and cash equivalents $ 3,985 Consumer and customer deposits (5,429 ) Accounts payable and accrued operating expenses (9,860 ) Other tangible assets, net 893 Debt (5,807 ) Identifiable technology and intangible assets 52,460 Goodwill 67,706 Total purchase consideration $ 103,948 The following table summarizes the final purchase price allocation (in thousands): Cash and cash equivalents $ 1,032 Settlement receivables, net 2,182 Settlement payables (2,273 ) Consumer and customer deposits (26,080 ) Other tangible assets, net 5,549 Identifiable intangible assets 21,271 Goodwill 15,549 Deferred income taxes (1,009 ) Total purchase consideration $ 16,221 The following table presents our initial estimates of the purchase price allocation. We may make adjustments to these amounts through the measurement period as we finalize information regarding our forecasts, valuation assumptions and income taxes (in thousands): Cash and cash equivalents $ 17,200 Restricted cash 5,527 Settlement receivables, net 1,912 Identifiable technology and intangible assets 105,290 Goodwill 81,850 Other tangible assets, net 97 Settlement payables (14,939 ) Consumer and customer deposits (4,600 ) Accounts payable and accrued operating expenses (4,705 ) Debt assumed (8,285 ) Deferred income taxes (13,379 ) Total purchase consideration $ 165,968 The following table summarizes the final purchase price allocation (in thousands): Cash and cash equivalents $ 4,733 Tangible assets, net 2,093 Cardholder liability (6,167 ) Deferred income taxes (6,723 ) Identifiable intangible and technology assets 26,892 Goodwill 20,385 Total purchase consideration $ 41,213 The following table summarizes the final purchase price allocation (in thousands): Cash and cash equivalents $ 38,957 Settlement receivables, net 24,290 Accounts receivables, net 10,692 Identifiable technology and intangible assets 64,825 Goodwill 52,901 Consumer and customer deposits (35,636 ) Accounts payable and accrued operating expenses (30,984 ) Deferred revenue (7,215 ) Deferred income taxes, net (9,274 ) Other tangible assets, net 3,096 Purchase consideration excluding GREBT 111,652 Restricted cash (GREBT) 8,541 Total purchase consideration including GREBT $ 120,193 The following table summarizes the final purchase price allocation (in thousands): Cash and cash equivalents $ 24,367 Accounts payables and accrued operating expenses (11,580 ) Deferred revenue (48,735 ) Deferred income taxes (14,019 ) Identifiable technology and intangible assets 94,800 Goodwill 58,659 Total purchase consideration $ 103,492 |
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 Technology $ 1,586 1 to 3 years Customer relationships 57,633 10 years Customer backlog 2,911 1 year Trade name 2,695 10 years Total identifiable technology and intangible assets $ 64,825 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 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 $ 103,000 10 years Technology 2,290 1.5 years Total identifiable technology and intangible assets $ 105,290 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 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 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 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 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 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 the combined pro forma results of operations of us and CashStar as though we have been combined as of the beginning of fiscal 2016 (in thousands, except per share amounts): 2017 (Unaudited) 2016 (Unaudited) Total revenues $ 2,259,191 $ 1,939,859 Net loss attributable to Blackhawk Network Holdings, Inc. $ (163,561 ) $ (7,544 ) Pro forma EPS—Basic $ (2.91 ) $ (0.14 ) Pro forma EPS—Diluted $ (2.91 ) $ (0.14 ) 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) Total revenues $ 1,830,848 Net income attributable to Blackhawk Network Holdings, Inc. $ 41,752 Pro forma EPS—Basic $ 0.77 Pro forma EPS—Diluted $ 0.74 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 |
Schedule of Assets Held-for-sale | The following table summarizes the selected final balance sheet amounts at the time of sale (in thousands): Cash and cash equivalents $ 24,976 Settlement receivables, net 1,743 Accounts receivable, net 15,141 Other current assets 2,617 Property, equipment and technology, net 863 Intangible assets, net 3,772 Goodwill 28,843 Deferred income taxes 1,388 Total assets $ 79,343 Settlement payables $ (8,589 ) Consumer and customer deposits (1,855 ) Accounts payable and accrued operating expenses (8,468 ) Deferred revenue (3,739 ) Other current liabilities (12,248 ) Total liabilities $ (34,899 ) The following table presents the aggregate carrying amounts of the major classes of assets and liabilities as of December 30, 2017 related to the Cardpool business (in thousands): December 30, 2017 Other current assets $ 5,513 Property, equipment and technology, net 8,527 Goodwill 8,991 Intangible assets, net 431 Total assets $ 23,462 Accounts payable and accrued operating expenses $ 1,745 Other current liabilities 450 Deferred revenue 246 Total liabilities $ 2,441 |
Investment in Unconsolidated 27
Investment in Unconsolidated Entities (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
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 2017 and 2016 (dollars in thousands): 2017 2016 Carrying Value Ownership Percentage Carrying Value Ownership Percentage Equity method investments Investment in China entity $ 8,831 42.0% $ 4,576 26.5% Investment in Australia entity 6,823 51.2% 6,392 51.2% Other equity method investments 330 42.5% — —% Total equity method investments 15,984 10,968 Cost method investments 7,954 7,954 Total unconsolidated entities $ 23,938 $ 18,922 |
Schedule of Cost Method Investments | The following table summarizes our equity and cost method investments as of year-end 2017 and 2016 (dollars in thousands): 2017 2016 Carrying Value Ownership Percentage Carrying Value Ownership Percentage Equity method investments Investment in China entity $ 8,831 42.0% $ 4,576 26.5% Investment in Australia entity 6,823 51.2% 6,392 51.2% Other equity method investments 330 42.5% — —% Total equity method investments 15,984 10,968 Cost method investments 7,954 7,954 Total unconsolidated entities $ 23,938 $ 18,922 |
Financing (Tables)
Financing (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
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 2017 and as of the date we drew the additional $75.0 million (in thousands): As of As of December 30, 2017 January 11, 2018 2018 $ 11,250 $ 15,000 2019 11,250 15,000 2020 22,500 30,000 2021 170,000 230,000 2022 500,000 500,000 Total amount due 715,000 790,000 Unamortized discount and debt issuance fees (60,242 ) (59,734 ) Note payable, net $ 654,758 $ 730,266 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
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 2017 and 2016 (in thousands): 2017 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents Money market mutual funds $ 694,075 $ — $ — $ 694,075 Contingent asset $ — $ — $ 6,131 $ 6,131 Liabilities Warrants $ — $ 20,000 $ — $ 20,000 Contingent consideration $ — $ — $ 3,886 $ 3,886 2016 Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents Money market mutual funds $ 300,015 $ — $ — $ 300,015 Contingent asset $ — $ — $ — $ — Liabilities Warrants $ — $ — $ — $ — Contingent consideration $ — $ — $ 23,752 $ 23,752 |
Summary of Changes in Fair Value of Contingent Consideration Classified as Level 3 | The changes in fair value of contingent consideration liabilities for 2017 and 2016 are as follows (in thousands): 2017 2016 Balance – beginning of year $ 23,752 $ — Addition from acquisition of Extrameasures — 20,300 Addition from acquisition of Spafinder — 1,352 Addition from other acquisition (see Note 2—Business Acquisitions and Divestiture ) 1,640 — Divestiture of M&E business 934 — Change in fair value of contingent consideration (14,937 ) 2,100 Settlements (7,503 ) — Balance – end of year $ 3,886 $ 23,752 |
Consolidated Financial Statem30
Consolidated Financial Statement Details (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
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 2017 , 2016 and 2015 (in thousands): 2017 2016 2015 Beginning balance $ 8,657 $ 8,046 $ 5,547 Provision 1,617 4,544 4,656 Charges against allowances, net of recoveries (1,855 ) (3,933 ) (2,157 ) Ending balance $ 8,419 $ 8,657 $ 8,046 |
Schedule of Other Current Assets | Other current assets as of year-end 2017 and 2016 consisted of the following (in thousands): 2017 2016 Inventory $ 37,007 $ 43,950 Deferred expenses 29,172 22,148 Income tax receivables 10,823 13,599 Assets held for sale 23,462 — Other 64,910 51,678 Total other current assets $ 165,374 $ 131,375 |
Schedule of Property, Equipment and Technology | Property, equipment and technology as of year-end 2017 and 2016 consisted of the following (dollars in thousands): Useful Lives in Years 2017 2016 Leasehold improvements 5 $ 13,754 $ 9,018 Computers and related equipment 3 - 5 50,944 45,910 Technology 5 331,192 291,124 Total property, equipment and technology 395,890 346,052 Less accumulated depreciation and amortization (223,283 ) (173,671 ) Property, equipment and technology, net $ 172,607 $ 172,381 |
Schedule of Other Assets | Other assets as of year-end 2017 and 2016 consisted of the following (in thousands): 2017 2016 Deferred program and contract costs $ 53,565 $ 48,066 Investments (see Note 3—Investment in Unconsolidated Entities ) 23,938 18,922 Other receivables 9,235 2,713 Income taxes receivable 2,321 2,358 Deferred financing costs 2,759 2,688 Other 23,418 11,109 Total other assets $ 115,236 $ 85,856 |
Schedule of Other Current Liabilities | Other current liabilities as of year-end 2017 and 2016 consisted of the following (in thousands): 2017 2016 Payroll and related liabilities $ 43,022 $ 24,944 Income taxes payable 8,056 4,199 Acquisition liability 4,012 6,672 Warrant liability 20,000 — Other payables and accrued liabilities 25,292 15,361 Liability held for sale 2,441 — Total other current liabilities $ 102,823 $ 51,176 |
Schedule of Other Liabilities | Other liabilities as of year-end 2017 and 2016 consisted of the following (in thousands): 2017 2016 Acquisition liability $ 1,874 $ 17,080 Income taxes payable 3,883 6,957 Deferred income and other liabilities 10,990 15,616 Total other liabilities $ 16,747 $ 39,653 |
Schedule of Assets Held-for-sale | The following table summarizes the selected final balance sheet amounts at the time of sale (in thousands): Cash and cash equivalents $ 24,976 Settlement receivables, net 1,743 Accounts receivable, net 15,141 Other current assets 2,617 Property, equipment and technology, net 863 Intangible assets, net 3,772 Goodwill 28,843 Deferred income taxes 1,388 Total assets $ 79,343 Settlement payables $ (8,589 ) Consumer and customer deposits (1,855 ) Accounts payable and accrued operating expenses (8,468 ) Deferred revenue (3,739 ) Other current liabilities (12,248 ) Total liabilities $ (34,899 ) The following table presents the aggregate carrying amounts of the major classes of assets and liabilities as of December 30, 2017 related to the Cardpool business (in thousands): December 30, 2017 Other current assets $ 5,513 Property, equipment and technology, net 8,527 Goodwill 8,991 Intangible assets, net 431 Total assets $ 23,462 Accounts payable and accrued operating expenses $ 1,745 Other current liabilities 450 Deferred revenue 246 Total liabilities $ 2,441 |
Goodwill and Other Intangible31
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Changes in Goodwill | A summary of changes in goodwill during 2017 is as follows (in thousands): 2017 U.S. Retail Incentives & Rewards International Total Balance, beginning of period $ 99,685 $ 366,508 $ 104,205 $ 570,398 Goodwill impairment (31,500 ) (46,000 ) — (77,500 ) Re-allocation of international Incentives goodwill — (7,152 ) 7,152 — Re-allocation of e-commerce goodwill (10,505 ) 10,505 — — Acquisitions (see Note 2—Business Acquisitions and Divestiture ) 81,850 9,919 1,948 93,717 Measurement period adjustments for 2016 acquisitions 2,121 — (1,509 ) 612 Asset held for sale (see Note 6—Consolidated Financial Statement Details ) (8,991 ) — — (8,991 ) Divestiture of business (see Note 2—Business Acquisitions and Divestiture ) — — (28,843 ) (28,843 ) Foreign currency translation adjustments — 1,518 12,494 14,012 Balance, end of year $ 132,660 $ 335,298 $ 95,447 $ 563,405 Accumulated goodwill impairment charges were $77.5 million as of year-end 2017. A summary of changes in goodwill during 2016 is as follows (in thousands): 2016 U.S. Retail Incentives & Rewards International Total Balance, beginning of year $ 42,729 $ 310,604 $ 49,156 $ 402,489 Re-allocation of e-commerce goodwill 2,671 (2,671 ) — — Acquisition of GiftCards 34,427 33,279 — 67,706 Acquisition of NimbleCommerce 10,505 — — 10,505 Acquisition of Extrameasures — 27,360 — 27,360 Acquisition of Grass Roots — — 54,219 54,219 Acquisition of Samba — — 4,074 4,074 Acquisition of Spafinder 9,353 — — 9,353 Measurement period adjustments for 2015 acquisitions — (1,235 ) — (1,235 ) Foreign currency translation adjustments — (829 ) (3,244 ) (4,073 ) Balance, end of year $ 99,685 $ 366,508 $ 104,205 $ 570,398 |
Summary of Intangible Assets | Intangible assets as of year-end 2017 are as follows (dollars in thousands): Weighted-Average Remaining Life in Years Gross Accumulated Amortization Net Distribution partner and customer relationships, including backlog 9 $ 569,445 $ (157,618 ) $ 411,827 Patents 5 5,003 (4,584 ) 419 Domain names, trade names and other intangibles 8 24,699 (5,264 ) 19,435 Total intangible assets $ 599,147 $ (167,466 ) $ 431,681 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 and customer relationships, including backlog 10 $ 447,665 $ (117,639 ) $ 330,026 Patents 7 6,944 (4,547 ) 2,397 Domain names, trade names and other intangibles 10 21,238 (3,476 ) 17,762 Total intangible assets $ 475,847 $ (125,662 ) $ 350,185 |
Schedule of Future Intangible Assets Amortization | The following table presents future intangible asset amortization as of year-end 2017 (in thousands): Fiscal Year Total 2018 $ 65,278 2019 57,569 2020 53,629 2021 49,980 2022 47,097 Thereafter 158,128 Total amortization $ 431,681 |
Equity Incentive Plans and St32
Equity Incentive Plans and Stock Based Compensation (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Assumptions used to Value Option Grants | We determine the fair value of our stock option awards and stock appreciation rights using a Black-Scholes option pricing model. We did not grant any stock option awards or stock appreciation rights during 2017 . The assumptions used to value the option grants for 2016 and 2015 are as follows: 2016 2015 Expected term (in years) 5 5 Expected volatility 34.8% - 34.9% 36.6% - 37.3% Risk-free rate 1.1% - 1.9% 1.4% - 1.7% Expected dividend yield 0% 0% The assumptions used to value our ESPP for 2017 , 2016 and 2015 are as follows: 2017 2016 2015 Expected term (in years) 0.5 0.5 0.5 Expected volatility 30.65% - 40.63% 30.12% - 36.72% 32.40% - 34.96% Risk-free rate 1.0% - 1.3% 0.4% - 0.5% 0.1% - 0.3% Expected dividend yield 0% 0% 0% |
Summary of Stock Option and Stock Appreciation Rights Activity | A summary of our stock options and stock appreciation rights activity under all Plans for 2017 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 2016 3,065,293 $ 26.57 3.6 $ 35,381 2017 activity: Granted — $ — Canceled (86,083 ) $ 35.37 Exercised (621,697 ) $ 19.75 Outstanding, year-end 2017 2,357,513 $ 28.04 2.8 $ 20,784 Exercisable, year-end 2017 1,633,701 $ 24.21 2.1 $ 19,757 |
Changes in Restricted Stock and Restricted Stock Units | The following table summarizes restricted stock and restricted stock unit awards during 2017 : Restricted Stock and Restricted Stock Unit Awards Weighted Average Grant-Date Fair Value Nonvested, year-end 2016 1,981,654 $ 35.45 2017 activity: Granted 1,219,419 $ 38.44 Vested (686,160 ) $ 33.80 Forfeited (357,209 ) $ 37.13 Nonvested, year-end 2017 2,157,704 $ 37.39 |
Changes in Performance Stock Unit Awards | The changes in performance stock unit awards for 2017 are as follows: Performance Stock Unit Awards Weighted Average Grant-Date Fair Value Nonvested, year-end 2016 328,106 $ 33.07 2017 activity: Granted 208,925 $ 38.45 Vested (134,010 ) $ 26.73 Forfeited (135,608 ) $ 36.31 Nonvested, year-end 2017 267,413 $ 38.80 |
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 2017 , 2016 and 2015 (in thousands): 2017 2016 2015 Processing and services $ 7,301 $ 5,831 $ 6,594 Sales and marketing 11,320 10,856 8,536 Cost of products sold 54 102 37 General and administrative 14,033 15,803 14,963 Total stock-based compensation expense $ 32,708 $ 32,592 $ 30,130 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Components of Income before Income Tax Expense | The components of income before income tax expense (benefit) for 2017, 2016 and 2015 are as follows (in thousands): 2017 2016 2015 Domestic $ (49,833 ) $ (3,533 ) $ 72,298 Foreign 12,743 4,469 307 Income before income tax expense (benefit) $ (37,090 ) $ 936 $ 72,605 |
Components of Income Tax Expense | The components of income tax expense (benefit) for the years ended 2017, 2016 and 2015 are as follows (in thousands): 2017 2016 2015 Current: Federal $ 483 $ (1,215 ) $ (6,403 ) State (707 ) 949 (942 ) Foreign 7,748 5,063 4,331 Total current 7,524 4,797 (3,014 ) Deferred: Federal 118,974 (3,186 ) 28,650 State (4,772 ) (1,275 ) 6,003 Foreign (3,926 ) (4,438 ) (4,843 ) Total deferred 110,276 (8,899 ) 29,810 Income tax expense (benefit) $ 117,800 $ (4,102 ) $ 26,796 |
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 2017, 2016 and 2015 is as follows (dollars in thousands): 2017 2016 2015 Amount Rate Amount Rate Amount Rate Income tax expense (benefit) at federal statutory rate $ (12,982 ) 35.0 % $ 327 35.0 % $ 25,412 35.0 % State income tax expense (benefit), net of federal impact (3,854 ) 10.4 % 439 46.9 % 3,469 4.8 % Foreign rate differential (761 ) 2.1 % (939 ) (100.3 )% (773 ) (1.1 )% Change in fair value of contingent consideration — — % — — % (2,978 ) (4.1 )% Compensation subject to certain limits 702 (1.9 )% 894 95.5 % 1,180 1.6 % Stock-based compensation (2,341 ) 6.3 % (956 ) (102.1 )% 316 0.4 % Change in valuation allowance 1,732 (4.7 )% — — % — — % Acquisition related 152 (0.4 )% (2,945 ) (314.6 )% 758 1.0 % R&D credits (948 ) 2.6 % (1,440 ) (153.9 )% (1,130 ) (1.5 )% Goodwill impairment 10,670 (28.8 )% — — % — — % U.S. Tax Reform Impact 126,198 (340.2 )% — — % — — % Other (768 ) 2.0 % 518 55.2 % 542 0.8 % Total income tax expense (benefit) /effective tax rate $ 117,800 (317.6 )% $ (4,102 ) (438.3 )% $ 26,796 36.9 % |
Components of Deferred Tax Assets (Liabilities) | The components of our deferred tax assets (liabilities) at year-end 2017 and 2016 were as follows (in thousands): 2017 2016 Deferred tax assets: Depreciation and amortization $ 112,642 $ 217,497 Net operating loss carryforwards 38,070 49,473 Accrued expenses 7,019 4,932 Non-deductible reserves 6,829 9,450 Deferred revenue 32,198 29,803 Stock-based compensation 10,293 21,497 Convertible debt 2,416 4,636 Other 8,787 8,622 Deferred tax assets 218,254 345,910 Valuation allowance (8,641 ) (8,283 ) Total deferred tax assets 209,613 337,627 Deferred tax liabilities: Prepaids (1,200 ) (3,212 ) Total deferred tax liabilities (1,200 ) (3,212 ) Net deferred tax assets $ 208,413 $ 334,415 Balance sheet presentation: Long-term deferred tax assets 236,496 362,302 Long-term deferred tax liabilities (28,083 ) (27,887 ) Net deferred tax assets $ 208,413 $ 334,415 |
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): 2017 2016 2015 Gross unrecognized tax benefits, beginning balance $ 13,877 $ 12,680 $ 3,808 Increase for tax position from prior fiscal years and current year acquisitions 6,004 977 8,633 Decrease for tax position from prior fiscal years (2,234 ) (388 ) (446 ) Settlements (177 ) — — Increases for tax positions taken during current fiscal year 601 760 938 Lapses of statutes of limitations (2,879 ) (41 ) (161 ) Foreign exchange rate difference 151 (111 ) (92 ) Gross unrecognized tax benefits, ending balance $ 15,343 $ 13,877 $ 12,680 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Operating Lease Payments | Future minimum operating lease payments as of year-end 2017 are as follows (in thousands): Fiscal Year Operating Leases 2018 $ 19,829 2019 16,099 2020 14,100 2021 13,838 2022 10,698 Thereafter 27,404 Total minimum lease payments $ 101,968 |
Schedule of Future Distribution Partners Commitments | Future commitments to our distribution partners as of year-end 2017 are as follows (in thousands): Fiscal Year Distribution Partner Commitments 2018 $ 123,922 2019 47,771 2020 30,458 2021 26,751 2022 and after 26,574 Distribution partner commitments (uncertainty in timing of future payments) 6,232 Total $ 261,708 |
Segment Reporting and Enterpr35
Segment Reporting and Enterprise-Wide Disclosures (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
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 strategic 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): 2017 U.S. Retail Incentives & Rewards International Consolidated Total operating revenues $ 1,233,861 $ 338,311 $ 659,434 $ 2,231,606 Partner distribution expense 665,088 22,793 352,425 1,040,306 Operating revenue net of distribution partner expense 568,773 315,518 307,009 1,191,300 Other operating expenses 538,977 353,511 303,420 1,195,908 Segment profit (loss) / Operating income (loss) $ 29,796 $ (37,993 ) $ 3,589 (4,608 ) Other income (expense) (32,482 ) Income (loss) before income tax expense $ (37,090 ) Significant noncash charges $ 98,097 $ 94,597 $ 36,793 2016 U.S. Retail Incentives & Rewards International Consolidated Total operating revenues $ 1,125,757 $ 280,217 $ 493,804 $ 1,899,778 Partner distribution expense 595,893 20,419 316,830 933,142 Operating revenue net of distribution partner expense 529,864 259,798 176,974 966,636 Other operating expenses 467,203 287,882 188,302 943,387 Segment profit (loss) / Operating income $ 62,661 $ (28,084 ) $ (11,328 ) 23,249 Other income (expense) (22,313 ) Income before income tax expense $ 936 Significant noncash charges $ 53,751 $ 85,171 $ 27,029 2015 U.S. Retail Incentives & Rewards International Consolidated Total operating revenues $ 1,165,828 $ 197,060 $ 438,190 $ 1,801,078 Partner distribution expense 577,661 16,591 279,791 874,043 Operating revenue net of distribution partner expense 588,167 180,469 158,399 927,035 Other operating expenses 465,464 206,121 167,704 839,289 Segment profit (loss) / Operating income $ 122,703 $ (25,652 ) $ (9,305 ) 87,746 Other income (expense) (15,141 ) Income before income tax expense $ 72,605 Significant noncash charges $ 46,719 $ 45,678 $ 13,806 |
Schedule of Revenue by Products | The following table summarizes operating revenues according to product for 2017 , 2016 and 2015 (dollars in thousands): 2017 2016 2015 Revenue Percent of Total Revenue Revenue Percent of Total Revenue Revenue Percent of Total Revenue Retail $ 1,764,092 79.0 % $ 1,383,499 72.8 % $ 1,453,129 80.6 % Incentives 338,311 15.2 % 289,140 15.2 % 211,964 11.8 % Other 129,203 5.8 % 227,139 12.0 % 135,985 7.6 % Total $ 2,231,606 100.0 % $ 1,899,778 100.0 % $ 1,801,078 100.0 % |
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 2017 , 2016 and 2015 (dollars in thousands): 2017 2016 2015 Revenue Percent of Total Revenue Revenue Percent of Total Revenue Revenue Percent of Total Revenue United States $ 1,546,898 69.3 % $ 1,382,188 72.8 % $ 1,352,872 75.1 % International 684,708 30.7 % 517,590 27.2 % 448,206 24.9 % Total $ 2,231,606 100.0 % $ 1,899,778 100.0 % $ 1,801,078 100.0 % 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 2017 and 2016 (dollars in thousands): 2017 2016 Long-Lived Assets Percent of Total Long-Lived Assets Long-Lived Assets Percent of Total Long-Lived Assets United States $ 145,607 84.3 % $ 149,020 86.4 % Canada 18,054 10.5 % 16,002 9.3 % Other foreign countries 8,946 5.2 % 7,359 4.3 % Total $ 172,607 100.0 % $ 172,381 100.0 % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
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): 2017 2016 2015 Basic Diluted Basic Diluted Basic Diluted Net income attributable to Blackhawk Network Holdings, Inc. $ (155,768 ) $ (155,768 ) $ 4,658 $ 4,658 $ 45,609 $ 45,609 Distributed and undistributed earnings allocated to participating securities — — (28 ) (28 ) (151 ) (147 ) Net income attributable to common stockholders $ (155,768 ) $ (155,768 ) $ 4,630 $ 4,630 $ 45,458 $ 45,462 Weighted-average common shares outstanding 56,287 56,287 55,734 55,734 54,294 54,294 Common share equivalents — 1,526 2,019 Weighted-average shares outstanding 56,287 57,260 56,313 Earnings (loss) per share $ (2.77 ) $ (2.77 ) $ 0.08 $ 0.08 $ 0.84 $ 0.81 |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Revenue and Expenses | 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. 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 (in thousands): 2015 OPERATING REVENUES: Commissions and fees $ 72 Program and other fees 471 Product sales 1,323 Total operating revenues $ 1,866 OPERATING EXPENSES: Partner distribution expense 17,069 Processing and services (288 ) General and administrative 607 Total operating expenses $ 17,388 |
Selected Quarterly Financial 38
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 30, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | Selected summarized quarterly financial information for 2017 and 2016 is as follows. Q4'17 Q3'17 Q2'17 Q1'17 Q4'16 Q3'16 Q2'16 Q1'16 (in thousands, except per share data) Operating revenues $ 941,965 $ 419,259 $ 463,146 $ 407,236 $ 780,550 $ 361,560 $ 391,206 $ 366,462 Operating income (loss) (1) $ 29,525 $ (12,701 ) $ (4,401 ) $ (17,031 ) $ 51,363 $ (10,093 ) $ (14,977 ) $ (3,044 ) Net income (loss) attributable to Blackhawk Network Holdings, Inc. (2) $ (128,165 ) $ (7,766 ) $ (6,351 ) $ (13,486 ) $ 24,650 $ (5,102 ) $ (11,337 ) $ (3,553 ) Earnings (loss) per share: Basic $ (2.28 ) $ (0.14 ) $ (0.11 ) $ (0.24 ) $ 0.44 $ (0.09 ) $ (0.20 ) $ (0.06 ) Diluted $ (2.28 ) $ (0.14 ) $ (0.11 ) $ (0.24 ) $ 0.43 $ (0.09 ) $ (0.20 ) $ (0.06 ) |
The Company and Significant A39
The Company and Significant Accounting Policies - Narrative (Detail) $ / shares in Units, $ in Thousands | Oct. 01, 2017USD ($)$ / shares | May 21, 2015 | Jan. 31, 2018shares | Oct. 31, 2017USD ($)shares | Nov. 30, 2015shares | Dec. 30, 2017USD ($)country$ / shares | Dec. 31, 2016USD ($)$ / sharesshares | Jan. 02, 2016USD ($)shares | Oct. 31, 2016USD ($) | Apr. 30, 2015USD ($) | Jan. 03, 2015USD ($) | 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 | 364 days | |||||||||
Cumulative adjustment upon modified retrospective adoption of ASUs | $ 16,521 | |||||||||||
Allowance for doubtful accounts and reserves for sales adjustments | $ 8,419 | $ 8,657 | 8,046 | $ 5,547 | ||||||||
Impairment charge | $ 4,600 | $ 5,500 | ||||||||||
Authorized repurchase amount | $ 100,000 | |||||||||||
Repurchase period | 2 years | |||||||||||
Repurchase of common stock (in shares) | shares | 1,200,000 | 1,000,000 | ||||||||||
Stock repurchased during period | $ 40,000 | $ 34,843 | ||||||||||
Remaining authorized repurchase amount | $ 60,000 | |||||||||||
Common Stock, par value (in usd per share) | $ / shares | $ 0.001 | $ 0.001 | ||||||||||
Notes payable to Safeway | $ 3,941 | $ 3,163 | $ 27,700 | |||||||||
Expected refunds to remit to third party | $ 19,400 | |||||||||||
Noncash income taxes 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 | |||||||||||
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 | |||||||||||
Allowance for settlement receivables | ||||||||||||
Accounting Policies | ||||||||||||
Allowance for doubtful accounts and reserves for sales adjustments | $ 1,900 | 2,600 | ||||||||||
Allowance for accounts receivable | ||||||||||||
Accounting Policies | ||||||||||||
Allowance for doubtful accounts and reserves for sales adjustments | $ 6,600 | $ 6,000 | ||||||||||
Common Stock | ||||||||||||
Accounting Policies | ||||||||||||
Repurchase of common stock (in shares) | shares | 996,000 | |||||||||||
Common Stock, par value (in usd per share) | $ / shares | $ 0.001 | |||||||||||
Exercise of warrant (in shares) | shares | 1,161,000 | |||||||||||
Retained Earnings | ||||||||||||
Accounting Policies | ||||||||||||
Cumulative adjustment upon modified retrospective adoption of ASUs | $ 15,871 | |||||||||||
Accounting Standards Update 2016-04 | Retained Earnings | ||||||||||||
Accounting Policies | ||||||||||||
Cumulative adjustment upon modified retrospective adoption of ASUs | $ 6,100 | |||||||||||
Safeway Inc. | Class B Common Stock | Spinoff | ||||||||||||
Accounting Policies | ||||||||||||
Tax free distribution (in shares) | shares | 37,800,000 | |||||||||||
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 | |||||||||||
Strategic Partner One | ||||||||||||
Accounting Policies | ||||||||||||
Warrant purchase value | $ 20,000 | |||||||||||
Fair value of the warrants | $ 20,000 | |||||||||||
Strategic Partner One | Common Stock | ||||||||||||
Accounting Policies | ||||||||||||
Exercise price (in usd per share) | $ / shares | $ 15 | |||||||||||
Exercise of warrant (in shares) | shares | 859,757 | |||||||||||
Subsequent Event | Strategic Partner One | Common Stock | ||||||||||||
Accounting Policies | ||||||||||||
Exercise of warrant (in shares) | shares | 546,395 |
The Company and Significant A40
The Company and Significant Accounting Policies - Expected Impact to Reported Results (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 4 Months Ended | 12 Months Ended | |||||||||
Sep. 09, 2017 | Jun. 17, 2017 | Mar. 25, 2017 | Sep. 10, 2016 | Jun. 18, 2016 | Mar. 26, 2016 | Dec. 30, 2017 | Dec. 31, 2016 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | Jan. 03, 2015 | |
Assets: | ||||||||||||
Other current assets | $ 165,374 | $ 131,375 | $ 165,374 | $ 131,375 | $ 103,319 | |||||||
Intangible assets, net | 431,681 | 350,185 | 431,681 | 350,185 | 240,898 | |||||||
Deferred income taxes | 236,496 | 362,302 | 236,496 | 362,302 | 339,558 | |||||||
Other assets | 115,236 | 85,856 | 115,236 | 85,856 | 81,764 | |||||||
TOTAL ASSETS | 4,139,680 | 3,595,778 | 4,139,680 | 3,595,778 | 3,112,956 | |||||||
Liabilities: | ||||||||||||
Consumer and customer deposits | 252,822 | 173,344 | 252,822 | 173,344 | 84,761 | |||||||
Deferred revenue | 179,684 | 150,582 | 179,684 | 150,582 | 113,458 | |||||||
Other current liabilities | 102,823 | 51,176 | 102,823 | 51,176 | 57,342 | |||||||
Deferred income taxes | 28,083 | 27,887 | 28,083 | 27,887 | 18,652 | |||||||
Other liabilities | 16,747 | 39,653 | 16,747 | 39,653 | 14,700 | |||||||
Total liabilities | 3,469,713 | 2,803,383 | 3,469,713 | 2,803,383 | 2,378,858 | |||||||
Stockholders’ equity: | ||||||||||||
Accumulated other comprehensive loss | (16,049) | (48,877) | (16,049) | (48,877) | (40,195) | |||||||
Retained earnings | 72,571 | 228,451 | 72,571 | 228,451 | 207,973 | |||||||
Total stockholders’ equity | 669,967 | 792,395 | 669,967 | 792,395 | 734,098 | $ 287,779 | ||||||
Operating revenues: | ||||||||||||
Commissions and fees | 1,468,867 | 1,315,755 | 1,259,801 | |||||||||
Program and other fees | 477,884 | 336,317 | 268,661 | |||||||||
Product sales | 182,014 | 153,408 | 167,745 | |||||||||
Total operating revenues | $ 419,259 | $ 463,146 | $ 407,236 | $ 361,560 | $ 391,206 | $ 366,462 | 941,965 | 780,550 | 2,231,606 | 1,899,778 | 1,801,078 | |
Operating expenses: | ||||||||||||
Partner distribution expense | 1,040,306 | 933,142 | 874,043 | |||||||||
Processing and services | 448,657 | 355,268 | 304,232 | |||||||||
Sales and marketing | 329,983 | 274,799 | 260,638 | |||||||||
Costs of products sold | 170,493 | 143,267 | 154,625 | |||||||||
Amortization of acquisition intangibles | 62,794 | 57,060 | 27,550 | |||||||||
Total operating expenses | 2,236,214 | 1,876,529 | 1,713,332 | |||||||||
INCOME TAX EXPENSE (BENEFIT) | 117,800 | (4,102) | 26,796 | |||||||||
Net income attributable to Blackhawk Network Holdings, Inc. | $ (7,766) | $ (6,351) | $ (13,486) | $ (5,102) | $ (11,337) | $ (3,553) | $ (128,165) | $ 24,650 | $ (155,768) | $ 4,658 | $ 45,609 | |
Diluted (in usd per share) | $ (0.14) | $ (0.11) | $ (0.24) | $ (0.09) | $ (0.20) | $ (0.06) | $ (2.28) | $ 0.43 | $ (2.77) | $ 0.08 | $ 0.81 | |
Impact of Adoption | ||||||||||||
Assets: | ||||||||||||
Other current assets | $ (21,892) | $ (16,496) | $ (21,892) | $ (16,496) | $ (17,002) | |||||||
Intangible assets, net | (703) | (2,637) | (703) | (2,637) | (649) | |||||||
Deferred income taxes | (699) | (1,704) | (699) | (1,704) | (7,264) | |||||||
Other assets | 6,434 | 5,641 | 6,434 | 5,641 | 2,065 | |||||||
TOTAL ASSETS | (16,860) | (15,196) | (16,860) | (15,196) | (22,850) | |||||||
Liabilities: | ||||||||||||
Consumer and customer deposits | 73,863 | 58,653 | 73,863 | 58,653 | 55,515 | |||||||
Deferred revenue | (125,510) | (100,617) | (125,510) | (100,617) | (95,569) | |||||||
Other current liabilities | 6,434 | 7,258 | 6,434 | 7,258 | 0 | |||||||
Deferred income taxes | 1,002 | 622 | 1,002 | 622 | 419 | |||||||
Other liabilities | 22,130 | 13,849 | 22,130 | 13,849 | 3,136 | |||||||
Total liabilities | (22,081) | (20,235) | (22,081) | (20,235) | (36,499) | |||||||
Stockholders’ equity: | ||||||||||||
Accumulated other comprehensive loss | (72) | (108) | (72) | (108) | (94) | |||||||
Retained earnings | 5,293 | 5,147 | 5,293 | 5,147 | 13,743 | |||||||
Total stockholders’ equity | 5,221 | 5,039 | 5,221 | 5,039 | 13,649 | |||||||
Operating revenues: | ||||||||||||
Commissions and fees | 4,346 | (7,357) | (76) | |||||||||
Program and other fees | 7,214 | (12,905) | 1,896 | |||||||||
Product sales | (55,404) | (46,734) | (19,884) | |||||||||
Total operating revenues | (43,844) | (66,996) | (18,064) | |||||||||
Operating expenses: | ||||||||||||
Partner distribution expense | 4,574 | (1,148) | 1,466 | |||||||||
Processing and services | 1,379 | 1,776 | 809 | |||||||||
Sales and marketing | (1,650) | (2,717) | (2,068) | |||||||||
Costs of products sold | (45,732) | (41,233) | (17,602) | |||||||||
Amortization of acquisition intangibles | (1,934) | (9,723) | (3,384) | |||||||||
Total operating expenses | (43,363) | (53,045) | (20,779) | |||||||||
INCOME TAX EXPENSE (BENEFIT) | (627) | (5,356) | 808 | |||||||||
Net income attributable to Blackhawk Network Holdings, Inc. | $ 146 | $ (8,595) | $ 1,907 | |||||||||
Diluted (in usd per share) | $ 0.01 | $ (0.15) | $ 0.03 | |||||||||
As Adjusted | ||||||||||||
Assets: | ||||||||||||
Other current assets | 143,482 | 114,879 | $ 143,482 | $ 114,879 | $ 86,317 | |||||||
Intangible assets, net | 430,978 | 347,548 | 430,978 | 347,548 | 240,249 | |||||||
Deferred income taxes | 235,797 | 360,598 | 235,797 | 360,598 | 332,294 | |||||||
Other assets | 121,670 | 91,497 | 121,670 | 91,497 | 83,829 | |||||||
TOTAL ASSETS | 4,122,820 | 3,580,582 | 4,122,820 | 3,580,582 | 3,090,106 | |||||||
Liabilities: | ||||||||||||
Consumer and customer deposits | 326,685 | 231,997 | 326,685 | 231,997 | 140,276 | |||||||
Deferred revenue | 54,174 | 49,965 | 54,174 | 49,965 | 17,889 | |||||||
Other current liabilities | 109,257 | 58,434 | 109,257 | 58,434 | 57,342 | |||||||
Deferred income taxes | 29,085 | 28,509 | 29,085 | 28,509 | 19,071 | |||||||
Other liabilities | 38,877 | 53,502 | 38,877 | 53,502 | 17,836 | |||||||
Total liabilities | 3,447,632 | 2,783,148 | 3,447,632 | 2,783,148 | 2,342,359 | |||||||
Stockholders’ equity: | ||||||||||||
Accumulated other comprehensive loss | (16,121) | (48,985) | (16,121) | (48,985) | (40,289) | |||||||
Retained earnings | 77,864 | 233,598 | 77,864 | 233,598 | 221,716 | |||||||
Total stockholders’ equity | $ 675,188 | $ 797,434 | 675,188 | 797,434 | 747,747 | |||||||
Operating revenues: | ||||||||||||
Commissions and fees | 1,473,213 | 1,308,398 | 1,259,725 | |||||||||
Program and other fees | 485,098 | 323,412 | 270,557 | |||||||||
Product sales | 126,610 | 106,674 | 147,861 | |||||||||
Total operating revenues | 2,187,762 | 1,832,782 | 1,783,014 | |||||||||
Operating expenses: | ||||||||||||
Partner distribution expense | 1,044,880 | 931,994 | 875,509 | |||||||||
Processing and services | 450,036 | 357,044 | 305,041 | |||||||||
Sales and marketing | 328,333 | 272,082 | 258,570 | |||||||||
Costs of products sold | 124,761 | 102,034 | 137,023 | |||||||||
Amortization of acquisition intangibles | 60,860 | 47,337 | 24,166 | |||||||||
Total operating expenses | 2,192,851 | 1,823,484 | 1,692,553 | |||||||||
INCOME TAX EXPENSE (BENEFIT) | 117,173 | (9,458) | 27,604 | |||||||||
Net income attributable to Blackhawk Network Holdings, Inc. | $ (155,622) | $ (3,937) | $ 47,516 | |||||||||
Diluted (in usd per share) | $ (2.76) | $ (0.07) | $ 0.84 |
Business Acquisitions and Div41
Business Acquisitions and Divestiture - Narrative (Detail) € in Millions, £ in Millions | Aug. 29, 2017USD ($) | Oct. 06, 2016USD ($) | Oct. 06, 2016GBP (£) | Jan. 05, 2016USD ($) | Sep. 14, 2015USD ($) | Sep. 14, 2015EUR (€) | Jun. 30, 2015USD ($) | Dec. 31, 2016USD ($) | Jun. 18, 2016USD ($)payment | Dec. 30, 2017USD ($) | Dec. 30, 2017GBP (£) | Dec. 31, 2016USD ($) | Jun. 18, 2016USD ($) | Jan. 02, 2016USD ($) | Dec. 30, 2017USD ($) | Dec. 31, 2016USD ($) | Jan. 02, 2016USD ($) | Dec. 30, 2017GBP (£) | Oct. 06, 2016GBP (£) |
Business Acquisition | |||||||||||||||||||
Borrowings under revolving bank line of credit | $ 3,011,270,000 | $ 2,985,490,000 | $ 2,473,529,000 | ||||||||||||||||
Deferred tax assets for net operating loss carryforwards | $ 49,473,000 | $ 38,070,000 | $ 49,473,000 | 38,070,000 | 49,473,000 | ||||||||||||||
Other deferred tax assets, net | 8,622,000 | 8,787,000 | 8,622,000 | 8,787,000 | 8,622,000 | ||||||||||||||
Acquisition related costs | 7,797,000 | 11,465,000 | 7,639,000 | ||||||||||||||||
Goodwill acquired during period | 93,717,000 | ||||||||||||||||||
Amortization of intangibles | 67,912,000 | 62,045,000 | 32,366,000 | ||||||||||||||||
Goodwill | 570,398,000 | 563,405,000 | 570,398,000 | $ 402,489,000 | 563,405,000 | 570,398,000 | 402,489,000 | ||||||||||||
US Retail | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Goodwill acquired during period | 81,850,000 | ||||||||||||||||||
Goodwill | 99,685,000 | 132,660,000 | 99,685,000 | 42,729,000 | 132,660,000 | 99,685,000 | $ 42,729,000 | ||||||||||||
Grass Roots & M&E Business | Disposed by sale | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Divestiture of businesses, consideration | 45,200,000 | 45,200,000 | £ 33.4 | ||||||||||||||||
Proceeds from divestiture of businesses | 40,000,000 | £ 29.6 | |||||||||||||||||
Contingent consideration with divestiture | 5,200,000 | 3.8 | |||||||||||||||||
Pre-tax income | 5,100,000 | ||||||||||||||||||
Grass Roots & M&E Business | Disposed by sale | Interest Income And Other Income (Expense) | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Pre-tax loss on disposal | 800,000 | ||||||||||||||||||
CashStar | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Cash consideration | $ 166,000,000 | ||||||||||||||||||
Deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets | 39,400,000 | ||||||||||||||||||
Deferred tax assets for net operating loss carryforwards | 23,800,000 | ||||||||||||||||||
Other deferred tax assets, net | 2,200,000 | ||||||||||||||||||
Transaction expenses paid | 3,200,000 | ||||||||||||||||||
Acquisition related costs | 800,000 | ||||||||||||||||||
Cash and cash equivalents | 17,200,000 | ||||||||||||||||||
Identifiable technology and intangible assets | 105,290,000 | ||||||||||||||||||
Restricted cash (GREBT) | 5,527,000 | ||||||||||||||||||
Goodwill | 81,850,000 | ||||||||||||||||||
CashStar | Customer relationships | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Identifiable technology and intangible assets | $ 103,000,000 | ||||||||||||||||||
Useful Life | 10 years | ||||||||||||||||||
CashStar | Credit Agreement | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Borrowings under revolving bank line of credit | $ 110,000,000 | ||||||||||||||||||
Other Acquisitions | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Cash consideration | 27,600,000 | ||||||||||||||||||
Acquisition related costs | 600,000 | ||||||||||||||||||
Total purchase consideration | 30,100,000 | ||||||||||||||||||
Contingent consideration transferred | 1,600,000 | ||||||||||||||||||
Contingent cash consideration, highest level | 2,000,000 | 2,000,000 | |||||||||||||||||
Consideration transferred, working capital adjustments | 900,000 | ||||||||||||||||||
Cash and cash equivalents | 8,300,000 | 8,300,000 | |||||||||||||||||
Identifiable technology and intangible assets | 15,500,000 | 15,500,000 | |||||||||||||||||
Goodwill acquired during period | 11,900,000 | ||||||||||||||||||
Liabilities | 5,500,000 | 5,500,000 | |||||||||||||||||
Deferred tax assets | 1,200,000 | 1,200,000 | |||||||||||||||||
Goodwill, expected tax deductible amount | 9,900,000 | 9,900,000 | |||||||||||||||||
Intangible assets, deductible for tax purposes | 7,800,000 | $ 7,800,000 | |||||||||||||||||
Other Acquisitions | Minimum | Customer relationships | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Useful Life | 7 years | ||||||||||||||||||
Other Acquisitions | Maximum | Customer relationships | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Useful Life | 10 years | ||||||||||||||||||
Grass Roots, Inc. | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Cash consideration | $ 111,700,000 | £ 87.8 | |||||||||||||||||
Deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets | 12,000,000 | ||||||||||||||||||
Deferred tax assets for net operating loss carryforwards | 2,200,000 | ||||||||||||||||||
Other deferred tax assets, net | 800,000 | ||||||||||||||||||
Transaction expenses paid | 600,000 | ||||||||||||||||||
Acquisition related costs | $ 2,600,000 | ||||||||||||||||||
Total purchase consideration | 120,200,000 | £ 94.6 | |||||||||||||||||
Cash and cash equivalents | 38,957,000 | ||||||||||||||||||
Identifiable technology and intangible assets | 64,825,000 | ||||||||||||||||||
Goodwill acquired during period | 54,219,000 | ||||||||||||||||||
Restricted cash (GREBT) | 8,541,000 | £ 6.7 | |||||||||||||||||
Amortization of intangibles | 5,000,000 | ||||||||||||||||||
Goodwill | 52,901,000 | ||||||||||||||||||
Grass Roots, Inc. | US Retail | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Goodwill acquired during period | 0 | ||||||||||||||||||
Grass Roots, Inc. | Customer relationships | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Identifiable technology and intangible assets | $ 57,633,000 | ||||||||||||||||||
Useful Life | 10 years | 10 years | |||||||||||||||||
Grass Roots, Inc. | Minimum | Income Approach Valuation Technique | Finite-Lived Intangible Assets | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Discount rate | 8.00% | 8.00% | |||||||||||||||||
Grass Roots, Inc. | Maximum | Income Approach Valuation Technique | Finite-Lived Intangible Assets | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Discount rate | 15.00% | 15.00% | |||||||||||||||||
Spafinder and Samba | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Cash consideration | 5,800,000 | ||||||||||||||||||
Deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets | 1,100,000 | 1,100,000 | 1,100,000 | ||||||||||||||||
Deferred tax assets for net operating loss carryforwards | 100,000 | 100,000 | 100,000 | ||||||||||||||||
Acquisition related costs | 900,000 | ||||||||||||||||||
Total purchase consideration | 16,200,000 | ||||||||||||||||||
Contingent consideration transferred | 1,400,000 | ||||||||||||||||||
Consideration transferred, working capital adjustments | 1,800,000 | ||||||||||||||||||
Cash and cash equivalents | 1,032,000 | 1,032,000 | 1,032,000 | ||||||||||||||||
Identifiable technology and intangible assets | 21,271,000 | 21,271,000 | 21,271,000 | ||||||||||||||||
Consideration transferred, notes receivable and accrued interest forgiven | 5,400,000 | ||||||||||||||||||
Goodwill | 15,549,000 | 15,549,000 | 15,549,000 | ||||||||||||||||
Spafinder and Samba | Customer relationships | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Identifiable technology and intangible assets | $ 19,083,000 | $ 19,083,000 | 19,083,000 | ||||||||||||||||
Useful Life | 10 years | ||||||||||||||||||
Spafinder and Samba | Minimum | Income Approach Valuation Technique | Finite-Lived Intangible Assets | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Discount rate | 18.00% | ||||||||||||||||||
Spafinder and Samba | Maximum | Income Approach Valuation Technique | Finite-Lived Intangible Assets | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Discount rate | 22.00% | ||||||||||||||||||
Samba | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Goodwill acquired during period | 4,074,000 | ||||||||||||||||||
Consideration transferred, relating to previous minority interest in Samba | $ 1,800,000 | ||||||||||||||||||
Samba | US Retail | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Goodwill acquired during period | 0 | ||||||||||||||||||
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 | ||||||||||||||||||
Cash and cash equivalents | 3,985,000 | ||||||||||||||||||
Identifiable technology and intangible assets | 52,460,000 | ||||||||||||||||||
Goodwill | 67,706,000 | ||||||||||||||||||
Omni Prepaid | Customer relationships | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Identifiable technology and intangible assets | $ 27,570,000 | ||||||||||||||||||
Useful Life | 10 years | ||||||||||||||||||
Omni Prepaid | Minimum | Income Approach Valuation Technique | Finite-Lived Intangible Assets | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Discount rate | 6.00% | ||||||||||||||||||
Omni Prepaid | Maximum | Income Approach Valuation Technique | Finite-Lived Intangible Assets | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Discount rate | 11.00% | ||||||||||||||||||
NimbleCommerce and Extrameasures | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Cash consideration | $ 58,500,000 | ||||||||||||||||||
Deferred tax liabilities for nondeductible amortization of identifiable technology and intangible assets | $ 2,300,000 | 2,300,000 | |||||||||||||||||
Deferred tax assets for net operating loss carryforwards | 3,900,000 | 3,900,000 | |||||||||||||||||
Other deferred tax assets, net | 300,000 | 300,000 | |||||||||||||||||
Acquisition related costs | 900,000 | ||||||||||||||||||
Total purchase consideration | 78,800,000 | ||||||||||||||||||
Contingent consideration transferred | 20,300,000 | ||||||||||||||||||
Cash and cash equivalents | 14,191,000 | 14,191,000 | |||||||||||||||||
Identifiable technology and intangible assets | 45,540,000 | 45,540,000 | |||||||||||||||||
Deferred tax assets | 1,926,000 | 1,926,000 | |||||||||||||||||
Goodwill | 37,865,000 | 37,865,000 | |||||||||||||||||
NimbleCommerce and Extrameasures | Customer relationships | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Identifiable technology and intangible assets | 39,230,000 | $ 39,230,000 | |||||||||||||||||
Useful Life | 10 years | ||||||||||||||||||
NimbleCommerce and Extrameasures | Minimum | Income Approach Valuation Technique | Finite-Lived Intangible Assets | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Discount rate | 9.00% | ||||||||||||||||||
NimbleCommerce and Extrameasures | Maximum | Income Approach Valuation Technique | Finite-Lived Intangible Assets | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Discount rate | 16.00% | ||||||||||||||||||
Extrameasures | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Contingent cash consideration, highest level | $ 15,000,000 | $ 15,000,000 | |||||||||||||||||
Goodwill acquired during period | $ 27,360,000 | ||||||||||||||||||
Discount rate | 16.70% | ||||||||||||||||||
Consideration transferred, number of payments | payment | 3 | ||||||||||||||||||
Consideration earnout percentage for employees | 10.00% | ||||||||||||||||||
Extrameasures | US Retail | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Goodwill acquired during period | $ 0 | ||||||||||||||||||
Extrameasures | Income Approach Valuation Technique | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Discount rate | 17.00% | ||||||||||||||||||
NimbleCommerce | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Goodwill acquired during period | 10,505,000 | ||||||||||||||||||
NimbleCommerce | US Retail | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Goodwill acquired during period | $ 10,505,000 | ||||||||||||||||||
NimbleCommerce | US Retail | Operating Segments | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Goodwill, expected tax deductible amount | $ 1,400,000 | $ 1,400,000 | |||||||||||||||||
Goodwill | $ 10,500,000 | $ 10,500,000 | |||||||||||||||||
Achievers Corp. | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Cash consideration | $ 103,500,000 | ||||||||||||||||||
Acquisition related costs | 1,600,000 | ||||||||||||||||||
Cash and cash equivalents | 24,367,000 | ||||||||||||||||||
Identifiable technology and intangible assets | 94,800,000 | ||||||||||||||||||
Amortization of intangibles | 3,800,000 | ||||||||||||||||||
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 | ||||||||||||||||||
After-tax net loss | $ 7,900,000 | ||||||||||||||||||
Achievers Corp. | Income Approach Valuation Technique | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Expected client attrition rate | 8.00% | ||||||||||||||||||
Achievers Corp. | Customer relationships | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Identifiable technology and intangible assets | $ 73,210,000 | ||||||||||||||||||
Useful Life | 15 years | ||||||||||||||||||
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 | |||||||||||||||||
Cash and cash equivalents | 4,733,000 | ||||||||||||||||||
Identifiable technology and intangible assets | 26,892,000 | ||||||||||||||||||
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% | |||||||||||||||||
Term ending December 31, 2017 | Grass Roots & M&E Business | Disposed by sale | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Contingent consideration with divestiture | 3,200,000 | 2.4 | |||||||||||||||||
Term ending December 31, 2018 | Grass Roots & M&E Business | Disposed by sale | |||||||||||||||||||
Business Acquisition | |||||||||||||||||||
Contingent consideration with divestiture | $ 4,500,000 | £ 3.3 |
Business Acquisitions and Div42
Business Acquisitions and Divestiture - Summary of Initial Purchase Price Allocation (Details) $ in Thousands, £ in Millions | Dec. 30, 2017USD ($) | Aug. 29, 2017USD ($) | Dec. 31, 2016USD ($) | Oct. 06, 2016USD ($) | Oct. 06, 2016GBP (£) | Jun. 18, 2016USD ($) | Jan. 05, 2016USD ($) | Jan. 02, 2016USD ($) | Sep. 14, 2015USD ($) | Jun. 30, 2015USD ($) |
Business Acquisition | ||||||||||
Goodwill | $ 563,405 | $ 570,398 | $ 402,489 | |||||||
CashStar | ||||||||||
Business Acquisition | ||||||||||
Cash and cash equivalents | $ 17,200 | |||||||||
Settlement receivables, net | 1,912 | |||||||||
Settlement payables | (14,939) | |||||||||
Identifiable technology and intangible assets | 105,290 | |||||||||
Goodwill | 81,850 | |||||||||
Consumer and customer deposits | (4,600) | |||||||||
Accounts payable and accrued operating expenses | (4,705) | |||||||||
Other tangible assets, net | 97 | |||||||||
Deferred income taxes | (13,379) | |||||||||
Debt | (8,285) | |||||||||
Restricted cash (GREBT) | 5,527 | |||||||||
Total purchase consideration | $ 165,968 | |||||||||
Grass Roots, Inc. | ||||||||||
Business Acquisition | ||||||||||
Cash and cash equivalents | $ 38,957 | |||||||||
Settlement receivables, net | 24,290 | |||||||||
Accounts receivables, net | 10,692 | |||||||||
Identifiable technology and intangible assets | 64,825 | |||||||||
Goodwill | 52,901 | |||||||||
Consumer and customer deposits | (35,636) | |||||||||
Accounts payable and accrued operating expenses | (30,984) | |||||||||
Deferred income taxes, net | (9,274) | |||||||||
Other tangible assets, net | 3,096 | |||||||||
Deferred revenue | (7,215) | |||||||||
Purchase consideration excluding GREBT | 111,652 | |||||||||
Restricted cash (GREBT) | 8,541 | £ 6.7 | ||||||||
Total purchase consideration | $ 120,193 | |||||||||
Spafinder and Samba | ||||||||||
Business Acquisition | ||||||||||
Cash and cash equivalents | 1,032 | |||||||||
Settlement receivables, net | 2,182 | |||||||||
Settlement payables | (2,273) | |||||||||
Identifiable technology and intangible assets | 21,271 | |||||||||
Goodwill | 15,549 | |||||||||
Consumer and customer deposits | (26,080) | |||||||||
Deferred income taxes, net | (1,009) | |||||||||
Other tangible assets, net | 5,549 | |||||||||
Total purchase consideration | $ 16,221 | |||||||||
Omni Prepaid | ||||||||||
Business Acquisition | ||||||||||
Cash and cash equivalents | $ 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 and cash equivalents | $ 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 and cash equivalents | $ 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 and cash equivalents | $ 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 |
Business Acquisitions and Div43
Business Acquisitions and Divestiture - Summary of Identifiable Technology and Intangible Assets at Date of Acquisition (Details) - USD ($) $ in Thousands | Aug. 29, 2017 | Oct. 06, 2016 | Jan. 05, 2016 | Sep. 14, 2015 | Jun. 30, 2015 | Dec. 31, 2016 | Jun. 18, 2016 |
CashStar | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 105,290 | ||||||
CashStar | Technology | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 2,290 | ||||||
Useful Life | 1 year 6 months | ||||||
CashStar | Customer relationships | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 103,000 | ||||||
Useful Life | 10 years | ||||||
Grass Roots, Inc. | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 64,825 | ||||||
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 | |||||||
Useful Life | 3 years | ||||||
Grass Roots, Inc. | Technology | Minimum | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Useful Life | 1 year | ||||||
Grass Roots, Inc. | Customer relationships | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 57,633 | ||||||
Useful Life | 10 years | ||||||
Grass Roots, Inc. | Customer backlog | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 2,911 | ||||||
Useful Life | 1 year | ||||||
Grass Roots, Inc. | Trade name | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 2,695 | ||||||
Useful Life | 10 years | ||||||
Spafinder and Samba | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 21,271 | ||||||
Spafinder and Samba | Customer relationships | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 19,083 | ||||||
Useful Life | 10 years | ||||||
Spafinder and Samba | Trade name | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 2,188 | ||||||
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 | ||||||
Useful Life | 5 years | ||||||
Omni Prepaid | Customer relationships | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 27,570 | ||||||
Useful Life | 10 years | ||||||
Omni Prepaid | Customer backlog | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 10,780 | ||||||
Useful Life | 3 years | ||||||
Omni Prepaid | Trade name | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 10,520 | ||||||
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 | ||||||
Useful Life | 5 years | ||||||
NimbleCommerce and Extrameasures | Customer relationships | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 39,230 | ||||||
Useful Life | 10 years | ||||||
NimbleCommerce and Extrameasures | Customer backlog | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 1,610 | ||||||
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 | ||||||
Useful Life | 6 years | ||||||
Achievers Corp. | Customer relationships | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 73,210 | ||||||
Useful Life | 15 years | ||||||
Achievers Corp. | Customer backlog | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 4,590 | ||||||
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 | ||||||
Useful Life | 4 years | ||||||
Didix | Trade name | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 4,106 | ||||||
Useful Life | 10 years | ||||||
Didix | Content provider relationships | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 17,382 | ||||||
Useful Life | 10 years | ||||||
Didix | Distribution relationships | |||||||
Acquired Finite-Lived Intangible Assets | |||||||
Identifiable technology and intangible assets | $ 4,614 | ||||||
Useful Life | 5 years |
Business Acquisitions and Div44
Business Acquisitions and Divestiture - Summary of Acquiree Revenues and Earnings Since Acquisition (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
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) |
Business Acquisitions and Div45
Business Acquisitions and Divestiture - Summary of Unaudited Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
CashStar | |||
Business Acquisition | |||
Total revenues | $ 2,259,191 | $ 1,939,859 | |
Net income (loss) attributable to Blackhawk Network Holdings, Inc. | $ (163,561) | $ (7,544) | |
Pro forma EPS—Basic (in usd per share) | $ (2.91) | ||
Pro forma EPS—Diluted (in usd per share) | $ (2.91) | $ (0.14) | |
Grass Roots, GiftCards, Extrameasures, Spafinder and Samba | |||
Business Acquisition | |||
Total revenues | $ 2,031,871 | $ 2,030,066 | |
Net income (loss) 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 | ||
Net income (loss) attributable to Blackhawk Network Holdings, Inc. | $ 41,752 | ||
Pro forma EPS—Basic (in usd per share) | $ 0.77 | ||
Pro forma EPS—Diluted (in usd per share) | $ 0.74 |
Business Acquisitions and Div46
Business Acquisitions and Divestiture - Summary of Disposal of Grass Roots and M&E Business (Details) - Grass Roots & M&E Business - Disposed by sale $ in Thousands | Dec. 30, 2017USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Cash and cash equivalents | $ 24,976 |
Settlement receivables, net | 1,743 |
Accounts receivable, net | 15,141 |
Other current assets | 2,617 |
Property, equipment and technology, net | 863 |
Intangible assets, net | 3,772 |
Goodwill | 28,843 |
Deferred income taxes | 1,388 |
Total assets | 79,343 |
Settlement payables | (8,589) |
Consumer and customer deposits | (1,855) |
Accounts payable and accrued operating expenses | (8,468) |
Deferred revenue | (3,739) |
Other current liabilities | (12,248) |
Total liabilities | $ (34,899) |
Investment in Unconsolidated 47
Investment in Unconsolidated Entities - Schedule of Equity and Cost Method investments (Details) - USD ($) $ in Thousands | Dec. 30, 2017 | Dec. 31, 2016 | Nov. 30, 2016 |
Schedule of Equity Method Investments [Line Items] | |||
Carrying value | $ 15,984 | $ 10,968 | |
Cost method investments | 7,954 | 7,954 | |
Total unconsolidated entities | 23,938 | 18,922 | |
Investment in China entity | |||
Schedule of Equity Method Investments [Line Items] | |||
Carrying value | $ 8,831 | $ 4,576 | |
Ownership percentage | 42.00% | 26.50% | |
Investment in Australia entity | |||
Schedule of Equity Method Investments [Line Items] | |||
Carrying value | $ 6,823 | $ 6,392 | |
Ownership percentage | 51.20% | 51.20% | 51.20% |
Other equity method investments | |||
Schedule of Equity Method Investments [Line Items] | |||
Carrying value | $ 330 | $ 0 | |
Ownership percentage | 42.50% | 0.00% |
Investment in Unconsolidated 48
Investment in Unconsolidated Entities - Narrative (Details) $ in Thousands, AUD in Millions | 1 Months Ended | 12 Months Ended | |||
Nov. 30, 2016USD ($) | Nov. 30, 2016AUD | Dec. 30, 2017USD ($) | Dec. 31, 2016USD ($) | Jan. 02, 2016USD ($) | |
Schedule of Equity Method Investments [Line Items] | |||||
Cash payment consideration | $ 6,201 | $ 10,541 | $ 5,877 | ||
Investment in China entity | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Cash payment consideration | $ 5,000 | ||||
Ownership percentage | 42.00% | 26.50% | |||
Investment in Australia entity | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Cash payment consideration | $ 6,000 | AUD 8 | |||
Ownership percentage | 51.20% | 51.20% | 51.20% | 51.20% |
Financing - Credit Agreement (D
Financing - Credit Agreement (Detail) - USD ($) | Jan. 11, 2018 | Nov. 22, 2017 | Apr. 20, 2017 | Jul. 27, 2016 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | Jul. 26, 2016 |
Debt Instrument [Line Items] | ||||||||
Term loan, repayments | $ 10,000,000 | $ 463,750,000 | $ 11,250,000 | |||||
Term loan, balance outstanding | 654,758,000 | |||||||
Borrowings under revolving bank line of credit | 3,011,270,000 | 2,985,490,000 | 2,473,529,000 | |||||
Interest Expense | 32,092,000 | 21,864,000 | 13,171,000 | |||||
Amortization of deferred financing costs | 1,200,000 | 1,700,000 | 1,200,000 | |||||
Federal Funds Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 0.50% | |||||||
One-month LIBOR Base Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 1.00% | |||||||
Minimum | London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 1.25% | |||||||
Minimum | One-month LIBOR Base Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 0.25% | |||||||
Maximum | London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 2.25% | |||||||
Maximum | One-month LIBOR Base Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 1.25% | |||||||
Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest expense for term loan | 11,700,000 | $ 12,900,000 | 12,500,000 | |||||
Line of Credit | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Amount outstanding under revolving credit facility | 0 | |||||||
Remaining borrowing capacity under revolving credit facility | 277,800,000 | |||||||
Average outstanding amount during period | 60,400,000 | |||||||
Maximum amount outstanding during period | $ 262,600,000 | |||||||
Line of Credit | Revolving Credit Facility | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Commitment fee percentage | 0.25% | |||||||
Interest rate during period | 3.82% | 2.97% | ||||||
Line of Credit | Revolving Credit Facility | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Commitment fee percentage | 0.45% | |||||||
Line of Credit | Letter of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Amount outstanding under revolving credit facility | $ 122,200,000 | |||||||
Line of Credit | Letter of Credit | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 2.25% | |||||||
Line of Credit | Letter of Credit, Secured with Cash | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated interest rate percentage | 0.75% | |||||||
Original Credit Agreement | Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Term loan, repayments | $ 276,000,000 | |||||||
Term loan, balance outstanding | $ 150,000,000 | $ 426,000,000 | ||||||
December 2015 Amended Credit Agreement | Line of Credit | Letter of Credit | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 1.25% | |||||||
Credit Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing capacity | $ 700,000,000 | |||||||
Term loan, incremental borrowing capacity | 300,000,000 | |||||||
Credit Agreement | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Revolving credit facility, current borrowing capacity | 400,000,000 | |||||||
Credit Agreement | Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Term loan, balance outstanding | 215,000,000 | |||||||
Term loan, maximum borrowing capacity | $ 300,000,000 | |||||||
Borrowings under revolving bank line of credit | $ 25,000,000 | $ 50,000,000 | ||||||
Term loan, incremental borrowing capacity | 75,000,000 | |||||||
Original Credit Agreement and Credit Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest Expense | $ 12,900,000 | $ 14,600,000 | $ 13,700,000 | |||||
Subsequent Event | ||||||||
Debt Instrument [Line Items] | ||||||||
Term loan, balance outstanding | $ 730,266,000 | |||||||
Subsequent Event | Credit Agreement | Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Borrowings under revolving bank line of credit | $ 75,000,000 |
Financing - Convertible Senior
Financing - Convertible Senior Notes (Details) | Jul. 27, 2016USD ($)day$ / shares | Dec. 30, 2017USD ($) | Dec. 31, 2016USD ($) | Jan. 02, 2016USD ($) |
Debt Instrument [Line Items] | ||||
Amortization of deferred financing costs and debt discount | $ 13,837,000 | $ 6,506,000 | $ 1,187,000 | |
Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Face amount of debt instrument | $ 500,000,000 | |||
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 | |||
Conversion per amount of principal | $ 1,000 | |||
Debt instrument, initial debt component of the notes | $ 436,600,000 | |||
Debt instrument, estimated non-convertible debt borrowing rate | 4.10% | |||
Debt instrument, interest rate, effective percentage | 4.65% | |||
Debt instrument, non-cash accretion expense, percentage | 3.15% | |||
Interest expense for the notes | 20,100,000 | 8,000,000 | ||
Interest expense from coupon | 7,500,000 | 3,200,000 | ||
Amortization of deferred financing costs and debt discount | $ 12,600,000 | $ 4,800,000 | ||
Convertible Debt | Convertible Senior Notes, Equity Component | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, debt discount | $ 63,400,000 | |||
Debt issuance costs | 1,800,000 | |||
Convertible Debt | Convertible Senior Notes, Debt Component | ||||
Debt Instrument [Line Items] | ||||
Debt issuance costs | $ 12,300,000 | |||
Convertible Debt | Debt Instrument, Redemption, Period One | ||||
Debt Instrument [Line Items] | ||||
Trading days threshold | day | 20 | |||
Consecutive trading days threshold | day | 30 | |||
Redemption price | 130.00% | |||
Convertible Debt | Debt Instrument, Redemption, Period Two | ||||
Debt Instrument [Line Items] | ||||
Consecutive trading days threshold | day | 5 | |||
Redemption price | 98.00% | |||
Number of business days | day | 5 |
Financing - Schedule of Annual
Financing - Schedule of Annual Maturities of Notes Payable (Detail) - USD ($) $ in Thousands | Jan. 11, 2018 | Dec. 30, 2017 |
Debt Instrument [Line Items] | ||
2,018 | $ 11,250 | |
2,019 | 11,250 | |
2,020 | 22,500 | |
2,021 | 170,000 | |
2,022 | 500,000 | |
Total amount due | 715,000 | |
Unamortized discount and debt issuance fees | (60,242) | |
Note payable, net | $ 654,758 | |
Subsequent Event | ||
Debt Instrument [Line Items] | ||
2,018 | $ 15,000 | |
2,019 | 15,000 | |
2,020 | 30,000 | |
2,021 | 230,000 | |
2,022 | 500,000 | |
Total amount due | 790,000 | |
Unamortized discount and debt issuance fees | (59,734) | |
Note payable, net | $ 730,266 |
Financing - Convertible Note He
Financing - Convertible Note Hedges and Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | Jul. 22, 2016 | Sep. 10, 2016 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | Jul. 21, 2016 |
Debt Instrument [Line Items] | ||||||
Aggregate payment for note hedges | $ 0 | $ 75,750 | $ 0 | |||
Proceeds from warrants | $ 0 | 47,000 | $ 0 | |||
Deferred tax asset, related to note hedges and warrants | $ 5,200 | |||||
Additional Paid-In Capital | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate payment for note hedges | $ 75,750 | |||||
Adjustments to additional paid in capital, deferred tax assets, convertible notes | $ 5,200 | |||||
Call Option Warrants | ||||||
Debt Instrument [Line Items] | ||||||
Proceeds from warrants | $ 47,000 | |||||
Shares issuable under warrants (in share) | 10 | 10 | ||||
Exercise price (in usd per share) | $ 61.20 | $ 61.20 | ||||
Call Option | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate payment for note hedges | $ 75,800 |
Financing - Shares Repurchased
Financing - Shares Repurchased (Details) - USD ($) $ in Thousands, shares in Millions | 1 Months Ended | 12 Months Ended |
Oct. 31, 2017 | Dec. 31, 2016 | |
Debt Disclosure [Abstract] | ||
Stock repurchased during period (in shares) | 1.2 | 1 |
Stock repurchased during period | $ 40,000 | $ 34,843 |
Financing - Impact to Earnings
Financing - Impact to Earnings per Share (Details) - $ / shares | Jul. 22, 2016 | Jul. 21, 2016 |
Call Option Warrants | ||
Debt Instrument [Line Items] | ||
Exercise price of warrant | $ 61.20 | $ 61.20 |
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. 30, 2017 | Dec. 31, 2016 |
Cash and cash equivalents | ||
Money market mutual funds | $ 694,075 | $ 300,015 |
Contingent asset | 6,131 | 0 |
Liabilities | ||
Warrants | 20,000 | 0 |
Contingent consideration | 3,886 | 23,752 |
Level 1 | ||
Cash and cash equivalents | ||
Money market mutual funds | 694,075 | 300,015 |
Contingent asset | 0 | 0 |
Liabilities | ||
Warrants | 0 | 0 |
Contingent consideration | 0 | 0 |
Level 2 | ||
Cash and cash equivalents | ||
Money market mutual funds | 0 | 0 |
Contingent asset | 0 | 0 |
Liabilities | ||
Warrants | 20,000 | 0 |
Contingent consideration | 0 | 0 |
Level 3 | ||
Cash and cash equivalents | ||
Money market mutual funds | 0 | 0 |
Contingent asset | 6,131 | 0 |
Liabilities | ||
Warrants | 0 | 0 |
Contingent consideration | $ 3,886 | $ 23,752 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Detail) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | Dec. 15, 2017 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | ||||
Settlements | $ (7,503) | $ 0 | ||
Payments for acquisition liability | (5,503) | $ 0 | $ (1,811) | |
Extrameasures | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | ||||
Fair value inputs, discount rate percentage | 16.70% | |||
Addition from acquisition | 0 | $ 20,300 | ||
Spafinder | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | ||||
Fair value inputs, discount rate percentage | 19.50% | |||
Addition from acquisition | 0 | $ 1,352 | ||
Other Acquisitions | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | ||||
Addition from acquisition | 1,640 | 0 | ||
Divestiture of M&E business | 934 | $ 0 | ||
Payments for acquisition liability | (2,000) | |||
Level 2 | Term Loan | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | ||||
Fair value of debt instrument | 215,000 | |||
Level 2 | Convertible Notes Payable | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | ||||
Fair value of debt instrument | 510,000 | |||
Grass Roots & M&E Business | Disposed by sale | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | ||||
Contingent asset | $ 6,100 | |||
Contingent asset, current | $ 3,200 | |||
Contingent asset, noncurrent | $ 2,900 | |||
Contingent Asset | Grass Roots & M&E Business | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | ||||
Fair value inputs, discount rate percentage | 2.50% |
Fair Value Measurements - Sum57
Fair Value Measurements - Summary of Changes in Fair Value of Contingent Consideration Classified as Level 3 (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 30, 2017 | Dec. 31, 2016 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Balance – beginning of year | $ 23,752 | $ 0 |
Change in fair value of contingent consideration | (14,937) | 2,100 |
Settlements | (7,503) | 0 |
Balance – end of year | 3,886 | 23,752 |
Extrameasures | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Addition from acquisition | 0 | 20,300 |
Spafinder | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Addition from acquisition | 0 | 1,352 |
Other Acquisitions | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation | ||
Addition from acquisition | 1,640 | 0 |
Divestiture of M&E business | $ 934 | $ 0 |
Consolidated Financial Statem58
Consolidated Financial Statement Details - Summary of Changes in Allowances for Doubtful Accounts and Sales Allowances (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Allowance for Doubtful Accounts and Sales Allowances | |||
Beginning balance | $ 8,657 | $ 8,046 | $ 5,547 |
Provision | 1,617 | 4,544 | 4,656 |
Charges against allowances, net of recoveries | (1,855) | (3,933) | (2,157) |
Ending balance | $ 8,419 | $ 8,657 | $ 8,046 |
Consolidated Financial Statem59
Consolidated Financial Statement Details - Schedule of Other Current Assets (Detail) - USD ($) $ in Thousands | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Inventory | $ 37,007 | $ 43,950 | |
Deferred expenses | 29,172 | 22,148 | |
Income tax receivables | 10,823 | 13,599 | |
Assets held for sale | 23,462 | 0 | |
Other | 64,910 | 51,678 | |
Total other current assets | $ 165,374 | $ 131,375 | $ 103,319 |
Consolidated Financial Statem60
Consolidated Financial Statement Details - Schedule of Property, Equipment and Technology (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 30, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment | ||
Total property, equipment and technology | $ 395,890 | $ 346,052 |
Less accumulated depreciation and amortization | (223,283) | (173,671) |
Property, equipment and technology, net | $ 172,607 | 172,381 |
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 | $ 13,754 | 9,018 |
Computers and Related Equipment | ||
Property, Plant and Equipment | ||
Total property, equipment and technology | $ 50,944 | 45,910 |
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 | $ 331,192 | $ 291,124 |
Consolidated Financial Statem61
Consolidated Financial Statement Details - Schedule of Other Assets (Detail) - USD ($) $ in Thousands | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Deferred program and contract costs | $ 53,565 | $ 48,066 | |
Investments (see Note 3—Investment in Unconsolidated Entities) | 23,938 | 18,922 | |
Other receivables | 9,235 | 2,713 | |
Income taxes receivable | 2,321 | 2,358 | |
Deferred financing costs | 2,759 | 2,688 | |
Other | 23,418 | 11,109 | |
Total other assets | $ 115,236 | $ 85,856 | $ 81,764 |
Consolidated Financial Statem62
Consolidated Financial Statement Details - Schedule of Other Current Liabilities (Detail) - USD ($) $ in Thousands | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Payroll and related liabilities | $ 43,022 | $ 24,944 | |
Income taxes payable | 8,056 | 4,199 | |
Acquisition liability | 4,012 | 6,672 | |
Warrant liability | 20,000 | 0 | |
Other payables and accrued liabilities | 25,292 | 15,361 | |
Liability held for sale | 2,441 | 0 | |
Total other current liabilities | $ 102,823 | $ 51,176 | $ 57,342 |
Consolidated Financial Statem63
Consolidated Financial Statement Details - Schedule of Other Liabilities (Details) - USD ($) $ in Thousands | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Acquisition liability | $ 1,874 | $ 17,080 | |
Income taxes payable | 3,883 | 6,957 | |
Deferred income and other liabilities | 10,990 | 15,616 | |
Total other liabilities | $ 16,747 | $ 39,653 | $ 14,700 |
Consolidated Financial Statem64
Consolidated Financial Statement Details - Assets Held-for-sale (Details) - Cardpool - Assets held-for-sale $ in Thousands | Dec. 30, 2017USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Other current assets | $ 5,513 |
Property and equipment | 8,527 |
Goodwill | 8,991 |
Intangible assets | 431 |
Total assets | 23,462 |
Accounts payable and accrued operating expenses | 1,745 |
Other current liabilities | 450 |
Deferred revenue | 246 |
Total liabilities | $ 2,441 |
Consolidated Financial Statem65
Consolidated Financial Statement Details - Narrative (Details) - USD ($) $ in Thousands | 4 Months Ended | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Depreciation and amortization of property, equipment and technology | $ 55,419 | $ 48,379 | $ 40,983 | |
Capitalized interest related to property and technology | 1,000 | 800 | 500 | |
Amortization of deferred program and contract costs | 30,584 | 29,015 | 28,991 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Goodwill impairment | $ 68,500 | 77,500 | $ 0 | $ 0 |
Assets held-for-sale | Cardpool | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Pre-tax income | $ 24,500 | |||
Goodwill impairment | $ 22,500 |
Goodwill and Other Intangible66
Goodwill and Other Intangible Assets - Summary of Changes in Goodwill (Detail) - USD ($) $ in Thousands | 4 Months Ended | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Goodwill | ||||
Balance, beginning of period | $ 570,398 | $ 402,489 | ||
Goodwill impairment | $ (68,500) | (77,500) | 0 | $ 0 |
Transfers of goodwill | 0 | |||
Acquisitions | 93,717 | |||
Measurement period adjustments | 612 | (1,235) | ||
Divestiture of business (see Note 2—Business Acquisitions and Divestiture) | (28,843) | |||
Foreign currency translation adjustments | 14,012 | (4,073) | ||
Balance, end of year | 563,405 | 563,405 | 570,398 | 402,489 |
GiftCards | ||||
Goodwill | ||||
Acquisitions | 67,706 | |||
NimbleCommerce | ||||
Goodwill | ||||
Acquisitions | 10,505 | |||
Extrameasures | ||||
Goodwill | ||||
Acquisitions | 27,360 | |||
Grass Roots, Inc. | ||||
Goodwill | ||||
Acquisitions | 54,219 | |||
Samba | ||||
Goodwill | ||||
Acquisitions | 4,074 | |||
Spafinder | ||||
Goodwill | ||||
Acquisitions | 9,353 | |||
US Retail | ||||
Goodwill | ||||
Balance, beginning of period | 99,685 | 42,729 | ||
Goodwill impairment | (31,500) | |||
Transfers of goodwill | 0 | |||
Acquisitions | 81,850 | |||
Measurement period adjustments | 2,121 | 0 | ||
Divestiture of business (see Note 2—Business Acquisitions and Divestiture) | 0 | |||
Foreign currency translation adjustments | 0 | 0 | ||
Balance, end of year | 132,660 | 132,660 | 99,685 | 42,729 |
US Retail | GiftCards | ||||
Goodwill | ||||
Acquisitions | 34,427 | |||
US Retail | NimbleCommerce | ||||
Goodwill | ||||
Acquisitions | 10,505 | |||
US Retail | Extrameasures | ||||
Goodwill | ||||
Acquisitions | 0 | |||
US Retail | Grass Roots, Inc. | ||||
Goodwill | ||||
Acquisitions | 0 | |||
US Retail | Samba | ||||
Goodwill | ||||
Acquisitions | 0 | |||
US Retail | Spafinder | ||||
Goodwill | ||||
Acquisitions | 9,353 | |||
Incentives & Rewards | ||||
Goodwill | ||||
Balance, beginning of period | 366,508 | 310,604 | ||
Goodwill impairment | (46,000) | |||
Transfers of goodwill | (7,152) | |||
Acquisitions | 9,919 | |||
Measurement period adjustments | 0 | (1,235) | ||
Divestiture of business (see Note 2—Business Acquisitions and Divestiture) | 0 | |||
Foreign currency translation adjustments | 1,518 | (829) | ||
Balance, end of year | 335,298 | 335,298 | 366,508 | 310,604 |
Incentives & Rewards | GiftCards | ||||
Goodwill | ||||
Acquisitions | 33,279 | |||
Incentives & Rewards | NimbleCommerce | ||||
Goodwill | ||||
Acquisitions | 0 | |||
Incentives & Rewards | Extrameasures | ||||
Goodwill | ||||
Acquisitions | 27,360 | |||
Incentives & Rewards | Grass Roots, Inc. | ||||
Goodwill | ||||
Acquisitions | 0 | |||
Incentives & Rewards | Samba | ||||
Goodwill | ||||
Acquisitions | 0 | |||
Incentives & Rewards | Spafinder | ||||
Goodwill | ||||
Acquisitions | 0 | |||
International | ||||
Goodwill | ||||
Balance, beginning of period | 104,205 | 49,156 | ||
Goodwill impairment | 0 | |||
Transfers of goodwill | 7,152 | |||
Acquisitions | 1,948 | |||
Measurement period adjustments | (1,509) | 0 | ||
Divestiture of business (see Note 2—Business Acquisitions and Divestiture) | (28,843) | |||
Foreign currency translation adjustments | 12,494 | (3,244) | ||
Balance, end of year | $ 95,447 | 95,447 | 104,205 | $ 49,156 |
International | GiftCards | ||||
Goodwill | ||||
Acquisitions | 0 | |||
International | NimbleCommerce | ||||
Goodwill | ||||
Acquisitions | 0 | |||
International | Extrameasures | ||||
Goodwill | ||||
Acquisitions | 0 | |||
International | Grass Roots, Inc. | ||||
Goodwill | ||||
Acquisitions | 54,219 | |||
International | Samba | ||||
Goodwill | ||||
Acquisitions | 4,074 | |||
International | Spafinder | ||||
Goodwill | ||||
Acquisitions | 0 | |||
e-commerce | ||||
Goodwill | ||||
Transfers of goodwill | 0 | 0 | ||
e-commerce | US Retail | ||||
Goodwill | ||||
Transfers of goodwill | (10,505) | 2,671 | ||
e-commerce | Incentives & Rewards | ||||
Goodwill | ||||
Transfers of goodwill | 10,505 | (2,671) | ||
e-commerce | International | ||||
Goodwill | ||||
Transfers of goodwill | 0 | $ 0 | ||
Assets held-for-sale | ||||
Goodwill | ||||
Transfers of goodwill | (8,991) | |||
Assets held-for-sale | US Retail | ||||
Goodwill | ||||
Transfers of goodwill | (8,991) | |||
Assets held-for-sale | Incentives & Rewards | ||||
Goodwill | ||||
Transfers of goodwill | 0 | |||
Assets held-for-sale | International | ||||
Goodwill | ||||
Transfers of goodwill | $ 0 |
Goodwill and Other Intangible67
Goodwill and Other Intangible Assets - Summary of Intangible Assets (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 30, 2017 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets | ||
Gross | $ 599,147 | $ 475,847 |
Accumulated Amortization | (167,466) | (125,662) |
Total amortization | $ 431,681 | $ 350,185 |
Distribution partner and customer relationships, including backlog | ||
Finite-Lived Intangible Assets | ||
Weighted-Average Remaining Life in Years | 9 years | 10 years |
Gross | $ 569,445 | $ 447,665 |
Accumulated Amortization | (157,618) | (117,639) |
Total amortization | $ 411,827 | $ 330,026 |
Patents | ||
Finite-Lived Intangible Assets | ||
Weighted-Average Remaining Life in Years | 5 years | 7 years |
Gross | $ 5,003 | $ 6,944 |
Accumulated Amortization | (4,584) | (4,547) |
Total amortization | $ 419 | $ 2,397 |
Domain names, trade names and other intangibles | ||
Finite-Lived Intangible Assets | ||
Weighted-Average Remaining Life in Years | 8 years | 10 years |
Gross | $ 24,699 | $ 21,238 |
Accumulated Amortization | (5,264) | (3,476) |
Total amortization | $ 19,435 | $ 17,762 |
Goodwill and Other Intangible68
Goodwill and Other Intangible Assets - Summary of Future Intangible Asset Amortization (Detail) - USD ($) $ in Thousands | Dec. 30, 2017 | Dec. 31, 2016 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2,018 | $ 65,278 | |
2,019 | 57,569 | |
2,020 | 53,629 | |
2,021 | 49,980 | |
2,022 | 47,097 | |
Thereafter | 158,128 | |
Total amortization | $ 431,681 | $ 350,185 |
Goodwill and Other Intangible69
Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) | 3 Months Ended | 4 Months Ended | 12 Months Ended | ||
Sep. 09, 2017 | Dec. 30, 2017 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Goodwill [Line Items] | |||||
Goodwill impairment | $ 68,500,000 | $ 77,500,000 | $ 0 | $ 0 | |
Goodwill | 563,405,000 | 563,405,000 | 570,398,000 | 402,489,000 | |
Accumulated goodwill impairment charges | $ 77,500,000 | 77,500,000 | 0 | ||
Amortization of intangibles | $ 67,912,000 | 62,045,000 | $ 32,366,000 | ||
Income Approach Valuation Technique | |||||
Goodwill [Line Items] | |||||
Weighted-average percentage | 75.00% | 75.00% | |||
Market Approach Valuation | |||||
Goodwill [Line Items] | |||||
Weighted-average percentage | 25.00% | 25.00% | |||
Discounted Cash Flow Analysis | |||||
Goodwill [Line Items] | |||||
Hypothetical change in rate affecting recorded impairment | 0.50% | 0.50% | |||
Terminal Cash Flow Analysis | |||||
Goodwill [Line Items] | |||||
Hypothetical change in rate affecting recorded impairment | 0.50% | 0.50% | |||
Cardpool | |||||
Goodwill [Line Items] | |||||
Amount of fair value in excess of carrying value | $ 3,400,000 | ||||
Percentage of fair value in excess of carrying value | 6.90% | ||||
Goodwill impairment | $ 9,000,000 | $ 22,500,000 | |||
Goodwill | $ 31,500,000 | 9,000,000 | $ 9,000,000 | ||
Cardpool | Discounted Cash Flow Analysis | |||||
Goodwill [Line Items] | |||||
Amount of fair value in excess of carrying value | 800,000 | 800,000 | |||
Cardpool | Terminal Cash Flow Analysis | |||||
Goodwill [Line Items] | |||||
Amount of fair value in excess of carrying value | 200,000 | 200,000 | |||
Blackhawk Engagement Solutions US | |||||
Goodwill [Line Items] | |||||
Goodwill impairment | 46,000,000 | ||||
Blackhawk Engagement Solutions US | Discounted Cash Flow Analysis | |||||
Goodwill [Line Items] | |||||
Amount of fair value in excess of carrying value | 12,600,000 | 12,600,000 | |||
Blackhawk Engagement Solutions US | Terminal Cash Flow Analysis | |||||
Goodwill [Line Items] | |||||
Amount of fair value in excess of carrying value | $ 5,300,000 | $ 5,300,000 |
Equity Incentive Plans and St70
Equity Incentive Plans and Stock Based Compensation - Narrative (Detail) - USD ($) | Dec. 14, 2012 | Jun. 30, 2017 | May 31, 2015 | Mar. 31, 2013 | Mar. 31, 2010 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | Dec. 28, 2013 | Feb. 28, 2007 | Feb. 28, 2006 |
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Stock-based compensation expense | $ 32,708,000 | $ 32,592,000 | $ 30,130,000 | ||||||||
Stock-based compensation capitalized | 2,000,000 | 2,000,000 | |||||||||
Cumulative adjustment upon modified retrospective adoption of ASUs | 16,521,000 | ||||||||||
Retroactive adjustment to net cash provided by operating activities, ASU 2016-09 | 345,501,000 | 185,231,000 | 204,680,000 | ||||||||
Dividends declared, common stock (in usd per share) | $ 1.369 | ||||||||||
Retroactive adjustment to net cash used in financing activities, ASU 2016-09 | (15,499,000) | $ (204,121,000) | $ 18,815,000 | ||||||||
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 | |||||||||
Stock-based compensation expense | 3,500,000 | $ 7,200,000 | $ 7,700,000 | ||||||||
Unamortized stock-based expense | $ 3,600,000 | ||||||||||
Unrecognized compensation expense recognition weighted average period | 1 year 7 months 6 days | ||||||||||
Intrinsic value of the options exercised | $ 12,300,000 | 5,600,000 | 21,700,000 | ||||||||
Restricted Stock and Restricted Stock Units Awards | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Stock-based compensation expense | 29,000,000 | 23,400,000 | 17,200,000 | ||||||||
Unamortized stock-based expense | $ 53,900,000 | ||||||||||
Unrecognized compensation expense recognition weighted average period | 2 years 3 months 19 days | ||||||||||
Fair value of vested awards | $ 26,100,000 | 18,400,000 | 13,800,000 | ||||||||
Performance Stock Units | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Stock-based compensation expense | 600,000 | 2,400,000 | 4,000,000 | ||||||||
Unamortized stock-based expense | $ 5,600,000 | ||||||||||
Unrecognized compensation expense recognition weighted average period | 1 year 2 months 12 days | ||||||||||
Fair value of vested awards | $ 5,100,000 | 0 | 0 | ||||||||
2006 Plan | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Common stock approved for issuance (in shares) | 1,500,000 | 1,250,000 | |||||||||
Increase in authorized shares of common stock available for grants (in shares) | 250,000 | ||||||||||
2006 Plan | Minimum | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Award vesting period (in years) | 4 years | ||||||||||
2006 Plan | Maximum | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Award vesting period (in years) | 5 years | ||||||||||
2007 Plan | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Common stock approved for issuance (in shares) | 4,500,000 | 2,500,000 | |||||||||
Increase in authorized shares of common stock available for grants (in shares) | 500,000 | 1,500,000 | |||||||||
2007 Plan | Minimum | Stock Options and Stock Appreciation Rights | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Award vesting period (in years) | 4 years | ||||||||||
2007 Plan | Maximum | Stock Options and Stock Appreciation Rights | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Award vesting period (in years) | 5 years | ||||||||||
2013 Plan | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Common stock approved for issuance (in shares) | 3,000,000 | ||||||||||
Increase in authorized shares of common stock available for grants (in shares) | 2,000,000 | 4,000,000 | |||||||||
Shares available for grant (in shares) | 4,183,000 | ||||||||||
2013 Plan | Non-employee Directors | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Maximum issuances value | $ 750,000 | ||||||||||
ESPP | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Common stock approved for issuance (in shares) | 2,000,000 | ||||||||||
Employee stock purchase plan, percentage of discount for purchase of shares | 15.00% | ||||||||||
Percentage of shares available for issuance | 1.00% | ||||||||||
ESPP | Employee Stock | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Shares available for grant (in shares) | 1,382,000 | ||||||||||
Stock-based compensation expense | $ 1,700,000 | $ 1,700,000 | $ 1,200,000 | ||||||||
Shares purchased under employee stock purchase plan | 189,727 | 193,092 | 124,324 | ||||||||
Retained Earnings | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Cumulative adjustment upon modified retrospective adoption of ASUs | $ 15,871,000 | ||||||||||
Accounting Standards Update 2016-09, Forfeiture Rate Component | Retained Earnings | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Cumulative adjustment upon modified retrospective adoption of ASUs | $ (300,000) | ||||||||||
Accounting Standards Update 2016-09, Tax Benefits Of Warrants | Retained Earnings | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Cumulative adjustment upon modified retrospective adoption of ASUs | $ 10,100,000 | ||||||||||
Accounting Standards Update 2016-09 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||||||
Retroactive adjustment to net cash provided by operating activities, ASU 2016-09 | 6,800,000 | ||||||||||
Retroactive adjustment to net cash used in financing activities, ASU 2016-09 | $ 6,800,000 |
Equity Incentive Plans and St71
Equity Incentive Plans and Stock Based Compensation - Assumptions Used to Value Awards (Detail) | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
ESPP | |||
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% |
ESPP | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Expected volatility | 30.65% | 30.12% | 32.40% |
Risk-free rate | 1.00% | 0.40% | 0.10% |
ESPP | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Expected volatility | 40.63% | 36.72% | 34.96% |
Risk-free rate | 1.30% | 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 | |
Expected dividend yield | 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% | |
Risk-free rate | 1.10% | 1.40% | |
Stock Options and Stock Appreciation Rights | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Expected volatility | 34.90% | 37.30% | |
Risk-free rate | 1.90% | 1.70% |
Equity Incentive Plans and St72
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. 30, 2017 | Dec. 31, 2016 | |
Stock Options and Appreciation Rights (in shares) | ||
Balance at beginning of the period (in shares) | 3,065,293 | |
Granted (in shares) | 0 | |
Canceled (in shares) | (86,083) | |
Exercised (in shares) | (621,697) | |
Balance at end of the period (in shares) | 2,357,513 | 3,065,293 |
Exercisable at period end (in shares) | 1,633,701 | |
Weighted Average Exercise Price | ||
Balance at beginning of the period (in usd per share) | $ 26.57 | |
Granted (in usd per share) | 0 | |
Canceled (in usd per share) | 35.37 | |
Exercised (in usd per share) | 19.75 | |
Balance at end of the period (in usd per share) | 28.04 | $ 26.57 |
Exercisable at period end (in usd per share) | $ 24.21 | |
Weighted Average Remaining Contractual Life (in years) | ||
Outstanding at end of the period (in years) | 2 years 9 months 18 days | 3 years 7 months 6 days |
Exercisable at period end (in years) | 2 years 1 month 6 days | |
Aggregate Intrinsic Value (in thousands) | ||
Oustanding at end of the period (in usd) | $ 20,784 | $ 35,381 |
Exercisable at period end (in usd) | $ 19,757 |
Equity Incentive Plans and St73
Equity Incentive Plans and Stock Based Compensation - Summary of Restricted Stock and Restricted Stock Awards Activity (Detail) - Restricted Stock And Restricted Stock Unit | 12 Months Ended |
Dec. 30, 2017$ / sharesshares | |
Restricted Stock and Restricted Stock Unit Awards | |
Balance at beginning of the period (in shares) | shares | 1,981,654 |
Granted (in shares) | shares | 1,219,419 |
Vested (in shares) | shares | (686,160) |
Forfeited (in shares) | shares | (357,209) |
Balance at end of the period (in shares) | shares | 2,157,704 |
Weighted Average Grant-Date Fair Value | |
Balance at beginning of the period (in usd per unit) | $ / shares | $ 35.45 |
Granted (in usd per share) | $ / shares | 38.44 |
Vested (in usd per share) | $ / shares | 33.80 |
Forfeited (in usd per share) | $ / shares | 37.13 |
Balance at end of the period (in usd per unit) | $ / shares | $ 37.39 |
Equity Incentive Plans and St74
Equity Incentive Plans and Stock Based Compensation - Summary of Performance Stock Unit Awards Activity (Detail) - Performance Stock Units | 12 Months Ended |
Dec. 30, 2017$ / sharesshares | |
Performance Stock Unit Awards | |
Balance at beginning of the period (in shares) | shares | 328,106 |
Granted (in shares) | shares | 208,925 |
Vested (in shares) | shares | (134,010) |
Forfeited (in shares) | shares | (135,608) |
Balance at end of the period (in shares) | shares | 267,413 |
Weighted Average Grant-Date Fair Value | |
Balance at beginning of the period (in usd per unit) | $ / shares | $ 33.07 |
Granted (in usd per share) | $ / shares | 38.45 |
Vested (in usd per share) | $ / shares | 26.73 |
Forfeited (in usd per share) | $ / shares | 36.31 |
Balance at end of the period (in usd per unit) | $ / shares | $ 38.80 |
Equity Incentive Plans and St75
Equity Incentive Plans and Stock Based Compensation - Summary of Employee Stock-Based Compensation (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||
Total stock-based compensation expense | $ 32,708 | $ 32,592 | $ 30,130 |
Processing and services | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||
Total stock-based compensation expense | 7,301 | 5,831 | 6,594 |
Sales and marketing | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||
Total stock-based compensation expense | 11,320 | 10,856 | 8,536 |
Cost of products sold | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||
Total stock-based compensation expense | 54 | 102 | 37 |
General and administrative | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs | |||
Total stock-based compensation expense | $ 14,033 | $ 15,803 | $ 14,963 |
Equity Awards Issued to Strat76
Equity Awards Issued to Strategic Partners - Narrative (Detail) - USD ($) $ / shares in Units, $ in Thousands | Oct. 01, 2017 | Jan. 31, 2018 | Nov. 30, 2015 | May 31, 2015 | Mar. 31, 2015 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | Apr. 30, 2015 | Apr. 30, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Common Stock, par value (in usd per share) | $ 0.001 | $ 0.001 | ||||||||
Intangible assets recognized for the issuance of fully vested warrants | $ 20,000 | $ 0 | $ 3,147 | |||||||
Partner Distribution Expense | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Recognized expense for shares issued | $ 4,900 | $ 4,900 | $ 4,700 | |||||||
Common Stock | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Exercise of warrant (in shares) | 1,161,000 | |||||||||
Common Stock, par value (in usd per share) | $ 0.001 | |||||||||
Strategic Partner One | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Fair value of the warrants | $ 20,000 | |||||||||
Warrant purchase value | $ 20,000 | |||||||||
Strategic Partner One | Common Stock | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Exercise price of warrant | $ 15 | |||||||||
Exercise of warrant (in shares) | 859,757 | |||||||||
Strategic Partner One | Warrant One | Common Stock | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Warrant issued to partner | 1,500,000 | |||||||||
Exercise price of warrant | $ 20 | |||||||||
Strategic Partner One | Warrant Two | Common Stock | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Warrant issued to partner | 15,306 | |||||||||
Exercise price of warrant | $ 20 | |||||||||
Strategic Partner Two | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Intangible assets recognized for the issuance of fully vested warrants | $ 3,100 | |||||||||
Strategic Partner Two | Common Stock | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Warrant issued to partner | 550,000 | |||||||||
Exercise price of warrant | $ 16.30 | |||||||||
Exercise of warrant (in shares) | 301,662 | |||||||||
Number of incremental securities called by warrants | 166,252 | |||||||||
Subsequent Event | Strategic Partner One | Common Stock | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Exercise of warrant (in shares) | 546,395 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Operating Loss Carryforwards | |||
Provisional income tax expense attributable to TCJA | $ 125.1 | ||
Provisional transition tax obligation | 1.1 | ||
Change in DTA valuation allowance | 0.4 | ||
Undistributed earnings from foreign operations | 38.2 | ||
Unrecognized tax benefits | 14 | $ 11.3 | |
Interest and penalties on unrecognized tax expense (benefits) | (1) | 0.4 | $ (0.1) |
Accrued interest and penalties | 0.6 | $ 1.6 | |
Internal Revenue Service (IRS) | |||
Operating Loss Carryforwards | |||
Net operating loss carryforwards | 131.1 | ||
State Jurisdiction | |||
Operating Loss Carryforwards | |||
Net operating loss carryforwards | 21.4 | ||
Foreign Tax Authority | |||
Operating Loss Carryforwards | |||
Net operating loss carryforwards | 45.9 | ||
Net operating loss carryforwards subject to expiration | $ 3.9 |
Income Taxes - Components of In
Income Taxes - Components of Income before Income Tax Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ (49,833) | $ (3,533) | $ 72,298 |
Foreign | 12,743 | 4,469 | 307 |
Income before income tax expense (benefit) | $ (37,090) | $ 936 | $ 72,605 |
Income Taxes - Components of 79
Income Taxes - Components of Income Tax Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Current: | |||
Federal | $ 483 | $ (1,215) | $ (6,403) |
State | (707) | 949 | (942) |
Foreign | 7,748 | 5,063 | 4,331 |
Total current | 7,524 | 4,797 | (3,014) |
Deferred: | |||
Federal | 118,974 | (3,186) | 28,650 |
State | (4,772) | (1,275) | 6,003 |
Foreign | (3,926) | (4,438) | (4,843) |
Total deferred | 110,276 | (8,899) | 29,810 |
Income tax expense (benefit) | $ 117,800 | $ (4,102) | $ 26,796 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Provision for Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Amount | |||
Income tax expense (benefit) at federal statutory rate | $ (12,982) | $ 327 | $ 25,412 |
State income tax expense (benefit), net of federal impact | (3,854) | 439 | 3,469 |
Foreign rate differential | (761) | (939) | (773) |
Change in fair value of contingent consideration | 0 | 0 | (2,978) |
Compensation subject to certain limits | 702 | 894 | 1,180 |
Stock-based compensation | (2,341) | (956) | 316 |
Change in valuation allowance | 1,732 | 0 | 0 |
Acquisition related | 152 | (2,945) | 758 |
R&D credits | (948) | (1,440) | (1,130) |
Goodwill impairment | 10,670 | 0 | 0 |
U.S. Tax Reform Impact | 126,198 | 0 | 0 |
Other | (768) | 518 | 542 |
Income tax expense (benefit) | $ 117,800 | $ (4,102) | $ 26,796 |
Rate | |||
Income tax expense (benefit) at federal statutory rate | 35.00% | 35.00% | 35.00% |
State income tax expense (benefit), net of federal impact | 10.40% | 46.90% | 4.80% |
Foreign rate differential | 2.10% | (100.30%) | (1.10%) |
Change in fair value of contingent consideration | 0.00% | 0.00% | (4.10%) |
Compensation subject to certain limits | (1.90%) | 95.50% | 1.60% |
Stock-based compensation | 6.30% | (102.10%) | 0.40% |
Change in valuation allowance | (4.70%) | 0.00% | 0.00% |
Acquisition related | (0.40%) | (314.60%) | 1.00% |
R&D credits | 2.60% | (153.90%) | (1.50%) |
Goodwill impairment | (28.80%) | 0.00% | 0.00% |
U.S. Tax Reform Impact | (340.20%) | (0.00%) | (0.00%) |
Other | 2.00% | 55.20% | 0.80% |
Total effective tax rate | (317.60%) | (438.30%) | 36.90% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets (Liabilities) (Detail) - USD ($) $ in Thousands | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 |
Deferred tax assets: | |||
Depreciation and amortization | $ 112,642 | $ 217,497 | |
Net operating loss carryforwards | 38,070 | 49,473 | |
Accrued expenses | 7,019 | 4,932 | |
Non-deductible reserves | 6,829 | 9,450 | |
Deferred revenue | 32,198 | 29,803 | |
Stock-based compensation | 10,293 | 21,497 | |
Convertible debt | 2,416 | 4,636 | |
Other | 8,787 | 8,622 | |
Deferred tax assets | 218,254 | 345,910 | |
Valuation allowance | (8,641) | (8,283) | |
Total deferred tax assets | 209,613 | 337,627 | |
Deferred tax liabilities: | |||
Prepaids | (1,200) | (3,212) | |
Total deferred tax liabilities | (1,200) | (3,212) | |
Net deferred tax assets | 208,413 | 334,415 | |
Balance sheet presentation: | |||
Long-term deferred tax assets | 236,496 | 362,302 | $ 339,558 |
Long-term deferred tax liabilities | (28,083) | (27,887) | $ (18,652) |
Net deferred tax assets | $ 208,413 | $ 334,415 |
Income Taxes - Summary of Unrec
Income Taxes - Summary of Unrecognized Tax Benefit (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Reconciliation of Unrecognized Tax Benefits | |||
Gross unrecognized tax benefits, beginning balance | $ 13,877 | $ 12,680 | $ 3,808 |
Increase for tax position from prior fiscal years and current year acquisitions | 6,004 | 977 | 8,633 |
Decrease for tax position from prior fiscal years | (2,234) | (388) | (446) |
Settlements | (177) | 0 | 0 |
Increases for tax positions taken during current fiscal year | 601 | 760 | 938 |
Lapses of statutes of limitations | (2,879) | (41) | (161) |
Foreign exchange rate difference | 151 | ||
Foreign exchange rate difference | (111) | (92) | |
Gross unrecognized tax benefits, ending balance | $ 15,343 | $ 13,877 | $ 12,680 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Detail) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Feb. 28, 2016 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Option to extend lease period | 5 years | |||
Capital lease obligations | $ 0 | |||
Rental expense for noncancelable operating leases | 21,100,000 | $ 17,200,000 | $ 10,500,000 | |
Foreign Tax Authority | ||||
Loss Contingencies | ||||
Estimate of possible tax liability | $ 4,300,000 |
Commitments and Contingencies84
Commitments and Contingencies - Schedule of Future Minimum Operating Lease Payments (Details) $ in Thousands | Dec. 30, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 19,829 |
2,019 | 16,099 |
2,020 | 14,100 |
2,021 | 13,838 |
2,022 | 10,698 |
Thereafter | 27,404 |
Total minimum lease payments | $ 101,968 |
Commitments and Contingencies85
Commitments and Contingencies - Schedule of Future Distribution Partners Commitments (Details) - Future Distribution Partner Commitments $ in Thousands | Dec. 30, 2017USD ($) |
Other Commitments | |
2,018 | $ 123,922 |
2,019 | 47,771 |
2,020 | 30,458 |
2,021 | 26,751 |
2022 and thereafter | 26,574 |
Distribution partner commitments (uncertainty in timing of future payments) | 6,232 |
Total | $ 261,708 |
Segment Reporting and Enterpr86
Segment Reporting and Enterprise-Wide Disclosures - Narrative (Detail) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 26, 2016segment | Dec. 30, 2017USD ($)segment | Dec. 31, 2016USD ($) | Jan. 02, 2016 | |
Segment Reporting Information | ||||
Number of reportable segments | segment | 3 | |||
Settlement receivables, net | $ 1,038,347 | $ 641,691 | ||
Sales | ||||
Segment Reporting Information | ||||
Percent of total revenue | 100.00% | 100.00% | 100.00% | |
Distribution Partner One | ||||
Segment Reporting Information | ||||
Settlement receivables, net | $ 44,700 | $ 26,900 | ||
Distribution Partner Two | ||||
Segment Reporting Information | ||||
Settlement receivables, net | 23,800 | 14,500 | ||
Distribution Partner Three | ||||
Segment Reporting Information | ||||
Settlement receivables, net | 73,500 | 28,000 | ||
Banks | ||||
Segment Reporting Information | ||||
Outstanding receivables | $ 86,000 | $ 91,300 | ||
e-commerce | ||||
Segment Reporting Information | ||||
Number of operating segments | segment | 2 | |||
Customer Concentration Risk | Distribution Partner One | Sales | ||||
Segment Reporting Information | ||||
Percent of total revenue | 10.00% | 12.00% | 12.00% | |
Customer Concentration Risk | Distribution Partner Two | Sales | ||||
Segment Reporting Information | ||||
Percent of total revenue | 6.00% | 7.00% | 5.00% | |
Customer Concentration Risk | Distribution Partner Three | Sales | ||||
Segment Reporting Information | ||||
Percent of total revenue | 4.00% | 5.00% | 9.00% | |
Customer Concentration Risk | Banks | Sales | ||||
Segment Reporting Information | ||||
Percent of total revenue | 13.00% | 13.00% | 15.00% | |
Customer Concentration Risk | Content Provider | Sales | ||||
Segment Reporting Information | ||||
Percent of total revenue | 11.00% | 13.00% | 14.00% |
Segment Reporting and Enterpr87
Segment Reporting and Enterprise-Wide Disclosures - Schedule of Segment Revenue (Detail) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 12 Months Ended | ||||||||
Sep. 09, 2017 | Jun. 17, 2017 | Mar. 25, 2017 | Sep. 10, 2016 | Jun. 18, 2016 | Mar. 26, 2016 | Dec. 30, 2017 | Dec. 31, 2016 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Segment Reporting Information | |||||||||||
Total operating revenues | $ 419,259 | $ 463,146 | $ 407,236 | $ 361,560 | $ 391,206 | $ 366,462 | $ 941,965 | $ 780,550 | $ 2,231,606 | $ 1,899,778 | $ 1,801,078 |
Partner distribution expense | 1,040,306 | 933,142 | 874,043 | ||||||||
Operating revenue net of distribution partner expense | 1,191,300 | 966,636 | 927,035 | ||||||||
Other operating expenses | 1,195,908 | 943,387 | 839,289 | ||||||||
OPERATING INCOME (LOSS) | $ (12,701) | $ (4,401) | $ (17,031) | $ (10,093) | $ (14,977) | $ (3,044) | $ 29,525 | $ 51,363 | (4,608) | 23,249 | 87,746 |
Other income (expense) | (32,482) | (22,313) | (15,141) | ||||||||
Income before income tax expense (benefit) | (37,090) | 936 | 72,605 | ||||||||
US Retail | |||||||||||
Segment Reporting Information | |||||||||||
Total operating revenues | 1,233,861 | 1,125,757 | 1,165,828 | ||||||||
Partner distribution expense | 665,088 | 595,893 | 577,661 | ||||||||
Operating revenue net of distribution partner expense | 568,773 | 529,864 | 588,167 | ||||||||
Other operating expenses | 538,977 | 467,203 | 465,464 | ||||||||
OPERATING INCOME (LOSS) | 29,796 | 62,661 | 122,703 | ||||||||
Significant noncash charges | 98,097 | 53,751 | 46,719 | ||||||||
Incentives & Rewards | |||||||||||
Segment Reporting Information | |||||||||||
Total operating revenues | 338,311 | 280,217 | 197,060 | ||||||||
Partner distribution expense | 22,793 | 20,419 | 16,591 | ||||||||
Operating revenue net of distribution partner expense | 315,518 | 259,798 | 180,469 | ||||||||
Other operating expenses | 353,511 | 287,882 | 206,121 | ||||||||
OPERATING INCOME (LOSS) | (37,993) | (28,084) | (25,652) | ||||||||
Significant noncash charges | 94,597 | 85,171 | 45,678 | ||||||||
International | |||||||||||
Segment Reporting Information | |||||||||||
Total operating revenues | 659,434 | 493,804 | 438,190 | ||||||||
Partner distribution expense | 352,425 | 316,830 | 279,791 | ||||||||
Operating revenue net of distribution partner expense | 307,009 | 176,974 | 158,399 | ||||||||
Other operating expenses | 303,420 | 188,302 | 167,704 | ||||||||
OPERATING INCOME (LOSS) | 3,589 | (11,328) | (9,305) | ||||||||
Significant noncash charges | $ 36,793 | $ 27,029 | $ 13,806 |
Segment Reporting and Enterpr88
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. 09, 2017 | Jun. 17, 2017 | Mar. 25, 2017 | Sep. 10, 2016 | Jun. 18, 2016 | Mar. 26, 2016 | Dec. 30, 2017 | Dec. 31, 2016 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Segment Reporting Information | |||||||||||
Operating revenues | $ 419,259 | $ 463,146 | $ 407,236 | $ 361,560 | $ 391,206 | $ 366,462 | $ 941,965 | $ 780,550 | $ 2,231,606 | $ 1,899,778 | $ 1,801,078 |
Retail | |||||||||||
Segment Reporting Information | |||||||||||
Operating revenues | 1,764,092 | 1,383,499 | 1,453,129 | ||||||||
Incentives | |||||||||||
Segment Reporting Information | |||||||||||
Operating revenues | 338,311 | 289,140 | 211,964 | ||||||||
Other | |||||||||||
Segment Reporting Information | |||||||||||
Operating revenues | $ 129,203 | $ 227,139 | $ 135,985 | ||||||||
Sales | |||||||||||
Segment Reporting Information | |||||||||||
Percent of total revenue | 100.00% | 100.00% | 100.00% | ||||||||
Product Concentration Risk | Sales | |||||||||||
Segment Reporting Information | |||||||||||
Percent of total revenue | 100.00% | 100.00% | 100.00% | ||||||||
Product Concentration Risk | Sales | Retail | |||||||||||
Segment Reporting Information | |||||||||||
Percent of total revenue | 79.00% | 72.80% | 80.60% | ||||||||
Product Concentration Risk | Sales | Incentives | |||||||||||
Segment Reporting Information | |||||||||||
Percent of total revenue | 15.20% | 15.20% | 11.80% | ||||||||
Product Concentration Risk | Sales | Other | |||||||||||
Segment Reporting Information | |||||||||||
Percent of total revenue | 5.80% | 12.00% | 7.60% |
Segment Reporting and Enterpr89
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. 09, 2017 | Jun. 17, 2017 | Mar. 25, 2017 | Sep. 10, 2016 | Jun. 18, 2016 | Mar. 26, 2016 | Dec. 30, 2017 | Dec. 31, 2016 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Segment Reporting Information | |||||||||||
Operating revenues | $ 419,259 | $ 463,146 | $ 407,236 | $ 361,560 | $ 391,206 | $ 366,462 | $ 941,965 | $ 780,550 | $ 2,231,606 | $ 1,899,778 | $ 1,801,078 |
Long-lived assets | $ 172,607 | $ 172,381 | $ 172,607 | $ 172,381 | |||||||
Percent of total long-lived assets | 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 | $ 1,546,898 | $ 1,382,188 | $ 1,352,872 | ||||||||
Long-lived assets | $ 145,607 | $ 149,020 | $ 145,607 | $ 149,020 | |||||||
Percent of total long-lived assets | 84.30% | 86.40% | 84.30% | 86.40% | |||||||
United States | Sales | |||||||||||
Segment Reporting Information | |||||||||||
Percent of total revenue | 69.30% | 72.80% | 75.10% | ||||||||
Canada | |||||||||||
Segment Reporting Information | |||||||||||
Long-lived assets | $ 18,054 | $ 16,002 | $ 18,054 | $ 16,002 | |||||||
Percent of total long-lived assets | 10.50% | 9.30% | 10.50% | 9.30% | |||||||
International | |||||||||||
Segment Reporting Information | |||||||||||
Operating revenues | $ 684,708 | $ 517,590 | $ 448,206 | ||||||||
Long-lived assets | $ 8,946 | $ 7,359 | $ 8,946 | $ 7,359 | |||||||
Percent of total long-lived assets | 5.20% | 4.30% | 5.20% | 4.30% | |||||||
International | Sales | |||||||||||
Segment Reporting Information | |||||||||||
Percent of total revenue | 30.70% | 27.20% | 24.90% |
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. 09, 2017 | Jun. 17, 2017 | Mar. 25, 2017 | Sep. 10, 2016 | Jun. 18, 2016 | Mar. 26, 2016 | Dec. 30, 2017 | Dec. 31, 2016 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Earnings Per Share [Abstract] | |||||||||||
Net income attributable to Blackhawk Network Holdings, Inc. | $ (7,766) | $ (6,351) | $ (13,486) | $ (5,102) | $ (11,337) | $ (3,553) | $ (128,165) | $ 24,650 | $ (155,768) | $ 4,658 | $ 45,609 |
Basic | |||||||||||
Distributed and undistributed earnings allocated to participating securities | 0 | (28) | (151) | ||||||||
Net income attributable to common stockholders | $ (155,768) | $ 4,630 | $ 45,458 | ||||||||
Weighted-average common shares outstanding | 56,287 | 55,734 | 54,294 | ||||||||
Basic earnings (loss) per share (in usd per share) | $ (0.14) | $ (0.11) | $ (0.24) | $ (0.09) | $ (0.20) | $ (0.06) | $ (2.28) | $ 0.44 | $ (2.77) | $ 0.08 | $ 0.84 |
Diluted | |||||||||||
Distributed and undistributed earnings allocated to participating securities | $ 0 | $ (28) | $ (147) | ||||||||
Net income attributable to common stockholders | $ (155,768) | $ 4,630 | $ 45,462 | ||||||||
Weighted-average common shares outstanding | 56,287 | 55,734 | 54,294 | ||||||||
Common share equivalents | 0 | 1,526 | 2,019 | ||||||||
Weighted-average shares outstanding | 56,287 | 57,260 | 56,313 | ||||||||
Diluted earnings (loss) per share (in usd per share) | $ (0.14) | $ (0.11) | $ (0.24) | $ (0.09) | $ (0.20) | $ (0.06) | $ (2.28) | $ 0.43 | $ (2.77) | $ 0.08 | $ 0.81 |
Antidilutive securities excluded from computation of earnings per share | 5,016 | 1,663 | 500 |
Earnings Per Share - Share Repu
Earnings Per Share - Share Repurchase Plan (Details) - USD ($) $ in Thousands, shares in Millions | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2017 | Dec. 31, 2016 | Dec. 30, 2017 | Oct. 31, 2016 | |
Earnings Per Share [Abstract] | ||||
Authorized repurchase amount | $ 100,000 | |||
Repurchase of common stock (in shares) | 1.2 | 1 | ||
Stock repurchased during period | $ 40,000 | $ 34,843 | ||
Remaining authorized repurchase amount | $ 60,000 |
Related-Party Transactions - Sc
Related-Party Transactions - Schedule of Related Party Revenues and Expenses (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
OPERATING REVENUES: | |||
Commissions and fees | $ 1,468,867 | $ 1,315,755 | $ 1,259,801 |
Program and other fees | 477,884 | 336,317 | 268,661 |
Product sales | 182,014 | 153,408 | 167,745 |
OPERATING EXPENSES: | |||
Partner distribution expense | 1,040,306 | 933,142 | 874,043 |
Processing and services | 448,657 | 355,268 | 304,232 |
General and administrative | $ 113,621 | $ 99,428 | 92,172 |
Related Party through Influence | |||
OPERATING REVENUES: | |||
Commissions and fees | 72 | ||
Program and other fees | 471 | ||
Product sales | 1,323 | ||
Total operating revenues | 1,866 | ||
OPERATING EXPENSES: | |||
Partner distribution expense | 17,069 | ||
Processing and services | (288) | ||
General and administrative | 607 | ||
Total operating expenses | $ 17,388 |
Related-Party Transactions - Na
Related-Party Transactions - Narrative (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Related Party Transaction | |||
Partner distribution expense | $ 1,040,306 | $ 933,142 | $ 874,043 |
General and administrative | 113,621 | 99,428 | 92,172 |
Revenue from certain equity method investments | $ 300 | $ 300 | 300 |
Related Party through Influence | |||
Related Party Transaction | |||
Partner distribution expense | 17,069 | ||
Revenue from related parties | 1,866 | ||
General and administrative | $ 607 |
Selected Quarterly Financial 94
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. 09, 2017 | Jun. 17, 2017 | Mar. 25, 2017 | Sep. 10, 2016 | Jun. 18, 2016 | Mar. 26, 2016 | Dec. 30, 2017 | Dec. 31, 2016 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Operating revenues | $ 419,259 | $ 463,146 | $ 407,236 | $ 361,560 | $ 391,206 | $ 366,462 | $ 941,965 | $ 780,550 | $ 2,231,606 | $ 1,899,778 | $ 1,801,078 |
Operating income (loss) | (12,701) | (4,401) | (17,031) | (10,093) | (14,977) | (3,044) | 29,525 | 51,363 | (4,608) | 23,249 | 87,746 |
Net income attributable to Blackhawk Network Holdings, Inc. | $ (7,766) | $ (6,351) | $ (13,486) | $ (5,102) | $ (11,337) | $ (3,553) | $ (128,165) | $ 24,650 | $ (155,768) | $ 4,658 | $ 45,609 |
EARNINGS (LOSS) PER SHARE: | |||||||||||
Basic (in usd per share) | $ (0.14) | $ (0.11) | $ (0.24) | $ (0.09) | $ (0.20) | $ (0.06) | $ (2.28) | $ 0.44 | $ (2.77) | $ 0.08 | $ 0.84 |
Diluted (in usd per share) | $ (0.14) | $ (0.11) | $ (0.24) | $ (0.09) | $ (0.20) | $ (0.06) | $ (2.28) | $ 0.43 | $ (2.77) | $ 0.08 | $ 0.81 |
Selected Quarterly Financial 95
Selected Quarterly Financial Data (Unaudited) - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 12 Months Ended | ||
Sep. 09, 2017 | Dec. 30, 2017 | Dec. 30, 2017 | Dec. 31, 2016 | Jan. 02, 2016 | |
Segment Reporting Information | |||||
Goodwill impairment | $ 68,500 | $ 77,500 | $ 0 | $ 0 | |
Provisional income tax expense attributable to TCJA | $ 125,100 | ||||
Cardpool | |||||
Segment Reporting Information | |||||
Goodwill impairment | $ 9,000 | $ 22,500 |
Subsequent Event (Details)
Subsequent Event (Details) - Silver Lake & P2 Capital - Subsequent Event - USD ($) $ / shares in Units, $ in Millions | Jan. 15, 2018 | Jan. 12, 2018 |
Subsequent Event [Line Items] | ||
Total purchase consideration | $ 3,500 | |
Share price in transaction (in usd per share) | $ 45.25 | |
Premium on closing share price | 24.00% | 29.30% |
Share price (in usd per share) | $ 36.50 | |
Period for calculation of average closing share price | 90 days | |
Term of extension of agreement | 3 months | |
Termination fee to be paid to acquirers | $ 109 | |
Termination fee to be paid to acquiree | 136.2 | |
Reimburseable expenses to acquirer | 6.8 | |
Alternative termination fee to be paid to acquirer | $ 27.2 |