IRVING, Texas, Aug. 07, 2019 (GLOBE NEWSWIRE) -- Blucora, Inc. (NASDAQ: BCOR), a leading provider of tax-smart financial solutions that empower people’s goals, today announced financial results for the second quarter ended June 30, 2019.

Second Quarter Highlights and Recent Developments

  • Closed acquisition of 1st Global, extending lead in tax-focused wealth management segment.
  • Increased total revenue by 23% and wealth management revenue by 39% year-over-year (y/y), including addition of 1st Global since May 6 acquisition date.
  • HD Vest Advisory Assets increased 12% y/y to $14.5 billion; 1st Global Advisory Assets increased 5% y/y to $11.7 billion. Total Client Assets ended quarter at $67.6 billion.
  • Initiated launch of Tax Smart Investing software solution that is expected to give advisors a significant incremental edge in driving value for clients.
  • Grew TaxAct revenue by 12.5% y/y for the first half of 2019, with 60% segment margin.

“Our second quarter results reflect the completion of a very strong tax season and first half in tax preparation, as well as the completion of an important acquisition in wealth management,” said John Clendening, Blucora's President and Chief Executive Officer. “Most importantly, we continue to improve our business positioning and capabilities across both businesses to ensure we are best positioned for future growth.”

Summary Financial Performance: Q2 2019
($ in millions except per share amounts)

 Q2 Q2  
 2019 2018 Change
Revenue:     
Wealth Management$127.8  $92.0  39%
Tax Preparation$65.9  $65.8  %
Total Revenue$193.7  $157.8  23%
Segment Income:     
Wealth Management$17.0  $13.0  31%
Tax Preparation$41.4  $44.1  (6)%
Total Segment Income$58.3  $57.1  2%
Unallocated Corporate Operating Expenses$(6.2) $(4.2) 47%
GAAP:     
Operating Income$28.0  $39.1  (28)%
Net Income Attributable to Blucora, Inc.$31.0  $35.2  (12)%
Diluted Net Income Per Share Attributable to Blucora, Inc. (EPS)$0.62  $0.71  (13)%
Non-GAAP*:     
Adjusted EBITDA*$52.1  $52.8  (1)%
Net Income*$41.4  $47.7  (13)%
Diluted Net Income Per Share (EPS)*$0.83  $0.97  (14)%
* See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.
 


Second Quarter Results vs. Prior Guidance    
$ in millionsPrior GuidanceMidpointActualDifference at Midpoint
Wealth Management Revenue$121.0 - $125.5123.3127.84.5
HD Vest$95.5 - $98.59798.81.8
1st Global (May 6-Jun 30)$25.5 - $27.026.3292.7
TaxAct Revenue$67.5 – $68.067.865.9-1.9
Total Revenue$188.5 - $193.5**191193.72.7
Wealth Management Segment Income$14.0 - $16.015172
HD Vest Segment Income$13.0 - $14.513.814.81
1st Global Segment Income$1.0 - $1.51.32.20.9
TaxAct Segment Income$39.0 - $40.039.541.41.9
Corporate Unallocated Operating Expenses$7.5 - $8.07.86.21.6
Adjusted EBITDA*$45.0 - $48.5**46.852.15.3
**Prior guidance including 1st Global.    
     

Third Quarter and Full Year 2019 Outlook

For the third quarter of 2019, the Company expects revenues to be between $142.5 million and $149.5 million, GAAP net loss attributable to Blucora, Inc. to be between $30.5 million and $35.5 million, or $0.62 to $0.72 per diluted share, Adjusted EBITDA* to be between $4.0 million and breakeven, and Non-GAAP net loss* to be between $10.0 million and $14.5 million, or $0.20 to $0.29 per diluted share.

Full Year 2019 Outlook   
$ in millionsPrior GuidanceCurrent OutlookDifference at Midpoint
Wealth Management Revenue$493.0 - $511.0$500.0 - $513.04.5
HD Vest$384.5 - $395.5  
1st Global (May 6-Dec. 31)$108.5 - $115.5  
TaxAct Revenue$211.0 - $213.0$210.0 - $211.0(1.5)
Total Revenue$704.0 - $724.0**$710.0 - $724.03
Wealth Management Segment Income$65.5 - $73.5$67.0 - $73.50.7
HD Vest Segment Income$56.5 - $62.5  
1st Global Segment Income$9.0 - $11.0  
TaxAct Segment Income$92.0 - $95.0$93.0 - $94.50.3
Corporate Unallocated Operating Expense$28.5 - $29.5$28.5 - $29.50
Adjusted EBITDA*$128.0 - $140.0**$130.5 - $139.51
Net Income $27.0 - $37.5 
Net Income per share $0.54 - $0.75 
Non-GAAP Net Income* $92.5 - $102.5 
Non-GAAP Net Income per share* $1.84 - $2.04 
    

The third quarter and fiscal 2019 outlook for GAAP net income or loss attributable to Blucora assumes an estimated tax rate of approximately (3%) to (7%).

Conference Call and Webcast

A conference call and live webcast will be held today at 8:30 a.m. Eastern Time during which the Company will further discuss second quarter results, its outlook for the full year 2019 and other business matters. We will also provide the prepared remarks for the conference call along with supplemental financial information to our results on the Investor Relations section of the Blucora corporate website at http://www.blucora.com prior to the call.  The supplemental financial information has also been filed with the SEC on Form 8-K.  A replay of the call will be available on our website.

About Blucora®

Blucora, Inc. (NASDAQ: BCOR) is on the forefront of financial technology, pioneering tax-smart financial solutions that empower people’s goals. Blucora operates in two segments including wealth management, through its HD Vest and 1st Global businesses, the No. 1 and No. 2 tax-focused broker-dealers, respectively, with a combined $67 billion in total client assets as of June 30, 2019, and tax preparation, through its TaxAct business, the No. 3 tax preparation software by market share with approximately 3 million consumer and professional users. With integrated tax and wealth management, Blucora is uniquely positioned to provide better long-term outcomes for customers with holistic, tax-advantaged solutions. For more information on Blucora, visit www.blucora.com.

Source: Blucora

Blucora Contact:

Bill Michalek (972) 870-6463

VP, Investor Relations

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this release, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “projects” and similar expressions and variations as they relate to the Company or its management are intended to identify forward-looking statements. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively implement our future business plans and growth strategy; our ability to effectively compete within our industry; our ability to attract and retain customers and productive financial advisors; our ability to realize all of the anticipated benefits of the acquisition of 1st Global, as well as our ability to integrate the operations of 1st Global; the availability of financing and our ability to meet our current and future debt service obligations and comply with our debt covenants; our ability to generate strong investment performance for our customers and the impact of the financial markets on our customers’ portfolios and investment behavior; political and economic conditions and changes and events that directly or indirectly impact the wealth management and tax preparation industries; our ability to successfully make technology enhancements and introduce new and improve on existing products and services; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; risks related to goodwill and other intangible asset impairment; our ability to comply with laws and regulations, including, among others, those related to privacy protection and consumer data; our expectations concerning the benefits that may be derived from our clearing platform and investment advisory platform; cybersecurity risks; our ability to maintain our relationships with third party partners; the seasonality of our business; litigation risks; our ability to attract and retain qualified employees; our assessments and estimates that determine our effective tax rate; the impact of new or changing tax legislation; our ability to develop, establish and maintain strong brands; our ability to protect our intellectual property; and our ability to effectively integrate other companies or assets that we may acquire. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this release, except as may be required by applicable law.

Blucora, Inc.
Preliminary Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except per share data)

 Three Months Ended June 30, Six months ended June 30,
 2019 2018 2019 2018
Revenue:       
Wealth management services revenue$127,831  $92,015  $217,363  $184,097 
Tax preparation services revenue65,909  65,833  202,145  179,716 
Total revenue193,740  157,848  419,508  363,813 
Operating expenses:       
Cost of revenue:       
Wealth management services cost of revenue87,477  62,149  148,851  125,213 
Tax preparation services cost of revenue3,149  2,459  7,350  6,812 
Amortization of acquired technology  49    99 
Total cost of revenue (1)90,626  64,657  156,201  132,124 
Engineering and technology (1)7,159  4,848  13,688  9,979 
Sales and marketing (1)29,256  23,791  84,828  79,044 
General and administrative (1)19,002  15,625  36,079  30,491 
Acquisition and integration9,183    10,980   
Depreciation1,315  993  2,376  2,908 
Amortization of other acquired intangible assets9,169  8,806  17,213  17,113 
Restructuring (1)  2    291 
Total operating expenses165,710  118,722  321,365  271,950 
Operating income28,030  39,126  98,143  91,863 
Other loss, net (2)(5,118) (2,759) (9,076) (7,987)
Income before income taxes22,912  36,367  89,067  83,876 
Income tax benefit (expense)8,124  (907) 4,139  (2,870)
Net income31,036  35,460  93,206  81,006 
Net income attributable to noncontrolling interests  (222)   (427)
Net income attributable to Blucora, Inc.:$31,036  $35,238  $93,206  $80,579 
Net income per share attributable to Blucora, Inc.:       
Basic$0.64  $0.75  $1.93  $1.72 
Diluted$0.62  $0.71  $1.88  $1.64 
Weighted average shares outstanding:       
Basic48,555  47,221  48,358  46,931 
Diluted49,822  49,434  49,681  49,049 
            

(1) Stock-based compensation expense was allocated among the following captions (in thousands):

 Three Months Ended June 30, Six months ended June 30,
 2019 2018 2019 2018
Cost of revenue$896 $271 $1,416  $527
Engineering and technology156 202 332  412
Sales and marketing180 702 (13) 1,218
General and administrative2,850 2,555 4,790  4,528
Total stock-based compensation expense$4,082 $3,730 $6,525  $6,685
             

(2) Other loss, net consisted of the following (in thousands):

 Three Months Ended June 30, Six months ended June 30,
 2019 2018 2019 2018
Interest income$(149) $(58) $(289) $(98)
Interest expense4,770  3,847  8,546  8,028 
Amortization of debt issuance costs375  284  547  487 
Accretion of debt discounts85  40  123  87 
Loss on debt extinguishment  758    1,534 
Other37  (2,112) 149  (2,051)
Other loss, net$5,118  $2,759  $9,076  $7,987 
                

Blucora, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)

 June 30,
2019
 December 31,
2018
ASSETS   
Current assets:   
Cash and cash equivalents$109,606  $84,524 
Cash segregated under federal or other regulations146  842 
Accounts receivable, net of allowance20,391  15,721 
Commissions receivable19,857  15,562 
Other receivables8,069  7,408 
Prepaid expenses and other current assets, net10,595  7,755 
Total current assets168,664  131,812 
Long-term assets:   
Property and equipment, net15,090  12,389 
Right-of-use assets, net11,338   
Goodwill, net674,130  548,685 
Other intangible assets, net355,596  294,603 
Other long-term assets10,820  10,236 
Total long-term assets1,066,974  865,913 
Total assets$1,235,638  $997,725 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable$7,945  $3,798 
Commissions and advisory fees payable18,810  15,199 
Accrued expenses and other current liabilities43,429  18,980 
Lease liabilities7,168  46 
Deferred revenue4,158  10,257 
Current portion of long-term debt, net919   
Total current liabilities82,429  48,280 
Long-term liabilities:   
Long-term debt, net381,579  260,390 
Deferred tax liability, net44,840  40,394 
Deferred revenue7,635  8,581 
Lease liabilities6,911  100 
Other long-term liabilities7,012  7,440 
Total long-term liabilities447,977  316,905 
Total liabilities530,406  365,185 
    
Redeemable noncontrolling interests  24,945 
    
Stockholders’ equity:   
Common stock5  5 
Additional paid-in capital1,575,554  1,569,725 
Accumulated deficit(870,119) (961,689)
Accumulated other comprehensive loss(208) (446)
Total stockholders’ equity705,232  607,595 
Total liabilities and stockholders’ equity$1,235,638  $997,725 
        

Blucora, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)

 Six months ended June 30,
 2019 2018
Operating Activities:   
Net income$93,206  $81,006 
Adjustments to reconcile net income to net cash from operating activities:   
Stock-based compensation6,525  6,685 
Depreciation and amortization of acquired intangible assets20,185  20,338 
Reduction of right-of-use lease assets1,977   
Deferred income taxes4,446  (781)
Amortization of premium on investments, net, and debt issuance costs547  487 
Accretion of debt discounts123  87 
Loss on debt extinguishment  1,533 
Other260   
Cash provided (used) by changes in operating assets and liabilities:   
Accounts receivable(3,217) 4,096 
Commissions receivable847  2 
Other receivables(661) 3,142 
Prepaid expenses and other current assets12,258  461 
Other long-term assets(355) (764)
Accounts payable(2,995) 59 
Commissions and advisory fees payable(663) (655)
Lease liabilities(2,066)  
Deferred revenue(24,760) (5,746)
Accrued expenses and other current and long-term liabilities(8,845) (3,393)
Net cash provided by operating activities96,812  106,557 
Investing Activities:   
Business acquisition, net of cash acquired(164,461)  
Purchases of property and equipment(2,938) (2,602)
Net cash used by investing activities(167,399) (2,602)
Financing Activities:   
Proceeds from credit facilities121,499   
Payments on credit facilities  (80,000)
Payment of redeemable noncontrolling interests(24,945)  
Proceeds from stock option exercises3,320  10,386 
Proceeds from issuance of stock through employee stock purchase plan1,144  704 
Tax payments from shares withheld for equity awards(5,160) (4,229)
Contingent consideration payments for business acquisition(943) (1,315)
Net cash provided (used) by financing activities94,915  (74,454)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash58  (30)
Net increase in cash, cash equivalents, and restricted cash24,386  29,471 
Cash, cash equivalents, and restricted cash, beginning of period85,366  62,311 
Cash, cash equivalents, and restricted cash, end of period$109,752  $91,782 
        

Blucora, Inc.
Preliminary Segment Information
(Unaudited)
(Amounts in thousands)

 Three months ended June 30, Six months ended June 30,
 2019 2018 2019 2018
Revenue:       
Wealth Management (1)$127,831  $92,015  $217,363  $184,097 
Tax Preparation (1)65,909  65,833  202,145  179,716 
Total revenue193,740  157,848  419,508  363,813 
Operating income (loss):       
Wealth Management16,979  12,954  28,519  26,029 
Tax Preparation41,368  44,121  120,640  102,927 
Corporate-level activity (2)(30,317) (17,949) (51,016) (37,093)
Total operating income28,030  39,126  98,143  91,863 
Other loss, net(5,118) (2,759) (9,076) (7,987)
Income tax benefit (expense)8,124  (907) 4,139  (2,870)
Net income$31,036  $35,460  $93,206  $81,006 
                

(1) Revenues by major category within each segment are presented below (in thousands):

 Three months ended June 30, Six months ended June 30,
 2019 2018 2019 2018
Wealth Management:       
Commission$48,068 $40,384 $85,228 $83,254
Advisory61,410 40,058 101,167 79,359
Asset-based13,219 7,306 22,912 14,478
Transaction and fee5,134 4,267 8,056 7,006
Total Wealth Management revenue$127,831 $92,015 $217,363 $184,097
Tax Preparation:       
Consumer$62,686 $63,137 $186,628 $165,049
Professional3,223 2,696 15,517 14,667
Total Tax Preparation revenue$65,909 $65,833 $202,145 $179,716
            

(2) Corporate-level activity included the following (in thousands):

 Three months ended June 30, Six months ended June 30,
 2019 2018 2019 2018
Operating expenses$(6,221) $(4,238) $(13,326) $(9,779)
Stock-based compensation(4,082) (3,730) (6,525) (6,685)
Acquisition-related costs(9,183)   (10,980)  
Depreciation(1,662) (1,124) (2,972) (3,126)
Amortization of acquired intangible assets(9,169) (8,855) (17,213) (17,212)
Restructuring  (2)   (291)
Total corporate-level activity$(30,317) $(17,949) $(51,016) $(37,093)
                

Blucora, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)

Preliminary Adjusted EBITDA Reconciliation (1)
(Unaudited)
(Amounts in thousands)

(In thousands)Three Months Ended June 30, Six months ended June 30,
 2019 2018 2019 2018
Net income attributable to Blucora, Inc. (2)$31,036  $35,238 $93,206  $80,579
Stock-based compensation4,082  3,730 6,525  6,685
Depreciation and amortization of acquired intangible assets10,831  9,979 20,185  20,338
Restructuring  2   291
Other loss, net (3)5,118  2,759 9,076  7,987
Net income attributable to noncontrolling interests  222   427
Acquisition and integration costs9,183   10,980  
Income tax (benefit) expense(8,124) 907 (4,139) 2,870
Adjusted EBITDA$52,126  $52,837 $135,833  $119,177
              

Preliminary Non-GAAP Net Income and Non-GAAP Net Income Per Share Reconciliation (1)
(Unaudited)
(Amounts in thousands, except per share amounts)

 Three months ended June 30, Six months ended June 30,
 2019 2018 2019 2018
Net income attributable to Blucora, Inc. (2)$31,036  $35,238  $93,206  $80,579 
Stock-based compensation4,082  3,730  6,525  6,685 
Amortization of acquired intangible assets9,169  8,855  17,213  17,212 
Restructuring  2    291 
Impact of noncontrolling interests  222    427 
Acquisition and integration costs9,183    10,980   
Cash tax impact of adjustments to GAAP net income(771) (903) (1,182) (1,216)
Non-cash income tax (benefit) expense (1)(11,317) 582  (8,166) 1,980 
Non-GAAP net income$41,382  $47,726  $118,576  $105,958 
Per diluted share:       
Net income attributable to Blucora, Inc.$0.62  $0.71  $1.88  $1.64 
Stock-based compensation0.08  0.08  0.13  0.14 
Amortization of acquired intangible assets0.20  0.19  0.34  0.34 
Restructuring      0.01 
Impact of noncontrolling interests  0.00  0.00  0.01 
Acquisition and integration costs0.18  0.00  0.22  0.00 
Cash tax impact of adjustments to GAAP net income(0.02) (0.02) (0.02) (0.02)
Non-cash income tax (benefit) expense(0.23) 0.01  (0.16) 0.04 
Non-GAAP net income per share$0.83  $0.97  $2.39  $2.16 
Weighted average shares outstanding used in computing per diluted share amounts49,822  49,434  49,681  49,049 
            

Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1)
(Amounts in thousands)

 Ranges for the three months ending Ranges for the year ending
 September 30, 2019 December 31, 2019
 Low High Low High
Net income (loss) attributable to Blucora, Inc.$(35,500) $(30,500) $27,000  $37,500 
Stock-based compensation4,900  4,900  16,700  16,300 
Depreciation and amortization of acquired intangible assets12,600  12,500  45,500  45,000 
Other loss, net (3)6,100  5,900  20,900  20,700 
Acquisition and integration costs6,500  6,100  22,400  22,000 
Income tax (benefit) expense1,400  1,100  (2,000) (2,000)
Adjusted EBITDA$(4,000) $  $130,500  $139,500 
                

Preliminary Adjusted EBITDA Reconciliation for Prior Guidance Including 1st Global (1)
(Amounts in thousands)

 Ranges for the three months ending Ranges for the year ending
 June 30, 2019 December 31, 2019
 Low High Low High
Net income attributable to Blucora, Inc.$20,100 $24,000 $33,200 $47,700
Stock-based compensation5,400 5,100 18,700 17,900
Depreciation and amortization of acquired intangible assets11,600 11,200 45,900 44,300
Other loss, net (3)5,700 5,400 24,000 23,300
Income tax expense2,200 2,800 6,200 6,800
Adjusted EBITDA$45,000 $48,500 $128,000 $140,000
            

Preliminary Non-GAAP Net Income (Loss) Reconciliation for Forward-Looking Guidance (1)
(Amounts in thousands, except per share amounts)

 Ranges for the three months ending Ranges for the year ending
 September 30, 2019 December 31, 2019
 Low High Low High
Net income (loss) attributable to Blucora, Inc.$(35,500) $(30,500) $27,000  $37,500 
Stock-based compensation4,900  4,900  16,700  16,300 
Amortization of acquired intangible assets9,900  9,900  37,000  37,000 
Acquisition and integration costs6,500  6,100  22,400  22,000 
Cash tax impact of adjustments to net income (loss)(500) (500) (2,000) (2,000)
Non-cash income tax benefit200  100  (8,600) (8,300)
Non-GAAP net income (loss)$(14,500) $(10,000) $92,500  $102,500 
Per diluted share:       
Net income (loss) attributable to Blucora, Inc.$(0.72) $(0.62) $0.54  $0.75 
Stock-based compensation0.10  0.10  0.33  0.32 
Amortization of acquired intangible assets0.20  0.20  0.73  0.74 
Acquisition and integration costs0.13  0.12  0.44  0.44 
Cash tax impact of adjustments to net income (loss)(0.01) (0.01) (0.04) (0.04)
Non-cash income tax benefit0.01  0.01  (0.16) (0.17)
Non-GAAP net income per share$(0.29) $(0.20) $1.84  $2.04 
Weighted average shares outstanding used in computing per diluted share amounts49,300  49,200  50,400  50,200 
            

Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures

(1) We define Adjusted EBITDA as net income attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, restructuring, other loss, net, the impact of noncontrolling interests, acquisition and integration costs and income tax (benefit) expense. Restructuring costs relate to the relocation of our corporate headquarters that were completed in 2018. Acquisition and integration costs relate to the acquisition of 1st Global.

We believe that Adjusted EBITDA provides meaningful supplemental information regarding our performance.  We use this non-GAAP financial measure for internal management and compensation purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons.  We believe that Adjusted EBITDA is a common measure used by investors and analysts to evaluate our performance, that it provides a more complete understanding of the results of operations and trends affecting our business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure.  Items excluded from Adjusted EBITDA are significant and necessary components to the operations of our business and, therefore, Adjusted EBITDA should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income.  Other companies may calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

We define non-GAAP net income as net income attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, restructuring costs (described further under Adjusted EBITDA above), the impact of noncontrolling interests, acquisition and integration costs, the related cash tax impact of those adjustments, and non-cash income taxes.  We exclude the non-cash portion of income taxes because of our ability to offset a substantial portion of our cash tax liabilities by using deferred tax assets, which primarily consist of U.S. federal net operating losses.  The majority of these net operating losses will expire, if unutilized, between 2020 and 2024. The aforementioned items are only included in non-GAAP net income in the periods they occurred.

We believe that non-GAAP net income and non-GAAP net income per share provide meaningful supplemental information to management, investors, and analysts regarding our performance and the valuation of our business by excluding items in the statement of operations that we do not consider part of our ongoing operations or have not been, or are not expected to be, settled in cash.  Additionally, we believe that non-GAAP net income and non-GAAP net income per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business.  Non-GAAP net income and non-GAAP net income per share should be evaluated in light of our financial results prepared in accordance with GAAP and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income and net income per share.  Other companies may calculate non-GAAP net income and non-GAAP net income per share differently, and, therefore, our non-GAAP net income and non-GAAP net income per share may not be comparable to similarly titled measures of other companies.

(2) As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited).

(3) Other loss, net primarily includes items such as interest income, interest expense, amortization of debt issuance costs, accretion of debt discounts, and gain/loss on debt extinguishment.