Blucora Announces Fourth Quarter and Full Year 2012 Results

  Blucora Announces Fourth Quarter and Full Year 2012 Results

 2012 Adjusted EBITDA Up 120 Percent on TaxACT Acquisition and Strong Search
                                 Performance

Business Wire

BELLEVUE, Wash. -- February 13, 2013

Blucora, Inc. (NASDAQ: BCOR) today announced financial results for the fourth
quarter and full year ended December 31, 2012.

“The success of online search and tax preparation led Blucora to strong
results for fiscal year 2012,” said Bill Ruckelshaus, President and Chief
Executive Officer of Blucora.“We are pleased with our performance in both
businesses in the fourth quarter and full year 2012. TaxACT entered the
current tax season with momentum, driven by core product enhancements, content
support improvements, and marketing programs aimed at increasing consumer
awareness.”

Highlights

  *Fourth quarter revenue and Adjusted EBITDA grew 46% and 19% respectively,
    over the prior year
  *Full year revenue and Adjusted EBITDA grew 78% and 120% respectively, year
    over year
  *Full year search segment income grew 35% over the prior year
  *Blucora Board of Directors approved a $50 million share repurchase program


Summary Financial Performance: 4Q and Full Year 2012

($ in millions except per share amounts)
            Q4 2012      Q4 2011      Growth  FY 2012  FY 2011       Growth
Revenue     $ 97.5       $ 66.6       46   %  $ 406.9  $ 228.8       78   %
Search      $ 96.3        $ 66.6        45   %   $ 344.8   $ 228.8        51   %
Tax         $ 1.2           N/A         N/A      $ 62.1      N/A          N/A
Preparation
                                                                          
Adjusted    $ 12.1        $ 10.2        19   %   $ 80.4    $ 36.6         120  %
EBITDA
Non-GAAP    $ 10.0        $ 6.9         45   %   $ 70.8    $ 28.8         146  %
Net Income
Non-GAAP    $ 0.24        $ 0.17        41   %   $ 1.70    $ 0.74         130  %
Diluted EPS
                                                                          
Net Income  $ 3.8         $ 22.9 ^(2)   -83  %   $ 22.5    $ 21.6  ^(2)   4    %
GAAP
Diluted     $ 0.04 ^(1)   $ 0.57 ^(2)   -92  %   $ 0.54    $ 0.56  ^(2)   -4   %
Income Per
Share
                                                                          
^(1) Excludes a $1.9 million non-cash gain on
derivative instrument

^(2) Includes a $18.9 million income tax
benefit due to the reversal of the valuation
allowance on deferred tax assets                                     



^See reconciliation of non-GAAP to GAAP
measures below.
                                                                          

Segment Information

Search

Search revenue for the fourth quarter and full year 2012 reflects strong
growth from search distribution, up 52 percent and 67 percent over the fourth
quarter and full year 2011, respectively. Search segment income for the fourth
quarter and full year 2012 was $17.4 million and $62.2 million, up 36 percent
and 35 percent over the fourth quarter and full year 2011, respectively.

Tax Preparation

Tax preparation segment loss for the fourth quarter of 2012 was $2.5 million.
Tax preparation typically posts a seasonal loss in the fourth quarter when
there is little revenue from its tax business. Tax preparation segment income
for the full year 2012 was $30.1 million. This figure excludes TaxACT
operating results before January 31, 2012 as the Company acquired TaxACT on
that date.

Corporate Operating Expenses

Unallocated corporate operating expenses for the fourth quarter and full year
2012 were $2.8 million and $11.8 million, up 6 percent and 23 percent over the
fourth quarter and full year 2011, respectively.

Share Repurchase Program

The Company’s board of directors has approved a share repurchase program of up
to $50 million of the Company’s outstanding shares of common stock. Under the
program, shares may be repurchased from time to time in the open market for a
two-year period.

First Quarter Outlook

For the first quarter of 2013, the Company expects revenues to be between
$156.0million and $161.0 million, Adjusted EBITDA to be between $43.0 million
and $45.0million, Non-GAAP Net Income to be between $39.5 million and $41.5
million, or $0.93 to $0.97 per diluted share, and Net Income to be between
$20.5 and $22.0million, or $0.48 to $0.52per diluted share. The Company's
forward-looking guidance does not reflect potential gains or losses from
derivative instruments.

Conference Call and Webcast

A conference call and live webcast will be held today at 2p.m. Pacific time /
5p.m. Eastern time during which the Company will further discuss fourth
quarter and full year results and its outlook including tax preparation
segment guidance for the first half of 2013, search segment guidance for the
first quarter 2013 and search segment expectations for 2013. The supplemental
materials are included in a current report on form 8-K filed today and can be
accessed in the Investor Relations section of the Blucora corporate website at
http://www.blucora.com. A replay of the call will also be available on our
website for one year and are may be accessed under the “Events &
Presentations” section of the Investor Center. You may also listen to the
conference call audio on the Blucora YouTube Channel at
www.YouTube.com/Blucora.

About Blucora™

Blucora operates two leading Internet businesses. OurInfoSpacebusiness
provides online search and monetization solutions to a network of more than
100 partners globally. Through TaxACT, we provide online tax preparation
solutions to consumers and professional preparers. The Blucora team brings
decades of experience operating and investing in desktop, online, and mobile
businesses. We are passionate about the power of the Internet to improve the
lives of consumers, and our businesses operate at the forefront of digital
migration trends in their respective markets. More information about Blucora
may be found atwww.blucora.com. Follow and subscribe to us on Twitter,
LinkedIn andYouTube.

This announcement 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. Actual results may differ significantly from
management’s expectations due to various risks and uncertainties including,
but not limited to: general economic, industry, and market sector conditions;
the timing and extent of market acceptance of developed products and services
and related costs; our dependence on companies to distribute our products and
services; the ability to successfully integrate acquired businesses; future
acquisitions; the successful execution of the Company’s strategic initiatives,
operating plans, and marketing strategies; and the condition of our cash
investments, and the completion of the audit of our financial statements for
2012. A more detailed description of these and certain other factors that
could affect actual results is included in Blucora, Inc.’s most recent Annual
Report on Form 10-K and subsequent reports filed with or furnished to 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. Blucora, Inc. undertakes no obligation to update any
forward-looking statements to reflect new information, events, or
circumstances after the date of this release or to reflect the occurrence of
unanticipated events.


Blucora, Inc.
Preliminary Condensed Consolidated Statements of Operations ^(1)
(Unaudited)
(Amounts in thousands, except per share data)
                                                               
                   Three months ended                Year ended
                   December 31,         December     December      December
                                        31,          31,           31,
                     2012              2011       2012        2011    
Revenues           $  97,470            $ 66,614     $ 406,919     $ 228,813
                                                                   
Cost of sales
(includes
amortization of
acquired
intangible            73,704              46,954       267,451       154,962
assets of
$1,975, $347,
$7,580, and
$2,595) ^(2)
                                                                
Gross profit          23,766              19,660       139,468       73,851
                                                                   
Expenses and
other loss
(income):
Engineering and       2,538               1,904        9,969         7,158
technology ^(2)
Sales and             8,085               4,753        44,138        21,510
marketing ^(2)
General and
administrative        5,713               4,899        27,418        21,542
^(2)
Depreciation          492                 473          2,119         2,162
Amortization of
intangible            3,169               -            11,619        -
assets
Other loss
(income), net        (1,004  )          972        6,677       1,246   
^(3)
                                                                   
Total expenses
and other loss       18,993            13,001     101,940     53,618  
(income)
                                                                   
Income from
continuing
operations            4,773               6,659        37,528        20,233
before income
taxes
                                                                   
Income tax
benefit              (953    )          16,215     (15,002 )    11,288  
(expense)
                                                                   
Income from
continuing           3,820             22,874     22,526      31,521  
operations
                                                                   
Discontinued
operations:
^(1)
Loss from
discontinued          -                   -            -             (2,253  )
operations, net
of taxes ^(2)
Loss on sale of
discontinued         -                 -          -           (7,674  )
operations, net
of taxes
Net income         $  3,820            $ 22,874    $ 22,526     $ 21,594  
                                                                   
Earnings per
share - Basic
Income from
continuing         $  0.09              $ 0.58       $ 0.56        $ 0.83
operations
Loss from
discontinued          -                   -            -             (0.06   )
operations
Loss on sale of
discontinued         -                 -          -           (0.20   )
operations
Net income per     $  0.09             $ 0.58      $ 0.56       $ 0.57    
share - Basic
                                                                   
Earnings per
share - Diluted
Income from
continuing         $  0.04       ((4 )) $ 0.57       $ 0.54        $ 0.82
operations
Loss from
discontinued          -                   -            -             (0.06   )
operations
Loss on sale of
discontinued         -                 -          -           (0.20   )
operations
Net income per     $  0.04             $ 0.57      $ 0.54       $ 0.56    
share - Diluted
                                                                   
Weighted
average shares
outstanding
used in              40,789            39,448     40,279      37,954  

computing basic
income per
share
Weighted
average shares
outstanding
used in              42,411            40,074     41,672      38,621  

computing
diluted income
per share
                                                                   
^(1) In the year ended December 31, 2011, the Company completed the sale of
its Mercantila e-commerce business.In the year ended December 31, 2011, the
Company recorded a $1.3 million income tax benefit related to discontinued
operations.In the year ended December 31, 2011, the Company recorded a loss,
net of an income tax benefit of $5.1 million, on the sale of the Mercantila
business.Revenue, operating expenses and income taxes, loss from
discontinued operations and the loss on sale of these discontinued operations
are presented below (in thousands):
                                                                   
                   Three months ended                Year ended
                   December 31,         December     December      December
                                        31,          31,           31,
E-Commerce           2012              2011       2012        2011    
Revenue            $  -                 $ -          $ -           $ 16,894
Operating
expenses and         -                 -          -           19,147  
income taxes
Loss from
discontinued       $  -                $ -         $ -          $ (2,253  )
operations, net
of taxes
Loss on sale of
discontinued       $  -                $ -         $ -          $ (7,674  )
operations, net
of taxes
                                                                   
^(2) In the year ended December 31, 2012, $5.2 million in stock-based
compensation expense was recorded in association with the modification of the
terms of a warrant and the vesting of a non-employee performance-based equity
award, which were both triggered by the acquisition of the TaxACT business,
and the related expense was allocated to general and administrative
expense.Stock-based compensation expense for the three months and year ended
December 31, 2012 and 2011 is allocated among the following captions (in
thousands):
                                                                   
                   Three months ended                Year ended
                   December 31,         December     December      December
                                        31,          31,           31,
Stock-Based          2012              2011       2012        2011    
Compensation
Cost of sales         227               $ 52         $ 558         $ 286
Engineering and       286                 137          1,180         821
technology
Sales and             520                 173          1,909         1,002
marketing
General and           1,267               906          9,576         5,579
administrative
Discontinued         -                 -          -           (159    )
operations
Total
stock-based        $  2,300            $ 1,268     $ 13,223     $ 7,529   
compensation
expense
                                                                   
^(3) Other loss, net for the three months and year ended December 31, 2012 and
2011 is allocated among the following captions (in thousands):
                                                                   
                   Three months ended                Year ended
                   December 31,         December     December      December
                                        31,          31,           31,
                     2012              2011       2012        2011    
Other Loss
(Income), Net
Interest           $  875               $ -          $ 3,522       $ -
expense
Interest income       (52     )           (85    )     (131    )     (369    )
Amortization of
debt issuance         74                  -            820           -
costs
Accretion of          31                  -            325           -
debt discount
Loss (gain) on
derivative            (1,928  )           -            2,346         -
instrument
Gain on
contingency           -                   -            -             (1,500  )
resolution
Increase in
fair value of
earn-out              -                   1,000        -             3,000
contingent
liability
Other                (4      )          57         (205    )    115     
Total other
loss (income),     $  (1,004  )         $ 972       $ 6,677      $ 1,246   
net
                                                                             
^(4) Calculation excludes the income effect of dilutive derivative
instruments.
                                                                             


Blucora, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
                                                              
                                                 December 31,    December 31,
                                                  2012          2011      
ASSETS
                                                                 
Current assets:
Cash and cash equivalents                        $ 68,278        $ 81,897
Short-term investments, available-for-sale         94,010          211,654
Accounts receivable, net                           34,932          25,019
Other receivables                                  3,942           542
Prepaid expenses and other current assets, net    10,911        1,958     
                                                                 
Total current assets                               212,073         321,070
                                                                 
Property and equipment, net                        7,533           5,277
Goodwill                                           230,290         44,815
Other intangible assets, net                       132,815         1,315
Deferred tax asset, net                            -               19,102
Other long-term assets                            2,582         3,560     
                                                                 
Total assets                                     $ 585,293      $ 395,139   
                                                                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                 
Current liabilities:
Accounts payable                                 $ 37,687        $ 28,947
Accrued expenses and other current liabilities     16,437          10,250
Short-term portion of long-term debt, net of       4,590           -
discount of $160
Derivative instruments                            8,974         -         
                                                                 
Total current liabilities                          67,688          39,197
                                                                 
Long-term liabilities:
Long-term debt, net of discount of $468            69,278          -
Deferred tax liability, net                        29,333          21
Other long-term liabilities                       3,544         816       
                                                                 
Total long-term liabilities                       102,155       837       
                                                                 
Total liabilities                                  169,843         40,034
                                                                 
Stockholders' equity:
Common stock                                       4               4
Additional paid-in capital                         1,392,098       1,353,971
Accumulated deficit                                (976,376  )     (998,902  )
Accumulated other comprehensive income (loss)     (276      )    32        
                                                                 
Total stockholders' equity                        415,450       355,105   
                                                                 
Total liabilities and stockholders' equity       $ 585,293      $ 395,139   
                                                                 
Summary of cash, cash equivalents, and
short-term investments:
Cash and cash equivalents                        $ 68,278        $ 81,897
Short-term investments, available-for-sale        94,010        211,654   
                                                                 
Cash, cash equivalents, and short-term           $ 162,288      $ 293,551   
investments
                                                                             


Blucora, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
                                                   
                                                   Year ended
                                                   December 31,  December 31,
                                                    2012         2011     
Operating activities:
Net income                                         $ 22,526       $ 21,594
Loss on sale of discontinued operations              -              7,674
Loss from discontinued operations                   -            2,253    
Income from continuing operations                    22,526         31,521
Adjustments to reconcile income from continuing
operations to net cash provided by operating
activities of continuing operations:
Depreciation and amortization of intangible assets   23,011         7,456
Stock-based compensation                             8,937          5,756
Warrant-related stock-based compensation             4,286          1,932
Excess tax benefits from stock-based award           (23,041  )     (1,260   )
activity
Deferred income taxes                                (8,738   )     (18,870  )
Unrealized amortization of premium or accretion of   (194     )     (89      )
discount on investments, net
Amortization of debt origination costs               820            -
Accretion of debt discount                           325            -
Loss on derivative instrument                        2,346          -
Earn-out contingent liability adjustments            -              3,000
Gain on resolution of contingent liability           -              (1,500   )
Other                                                31             18
Changes in operating assets and liabilities:                        -
Accounts receivable                                  (597     )     (5,734   )
Other receivables                                    (665     )     643
Prepaid expenses and other current assets            (5,862   )     284
Other long-term assets                               1,981          (258     )
Accounts payable                                     (1,600   )     26,253
Accrued expenses and other current and long-term    25,265       (23,889  )
liabilities
Net cash provided by operating activities of         48,831         25,263
continuing operations
                                                                  
Investing activities:
Business acquisition, net of cash acquired           (279,386 )     -
Purchases of property and equipment                  (3,756   )     (2,679   )
Proceeds from the sale of assets                     4              -
Change in restricted cash                            252            649
Proceeds from sales of investments                   203,493        63,166
Proceeds from maturities of investments              36,753         160,161
Purchases of investments                            (122,433 )    (336,770 )
Net cash used by investing activities of             (165,073 )     (115,473 )
continuing operations
                                                                  
Financing activities:
Proceeds from loan, net of debt issuance costs of    96,704         -
$2,343 and debt discount of $953
Repayment of debt                                    (25,504  )     -
Excess tax benefits from stock-based award           23,041         1,260
activity
Proceeds from stock option exercises                 9,099          17,049
Proceeds from issuance of stock through employee     601            377
stock purchase plan
Tax payments from shares withheld upon vesting of    (1,318   )     (1,786   )
restricted stock units
Proceeds from sale of common stock                   -              7,000
Earn-out payments for business acquisition           -              (423     )
Repayment of capital lease obligation               -           (221     )
Net cash provided by financing activities of         102,623        23,256
continuing operations
                                                                  
Discontinued operations:
Net cash used by operating activities attributable   -              (6,156   )
to discontinued operations
Net cash used by investing activities attributable  -            (638     )
to discontinued operations
Net cash used by discontinued operations             -              (6,794   )
                                                                  
                                                                  
Net decrease in cash and cash equivalents            (13,619  )     (73,748  )
                                                                  
Cash and cash equivalents:
Beginning of period                                 81,897       155,645  
End of period                                      $ 68,278      $ 81,897   
                                                                             


Blucora, Inc.
Preliminary Segment Information
(Unaudited)
(Amounts in thousands)
                                                              
                                                                   
                 Three months ended                 Year ended
                 December 31,     December 31,      December 31,   December
                                                                   31,
                   2012           2011            2012        2011    
Search:
Revenue          $  96,303        $  66,614         $  344,814     $ 228,813
Cost of             68,590           44,856            245,135       143,887
revenue ^(1)
Operating          10,335         8,990           37,494      38,720  
expenses
Search
segment             17,378           12,768            62,185        46,206
income
Search
segment             18      %        19       %        18      %     20      %
margin
                                                                   
Tax
Preparation:
Revenue             1,167            -                 62,105        -
Cost of             319              -                 4,729         -
revenue ^(2)
Operating          3,324          -               27,324      -       
expenses
Tax
Preparation         (2,476  )        -                 30,052        -
segment
income (loss)
Tax
Preparation         -212    %        0        %        48      %     0       %
segment
margin
                                                                   
Total
segment:
Total revenue       97,470           66,614            406,919       228,813
Total cost of       68,909           44,856            249,864       143,887
revenue
Total segment
operating          13,659         8,990           64,818      38,720  
expenses
Total segment       14,902           12,768            92,237        46,206
income
Total segment       15      %        19       %        23      %     20      %
margin
                                                                   
Corporate:
Operating           2,772            2,603             11,798        9,583
expense
Stock-based         2,300            1,268             13,223        7,688
compensation
Depreciation        917              919               3,812         4,861
Amortization
of intangible       5,144            347               19,199        2,595
assets
Other loss          (1,004  )        972               6,677         1,246
(income), net
Income tax
expense             953              (16,215  )        15,002        (11,288 )
(benefit)
Loss from
discontinued       -              -               -           9,927   
operations,
net of taxes
Total
corporate           11,082           (10,106  )        69,711        24,612
expense
(benefit)
                                                                
Net income       $  3,820        $  22,874        $  22,526     $ 21,594  
                                                                             
^(1) Amounts do not include amortization of acquired technology and costs
associated with the operation of the Company’s data centers that serve its
search business, including depreciation, personnel expenses (including
stock-based compensation expense), energy, and bandwidth costs.
                                                                             
^(2) Amounts do not include amortization of acquired technology and costs
associated with the operation of the Company’s data center that serves its tax
preparation business, including depreciation, personnel expenses, (including
stock-based compensation expense), energy, and bandwidth costs, and personnel
costs associated with customer service.
                                                                             

                                                                             
Blucora, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable
GAAP Measure
Preliminary Adjusted EBITDA Reconciliation ^(1)
(Unaudited)
(Amounts in thousands)
                                                            
                 Three months ended                 Year ended
                 December 31,         December      December     December
                                      31,           31,          31,
                   2012              2011        2012       2011    
Net income       $  3,820             $ 22,874      $ 22,526     $ 21,594
^(2)
Loss from
discontinued        -                   -             -            9,927
operations
Depreciation
and
amortization        6,061               1,266         23,011       7,456
of intangible
assets
Stock-based         2,300               1,268         13,223       7,688
compensation
Other loss
(income), net       (1,004  )           972           6,677        1,246
^(3)
Income tax
expense            953               (16,215 )    15,002     (11,288 )
(benefit)
Adjusted         $  12,130           $ 10,165     $ 80,439    $ 36,623  
EBITDA
                                                                             
                                                                             
Blucora, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable
GAAP Measure
Preliminary Non-GAAP Net Income Reconciliation ^(1)
(Unaudited)
(Amounts in thousands, except per share amounts)
                                                                             
                 Three months ended                 Year ended
                 December 31,         December      December     December
                                      31,           31,          31,
                   2012              2011        2012       2011    
Net income       $  3,820             $ 22,874      $ 22,526    $ 21,594
^(2)
Loss from
discontinued       -                 -           -         9,927   
operations
Income from
continuing          3,820               22,874        22,526       31,521
operations
^(2)
Stock-based         2,300               1,268         13,223       7,688
compensation
Amortization
of acquired         5,144               347           19,199       2,595
intangible
assets
Loss (gain)
on derivative       (1,928  )           -             2,346        -
instruments
Cash tax
impact of           9                   20            (93    )     (40     )
GAAP
adjustments
Non-cash
income tax
expense
(benefit)          660               (17,613 )    13,559     (13,000 )
from
continuing
operations
^(1)
Non-GAAP net     $  10,005           $ 6,896      $ 70,760    $ 28,764  
income ^(4)
                                                                             
Per share
amounts
Income from
continuing          0.04       ^(5)    0.57          0.54         0.82
operations-
diluted
Stock-based
compensation        0.06                0.03          0.32         0.19
- diluted
Amortization
of acquired
intangible          0.12                0.01          0.46         0.07
assets -
diluted
Loss (gain)
on derivative       -          ^(5)    -             0.06         -
instruments -
diluted
Cash tax
impact of
GAAP                0.00                0.00          0.00         0.00
adjustments -
diluted
Non-cash
income taxes       0.02              (0.44   )   0.32       (0.34   )
per share -
diluted
Non-GAAP net
income per       $  0.24             $ 0.17      $ 1.70      $ 0.74    
share -
diluted
                                                                             
                                                                             
Preliminary Adjusted EBITDA Reconciliation for
Forward-Looking Guidance
(Amounts in thousands)
                                                                             
                 Ranges for the three months
                 ending
                 March 31, 2013
Net income          20,500              22,000
Depreciation
and
amortization        6,100               6,100
of acquired
intangible
assets
Stock-based         2,500               2,500
compensation
Other loss,         1,300               1,000
net ^(6)
Income tax         12,600            13,400  
expense
Adjusted         $  43,000           $ 45,000  
EBITDA
                                                                             
Preliminary Non-GAAP Net Income Reconciliation
for Forward-Looking Guidance
(Amounts in thousands)
                                                                             
                 Ranges for the three months
                 ending
                 March 31, 2013
Net income          20,500              22,000
Stock-based         2,500               2,500
compensation
Amortization
of acquired         5,100               5,100
intangible
assets
Non-cash
income tax
expense from       11,400            11,900  
continuing
operations
Non-GAAP net     $  39,500           $ 41,500  
income
                                                                             
^(1) Blucora’s Adjusted EBITDA is calculated by adjusting net income
determined in accordance with generally accepted accounting principles
("GAAP") to exclude the effects of loss from discontinued operations (which
includes loss from discontinued operations, net of taxes, and loss on sale
of discontinued operations, net of taxes), income taxes, depreciation,
amortization of acquired intangible assets, stock-based compensation
expense, and other loss(income), net (which includes such items as
interest expense, interest income, derivative instrument gains or losses,
foreign currency gains or losses, gains or losses from the disposal of
assets, adjustments to the fair values of contingent liabilities related to
business combinations, and gains on resolutions of contingencies), as
detailed above.Blucora’s management believes that Adjusted EBITDA provides
meaningful supplemental information regarding the Company’s performance by
excluding certain expenses and gains that management believes are not
indicative of its core business operating results.Blucora uses this
non-GAAP financial measure for internal management purposes, when publicly
providing guidance on possible future results, and as a means to evaluate
period-to-period comparisons.Blucora believes that Adjusted EBITDA is a
common measure used by investors and analysts to evaluate its performance,
that it provides a more complete understanding of the results of operations
and trends affecting the Company's business when viewed together with GAAP
results, and that management and investors benefit from referring to this
non-GAAP financial measure.
                                                                             
Blucora's Non-GAAP net income and Non-GAAP earnings per share is calculated
by adjusting GAAP net income to exclude the effects of discontinued
operations, net of taxes (which includes loss from discontinued operations,
net of taxes, and loss on sale of discontinued operations, net of taxes),
loss from the sale of discontinued operations, net of taxes, stock-based
compensation expense, amortization ofacquired intangible assets, gain or
loss on derivative instruments, the cash tax impact of those adjustments to
GAAP net income, and non-cash portion of income tax expense from continuing
operations, as detailed in the accompanying table to the preliminary
condensed consolidated financial statements (unaudited).The Company
excludes the non-cash portion of income tax expense because of its ability
to offset a substantial portion of its cash tax liabilities by using these
deferred tax assets.The majority of these deferred tax assets will expire
if unutilized in 2020.
                                                                             
Blucora’s management believes that non-GAAP net income and non-GAAP earnings
per share provide meaningful supplemental information to management,
investors and analysts regarding the Company's performance and the valuation
of its business by excluding items in the statement of operations that
management does not consider part of the Company's ongoing operations or
have not been, or are not expected to be, settled in cash.Additionally,
Blucora's management believes that non-GAAP net income and non-GAAP earnings
per share are common measures used by investors and analysts to evaluate the
Company's performance and the valuation of its business.
                                                                             
Adjusted EBITDA, non-GAAP net income and non-GAAP earnings per share should
be evaluated in light of the Company's 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.
                                                                             
^(2) As presented in the Preliminary Condensed Consolidated Statements of
Operations (unaudited).
                                                                             
^(3) Other loss (income), net includes such items as interest expense,
interest income, derivative instrument gains or losses, foreign currency
gains or losses, gains or losses from the disposal of assets, adjustments to
the fair values of contingent liabilities related to business combinations,
and gains on resolutions of contingencies.
                                                                             
^(4)Amounts previously disclosed have been revised to conform to the
current presentation.For further information, see section titled,
“Non-GAAP Financial Measures” in “Item 2: Management's Discussion and
Analysis of Financial Condition and Results of Operations” in the Company's
Form 10-Q for the quarterly period ended March31, 2012.
                                                                             
^(5) Calculation excludes the income effect of dilutive derivative
instruments.
                                                                             
^(6) Other loss, net, primarily consists of interest expense, interest
income, foreign currency gains or losses, and gains or losses from the
disposal of assets, and the Company's forward-looking guidance does not
reflect potential gains or losses from derivative instruments.
                                                                             

Contact:

Blucora
Stacy Ybarra, 425-709-8127
stacy.ybarra@blucora.com
 
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