IRVING, Texas, Feb. 15, 2018 (GLOBE NEWSWIRE) -- Blucora, Inc. (NASDAQ:BCOR), a leading provider of technology-enabled financial solutions to consumers, small businesses and tax professionals, today announced financial results for the fourth quarter and full year ended December 31, 2017.

2017 Highlights and Recent Developments

  • Increased total revenue by 12% year-over-year
  • Grew assets under management by 21% year-over-year to $12.5 billion, total assets under administration by 14% year-over-year to $44.2 billion at HD Vest
  • Achieved 20th consecutive year of revenue growth at TaxAct, growing 15% year-over-year
  • Lowered debt by $90 million, reduced net leverage ratio to 2.8x from 4.0x vs. prior year and lowered interest rate by 300 bps
  • Announced clearing transition expected to generate $60-$100 million in incremental HD Vest segment income over 10-year term
  • Announced appointment of Davinder Athwal as CFO effective February 21, 2018

“We delivered another solid quarter capping a strong year for our overall business and financial results,” said John Clendening, Blucora’s President and Chief Executive Officer.  “The momentum we have seen throughout the year continued into the fourth quarter as we achieved 13% growth in revenue, on a year-over-year basis, and hit record asset levels.”

“For the full year 2017 we achieved double-digit growth in nearly all of our key metrics, including revenue, while significantly strengthening our balance sheet, our platform and our team.  All told, we are on or ahead of schedule as we finalize our strategic transformation, and we are well-positioned to capitalize on the growth opportunities that lay ahead.”

  
Summary Financial Performance: Q4 and Full Year 2017
($ in millions except per share amounts)
 
  
 Q4 Q4   Full Year Full Year  
 2017 2016 Change 2017 2016 Change
Revenue$97.8 $86.8 13% $509.6 $455.9 12%
Wealth Management$93.8 $83.0 13% $348.6 $316.5 10%
Tax Preparation$4.0 $3.8 7% $160.9 $139.4 15%
Segment Income (Loss)$3.7 $7.7 (52)% $123.8 $113.2 9%
Wealth Management$14.2 $13.8 3% $50.9 $46.3 10%
Tax Preparation$(10.5) $(6.1) 72% $72.9 $66.9 9%
Unallocated Corporate Operating Expenses$5.1 $4.9 3% $22.9 $19.0 21%
GAAP:           
Operating Income (Loss)$(14.5) $(14.2) 2% $48.0 $37.1 29%
Net Income (Loss) Attributable to Blucora. Inc.$10.0 $(19.3) (152)% $27.0 $(65.2) (141)%
Diluted Net Income (Loss) Per Share Attributable to Blucora. Inc.$0.21 $(0.46) (146)% $0.57 $(1.53) (137)%
Non-GAAP:           
Adjusted EBITDA$(1.3) $2.8 (148)% $100.9 $94.2 7%
Net Income (Loss)$(5.7) $(7.5) (24)% $69.1 $45.1 53%
Diluted Net Income (Loss) per Share$(0.12) $(0.18) (33)% $1.46 $1.06 38%
(1) Includes a non-cash benefit of $21.4 million related to the Tax Cuts and Jobs Act
See reconciliation of as reported and pro forma non-GAAP to GAAP measures in tables below.
 

First Quarter Outlook

For the first quarter of 2018, the Company expects revenues to be between $193.5 million and $198.0 million, GAAP income from continuing operations to be between $29.9 million and $36.0 million, or $0.61 to $0.74 per diluted share, Adjusted EBITDA to be between $52.6 million and $56.8 million, and Non-GAAP income from continuing operations to be between $45.0 million and $49.7 million, or $0.92 to $1.02 per diluted share.

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 fourth quarter and full year results, its outlook for the first quarter, tax season update 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 a leading provider of technology-enabled financial solutions to consumers, small businesses and tax professionals.  Our products and services in tax preparation and wealth management, through TaxAct and HD Vest, respectively, help consumers manage their financial lives.  TaxAct is an affordable digital tax preparation solution for individuals, business owners and tax professionals.  HD Vest Financial Services ® supports an independent network of tax professionals who provide comprehensive financial planning solutions.  For more information on Blucora or its businesses, please 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; 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; political and economic conditions and events that directly or indirectly impact the wealth management and tax preparation industries; our ability to attract and retain productive financial advisors; 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; our ability to comply with laws and regulations, including, among others, those related to privacy protection and consumer data; our ability to successfully transition our wealth management business to a new clearing platform and our expectations concerning the benefits that may be derived therefrom; 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 companies or assets that we 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.

 
Blucora, Inc.
Preliminary Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except per share data)
 
 Three months ended December 31, Years ended December 31,
 2017 2016 2017 2016
Revenue:       
Wealth management services revenue$93,848 $83,050 $348,620 $316,546
Tax preparation services revenue4,001 3,751 160,937 139,365
Total revenue97,849 86,801 509,557 455,911
Operating expenses:       
Cost of revenue:       
Wealth management services cost of revenue63,415 55,783 235,859 213,996
Tax preparation services cost of revenue2,475 1,819 10,018 8,368
Amortization of acquired technology50 47 195 812
Total cost of revenue (1)65,940 57,649 246,072 223,176
Engineering and technology (1)5,573 4,938 19,614 17,780
Sales and marketing (1)17,824 13,645 102,798 89,360
General and administrative (1)13,263 11,497 52,668 47,396
Depreciation780 975 3,460 3,881
Amortization of other acquired intangible assets8,615 8,402 33,807 33,331
Restructuring (1)375 3,870 3,101 3,870
Total operating expenses112,370 100,976 461,520 418,794
Operating income (loss)(14,521) (14,175) 48,037 37,117
Other loss, net (2)(5,402) (9,898) (44,551) (39,781)
Income (loss) from continuing operations before income taxes(19,923) (24,073) 3,486 (2,664)
Income tax benefit (3) 31,842 10,184 25,890 1,285
Income (loss) from continuing operations11,919 (13,889) 29,376 (1,379)
Discontinued operations, net of income taxes (4) (5,140)  (63,121)
Net income (loss)11,919 (19,029) 29,376 (64,500)
Net income attributable to noncontrolling interests(1,871) (232) (2,337) (658)
Net income (loss) attributable to Blucora, Inc.$10,048 $(19,261) $27,039 $(65,158)
Net income (loss) per share attributable to Blucora, Inc. - basic:       
Continuing operations$0.22 $(0.34) $0.61 $(0.05)
Discontinued operations (0.12)  (1.52)
Basic net income (loss) per share$0.22 $(0.46) $0.61 $(1.57)
Net income (loss) per share attributable to Blucora, Inc. - diluted:       
Continuing operations$0.21 $(0.34) $0.57 $(0.05)
Discontinued operations (0.12)  (1.52)
Diluted net income (loss) per share$0.21 $(0.46) $0.57 $(1.57)
Weighted average shares outstanding:       
Basic46,231 41,766 44,370 41,494
Diluted48,406 41,766 47,211 41,494
 


 
(1) Stock-based compensation expense was allocated among the following captions (in thousands):
 Three months ended December 31, Years ended December 31,
 2017 2016 2017 2016
Cost of revenue$228 $49 $774 $166
Engineering and technology250 473 984 1,640
Sales and marketing575 860 2,376 2,548
General and administrative2,166 2,130 7,519 9,774
Restructuring70 (364) 1,148 (364)
Total stock-based compensation expense$3,289 $3,148 $12,801 $13,764
 


 
(2) Other loss, net consisted of the following (in thousands):
 Three months ended December 31, Years ended December 31,
 2017 2016 2017 2016
Interest income$(34) $(27) $(110) $(81)
Interest expense4,465 7,028 21,211 32,424
Amortization of debt issuance costs198 400 1,089 1,840
Accretion of debt discounts54 1,091 1,947 4,690
Loss on debt extinguishment and modification expense681 1,677 20,445 1,036
Gain on third party bankruptcy settlement(54) (44) (116) (172)
Other92 (227) 85 44
Other loss, net$5,402 $9,898 $44,551 $39,781
 

(3) On December 22, 2017, the Tax Cuts and Job Act was signed into law. This law, effective January 1, 2018, lowered the corporate income tax rate from 35% to 21%. As a result of that reduction we re-valued our net deferred tax liabilities in 2017, which resulted in an additional income tax benefit of $21.4 million. During 2017 we recorded an income tax benefit of $25.9 million.

(4) Discontinued operations included loss on sale of discontinued operations before income taxes of $73.8 million for the year ended December 31, 2016.

 
Blucora, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
 
 December 31,
 2017 2016
ASSETS   
Current assets:   
Cash and cash equivalents$59,965 $51,713
Cash segregated under federal or other regulations1,371 2,355
Available-for-sale investments 7,101
Accounts receivable, net of allowance10,694 10,209
Commissions receivable16,822 16,144
Other receivables3,180 4,004
Prepaid expenses and other current assets, net7,365 6,321
Total current assets99,397 97,847
Long-term assets:   
Property and equipment, net9,831 10,836
Goodwill, net549,037 548,741
Other intangible assets, net328,205 362,178
Other long-term assets15,201 3,057
Total long-term assets902,274 924,812
Total assets$1,001,671 $1,022,659
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable$4,413 $4,536
Commissions and advisory fees payable17,813 16,587
Accrued expenses and other current liabilities19,577 18,528
Deferred revenue9,953 12,156
Current portion of long-term debt, net 2,560
Total current liabilities51,756 54,367
Long-term liabilities:   
Long-term debt, net338,081 248,221
Convertible senior notes, net 164,176
Deferred tax liability, net43,433 111,126
Deferred revenue804 1,849
Other long-term liabilities8,177 10,205
Total long-term liabilities390,495 535,577
Total liabilities442,251 589,944
    
Redeemable noncontrolling interests18,033 15,696
    
Stockholders’ equity:   
Common stock5 4
Additional paid-in capital1,555,560 1,510,152
Accumulated deficit(1,014,174) (1,092,756)
Accumulated other comprehensive loss(4) (381)
Total stockholders’ equity541,387 417,019
Total liabilities and stockholders’ equity$1,001,671 $1,022,659
 


 
Blucora, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
 
 Years ended December 31,
 2017 2016
Operating Activities:   
Net income (loss)$29,376 $(64,500)
Less: Discontinued operations, net of income taxes (63,121)
Net income (loss) from continuing operations29,376 (1,379)
Adjustments to reconcile net income (loss) from continuing operations to net cash from operating activities:   
Stock-based compensation11,653 14,128
Depreciation and amortization of acquired intangible assets38,139 38,688
Restructuring (non-cash)1,569 (364)
Deferred income taxes(16,159) (18,055)
Amortization of premium on investments, net10 174
Amortization of debt issuance costs1,089 1,840
Accretion of debt discounts1,947 4,690
Loss on debt extinguishment and modification expense20,445 1,036
Revaluation of acquisition-related contingent consideration liability 391
Other30 19
Cash provided (used) by changes in operating assets and liabilities:   
Accounts receivable(483) (2,340)
Commissions receivable(678) 184
Other receivables(204) 22,875
Prepaid expenses and other current assets(869) 3,741
Other long-term assets(12,281) (887)
Accounts payable(123) (153)
Commissions and advisory fees payable1,226 (395)
Deferred revenue(3,248) 582
Accrued expenses and other current and long-term liabilities1,407 21,195
Net cash provided by operating activities from continuing operations72,846 85,970
Investing Activities:   
Business acquisitions, net of cash acquired (1,788)
Purchases of property and equipment(5,039) (3,812)
Proceeds from sales of investments249 
Proceeds from maturities of investments7,252 12,807
Purchases of investments(409) (8,767)
Net cash provided (used) by investing activities from continuing operations2,053 (1,560)
Financing Activities:   
Proceeds from credit facility, net of debt issuance costs and debt discount of $5,913 and $1,875 in 2017365,836 
Repurchase of convertible notes(172,827) (20,667)
Repayment of credit facility(290,000) (140,000)
Repayment of note payable with related party(3,200) (3,200)
Proceeds from stock option exercises40,271 2,216
Proceeds from issuance of stock through employee stock purchase plan1,429 1,402
Tax payments from shares withheld for equity awards(9,095) (1,752)
Contingent consideration payments for business acquisition(946) 
Other(30) 
Net cash used in financing activities from continuing operations(68,562) (162,001)
Net cash provided (used) by continuing operations6,337 (77,591)
    
Net cash provided by operating activities from discontinued operations 14,047
Net cash provided by investing activities from discontinued operations1,028 83,608
Net cash used in financing activities from discontinued operations (25,000)
Net cash provided by discontinued operations1,028 72,655
    
Effect of exchange rate changes on cash and cash equivalents78 (26)
Net increase (decrease) in cash, cash equivalents, and restricted cash7,443 (4,962)
Cash and cash equivalents, beginning of period54,868 59,830
Cash and cash equivalents, end of period$62,311 $54,868
 


 
Blucora, Inc.
Preliminary Segment Information
(Unaudited)
(Amounts in thousands)
 
 Three months ended December 31, Years ended December 31,
 2017 2016 2017 2016
Revenue:       
Wealth Management (1)$93,848 $83,050 $348,620 $316,546
Tax Preparation (1)4,001 3,751 160,937 139,365
Total revenue97,849 86,801 509,557 455,911
Operating income (loss):       
Wealth Management14,232 13,838 50,916 46,296
Tax Preparation(10,489) (6,090) 72,921 66,897
Corporate-level activity (2)(18,264) (21,923) (75,800) (76,076)
Total operating income (loss)(14,521) (14,175) 48,037 37,117
Other loss, net(5,402) (9,898) (44,551) (39,781)
Income tax benefit31,842 10,184 25,890 1,285
Discontinued operations, net of income taxes (5,140)  (63,121)
Net income (loss)$11,919 $(19,029) $29,376 $(64,500)
 


 
(1) Revenues by major category within each segment are presented below (in thousands):
 Three months ended December 31, Years ended December 31,
 2017 2016 2017 2016
Wealth Management:       
Commission$43,060 $39,055 $160,241 $150,125
Advisory38,616 33,658 145,694 129,417
Asset-based7,021 5,964 26,297 22,653
Transaction and fee5,151 4,373 16,388 14,351
Total Wealth Management revenue$93,848 83,050 $348,620 316,546
Tax Preparation:       
Consumer$3,638 $3,611 $146,455 $126,289
Professional363 140 14,482 13,076
Total Tax Preparation revenue$4,001 $3,751 $160,937 $139,365
 


 
(2) Corporate-level activity included the following (in thousands):
 Three months ended December 31, Years ended December 31,
 2017 2016 2017 2016
Operating expenses$5,084 $4,933 $22,907 $18,999
Stock-based compensation3,219 3,512 11,653 14,128
Acquisition-related costs   391
Depreciation921 1,159 4,137 4,545
Amortization of acquired intangible assets8,665 8,449 34,002 34,143
Restructuring375 3,870 3,101 3,870
Total corporate-level activity$18,264 $21,923 $75,800 $76,076
 


 
Blucora, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
 
Preliminary Adjusted EBITDA Reconciliation (1)
(Unaudited)
(Amounts in thousands)
 
 Three months ended December 31, Years ended December 31,
 2017 2016 2017 2016
Net income (loss) attributable to Blucora, Inc.$10,048 $(19,261) $27,039 $(65,158)
Stock-based compensation3,219 3,512 11,653 14,128
Depreciation and amortization of acquired intangible assets9,586 9,608 38,139 38,688
Restructuring375 3,870 3,101 3,870
Other loss, net5,402 9,898 44,551 39,781
Net income attributable to noncontrolling interests1,871 232 2,337 658
Income tax expense (benefit)(31,842) (10,184) (25,890) (1,285)
Discontinued operations, net of income taxes 5,140  63,121
Acquisition-related costs   391
Adjusted EBITDA$(1,341) $2,815 $100,930 $94,194
 


 
Preliminary Non-GAAP Net Income (Loss) Reconciliation (1)
(Unaudited)
(Amounts in thousands, except per share amounts)
 
 Three months ended December 31, Years ended December 31,
 2017 2016 2017 2016
Net loss attributable to Blucora, Inc.(2)$10,048 $(19,261) $27,039 $(65,158)
Discontinued operations, net of income taxes 5,140  63,121
Stock-based compensation3,219 3,512 11,653 14,128
Amortization of acquired intangible assets8,665 8,449 34,002 34,143
Accretion of debt discount on Convertible Senior Notes 917 1,567 3,666
Accelerated accretion of debt discount on Convertible Senior Notes   1,628
Gain on the Notes repurchased   (7,724)
Write-off of debt discount and debt issuance costs on terminated Convertible Senior Notes  6,715 
Write-off of debt discount and debt issuance costs on closed TaxAct - HD Vest 2015 credit facility  9,593 
Acquisition-related costs   391
Restructuring375 3,870 3,101 3,870
Impact of noncontrolling interests1,871 232 2,337 658
Cash tax impact of adjustments to GAAP net income3,328 (69) (6) 175
Non-cash income tax benefit (1)(33,178) (10,262) (26,853) (3,802)
Non-GAAP net income (loss)$(5,672) $(7,472) $69,148 $45,096
        
Per diluted share:       
Net loss attributable to Blucora, Inc.(2)$0.21 $(0.46) $0.57 $(1.53)
Discontinued operations, net of income taxes 0.12  1.48
Stock-based compensation0.07 0.08 0.25 0.33
Amortization of acquired intangible assets0.20 0.21 0.72 0.80
Accretion of debt discount on Convertible Senior Notes 0.02 0.03 0.09
Accelerated accretion of debt discount on Convertible Senior Notes   0.04
Gain on the Notes repurchased   (0.18)
Write-off of debt issuance costs on closed TaxAct 2013 credit facility  0.14 
Write-off of debt discount and debt issuance costs on terminated Convertible Senior Notes  0.20 
Acquisition-related costs   0.01
Restructuring0.01 0.09 0.07 0.09
Impact of noncontrolling interests0.04 0.01 0.05 0.02
Cash tax impact of adjustments to GAAP net income0.07 0.00 0.00 0.00
Non-cash income tax benefit(0.72) (0.25) (0.57) (0.09)
Non-GAAP net income (loss)$(0.12) $(0.18) $1.46 $1.06
Weighted average shares outstanding used in computing per diluted share amounts46,231 41,766 47,211 42,686
 


 
Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance
(Amounts in thousands)
 
 Ranges for the three months ending
 March 31, 2018
 Low High
Net income (loss) attributable to Blucora, Inc.$29,900 $36,000
Stock-based compensation3,700 3,600
Depreciation and amortization of acquired intangible assets9,200 9,200
Restructuring400 300
Other loss, net (3)5,900 5,600
Impact of noncontrolling interests200 200
Income tax expense3,300 1,900
Adjusted EBITDA$52,600 $56,800
 


 
Preliminary Non-GAAP Income from Continuing Operations Reconciliation for Forward-Looking Guidance
(Amounts in thousands)
 
 Ranges for the three months ending
 March 31, 2018
Net income (loss) attributable to Blucora, Inc.$29,900 $36,000
Stock-based compensation3,700 3,600
Amortization of acquired intangible assets8,400 8,400
Restructuring400 300
Impact of noncontrolling interests200 200
Cash tax impact of adjustments to net income (loss)(400) (300)
Non-cash income tax expense2,800 1,500
Non-GAAP income from continuing operations$45,000 $49,700
 


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

(1) We define Adjusted EBITDA as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation, amortization of acquired intangible assets (including acquired technology), restructuring, other loss, net, the impact of noncontrolling interests, income tax expense (benefit), the effects of discontinued operations, acquisition-related costs and CEO separation-related costs. Restructuring costs relate to the move of our corporate headquarters, which was announced in the fourth quarter of 2016.  Acquisition-related costs include professional services fees and other direct transaction costs and changes in the fair value of contingent consideration liabilities related to acquired companies.  The SimpleTax acquisition that was completed in 2015 included contingent consideration, for which the fair value of that liability was revalued in the second quarter of 2016.

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 (loss).  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 (loss) as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of discontinued operations, stock-based compensation, amortization of acquired intangible assets (including acquired technology), accretion of debt discount and accelerated accretion of debt discount on the Convertible Senior Notes (the "Notes"), gain on the Notes repurchased, write-off of debt discount and debt issuance costs on the Notes that were redeemed and the terminated TaxAct - HD Vest 2015 credit facility, acquisition-related costs (described further under Adjusted EBITDA above), restructuring costs (described further under Adjusted EBITDA above), the impact of noncontrolling interests, the related cash tax impact of those adjustments, and non-cash income taxes.  The write-off of debt discount and debt issuance costs on the terminated Notes and the closed TaxAct - HD Vest 2015 credit facility relates to the debt refinancing that occurred in the second quarter of 2017.  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.

We believe that non-GAAP net income (loss) and non-GAAP net income (loss) 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 (loss) and non-GAAP net income (loss) per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business.  Non-GAAP net income (loss) 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 (loss).  Other companies may calculate non-GAAP net income differently, and, therefore, our non-GAAP net income 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, gain/loss on debt extinguishment and modification expense, and gain on third party bankruptcy settlement.