Blucora Announces Fourth Quarter and Full Year 2012 Results

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

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

“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.”

“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 Preparation	$	1.2			N/A		N/A		$	62.1		N/A		N/A
Adjusted EBITDA	$	12.1		$	10.2		19	%	$	80.4	$	36.6		120	%
Non-GAAP Net Income	$	10.0		$	6.9		45	%	$	70.8	$	28.8		146	%
Non-GAAP Diluted EPS	$	0.24		$	0.17		41	%	$	1.70	$	0.74		130	%
Net Income	$	3.8		$	22.9	^(2)	-83	%	$	22.5	$	21.6	^(2)	4	%
GAAP Diluted Income Per Share	$	0.04	^(1)	$	0.57	^(2)	-92	%	$	0.54	$	0.56	^(2)	-4	%
^(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 $156.0 million and $161.0 million, Adjusted EBITDA to be between $43.0 million and $45.0 million, 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 $22.0 million, or $0.48 to $0.52 per 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 2 p.m. Pacific time / 5 p.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. Our InfoSpace business 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 at www.blucora.com. Follow and subscribe to us on Twitter, LinkedIn and YouTube.

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 31,			December 31,			December 31,
		2012					2011			2012			2011
Revenues	$	97,470				$	66,614		$	406,919		$	228,813
Cost of sales (includes amortization of acquired intangible assets of $1,975, $347, $7,580, and $2,595) ^(2)		73,704					46,954			267,451			154,962
Gross profit		23,766					19,660			139,468			73,851
Expenses and other loss (income):
Engineering and technology ^(2)		2,538					1,904			9,969			7,158
Sales and marketing ^(2)		8,085					4,753			44,138			21,510
General and administrative ^(2)		5,713					4,899			27,418			21,542
Depreciation		492					473			2,119			2,162
Amortization of intangible assets		3,169					-			11,619			-
Other loss (income), net ^(3)		(1,004	)				972			6,677			1,246
Total expenses and other loss (income)		18,993					13,001			101,940			53,618
Income from continuing operations before income taxes		4,773					6,659			37,528			20,233
Income tax benefit (expense)		(953	)				16,215			(15,002	)		11,288
Income from continuing operations		3,820					22,874			22,526			31,521
Discontinued operations: ^(1)
Loss from discontinued operations, net of taxes ^(2)		-					-			-			(2,253	)
Loss on sale of discontinued operations, net of taxes		-					-			-			(7,674	)
Net income	$	3,820				$	22,874		$	22,526		$	21,594
Earnings per share - Basic
Income from continuing operations	$	0.09				$	0.58		$	0.56		$	0.83
Loss from discontinued operations		-					-			-			(0.06	)
Loss on sale of discontinued operations		-					-			-			(0.20	)
Net income per share - Basic	$	0.09				$	0.58		$	0.56		$	0.57
Earnings per share - Diluted
Income from continuing operations	$	0.04		((4	))	$	0.57		$	0.54		$	0.82
Loss from discontinued operations		-					-			-			(0.06	)
Loss on sale of discontinued operations		-					-			-			(0.20	)
Net income per share - Diluted	$	0.04				$	0.57		$	0.54		$	0.56
Weighted average shares outstanding used in computing basic income per share		40,789					39,448			40,279			37,954
Weighted average shares outstanding used in computing diluted income per share		42,411					40,074			41,672			38,621
^(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 31,			December 31,			December 31,
E-Commerce		2012					2011			2012			2011
Revenue	$	-				$	-		$	-		$	16,894
Operating expenses and income taxes		-					-			-			19,147
Loss from discontinued operations, net of taxes	$	-				$	-		$	-		$	(2,253	)
Loss on sale of discontinued operations, net of taxes	$	-				$	-		$	-		$	(7,674	)
^(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 31,			December 31,			December 31,
Stock-Based Compensation		2012					2011			2012			2011
Cost of sales		227				$	52		$	558		$	286
Engineering and technology		286					137			1,180			821
Sales and marketing		520					173			1,909			1,002
General and administrative		1,267					906			9,576			5,579
Discontinued operations		-					-			-			(159	)
Total stock-based compensation expense	$	2,300				$	1,268		$	13,223		$	7,529
^(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 31,			December 31,			December 31,
		2012					2011			2012			2011
Other Loss (Income), Net
Interest expense	$	875				$	-		$	3,522		$	-
Interest income		(52	)				(85	)		(131	)		(369	)
Amortization of debt issuance costs		74					-			820			-
Accretion of debt discount		31					-			325			-
Loss (gain) on derivative instrument		(1,928	)				-			2,346			-
Gain on contingency resolution		-					-			-			(1,500	)
Increase in fair value of earn-out contingent liability		-					1,000			-			3,000
Other		(4	)				57			(205	)		115
Total other loss (income), net	$	(1,004	)			$	972		$	6,677		$	1,246
^(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 discount of $160		4,590			-
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 investments	$	162,288		$	293,551

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 activity		(23,041	)		(1,260	)
Deferred income taxes		(8,738	)		(18,870	)
Unrealized amortization of premium or accretion of discount on investments, net		(194	)		(89	)
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 liabilities		25,265			(23,889	)
Net cash provided by operating activities of continuing operations		48,831			25,263
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 continuing operations		(165,073	)		(115,473	)
Financing activities:
Proceeds from loan, net of debt issuance costs of $2,343 and debt discount of $953		96,704			-
Repayment of debt		(25,504	)		-
Excess tax benefits from stock-based award activity		23,041			1,260
Proceeds from stock option exercises		9,099			17,049
Proceeds from issuance of stock through employee stock purchase plan		601			377
Tax payments from shares withheld upon vesting of restricted stock units		(1,318	)		(1,786	)
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 continuing operations		102,623			23,256
Discontinued operations:
Net cash used by operating activities attributable to discontinued operations		-			(6,156	)
Net cash used by investing activities attributable to discontinued operations		-			(638	)
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 revenue ^(1)		68,590			44,856			245,135			143,887
Operating expenses		10,335			8,990			37,494			38,720
Search segment income		17,378			12,768			62,185			46,206
Search segment margin		18	%		19	%		18	%		20	%
Tax Preparation:
Revenue		1,167			-			62,105			-
Cost of revenue ^(2)		319			-			4,729			-
Operating expenses		3,324			-			27,324			-
Tax Preparation segment income (loss)		(2,476	)		-			30,052			-
Tax Preparation segment margin		-212	%		0	%		48	%		0	%
Total segment:
Total revenue		97,470			66,614			406,919			228,813
Total cost of revenue		68,909			44,856			249,864			143,887
Total segment operating expenses		13,659			8,990			64,818			38,720
Total segment income		14,902			12,768			92,237			46,206
Total segment margin		15	%		19	%		23	%		20	%
Corporate:
Operating expense		2,772			2,603			11,798			9,583
Stock-based compensation		2,300			1,268			13,223			7,688
Depreciation		917			919			3,812			4,861
Amortization of intangible assets		5,144			347			19,199			2,595
Other loss (income), net		(1,004	)		972			6,677			1,246
Income tax expense (benefit)		953			(16,215	)		15,002			(11,288	)
Loss from discontinued operations, net of taxes		-			-			-			9,927
Total corporate expense (benefit)		11,082			(10,106	)		69,711			24,612
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 31,			December 31,			December 31,
		2012				2011			2012			2011
Net income ^(2)	$	3,820			$	22,874		$	22,526		$	21,594
Loss from discontinued operations		-				-			-			9,927
Depreciation and amortization of intangible assets		6,061				1,266			23,011			7,456
Stock-based compensation		2,300				1,268			13,223			7,688
Other loss (income), net ^(3)		(1,004	)			972			6,677			1,246
Income tax expense (benefit)		953				(16,215	)		15,002			(11,288	)
Adjusted EBITDA	$	12,130			$	10,165		$	80,439		$	36,623
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 31,			December 31,			December 31,
		2012				2011			2012			2011
Net income ^(2)	$	3,820			$	22,874		$	22,526		$	21,594
Loss from discontinued operations		-				-			-			9,927
Income from continuing operations ^(2)		3,820				22,874			22,526			31,521
Stock-based compensation		2,300				1,268			13,223			7,688
Amortization of acquired intangible assets		5,144				347			19,199			2,595
Loss (gain) on derivative instruments		(1,928	)			-			2,346			-
Cash tax impact of GAAP adjustments		9				20			(93	)		(40	)
Non-cash income tax expense (benefit) from continuing operations ^(1)		660				(17,613	)		13,559			(13,000	)
Non-GAAP net income ^(4)	$	10,005			$	6,896		$	70,760		$	28,764
Per share amounts
Income from continuing operations- diluted		0.04		^(5)		0.57			0.54			0.82
Stock-based compensation - diluted		0.06				0.03			0.32			0.19
Amortization of acquired intangible assets - diluted		0.12				0.01			0.46			0.07
Loss (gain) on derivative instruments - diluted		-		^(5)		-			0.06			-
Cash tax impact of GAAP adjustments - diluted		0.00				0.00			0.00			0.00
Non-cash income taxes per share - diluted		0.02				(0.44	)		0.32			(0.34	)
Non-GAAP net income per share - diluted	$	0.24			$	0.17		$	1.70		$	0.74
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 of acquired intangible assets		6,100				6,100
Stock-based compensation		2,500				2,500
Other loss, net ^(6)		1,300				1,000
Income tax expense		12,600				13,400
Adjusted EBITDA	$	43,000			$	45,000
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 compensation		2,500				2,500
Amortization of acquired intangible assets		5,100				5,100
Non-cash income tax expense from continuing operations		11,400				11,900
Non-GAAP net income	$	39,500			$	41,500
^(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 of  acquired 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 March 31, 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.