8-K

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K/A
(Amendment No. 1 to Form 8-K)
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
March 17, 2016
Date of Report
(Date of earliest event reported)
  
 
BLUCORA, INC.
(Exact name of registrant as specified in its charter)
 

DELAWARE
000-25131
91-1718107
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
10900 NE 8th Street, Suite 800
Bellevue, Washington 98004
(Address of principal executive offices)
(425) 201-6100
Registrant’s telephone number, including area code
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


 



Item 2.01    COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On December 31, 2015, Blucora, Inc. (“Blucora” or the “Company”) filed a Current Report on Form 8-K under item 2.01 that it had completed the acquisition of HDV Holdings, Inc., pursuant to the terms of the Stock Purchase Agreement dated as of October 14, 2015 described in, and filed with, the Form 8-K filed by Blucora on October 14, 2015. In that Form 8-K, Blucora stated that it would file the required historical and pro forma financial information by amendment, and this Form 8-K/A is being filed to provide that financial information.
HDV Holdings, Inc. is the holding company for the group of companies that comprise the HD Vest Financial Services® business (“HD Vest”), a provider of wealth management solutions for financial advisors. HD Vest generates revenue primarily through commissions, quarterly investment advisory fees based on assets under management, and other fees.
Blucora acquired HD Vest for $611.9 million, which is subject to a final working capital adjustment in the first quarter of 2016. In connection with the acquisition, certain members of HD Vest management rolled over a portion of the proceeds they would have otherwise received at the closing into shares of the acquisition subsidiary through which Blucora consummated the purchase of HD Vest. A portion of those shares were sold to Blucora in exchange for a promissory note. After giving effect to the rollover shares and related purchase of the rollover shares for the promissory note, Blucora indirectly owns 95.52% of HDV Holdings, Inc., with the remaining 4.48% non-controlling interest held collectively by the rollover management members and subject to put and call arrangements exercisable beginning in 2019.
Item 9.01    FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired
The unaudited financial statements for HDV Holdings, Inc. as of and for the nine months ended September 30, 2015 and 2014 and the audited financial statements as of and for the years ended December 31, 2014, 2013, and 2012 are attached hereto as Exhibits 99.2, 99.3, and 99.4 and are incorporated by reference herein.
(b) Pro forma financial information
The following unaudited pro forma condensed combined consolidated financial statements of Blucora consist of (i) pro forma condensed combined consolidated statements of operations for the year ended December 31, 2014 and for the nine months ended September 30, 2015, (ii) a pro forma condensed combined consolidated balance sheet as of September 30, 2015, and (iii) accompanying notes, giving effect to Blucora's acquisition of HD Vest on December 31, 2015 (collectively, the “Unaudited Pro Forma Condensed Combined Consolidated Financial Statements”). The unaudited pro forma condensed combined consolidated statements of operations are presented as if Blucora's acquisition of HD Vest occurred on January 1, 2014, and the unaudited pro forma condensed combined consolidated balance sheet is presented as if Blucora's acquisition of HD Vest occurred on September 30, 2015. As part of Blucora's October 14, 2015 announcement of the acquisition of HD Vest, Blucora stated its plans to divest the Search and Content and E-Commerce businesses in order to focus on the technology-enabled financial solutions market. As a result, Blucora classified the Search and Content and E-Commerce businesses as discontinued operations effective with the fourth quarter of 2015. Pro forma consolidated financial results for Blucora excluding the Search and Content and E-Commerce businesses can be found in the Supplemental Information filed as Exhibit 99.2 to the Form 8-K filed by Blucora on February 11, 2016.
The Unaudited Pro Forma Condensed Combined Consolidated Financial Statements are provided for informational purposes only and do not purport to reflect the results of operations that would have existed or occurred had such transaction taken place on the dates indicated, nor do they purport to reflect the financial condition or results of operations that will exist or occur in the future. The Unaudited Pro Forma Condensed Combined Consolidated Financial Statements should be read in conjunction with (i) Blucora’s unaudited historical consolidated financial statements and the notes thereto, included in its Quarterly Report on Form 10-Q for the period ended September 30, 2015 and its audited Annual Report on Form 10-K for the year ended December 31, 2014, as well as (ii) HD Vest’s historical unaudited consolidated financial statements for the nine months ended September 30, 2015 and 2014 and its audited consolidated financial statements for the years ended December 31, 2014, 2013, and 2012 and the notes thereto, included in Exhibits 99.2, 99.3, and 99.4 of this Form 8-K/A.
Blucora acquired HD Vest for $611.9 million, which is subject to a final working capital adjustment in the first quarter of 2016. As described under Item 2.01 above, Blucora indirectly owns 95.52% of HDV Holdings, Inc., with the remaining 4.48% non-controlling interest held collectively by the rollover management members and subject to put and call arrangements exercisable beginning in 2019. The acquisition was funded by a combination of cash on hand and a new credit facility, under which Blucora borrowed $400.0 million. The Unaudited Pro Forma Condensed Combined Consolidated Financial Statements

2

present the acquisition of HD Vest under the acquisition method of accounting, which reflects the allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The Unaudited Pro Forma Condensed Combined Consolidated Financial Statements reflect the purchase price allocation based on Blucora’s best estimate of the fair value of the assets acquired and liabilities assumed.

3

BLUCORA, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2015
(In thousands)
 
Blucora
 
HD Vest
 
Presentation Adjustments (Note 3)
 
Pro Forma
Adjustments (Note 4)
 
Pro Forma
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
59,638

 
$
33,363

 
$
—

 
$
—

 
$
93,001

Cash segregated under federal or other regulations
—

 
845

 
—

 
—

 
845

Available-for-sale investments
232,705

 
—

 
—

 
(232,230
)
(1) 
475

Accounts receivable, net
23,157

 
4,650

 
—

 
—

 
27,807

Taxes receivable
—

 
1,120

 
(1,120
)
(A) 
—

 
—

Commissions and advisory fees receivable
—

 
15,586

 
—

 
—

 
15,586

Other receivables
1,230

 
—

 
1,120

(A) 
20,062

(2) (3) 
22,412

Inventories
33,673

 
—

 
—

 
—

 
33,673

Prepaid expenses and other current assets, net
10,768

 
1,926

 
—

 
(217
)
(3) (6) 
12,477

Total current assets
361,171

 
57,490

 
—

 
(212,385
)
 
206,276

Long-term assets:
 
 
 
 
 
 
 
 
 
Property and equipment at cost, net
15,089

 
5,998

 
—

 
—

 
21,087

Goodwill and intangible assets, net
—

 
173,826

 
(173,826
)
(B) 
—

 
—

Goodwill, net
308,827

 
—

 
93,220

(B) 
295,906

(4) 
697,953

Other intangible assets, net
147,253

 
—

 
80,606

(B) 
243,094

(5) 
470,953

Deferred financing costs
—

 
2,392

 
(2,392
)
(C) 
—

 
—

Other long-term assets, net
4,134

 
508

 
2,392

(C) 
(1,870
)
(6) 
5,164

Total long-term assets
475,303

 
182,724

 
—

 
537,130

 
1,195,157

Total assets
$
836,474

 
$
240,214

 
$
—

 
$
324,745

 
$
1,401,433

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$
33,570

 
$
—

 
$
1,429

(D)(E) 
$
—

 
$
34,999

Accounts payable and other current liabilities
—

 
3,536

 
(3,536
)
(D) 
—

 
—

Commissions and advisory fees payable
—

 
15,576

 
—

 
—

 
15,576

Amounts due on clearing transactions
 
 
845

 
(845
)
(E) 
—

 
—

Accrued expenses and other current liabilities
18,918

 
—

 
2,952

(D) 
8,893

(7) 
30,763

Deferred revenue
6,563

 
5,183

 
—

 
—

 
11,746

Current portion of long-term debt, net
—

 
—

 
—

 
31,631

(8) 
31,631

Total current liabilities
59,051

 
25,140

 
—

 
40,524

 
124,715

Long-term liabilities:
 
 
 
 
 
 
 
 
 
Long-term debt, net
30,000

 
231,200

 
—

 
122,650

(8) 
383,850

Convertible senior notes, net
188,050

 
—

 
—

 
—

 
188,050

Deferred tax liability, net
15,024

 
19,170

 
—

 
121,234

(9) 
155,428

Deferred revenue
2,382

 
—

 
—

 
—

 
2,382

Other long-term liabilities
6,225

 
3,572

 
—

 
(3,570
)
(10) 
6,227

Total long-term liabilities
241,681

 
253,942

 
—

 
240,314

 
735,937

Total liabilities
300,732

 
279,082

 
—

 
280,838

 
860,652

 
 
 
 
 
 
 
 
 
 
Redeemable non-controlling interests
—

 
—

 
—

 
15,038

(11) 
15,038

 
 
 
 
 
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
 
 
 
 
Common stock
4

 
—

 
—

 
—

 
4

Additional paid-in capital
1,506,593

 
93,593

 
—

 
(93,593
)
(12) 
1,506,593

Accumulated deficit
(970,784
)
 
(132,461
)
 
—

 
132,461

(12) 
(970,784
)
 
 
 
 
 
—

 
(9,999
)
(12) 
(9,999
)
Accumulated other comprehensive income (loss)
(71
)
 
—

 
—

 
—

 
(71
)
Total stockholders’ equity
535,742

 
(38,868
)
 
—

 
28,869

 
525,743

Total liabilities and stockholders’ equity
$
836,474

 
$
240,214

 
$
—

 
$
324,745

 
$
1,401,433

See accompanying notes to Unaudited Pro Forma Condensed Combined Consolidated Financial Statements.


4

BLUCORA, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2015
(In thousands, except per share data)
 
Blucora
 
HD Vest
 
Presentation
Adjustments (Note 3)
 
Pro Forma
Adjustments (Note 4)
 
Pro Forma
Revenues:
 
 
 
 
 
 
 
 
 
Services revenue
$
268,819

 
$
237,606

 
$
—

 
$
—

 
$
506,425

Product revenue, net
109,764

 
—

 
—

 
—

 
109,764

Total revenues
378,583

 
237,606

 
—

 
—

 
616,189

Operating expenses:
 
 
 
 
 
 
 
 
 
Cost of revenues:
 
 
 
 
 
 
 
 
 
Services cost of revenue
94,204

 
—

 
163,469

(F) 
—

 
257,673

Product cost of revenue
77,878

 
—

 
—

 
—

 
77,878

Total cost of revenues
172,082

 
—

 
163,469

 
—

 
335,551

Operating expenses
 
 
212,905

 
(212,905
)
 
 
 
—

Engineering and technology
15,803

 
—

 
7,026

(F) 
602

(13) 
23,431

Sales and marketing
98,416

 
—

 
26,958

(F) 
863

(13) 
126,237

General and administrative
33,936

 
—

 
12,477

(F) 
(3,802
)
(13) (14) 
42,611

Depreciation and amortization
—

 
6,052

 
(6,052
)
(G) 
—

 
—

Depreciation
3,540

 
—

 
4,269

(G) 
—

 
7,809

Amortization of intangible assets
17,585

 
—

 
1,783

(G) 
11,142

(15) 
30,510

Total operating expenses
341,362

 
218,957

 
(2,975
)
 
8,805

 
566,149

Operating income (loss)
37,221

 
18,649

 
2,975

 
(8,805
)
 
50,040

Other loss, net
(11,578
)
 
(11,574
)
 
(2,975
)
(F) 
(9,034
)
(16) (17) 
(35,161
)
Income (loss) before income taxes
25,643

 
7,075

 
—

 
(17,839
)
 
14,879

Income tax benefit (expense)
(8,903
)
 
(2,639
)
 
—

 
5,814

(18) 
(5,728
)
Net income (loss)
16,740

 
4,436

 
—

 
(12,025
)
 
9,151

Net income attributable to non-controlling interests
—

 
—

 
—

 
(247
)
(19) 
(247
)
Net income (loss) attributable to Blucora, Inc.
$
16,740

 
$
4,436

 
$
—

 
$
(12,272
)
 
$
8,904

Net income per share attributable to Blucora, Inc.:
 
 
 
 
 
 
 
 
 
Basic
$
0.41

 
 
 
 
 
 
 
$
0.22

Diluted
$
0.40

 
 
 
 
 
 
 
$
0.21

Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
40,952

 
 
 
 
 
 
 
40,952

Diluted
41,911

 
 
 
 
 
 
 
41,911

See accompanying notes to Unaudited Pro Forma Condensed Combined Consolidated Financial Statements.

5

BLUCORA, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 2014
(In thousands, except per share data)
 
Blucora
 
HD Vest
 
Presentation
Adjustments (Note 3)
 
Pro Forma
Adjustments (Note 4)
 
Pro Forma
Revenues:
 
 
 
 
 
 
 
 
 
Services revenue
$
429,989

 
$
304,854

 
$
—

 
$
—

 
$
734,843

Product revenue, net
150,731

 
—

 
—

 
—

 
150,731

Total revenues
580,720

 
304,854

 
—

 
—

 
885,574

Operating expenses:
 
 
 
 
 
 
 
 
 
Cost of revenues:
 
 
 
 
 
 
 
 
 
Services cost of revenue
218,153

 
—

 
208,120

 
—

 
426,273

Product cost of revenue
102,344

 
—

 
—

 
—

 
102,344

Total cost of revenues
320,497

 
—

 
208,120

 
—

 
528,617

Operating expenses
 
 
266,581

 
(266,581
)
 
 
 
—

Engineering and technology
20,670

 
—

 
8,282

(F) 
828

(13) 
29,780

Sales and marketing
118,124

 
—

 
34,568

(F) 
1,185

(13) 
153,877

General and administrative
39,120

 
—

 
14,914

(F) 
2,793

(13) (14) 
56,827

Depreciation and amortization
 
 
7,970

 
(7,970
)
(G) 
—

 
—

Depreciation
4,352

 
—

 
5,970

(G) 
—

 
10,322

Amortization of intangible assets
23,581

 
—

 
2,000

(G) 
14,578

(15) 
40,159

Impairment of goodwill and intangible assets
62,817

 
—

 
—

 
—

 
62,817

Total operating expenses
589,161

 
274,551

 
(697
)
 
19,384

 
882,399

Operating income (loss)
(8,441
)
 
30,303

 
697

 
(19,384
)
 
3,175

Other loss, net
(14,766
)
 
(12,461
)
 
(697
)
(F) 
(16,771
)
(16) (17) 
(44,695
)
Income (loss) before income taxes
(23,207
)
 
17,842

 
—

 
(36,155
)
 
(41,520
)
Income tax benefit (expense)
(12,340
)
 
(7,004
)
 
—

 
35,329

(18) 
15,985

Net income (loss)
(35,547
)
 
10,838

 
—

 
(826
)
 
(25,535
)
Net income attributable to non-controlling interests
—

 
—

 
—

 
(317
)
(19) 
(317
)
Net income (loss) attributable to Blucora, Inc.
$
(35,547
)
 
$
10,838

 
$
—

 
$
(1,143
)
 
$
(25,852
)
Net loss per share attributable to Blucora, Inc.:

 

 

 

 

Basic
$
(0.86
)
 
 
 
 
 
 
 
$
(0.62
)
Diluted
$
(0.86
)
 

 

 

 
$
(0.62
)
Weighted average shares outstanding:
 
 
 
 
 
 
 
 

Basic
41,396

 

 

 

 
41,396

Diluted
41,396

 
 
 
 
 
 
 
41,396

See accompanying notes to Unaudited Pro Forma Condensed Combined Consolidated Financial Statements.

6

BLUCORA, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Basis of Pro Forma Presentation
On December 31, 2015 and pursuant to the Purchase Agreement dated October 14, 2015, Blucora, Inc. (the “Company” or “Blucora”) acquired HD Vest for $611.9 million, which is subject to a final working capital adjustment in the first quarter of 2016. HD Vest provides wealth management solutions for financial advisors and is expected to be synergistic with TaxAct, Inc. (“TaxAct”) as a result of cross-selling opportunities and an expanded addressable market for both HD Vest and TaxAct. In connection with the acquisition, certain members of HD Vest management rolled over a portion of the proceeds they would have otherwise received at the closing into shares of the acquisition subsidiary through which Blucora consummated the purchase of HD Vest. A portion of those shares were sold to Blucora in exchange for a promissory note. After giving effect to the rollover shares and the related purchase of the rollover shares for the promissory note, Blucora indirectly owns 95.52% of HDV Holdings, Inc., with the remaining 4.48% non-controlling interest held collectively by the rollover management members and subject to put and call arrangements exercisable beginning in 2019.
The accompanying Unaudited Pro Forma Condensed Combined Consolidated Financial Statements consist of the historical statements of operations of Blucora and HD Vest for the year ended December 31, 2014 and the nine months ended September 30, 2015 and the historical balance sheets of Blucora and HD Vest as of September 30, 2015, with adjustments, as described in "Note 3: Presentation Adjustments" and "Note 4: Pro Forma Adjustments and Assumptions," to reflect Blucora's acquisition of HD Vest.
The historical results of operations and financial position of Blucora have been derived from Blucora’s consolidated financial statements as previously reported in its Annual Report on Form 10-K for the year ended December 31, 2014 and its Quarterly Report on Form 10-Q for the period ended September 30, 2015. The historical information of Blucora has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The historical operating results and financial position of HD Vest have been derived from HD Vest’s historical unaudited consolidated financial statements of earnings for the nine months ended September 30, 2015 and 2014, its unaudited consolidated balance sheet as of September 30, 2015, and its audited consolidated financial statements of earnings for the years ended December 31, 2014 , 2013, and 2012 included in Exhibits 99.2, 99.3, and 99.4 of this Form 8-K/A.
The Unaudited Pro Forma Condensed Combined Consolidated Financial Statements are presented for illustrative purposes only and are not necessarily indicative of the financial position or operating results that would have been achieved had the acquisition been completed as of the dates indicated above or the results that may be attained in the future.
Note 2: Acquisition of HD Vest
Blucora acquired HD Vest for $611.9 million, which is subject to a final working capital adjustment in the first quarter of 2016. As described in "Note 1: Basis of Pro Forma Presentation," Blucora indirectly owns 95.52% of HDV Holdings, Inc., with the remaining 4.48% non-controlling interest held collectively by the rollover management members and subject to put and call arrangements exercisable beginning in 2019.
Blucora paid $610.5 million, which was funded by a combination of cash on hand and a new credit facility (the “TaxAct - HD Vest 2015 credit facility”). The TaxAct - HD Vest 2015 credit facility consists of a $25.0 million revolving credit loan and a $400.0 million term loan for an aggregate $425.0 million credit facility. TaxAct and HD Vest borrowed $400.0 million under the term loan. The interest rate on the term loan is variable at the London Interbank Offered Rate, subject to a floor of 1.00%, plus a margin of 6.00%, payable at the end of each interest period.
The Unaudited Pro Forma Condensed Combined Consolidated Financial Statements present the acquisition of HD Vest under the acquisition method of accounting, which reflects the allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The Unaudited Pro Forma Condensed Combined Consolidated Financial Statements reflect the purchase price allocation based on Blucora’s best estimate of the fair value of the assets acquired and liabilities assumed. After giving effect to the HD Vest acquisition as if it had occurred as of September 30, 2015, the purchase price allocation and excess purchase price over net assets acquired are as follows (in thousands):


7

BLUCORA, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

Tangible assets acquired
$
77,181

Liabilities assumed
(21,845
)
Identifiable net assets acquired
$
55,336

Fair value adjustments for intangible assets:
 
Advisor relationships
$
240,300

Sponsor relationships
16,500

Curriculum
800

Proprietary technology
13,600

Trade name
52,500

Fair value of intangible assets acquired
$
323,700

Purchase price allocation:
 
Cash paid
$
610,500

Plus: promissory note
6,400

Plus: non-controlling interest
15,038

Less: escrow receivable
(20,000
)
Purchase price
611,938

Less: identifiable net assets acquired
(55,336
)
Less: fair value of intangible assets acquired
(323,700
)
Plus: deferred tax liability related to intangible assets
123,484

Excess of purchase price over net assets acquired, allocated to goodwill
$
356,386

Blucora’s estimates of the economic lives of the acquired intangible assets are 14 years for the advisor relationships, 18 years for the sponsor relationships, 4 years for the curriculum, 6 years for the proprietary technology, and the trade name is estimated to have an indefinite life. Blucora plans to amortize the definite-lived intangible assets over their respective estimated lives. The pro forma adjustments (see "Note 4: Pro Forma Adjustments and Assumptions") include the amortization of the definite-lived intangible assets over their respective useful lives.
The promissory note is with the President of HD Vest and will be paid over a three-year period. The note bears interest at a rate of 5% per year.
The Purchase Agreement dictates that Blucora place into escrow $20.0 million of additional consideration that is contingent upon HD Vest's 2015 earnings performance. The contingent consideration was not achieved; therefore, the amount has been excluded from the purchase price and recorded as a receivable for the amount that will be returned to Blucora from the escrow agent in the first half of 2016.
The purchase price in excess of the net assets acquired was allocated to goodwill. Goodwill consists largely of the increased cross-selling opportunities and expanded addressable markets for both HD Vest and TaxAct, neither of which apply for separate recognition, and is not expected to be deductible for income tax purposes. Goodwill and trade names are considered intangible assets with indefinite lives and will be tested for impairment at least annually, with Blucora’s other indefinite-lived assets.
Note 3: Presentation Adjustments
Certain adjustments were made to conform the presentation of HD Vest’s historical balance sheet and statements of earnings in a manner consistent with Blucora’s presentation. These adjustments did not impact HD Vest’s previously reported net earnings.
Presentation adjustments to the balance sheet:
(A)
To reclassify "Taxes receivable" to "Other receivables" for presentation purposes.
(B)
To reclassify the components of "Goodwill and intangible assets, net" to "Goodwill, net" and "Other intangible assets, net" for presentation purposes.
(C)
To reclassify debt issuance costs from "Deferred financing costs" to "Other long-term assets, net" for presentation purposes.

8

BLUCORA, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(D)
To reclassify the components of "Accounts payable and other current liabilities" to "Accounts payable" and "Accrued expenses and other current liabilities" for presentation purposes.
(E)
To reclassify "Amounts due on clearing transactions" to "Accounts payable" for presentation purposes.
Presentation adjustments to the statements of operations:
(F)
To reclassify "Operating expenses" into the following Blucora categories (in thousands):
 
Nine months ended
 
Year ended
 
September 30, 2015
 
December 31, 2014
Services cost of revenue
$
163,469

 
$
208,120

Engineering and technology
7,026

 
8,282

Sales and marketing
26,958

 
34,568

General and administrative
12,477

 
14,914

Other loss, net
2,975

 
697

Total
$
212,905

 
$
266,581

(G)
To reclassify the components of "Depreciation and amortization" to "Depreciation" and "Amortization of intangible assets" for presentation purposes.
Note 4: Pro forma adjustments and assumptions
The pro forma adjustments reflected in the Unaudited Pro Forma Condensed Combined Consolidated Financial Statements represent estimated values and amounts based on available information and do not reflect cost savings that management believes would have resulted had the acquisition been completed as of the dates indicated above. For purposes of this pro forma information, an estimated effective tax rate of 38.5%, which includes the U.S. federal statutory tax rate and a blended state tax rate, has been used for all periods presented. This rate is an estimate and does not take into account any possible future tax events that may result for the ongoing combined company. Had the results of HD Vest’s operations been included in Blucora’s U.S. federal consolidated return for the periods presented, Blucora would have been able to offset HD Vest’s U.S taxable income against Blucora’s net operating loss carryforwards. The unaudited pro forma condensed combined consolidated balance sheet reflects the acquisition using the acquisition method as of September 30, 2015.
Pro forma adjustments to the balance sheet:
(1)To record the cash consideration transferred to former HD Vest shareholders, net of cash raised through the TaxAct - HD Vest 2015 credit facility, as follows (in thousands):
Cash paid
$
(610,500
)
Net cash raised through TaxAct - HD Vest 2015 credit facility
378,270

Total
$
(232,230
)
(2)
To record the $20.0 million escrow receivable.
(3)
To reclassify prepaid insurance to an insurance receivable for a refund due upon HD Vest insurance policy cancellation.
(4)
To record goodwill recognized, less goodwill on the HD Vest balance sheet.
(5)To record the fair value of identifiable intangible assets recognized, less identifiable intangible assets on the HD Vest balance sheet, as follows (in thousands):
Advisor relationships
$
240,300

Sponsor relationships
16,500

Curriculum
800

Proprietary technology
13,600

Trade name
52,500

Fair value of intangible assets acquired
323,700

Less: intangible assets on acquiree balance sheet
(80,606
)
Total
$
243,094


9

BLUCORA, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(6)
To record debt issue-related costs, which include costs on the TaxAct - HD Vest 2015 credit facility less costs on TaxAct and HD Vest debt facilities that were written off when both facilities were closed upon acquisition.
(7)
To record (a) non-recurring transaction costs incurred by the Company in connection with the acquisition and (b) the write-off of accrued interest and rating agency fees related to HD Vest debt that was paid upon acquisition.
(8)
To record the net carrying value of the TaxAct - HD Vest 2015 credit facility and the promissory note, less HD Vest debt that was paid upon acquisition, as follows (in thousands):
 
Current
 
Long-term
 
Total
TaxAct - HD Vest 2015 credit facility, net carrying value
$
28,431

 
$
350,650

 
$
379,081

Promissory note
3,200

 
3,200

 
6,400

Less: debt paid upon acquisition
—

 
(231,200
)
 
(231,200
)
Total
$
31,631

 
$
122,650

 
$
154,281

(9)
To record an adjustment to deferred tax liabilities upon acquisition.
(10)
To write-off HD Vest's deferred rent upon acquisition.
(11)
To record the redeemable non-controlling interests for the 4.48% interest held by the rollover management members.
(12)
To record the elimination of HD Vest’s historical stockholders’ equity.
Pro forma adjustments to the statements of operations:
(13)
To record estimated stock-based compensation expense as if the acquisition had occurred on January 1, 2014.
(14)
To eliminate acquisition-related transaction costs of $4.6 million and $1.3 million that were incurred by HD Vest and Blucora, respectively, during the nine months ended September 30, 2015, and $0.1 million that were incurred by HD Vest during the year ended December 31, 2014.
(15)
To record the difference between amortization expense related to the intangible assets acquired and HD Vest's historical amortization expense.
(16)
To record the elimination of management fees paid to the former HD Vest shareholders.
(17)
To record interest expense, which includes interest expense on the TaxAct - HD Vest 2015 credit facility less interest expense on HD Vest debt that was paid upon acquisition.
(18)
To apply the estimated effective tax rate to the combined consolidated results of operations.
(19)
To record the net income attributable to non-controlling interests based on HD Vest's pro forma net income multiplied by the 4.48% interest held by the rollover management members.


10

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 
 
BLUCORA, INC.
 
 
 
 
By:
/s/ Eric M. Emans
 
 
Eric M. Emans
 
 
Chief Financial Officer
 
 
March 17, 2016

11

EXHIBIT INDEX
Exhibit No
 
Description
 
 

23.1
 
Consent of Independent Auditors
99.1
*
Press release issued on October 14, 2015
99.2
 
HDV Holdings, Inc.'s Unaudited Consolidated Financial Statements as of September 30, 2015 and for the nine months ended September 30, 2015 and 2014
99.3
 
HDV Holdings, Inc.'s Audited Consolidated Financial Statements as of and for the years ended December 31, 2014 and 2013
99.4
 
HDV Holdings, Inc.'s Audited Consolidated Financial Statements as of and for the years ended December 31, 2013 and 2012
 
*
Previously filed

12