Exhibit 99.1
Internet Capital Group Announces Financial Results for Third Quarter 2004;
Net Loss, Excluding Unusual Items, Decreases by 36%
WAYNE, Pa.--(BUSINESS WIRE)--Nov. 4, 2004--Internet Capital Group,
Inc. (Nasdaq:ICGE) today reported its results for the third quarter
ended September 30, 2004.
"With a sound balance sheet and ample cash, the team further
heightened its focus on driving partner company performance this
quarter," said Walter Buckley, ICG's Chairman and Chief Executive
Officer. "We are encouraged by the growing sales pipelines at many of
our Core companies, as well as significant new customer signings this
quarter, such as those at both ICG Commerce and LinkShare."
ICG Financial Results
Consolidated net loss for the third quarter of 2004 was $(7.1)
million, compared with $(35.7) million in the prior year. Unusual
items reported in the third quarter 2004 results totaled a net gain of
$1.8 million mostly related to asset dispositions offset by impairment
charges. The prior year quarter was impacted by $21.7 million in net
charges principally related to debt-for-equity exchanges offset by a
restructuring reserve reversal and other gains. Excluding unusual
items, net loss for the third quarter of 2004 was $(8.9) million
versus $(14.0) million for the 2003 period, a reduction of 36%.
ICG reported consolidated revenue of $12.7 million and a net loss
of $(7.1) million, or $(0.19) per share, for the third quarter of
2004. Consolidated revenue was $16.0 million and net loss was $(35.7)
million, or $(2.48) per share, for the comparable 2003 period. The
decrease in revenue is primarily due to the loss of a significant
customer at the end of 2003.
ICG has ownership interests in ten private companies that are
classified as Core companies. Two of these companies are consolidated,
ICG Commerce and CommerceQuest. The other eight companies are
accounted for under the equity method and include CreditTrade,
eCredit.com, Freeborders, GoIndustry, Investor Force, LinkShare,
Marketron and StarCite. During the quarter, we increased our ownership
in StarCite from 28% to 37%. The comparative operating results of the
ten Core companies, based on ICG's current accounting methods for
their results, are summarized below:
Three months ended September 30,
(in thousands)
---------------------------------------------------------
2004 2003
---------------------------- ----------------------------
Consolidated Equity Consolidated Equity
-------------- ------------- -------------- -------------
Revenue $ 12,732 $ 41,586 $ 16,034 $ 35,655
EBITDA (a) (1,918) (914) (876) (5,029)
Net loss (2,805) (4,859) (2,536) (9,593)
(a) EBITDA represents earnings/(losses) before interest, tax,
depreciation, and amortization of intangibles. A reconciliation of
EBITDA to GAAP net income is included as an attachment to this
release.
ICG's corporate cash and short-term investment balance at
September 30, 2004 was $67.2 million and the value of its marketable
securities was $53.8 million.
ICG will host a webcast at 10:00 am ET today to discuss results.
As part of the live webcast for this call, ICG will post a slide
presentation to accompany the prepared remarks. To access the webcast,
go to http://www.internetcapital.com/investors/presentations and click
on the link for the third quarter conference call webcast. Please log
on to the website approximately ten minutes prior to the call to
register and download and install any necessary audio software. The
conference call is also accessible through listen-only mode at
877-211-0292. The international dial in number is 706-679-0702. The
pass code to the call is "Third Quarter Earnings."
For those unable to participate in the conference call, a replay
will be available beginning November 4, 2004 at 11:00 am until
November 15, 2004 at 11:59 pm. To access the replay, dial 800-642-1687
(domestic) or 706-645-9291 (international). The access code is
1823188. The replay and slide presentation can also be accessed on the
Internet Capital Group web site at
http://www.internetcapital.com/investors/presentations.
About Internet Capital Group
Internet Capital Group (www.internetcapital.com) is an e-business
applications holding company that builds, acquires, and owns software
and services businesses that leverage the Internet to help
organizations operate more productively. Founded in 1996, ICG devotes
its expertise and capital to maximizing the success of e-business
companies that take advantage of the evolution to the Internet in key
business sectors.
Safe Harbor Statement under Private Securities Litigation Reform
Act of 1995
The statements contained in this press release that are not
historical facts are forward-looking statements that involve certain
risks and uncertainties including but not limited to risks associated
with the uncertainty of future performance of our partner companies,
acquisitions or dispositions of interests in additional partner
companies, the effect of economic conditions generally, capital
spending by customers and development of the e-commerce and
information technology markets, and uncertainties detailed in the
Company's filings with the Securities and Exchange Commission. These
and other factors may cause actual results to differ materially from
those projected.
Internet Capital Group, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Revenue $ 12,732 $ 16,034 $ 37,397 $ 53,510
Operating Expenses
Cost of revenue 6,928 9,261 21,078 32,235
Selling, general and
administrative 9,521 9,770 26,918 38,190
Research and
development 2,351 2,536 7,342 11,830
Amortization of
intangibles 689 1,134 2,183 4,410
Impairment related and
other 20 (7,030) 666 (3,133)
--------------------- ---------------------
Total operating
expenses 19,509 15,671 58,187 83,532
--------------------- ---------------------
(6,777) 363 (20,790) (30,022)
Other income (loss), net 1,792 (28,612) (108,604) (25,251)
Interest income 366 257 937 1,071
Interest expense (855) (4,217) (4,058) (13,293)
--------------------- ---------------------
Loss before minority
interest and equity loss (5,474) (32,209) (132,515) (67,495)
Minority interest 210 (33) 1,413 2,445
Equity loss (1,845) (2,704) (4,655) (12,771)
--------------------- ---------------------
Loss from continuing
operations (7,109) (34,946) (135,757) (77,821)
Income (loss) on
discontinued operations - (744) 3,000 (1,642)
--------------------- ---------------------
Net loss $ (7,109) $ (35,690) $(132,757) $ (79,463)
===================== =====================
Basic and diluted loss per
share:
Loss from continuing
operations $ (0.19) $ (2.43) $ (3.85) $ (5.64)
Discontinued operations - (0.05) 0.09 (0.12)
--------------------- ---------------------
$ (0.19) $ (2.48) $ (3.76) $ (5.76)
===================== =====================
Shares used in computation
of basic and diluted
loss per share 37,003 14,389 35,282 13,795
===================== =====================
Internet Capital Group, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
September 30, December 31,
2004 2003
------------- -------------
ASSETS
Cash, cash equivalents and short-term
investments $ 88,114 $ 79,409
Other current assets 25,040 32,030
------------- -------------
Total current assets 113,154 111,439
Marketable securities 53,820 6,714
Fixed assets, net 2,269 2,368
Ownership interests in Partner
Companies 54,598 52,467
Goodwill 45,196 45,196
Intangibles, net 5,152 6,452
Other assets 7,447 6,527
------------- -------------
Total Assets $ 281,636 $ 231,163
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current maturities of convertible
subordinated notes $ - $ 173,919
Other current liabilities 41,462 61,999
------------- -------------
Total current liabilities 41,462 235,918
Senior convertible notes 60,000 -
Minority interest and other liabilities 11,867 14,539
------------- -------------
Total Liabilities 113,329 250,457
Stockholders' equity (deficit) 168,307 (19,294)
------------- -------------
Total Liabilities and Stockholders'
Equity (Deficit) $ 281,636 $ 231,163
============= =============
Internet Capital Group
- ----------------------------------------------------------------------
Q3 2004 Supplemental Analysis ($ in thousands, except per share data)
Three Months Ended
September 30,
--------------------
2004 2003
--------- ----------
ICG Corporate Cash, cash equivalents and
short-term investments $ 67,183 $ 56,470
--------- ----------
ICG Corporate Marketable Securities
September 30, 2004
-------------------------
Shares held Market Price
----------- -------------
Blackboard, Inc. 2,923,777 $ 17.16 $ 50,172 $ -
Verticalnet, Inc. 2,917,794 $ 1.19 $ 3,472 $ 3,531
Other $ 176 $ 3,633
--------- ----------
$ 53,820 $ 7,164 (1)
--------- ----------
ICG Corporate Debt $(60,000) $(223,189)
--------- ----------
Partner Company Information:
Consolidated Core Companies
(Ownership %):
Revenue $ 12,732 $ 16,034
Expenses other
- ---------------------------- than interest,
CommerceQuest, Inc. (87%) taxes,
ICG Commerce Holdings, depreciation and
Inc. (76%) amortization (14,650) (16,910)
- ---------------------------- --------- ----------
EBITDA (1,918) (876)
Interest 70 (138)
Taxes (1) (11)
Depreciation/
Amortization (956) (1,511)
--------- ----------
Net loss $ (2,805) $ (2,536)
--------- ----------
ICG's Share $ (2,595) $ (2,569)
Equity Method Core Companies
(Ownership %):
Revenue $ 41,586 $ 35,655
Expenses other
- ---------------------------- than interest,
CreditTrade Inc. (30%) taxes,
eCredit.com, Inc. (32%) depreciation and
Freeborders, Inc. (48%) amortization (42,500) (40,684)
GoIndustry AG (54%) --------- ----------
Investor Force Holdings, EBITDA $ (914) $ (5,029)
Inc. (38%) Interest (300) (392)
LinkShare Corporation (40%) Taxes (738) (1,187)
Marketron International, Depreciation/
Inc. (38%) Amortization (2,907) (2,985)
StarCite, Inc. (37%) --------- ----------
- ---------------------------- Net loss $ (4,859) $ (9,593)
--------- ----------
ICG's Share $ (1,690) $ (1,088)
Equity Method Emerging
Companies (Ownership %):
Revenue $ 5,018 $ 5,131
Expenses other
- ---------------------------- than interest,
Agribuys, Inc. (26%) taxes,
ComputerJobs.com, Inc. (46%) depreciation and
Co-nect Inc. (36%) amortization (7,547) (7,643)
Syncra Systems, Inc. (31%) --------- ----------
- ---------------------------- EBITDA $ (2,529) $ (2,512)
Interest (457) (809)
Taxes - -
Depreciation/
Amortization (826) (691)
--------- ----------
Net loss $ (3,812) $ (4,012)
--------- ----------
ICG's Share $ (155) $ (652)
Other Cost Method Companies
(Ownership %):
Balance Sheet
Carrying Value $ 7,916 $ 9,723
--------- ----------
- ----------------------------
Anthem/CIC Ventures Fund
LP (9%)
Arbinet - thexchange
Inc. (3%)
Axxis, Inc. (9%)
Captive Capital
Corporation (5%)
ClearCommerce
Corporation (11%)
Emptoris, Inc. (7%)
Entegrity Solutions
Corporation (2%)
Jamcracker, Inc. (2%)
Mobility Technologies,
Inc. (3%)
Tibersoft Corporation (5%)
- ----------------------------
Reconciliation to GAAP results
- ----------------------------------------------------------------------
Three Months Ended
September 30,
--------------------
2004 2003
--------- ----------
ICG's share of results of:
Core consolidated companies $ (2,595) $ (2,569)
Core equity method companies (1,690) (1,088)
Emerging equity method companies (155) (652)
Public equity method companies - (830)
Disposed equity method companies - (134)
--------- ----------
(4,440) (5,273)
--------- ----------
Corporate general and administrative (3,863) (3,628)
Corporate interest, net (559) (3,822)
Other income(loss)/restructuring/impairments 1,753 (22,223)
Income (loss) on discontinued operations - (744)
--------- ----------
Consolidated net loss $ (7,109) $ (35,690)
========= ==========
- ----------------------------------------------------------------------
(1) As of September 30, 2003, the total value of our publicly traded
partner companies, eMerge Interactive, Inc., Onvia, Inc.,
Universal Access Global Holdings Inc. and Verticalnet, Inc. was
$20.6 million.
INTERNET CAPITAL GROUP, INC.
September 30, 2004
Description of Terms for Consolidated Statements of Operations and
Supplemental Information - Consolidated Statements of Operations
Consolidated Statements of Operations
Effect of Various Accounting Methods on our Results of Operations
The various interests that the Company acquires in its partner
companies are accounted for under three methods: consolidation, equity
method and cost method. The effect of a partner company's net results
of operations on the Company's net results of operations is generally
the same under either the consolidation method of accounting or the
equity method of accounting, because under each of these methods only
our share of the earnings or losses of a partner company is reflected
in its net results of operations in the Consolidated Statements of
Operations. The applicable accounting method is generally determined
based on the Company's voting interest in a partner company.
Consolidation. Partner companies in which the Company directly or
indirectly possesses voting control or those where the Company has
effective control, and for which other shareholders do not possess the
right to participate in significant management decisions are generally
accounted for under the consolidation method of accounting. Under this
method, a partner company's accounts (revenue, cost of revenue,
selling, general and administrative, research and development,
impairment related and other, amortization of intangibles, other
income (loss) and interest income/expense) are reflected within the
Company's Consolidated Statements of Operations. Participation of
other partner company stockholders in the earnings or losses of a
consolidated partner company is reflected in the caption "Minority
interest" in the Company's Consolidated Statements of Operations.
Minority interest adjusts the Company's consolidated net results of
operations to reflect only its share of the earnings or losses of the
consolidated partner company. As of September 30, 2004, the Company
accounted for 2 of its partner companies under this method.
Equity Method. Partner companies whose results the Company does
not consolidate, but over whom it exercises significant influence, are
generally accounted for under the equity method of accounting. Whether
or not the Company exercises significant influence with respect to a
partner company depends on an evaluation of several factors including,
among others, representation on the partner company's board of
directors and ownership level, which is generally a 20% to 50%
interest in the voting securities of the partner company, including
voting rights associated with the Company's holdings in common,
preferred and other convertible instruments in the partner company.
Under the equity method of accounting, a partner company's accounts
are not reflected within the Company's Consolidated Statements of
Operations; however, its share of the earnings or losses of the
partner company is reflected in the caption "Equity Loss" in the
Consolidated Statements of Operations. As of September 30, 2004, the
Company accounted for 12 of its partner companies under this method.
Cost Method. Partner companies not accounted for under either the
consolidation or the equity method of accounting are accounted for
under the cost method of accounting. Under this method, the Company's
share of the earnings or losses of these companies is not included in
the Company's Consolidated Statements of Operations. As of September
30, 2004, the Company accounted for 13 of its partner companies under
this method.
Supplemental Information - Consolidated Statements of Operations
ICG's share of net loss of Core, Emerging and disposed Partner
Companies
Represents ICG's share of the net loss of Core, Emerging and
disposed Partner Companies accounted for under the consolidated and
equity method of accounting.
Discontinued Operations
During the three months ended December 31, 2003, one of the
Company's consolidated Partner Companies, OneCoast Network, disposed
of substantially all of its assets. Accordingly, the operating results
of this discontinued operation have been presented separately from
continuing operations.
During the three months ended December 31, 2002, two of the
Company's consolidated Partner Companies, Delphion and Logistics,
disposed of substantially all of their assets. Accordingly, the
operating results of these two discontinued operations have been
presented separately from continuing operations. During the three
months ended June 30, 2004, the Company received $3.0 million in cash
proceeds from the release of a Delphion escrow. This amount has been
reflected as income from discontinued operations.
Corporate Expenses and Interest Expense, net
General and administrative expenses consist of payroll and related
expenses for executive, operational, acquisitions, finance and
administrative personnel, professional fees and other general
corporate expenses for Internet Capital Group. Stock-based
compensation is included and primarily consists of non-cash charges
related to certain compensation arrangements. The three months ended
September 30, 2003 includes a gain of approximately $7.0 relating to
the reversal of a restructuring reserve accrual settled for less than
the original estimate.
Interest expense relates primarily to the interest expense on the
Company's outstanding 5% senior convertible notes due April 2009 and
redeemed 5.5 % convertible notes.
Debt for equity exchange expense
During the three months ended March 31, 2004 and the three months
ended September 30, 2003, the Company, in a number of transactions,
exchanged a portion of its 5.5 % convertible notes in exchange for
shares of common stock. Under Statement of Financial Accounting
Standards No. 84, "Induced Conversions of Convertible Debt", the
Company is required to record a non-cash accounting expense equal to
the fair value of shares issued in excess of the fair value of shares
issuable pursuant to the original conversion terms. Such expense is
calculated as follows:
Q1 '04 Q3 '03
----------- -----------
(in millions)
Bonds repurchased $ 134.8 $ 47.9
----------- -----------
Shares issued for debt exchanges 15.9 2.9
----------- -----------
Fair value of shares issued $ 133.3 $ 30.8
Fair value of shares issuable -original terms $ (0.4) $ (0.2)
Accrued interest $ (0.8) $ (0.5)
Debt issue costs expensed $ 0.5 $ 0.2
----------- -----------
Net expense recorded $ 132.6 $ 30.3
=========== ===========
Other income (loss)
Other income (loss), net for the three months ended September 30,
2004 consists primarily of gains of $3.4 million related to the sale
of marketable securities and $0.4 million of gains related to prior
Partner Company dispositions offset by losses of $1.3 million related
to an other than temporary impairment charge on its marketable
securities, $0.3 million related to the Company's Partner Company
warrants accounted for in accordance with SFAS 133 and $0.4 million
related to an impairment charge on a cost method Partner Company.
Other income (loss), net for the three months ended September 30,
2003 consists primarily of the aforementioned loss on the debt for
equity exchanges of $30.3 million offset by $1.6 million in gains
primarily related to prior Partner Company dispositions.
CONTACT: Internet Capital Group, Inc.
Investor Inquiries:
Karen Greene, 610-727-6900
IR@internetcapital.com