Exhibit 99.1
Internet Capital Group Announces Second Quarter Financial Results
WAYNE, Pa.--(BUSINESS WIRE)--Aug. 2, 2007--Internet Capital Group,
Inc. (Nasdaq:ICGE) today reported its results for the second quarter
ended June 30, 2007.
Highlights:
-- Aggregate core company revenue grew 27% from the comparable
2006 period;
-- Sold Marketron, realizing $36.7 million in proceeds, $4.8
million of which is held in escrow;
-- ICG Commerce increased backlog by $49 million through new and
extended agreements; and
-- Subsequent to quarter end, Metastorm announced the acquisition
of Proforma Corporation.
"During the quarter, our partner companies continued to
demonstrate solid growth," said Walter Buckley, ICG's chairman and
CEO. "This growth, combined with the M&A activity at a number of our
companies, reflects our progress in building value within the core
group, with the ultimate goal of capturing value for our shareholders.
To that end, the monetization of Marketron was an important milestone
in realizing our monetization goals for 2007."
ICG Financial Results
ICG consolidated the results of two partner companies, ICG
Commerce and Investor Force, for the three and six months ended June
30, 2007, versus the results of three partner companies, ICG Commerce,
Investor Force and StarCite, for the three and six months ended June
30, 2006.
ICG reported consolidated revenue of $12.5 million for the second
quarter of 2007, versus $16.0 million for the comparable 2006 period.
ICG reported consolidated revenue of $24.3 million for the six months
ended June 30, 2007, versus $31.2 million for the comparable 2006
period.
ICG reported a net loss of $(4.0) million, or $(0.11) per share,
for the second quarter of 2007, versus a net loss of $(7.8) million,
or $(0.21) per share, for the comparable 2006 period. Results for the
second quarter of 2007 include $4.0 million in net gains, driven
primarily by an $8.2 million gain related to the sale of Marketron,
offset by charges of $6.0 million related to hedges associated with a
portion of our Blackboard (Nasdaq: BBBB) holdings. Results for the
second quarter of 2006 include $(0.3) million in net charges primarily
related to a loss on debt repurchases offset by other gains and an
income tax benefit. ICG reported a net loss of $(23.6) million, or
$(0.63) per share, for the six months ended June 30, 2007, versus a
net loss of $(12.7) million, or $(0.34) per share, for the prior year
period.
As of June 30, 2007, ICG's corporate cash balance was $85.4
million and the value of its holdings in Blackboard was $85.0 million,
net of $7.1 million in hedge positions. The value of its holdings in
GoIndustry (LSE.AIM: GOI) was $29.2 million.
ICG Core Partner Company Information
Recently, Marketron was sold and Metastorm announced the
acquisition of Proforma Corporation. To aid in the comparability of
the ICG core company information, ICG is presenting pro forma
financial information assuming those events occurred on January 1,
2006. Set forth below is pro forma information relating to ICG's eight
core companies: Channel Intelligence, Freeborders, ICG Commerce,
Investor Force, Metastorm, StarCite, Vcommerce and WhiteFence. Our
average ownership position in these eight companies was 45% at June
30, 2007. Please refer to the supplemental financial data at the end
of this release for a reconciliation of such amounts to the nearest
comparable GAAP measures.
In the second quarter of 2007, aggregate pro forma revenue of
ICG's eight core companies grew 27% year-over-year, to $57.1 million
from $44.8 million in the second quarter of 2006. Aggregate pro forma
EBITDA (loss) for the core companies was $(3.9) million in the second
quarter of 2007, versus $(8.4) million in the second quarter of 2006.
In the first half of 2007, aggregate pro forma revenue of ICG's eight
core companies grew 29% year-over-year, to $110.9 million from $86.0
million in the first half of 2006. Aggregate pro forma EBITDA (loss)
for the core companies improved to $(8.2) million in the first half of
2007 from $(15.8) million in the first half of 2006.
"Based on the momentum we are seeing at our core companies, we
would expect our full year revenue growth for 2007 to be in line with
the revenue growth we have experienced in the first half of 2007,"
said R. Kirk Morgan, CFO at ICG.
ICG will host a webcast at 10:00 a.m. ET today to discuss its
financial 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/investorinfo-preswebcast.htm and click
on the link for the second 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
877-407-8035. The international dial-in number is 201-689-8035.
For those unable to participate in the conference call, a replay
will be available from August 2, 2007 at 11:00 a.m. ET until August
12, 2007 at 11:59 p.m. ET. To access the replay, dial 877-660-6853
(domestic) or 201-612-7415 (international) and enter the account code
286, followed by the conference ID number 248303. The replay and slide
presentation also can be accessed on the Internet Capital Group web
site at http://www.internetcapital.com/investorinfo-preswebcast.htm.
About Internet Capital Group
Internet Capital Group (www.internetcapital.com) acquires and
builds Internet software and services companies that drive business
productivity and reduce transaction costs between firms. Founded in
1996, ICG devotes its expertise and capital to maximizing the success
of these platform companies, which are delivering software and service
applications to customers worldwide.
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, the 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 Six Months Ended
June 30, June 30,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Revenue $ 12,520 $ 15,986 $ 24,302 $ 31,161
Operating Expenses
Cost of revenue 10,381 9,996 19,406 19,231
Selling, general and
administrative 7,756 10,039 16,871 20,152
Research and development 1,562 2,465 3,130 4,896
Amortization of intangibles 34 558 66 1,115
Impairment related and other 20 32 40 125
--------- --------- --------- ---------
Total operating expenses 19,753 23,090 39,513 45,519
--------- --------- --------- ---------
(7,233) (7,104) (15,211) (14,358)
Other income (loss), net 3,678 (1,953) (8,191) (1,855)
Interest income 1,148 1,913 2,626 4,445
Interest expense (22) (579) (268) (1,233)
------------------- -------------------
Income (loss) before income
taxes, minority interest and
equity loss (2,429) (7,723) (21,044) (13,001)
Income tax benefit (expense) 494 1,004 2,642 1,647
Minority interest (19) 47 369 (17)
Equity loss (1,806) (1,737) (5,322) (2,473)
--------- --------- --------- ---------
Income (loss) from continuing
operations (3,760) (8,409) (23,355) (13,844)
Income (loss) on discontinued
operations (220) 639 (220) 1,166
--------- --------- --------- ---------
Net income (loss) $ (3,980) $ (7,770) $(23,575) $(12,678)
========= ========= ========= =========
Basic and diluted net income
(loss) per share:
Income (loss) from continuing
operations $ (0.10) $ (0.23) $ (0.62) $ (0.37)
Income (loss) on discontinued
operations (0.01) 0.02 (0.01) 0.03
--------- --------- --------- ---------
$ (0.11) $ (0.21) $ (0.63) $ (0.34)
========= ========= ========= =========
Shares used in computation of
basic and diluted income
(loss) per share 37,846 37,470 37,825 37,436
========= ========= ========= =========
Internet Capital Group, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2007 2006
------------ ------------
ASSETS
Cash, cash equivalents and short-term
investments $ 94,616 $ 120,841
Other current assets 11,928 8,830
------------ ------------
Total current assets 106,544 129,671
Marketable securities 92,118 65,718
Fixed assets, net 2,056 1,847
Ownership interests in partner companies 121,374 137,911
Goodwill 17,084 17,084
Intangibles, net 186 182
Other assets 2,771 2,014
------------ ------------
Total assets $ 342,133 $ 354,427
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of senior convertible
notes $ - $ 26,590
Other current liabilities 19,072 24,142
------------ ------------
Total current liabilities 19,072 50,732
Hedges of marketable securities 7,119 -
Minority interest and other liabilities 4,919 5,157
------------ ------------
Total liabilities 31,110 55,889
Stockholders' equity 311,023 298,538
------------ ------------
Total liabilities and stockholders'
equity $ 342,133 $ 354,427
============ ============
Internet Capital Group
- ----------------------------------------------------------------------
2007 Pro Forma Core Partner Company Information
-----------------------------
Three Months Ended
-----------------------------
Mar 31, Jun 30, Sep 30,
2006 2006 2006
- ----------------------------------------------------------------------
Aggregate Pro Forma
Core Company
Information: (1)
Aggregate Revenue $41,248 $44,775 $45,818
Aggregate EBITDA
(loss) $(7,481) $(8,360) $(7,488)
Aggregate Net
Loss $(9,194) $(11,081) $(10,868)
Components of
Aggregate Pro Forma
Core Company
Information
Consolidated Core
Companies
(Ownership %):
Revenue $10,023 $10,007 $10,417
ICG Commerce Expenses other than
Holdings, Inc. interest, taxes,
(65%) depreciation and
amortization
Investor Force
Holdings, Inc.
(80%) (11,455) (11,151) (11,948)
- --------------------- -------- --------- ----------
EBITDA (loss) (1,432) (1,144) (1,531)
Interest 106 113 (42)
Taxes - - -
Depreciation/
Amortization (500) (544) (285)
-------- --------- ----------
Net loss $(1,826) $(1,575) $(1,858)
-------- --------- ----------
Equity Method Core
Companies
(Ownership %):
Revenue $31,225 $34,768 $35,401
Channel Expenses other than
Intelligence, interest, taxes,
Inc. (41%) depreciation and
amortization
Freeborders, Inc.
(33%) (37,274) (41,984) (41,358)
-------- --------- ----------
Metastorm Inc. EBITDA (loss)
(41%) $(6,049) $(7,216) $(5,957)
StarCite, Inc. Interest
(26%) (127) (105) (127)
Vcommerce Inc. Taxes
(46%) (309) (1,049) (1,380)
WhiteFence (35%) Depreciation/
Amortization (883) (1,136) (1,546)
- -------------------- -------- --------- ----------
Net loss $(7,368) $(9,506) $(9,010)
-------- --------- ----------
------------------------------
Three Months Ended
------------------------------
Dec 31, Mar 31, Jun 30,
2006 2007 2007
- ----------------------------------------------------------------------
Aggregate Pro Forma
Core Company
Information: (1)
Aggregate Revenue $49,998 $53,845 $57,052
Aggregate EBITDA
(loss) $(7,431) $(4,306) $(3,900)
Aggregate Net
Loss $(10,405) $(5,983) $(5,845)
Components of
Aggregate Pro Forma
Core Company
Information
Consolidated Core
Companies
(Ownership %):
Revenue $10,255 $11,782 $12,520
ICG Commerce Expenses other than
Holdings, Inc. interest, taxes,
(65%) depreciation and
amortization
Investor Force
Holdings, Inc.
(80%) (12,859) (13,407) (14,009)
- --------------------- --------- -------- ---------
EBITDA (loss) (2,604) (1,625) (1,489)
Interest 166 118 90
Taxes - - (220)
Depreciation/
Amortization (305) (326) (347)
--------- -------- ---------
Net loss $(2,743) $(1,833) $(1,966)
--------- -------- ---------
Equity Method Core
Companies
(Ownership %):
Revenue $39,743 $42,063 $44,532
Channel Expenses other than
Intelligence, interest, taxes,
Inc. (41%) depreciation and
amortization
Freeborders, Inc.
(33%) (44,570) (44,744) (46,943)
--------- -------- ---------
Metastorm Inc. EBITDA (loss)
(41%) $(4,827) $(2,681) $(2,411)
StarCite, Inc. Interest
(26%) (92) 60 146
Vcommerce Inc. Taxes
(46%) (740) (628) (617)
WhiteFence (35%) Depreciation/
Amortization (2,003) (901) (997)
- -------------------- --------- -------- ---------
Net loss $(7,662) $(4,150) $(3,879)
--------- -------- ---------
Reconciliation of Aggregate Pro Forma
Core Company Information to GAAP
Results
----------------------------
Three Months Ended
----------------------------
Mar 31, Jun 30, Sep 30,
2006 2006 2006
----------------------------
Revenue
Aggregate Pro Forma Core Company
Revenue $41,248 $44,775 $45,818
Non-consolidated partner companies (26,073) (28,789) (29,242)
-------- --------- ---------
Consolidated Revenue $15,175 $15,986 $16,576
Net Income (Loss)
Aggregate Pro Forma Core Company EBITDA
(loss) $(7,481) $(8,360) $(7,488)
Interest, Taxes, Depreciation/
Amortization (1,713) (2,721) (3,380)
-------- --------- ---------
Aggregate Pro Forma Core Company Net
Income (Loss) (9,194) (11,081) (10,868)
Amount attributable to other
stockholders (6,285) (7,483) (7,032)
-------- --------- ---------
ICG's share of net income (loss) of
Core Partner Companies (2,909) (3,598) (3,836)
Other holdings/disposed equity method
companies 151 (10) (737)
Corporate general and administrative (3,153) (3,284) (3,519)
Corporate stock-based compensation (2,100) (1,911) (1,852)
Corporate interest income (expense),
net 1,797 1,243 2,074
Other income(loss)/restructuring/
impairments 135 (1,853) 15,720
Income taxes 643 1,004 (1,607)
Income (loss) on discontinued
operations 527 639 7,120
-------- --------- ---------
Consolidated net income (loss) $(4,909) $(7,770) $13,363
Reconciliation of Aggregate Pro Forma
Core Company Information to GAAP
Results
-----------------------------
Three Months Ended
-----------------------------
Dec 31, Mar 31, Jun 30,
2006 2007 2007
-----------------------------
Revenue
Aggregate Pro Forma Core Company
Revenue $49,998 $53,845 $57,052
Non-consolidated partner companies (32,986) (42,063) (44,532)
-------- --------- --------
Consolidated Revenue $17,012 $11,782 $12,520
Net Income (Loss)
Aggregate Pro Forma Core Company EBITDA
(loss) $(7,431) $(4,306) $(3,900)
Interest, Taxes, Depreciation/
Amortization (2,974) (1,677) (1,945)
-------- --------- --------
Aggregate Pro Forma Core Company Net
Income (Loss) (10,405) (5,983) (5,845)
Amount attributable to other
stockholders (6,889) (1,297) (1,690)
-------- --------- --------
ICG's share of net income (loss) of
Core Partner Companies (3,516) (4,686) (4,155)
Other holdings/disposed equity method
companies 723 (275) 584
Corporate general and administrative (3,293) (4,317) (3,567)
Corporate stock-based compensation (1,761) (1,716) (1,738)
Corporate interest income (expense),
net 1,972 1,114 1,036
Other income(loss)/restructuring/
impairments 20,811 (11,863) 3,586
Income taxes - 2,148 494
Income (loss) on discontinued
operations 3 - (220)
-------- --------- --------
Consolidated net income (loss) $14,939 $(19,595) $(3,980)
(1) The rationale for management's use of non-GAAP measures is
included in the "Description of Terms" supplement to this release.
INTERNET CAPITAL GROUP, INC.
June 30, 2007
Description of Terms
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: the consolidation
method, the equity method and the cost method. 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 owns more than 50% of the outstanding voting securities and
for which other stockholders do not possess the right to affect
significant management decisions are accounted for under the
consolidation method of accounting. Under this method, a partner
company's balance sheet and results of operations are reflected within
the Company's Consolidated Financial Statements. All significant
intercompany accounts and transactions have been eliminated.
Participation of other partner company stockholders in the net assets
and in the earnings or losses of a consolidated partner company is
reflected in the caption "Minority interest" in the Company's
Consolidated Balance Sheets and Statements of Operations. Minority
interest adjusts the Company's consolidated results of operations to
reflect only the Company's share of the earnings or losses of the
consolidated partner company. The results of operations and cash flows
of a consolidated partner company are included through the latest
interim period in which the Company owned a greater than 50% direct or
indirect voting interest for the entire interim period or otherwise
exercised control over the partner company. Upon dilution of control
below 50%, the accounting method is adjusted to the equity or cost
method of accounting, as appropriate, for subsequent periods.
During the three and six months ended June 30, 2007, the Company
accounted for two of its partner companies under this method: ICG
Commerce and Investor Force. During the three and six months ended
June 30, 2006, the Company accounted for three of its partner
companies under this method: ICG Commerce, Investor Force and
StarCite.
Equity Method. Partner companies that are not consolidated, but
over which the Company exercises significant influence, are 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 the
Company's ownership level, which is generally between a 20% and 50%
interest in the voting securities of the partner company, including
voting rights associated with the Company's holdings in common stock,
preferred stock 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 Balance
Sheets and Statements of Operations; however, the Company's share of
the earnings or losses of the partner company is reflected in the
caption "Equity loss" in the Consolidated Statements of Operations.
The carrying value of equity method partner companies is reflected in
"Ownership interests in partner companies" in the Company's
Consolidated Balance Sheets.
When the Company's interest in an equity method partner company is
reduced to zero, no further losses are recorded in the Company's
Consolidated Financial Statements unless the Company guaranteed
obligations of the partner company or has committed additional
funding. When the partner company subsequently reports income, the
Company will not record its share of such income until it equals the
amount of its share of losses not previously recognized.
During the three months ended June 30, 2007, the Company accounted
for seven of its partner companies under this method.
Cost Method. Partner companies not accounted for under 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 such companies is not included in
the Consolidated Balance Sheets or Consolidated Statements of
Operations. However, cost method partner company impairment charges
are recognized in the Consolidated Statements of Operations. If
circumstances suggest that the value of the partner company has
subsequently recovered, such recovery is not recorded.
When a cost method partner company qualifies for use of the equity
method, the Company's interest is adjusted retroactively for its share
of the past results of its operations. Therefore, prior losses could
significantly decrease the Company's carrying value at that time.
The Company records its ownership interest in equity securities of
partner companies accounted for under the cost method at cost, unless
these securities have readily determinable fair values based on quoted
market prices, in which case these interests are valued at fair value
and classified as marketable securities or some other classification
in accordance with Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities."
During the three months ended June 30, 2007, the Company accounted
for eight of its partner companies under this method.
Certain items impacting the consolidated financial statements: ($
millions)
Q2 FYTD
----------------- -----------------
Gains (losses): 2007 2006 2007 2006
-------- -------- -------- --------
Other gains (losses):
Loss on convertible note
repurchases $-- $(2.5) $(10.8) $(2.5)
Mark to market charge on
Blackboard hedges (6.0) -- (7.1) --
Sales of partner companies 8.6 0.6 8.6 0.7
Other, net 1.1 -- 1.1 --
-------- -------- -------- --------
Other Income (Loss) $3.7 $(1.9) $(8.2) $(1.8)
-------- -------- -------- --------
Income tax benefit (expense) $0.5 $1.0 $2.6 $1.6
-------- -------- -------- --------
ICG's share of Partner Company
charges, net $-- $-- $(0.1) $(0.2)
-------- -------- -------- --------
Discontinued Operations $(0.2) $0.6 $(0.2) $1.2
-------- -------- -------- --------
$4.0 $(0.3) $(5.9) $0.8
======== ======== ======== ========
Stock-based compensation $(1.9) $(1.9) $(3.8) $(4.0)
======== ======== ======== ========
Aggregate Pro Forma Core Company Information
In an effort to illustrate macro trends within its private core
companies, ICG provides an aggregation of revenue and net loss figures
reflecting 100% of the pro forma revenue and aggregate pro forma
EBITDA for these companies. The Company calculates aggregate pro forma
EBITDA for these purposes as earnings (losses) before interest, tax,
depreciation and amortization and refers to it as "aggregate EBITDA."
These non-GAAP measures are considered pro forma because management
has updated its results to include Metastorm's acquisition of Proforma
Corporation and has removed Marketron as if Metastorm's acquisition of
Proforma Corporation and the disposition of Marketron occurred on
January 1, 2006. The Company refers to the aggregate pro forma revenue
of its private core partner companies as "aggregate revenue." ICG does
not own its core companies in their entirety and, therefore, this
information should be considered in this context. Aggregate revenue
and aggregate EBITDA, in this context, represent certain of the
financials measures used by the Company's management to evaluate the
performance for core companies. The Company's management believes
these non-GAAP financial measures provide useful information to
investors, potential investors, securities analysts and others so each
group can evaluate private core companies' current and future
prospects in a similar manner as the Company's management, and review
results on a comparable basis for all periods presented.
ICG's Share of Net Loss of Core, Other Holdings and Disposed
Partner Companies
Represents ICG's share of the net loss of core, other holdings and
disposed partner companies accounted for under the consolidated and
equity method of accounting.
Corporate Expenses and Interest Income (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.
Corporate expenses increased during the three months ended June
30, 2007 versus prior periods due to increased payroll expenses,
investor relations/marketing expenses and a 401(k) employer match
program. ICG estimates that its corporate operating expenses for the
twelve months ended December 31, 2007 will be approximately $14.5
million.
Corporate interest income (expense), net related primarily to the
interest income on cash balances during the three and six months ended
June 30, 2007.
Discontinued Operations
Investor Force (a consolidated partner company) sold its database
division in August 2006 for $10.0 million ($9.0 million was received
in August 2006 and $1.0 million is held in escrow until August 2007)
and has been reflected as a discontinued operation. Accordingly, the
operating results of this discontinued operation have been presented
separately from continuing operations for all periods presented.
CONTACT: Investor inquiries:
Internet Capital Group, Inc.
Karen Greene
Investor Relations
610-727-6900
IR@internetcapital.com