Exhibit 99.1
Internet Capital Group Announces Third Quarter Financial Results
Core Partner Companies Achieve Excellent Aggregate Revenue Growth of 35%
WAYNE, Pa.--(BUSINESS WIRE)--Nov. 1, 2007--Internet Capital Group, Inc.
(Nasdaq:ICGE) today reported its results for the third quarter ended September
30, 2007.
"We are very pleased with the performance of our core partner companies,"
said Walter Buckley, ICG's chairman and CEO. "We continue to work closely with
these companies, driving execution of strategic product development, aggressive
sales and marketing and M&A activity. These efforts have resulted in
accelerating revenue growth, which we believe is a key component to building
stockholder value."
ICG Financial Results
ICG consolidated the results of two partner companies, ICG Commerce and
Investor Force, for the three and nine months ended September 30, 2007, versus
the results of three partner companies, ICG Commerce, Investor Force and
StarCite, for the three and nine months ended September 30, 2006.
ICG reported consolidated revenue of $14.6 million for the third quarter of
2007, versus $16.6 million for the comparable 2006 period. ICG reported
consolidated revenue of $38.9 million for the nine months ended September 30,
2007, versus $47.7 million for the comparable 2006 period.
ICG reported a net loss of $(4.0) million, or $(0.11) per diluted share,
for the third quarter of 2007, versus net income of $13.4 million, or $0.34 per
diluted share, for the comparable 2006 period. Results for the third quarter of
2007 include $3.3 million in net gains, compared to $21.1 million in net gains
in the 2006 period, primarily related to gains from dispositions. ICG reported a
net loss of $(27.6) million, or $(0.73) per diluted share, for the nine months
ended September 30, 2007, versus net income of $0.7 million, or $0.02 per
diluted share, for the prior year period.
As of September 30, 2007, ICG's corporate cash balance was $73.6 million
and the value of its holdings in Blackboard was $91.1 million, net of $9.2
million in hedge positions. The value of its holdings in GoIndustry at
quarter-end was $23.8 million.
ICG Core Partner Company Information
Set forth below is pro forma information relating to the following eight
core companies: Channel Intelligence, Freeborders, ICG Commerce, Investor Force,
Metastorm, StarCite, Vcommerce and WhiteFence. Our ownership positions in these
eight companies ranged from 26% to 80% and averaged 45% at September 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 third quarter of 2007, aggregate pro forma revenue of ICG's eight
core companies grew 35% year-over-year, to $61.9 million from $45.8 million in
the third quarter of 2006. Aggregate pro forma EBITDA (loss) for the core
companies was $(4.0) million in the third quarter of 2007, versus $(8.0) million
in the third quarter of 2006. In the nine months ended September 30, 2007,
aggregate pro forma revenue of ICG's eight core companies grew 31%
year-over-year, to $172.8 million from $131.8 million in the comparable period
of 2006. Aggregate pro forma EBITDA (loss) for the core companies improved to
$(12.1) million in the nine months ended September 30, 2007 from $(23.8) million
in the comparable period of 2006.
"Based on the strong year-to-date aggregate performance of our core
companies, we would expect the full year 2007 aggregate revenue growth of our
core companies to be approximately 30%, exceeding our initial 2007 full year
guidance of 25%," said R. Kirk Morgan, ICG's CFO.
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 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 877-407-8035. The international dial-in number is
201-689-8035.
For those unable to participate in the conference call, a replay will be
available from November 1, 2007 at 11:00 a.m. ET until November 8, 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 258456. 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 Nine Months Ended
September 30, September 30,
------------------ -------------------
2007 2006 2007 2006
--------- -------- --------- ---------
Revenue $14,559 $16,576 $ 38,861 $ 47,737
Operating Expenses
Cost of revenue 10,029 10,452 29,435 29,683
Selling, general and
administrative 8,342 11,317 25,213 31,470
Research and development 1,532 2,112 4,662 7,008
Amortization of intangibles 31 293 97 1,408
Impairment related and other 6 24 46 149
--------- -------- --------- ---------
Total operating expenses 19,940 24,198 59,453 69,718
--------- -------- --------- ---------
(5,381) (7,622) (20,592) (21,981)
Other income (loss), net 1,646 15,671 (6,545) 13,816
Interest income 1,462 2,444 4,088 6,889
Interest expense (19) (431) (287) (1,664)
------------------ -------------------
Income (loss) before income
taxes, minority interest and
equity loss (2,292) 10,062 (23,336) (2,940)
Income tax benefit (expense) 794 (1,607) 3,436 40
Minority interest (487) 514 (117) 424
Equity loss (3,070) (2,726) (8,393) (5,125)
--------- -------- --------- ---------
Income (loss) from continuing
operations (5,055) 6,243 (28,410) (7,601)
Income (loss) on discontinued
operations 1,024 7,120 804 8,286
--------- -------- --------- ---------
Net income (loss) $(4,031) $13,363 $(27,606) $ 685
========= ======== ========= =========
Basic net income (loss) per
share:
Income (loss) from continuing
operations $ (0.14) $ 0.17 $ (0.75) $ (0.20)
Income (loss) on discontinued
operations 0.03 0.19 0.02 0.22
--------- -------- --------- ---------
$ (0.11) $ 0.36 $ (0.73) $ 0.02
========= ======== ========= =========
Shares used in computation of
basic income (loss) per share 37,925 37,535 37,858 37,503
========= ======== ========= =========
Diluted net income (loss) per
share:
Income (loss) from continuing
operations $ (0.14) $ 0.16 $ (0.75) $ (0.20)
Discontinued operations 0.03 0.18 0.02 0.22
--------- -------- --------- ---------
$ (0.11) $ 0.34 $ (0.73) $ 0.02
========= ======== ========= =========
Shares used in computation of
diluted income (loss) per
share 37,925 40,986 37,858 37,503
========= ======== ========= =========
Internet Capital Group, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
September 30, December 31,
2007 2006
------------- ------------
ASSETS
Cash, cash equivalents and short-term
investments $ 84,136 $ 120,841
Other current assets 14,306 8,830
------------- ------------
Total current assets 98,442 129,671
Marketable securities 100,254 65,718
Fixed assets, net 1,918 1,847
Ownership interests in partner companies 139,188 137,911
Goodwill 17,084 17,084
Intangibles, net 175 182
Other assets 627 2,014
------------- ------------
Total assets $ 357,688 $ 354,427
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of senior convertible
notes $ - $ 26,590
Other current liabilities 17,076 24,142
------------- ------------
Total current liabilities 17,076 50,732
Hedges of marketable securities 9,202 -
Minority interest and other liabilities 5,420 5,157
------------- ------------
Total liabilities 31,698 55,889
Stockholders' equity 325,990 298,538
------------- ------------
Total liabilities and stockholders'
equity $ 357,688 $ 354,427
============= ============
Internet Capital Group
- ----------------------------------------------------------------------
2007 Pro Forma Core Partner Company Information
- ----------------------------------------------------------------------
Three Months Ended
-----------------------------------------
Mar 31, Jun 30, Sep 30, Dec 31,
2006 2006 2006 2006
- ----------------------------------------------------------------------
Aggregate Pro
Forma Core
Company
Information:
(1)
Aggregate
Revenue $ 41,248 $ 44,775 $ 45,818 $ 49,998
Aggregate
EBITDA (loss) $ (6,976) $ (8,768) $ (8,037) $ (8,154)
Aggregate Net
Loss $ (9,194) $(11,081) $(10,868) $(10,404)
Components of
Aggregate Pro
Forma Core
Company
Information
Consolidated
Core
Companies
(Ownership
%):
Revenue $ 10,023 $ 10,007 $ 10,417 $ 10,255
ICG Commerce
Holdings,
Inc. (65%)
Investor Force Expenses
Holdings, other than
Inc. (80%) interest,
taxes,
depreciation
and
amortization (11,455) (11,151) (11,948) (12,859)
--------- --------- --------- ---------
EBITDA (loss) (1,432) (1,144) (1,531) (2,604)
Interest 106 113 (42) 166
Taxes - - - -
Depreciation/
Amortization (500) (544) (285) (305)
--------- --------- --------- ---------
Net loss $ (1,826) $ (1,575) $ (1,858) $ (2,743)
--------- --------- --------- ---------
Equity Method
Core
Companies
(Ownership
%):
Revenue $ 31,225 $ 34,768 $ 35,401 $ 39,743
Channel
Intelligence,
Inc. (41%)
Freeborders, Expenses
Inc. (33%) other than
interest,
taxes,
depreciation
and
amortization (36,769) (42,392) (41,907) (45,293)
--------- --------- --------- ---------
Metastorm Inc. EBITDA (loss)
(32%) $ (5,544) $ (7,624) $ (6,506) $ (5,550)
StarCite, Inc.
(26%) Interest (269) (85) (197) (71)
Vcommerce Inc.
(46%) Taxes (7) (5) (33) (9)
WhiteFence Depreciation/
(35%) Amortization (1,548) (1,792) (2,274) (2,031)
--------- --------- --------- ---------
Net loss $ (7,368) $ (9,506) $ (9,010) $ (7,661)
--------- --------- --------- ---------
- ------------------------------------------------------------
Three Months Ended
------------------------------
Mar 31, Jun 30, Sep 30,
2007 2007 2007
- ------------------------------------------------------------
Aggregate Pro
Forma Core
Company
Information:
(1)
Aggregate
Revenue $ 53,845 $ 57,052 $ 61,872
Aggregate
EBITDA (loss) $ (4,270) $ (3,794) $ (3,998)
Aggregate Net
Loss $ (5,983) $ (5,626) $ (6,113)
Components of
Aggregate Pro
Forma Core
Company
Information
Consolidated
Core Companies
(Ownership %):
Revenue $ 11,782 $ 12,520 $ 14,559
ICG Commerce
Holdings, Inc.
(65%)
Investor Force Expenses
Holdings, Inc. other than
(80%) interest,
taxes,
depreciation
and
amortization (13,407) (14,009) (14,350)
---------- --------- ---------
EBITDA (loss) (1,625) (1,489) 209
Interest 118 90 84
Taxes - - -
Depreciation/
Amortization (326) (347) (364)
---------- --------- ---------
Net loss $ (1,833) $ (1,746) $ (71)
---------- --------- ---------
Equity Method
Core Companies
(Ownership %):
Revenue $ 42,063 $ 44,532 $ 47,313
Channel
Intelligence,
Inc. (41%)
Freeborders, Expenses
Inc. (33%) other than
interest,
taxes,
depreciation
and
amortization (44,708) (46,837) (51,520)
---------- --------- ---------
Metastorm Inc. EBITDA (loss)
(32%) $ (2,645) $ (2,305) $ (4,207)
StarCite, Inc.
(26%) Interest 70 151 (41)
Vcommerce Inc.
(46%) Taxes 28 (18) -
WhiteFence Depreciation/
(35%) Amortization (1,603) (1,708) (1,794)
---------- --------- ---------
Net loss $ (4,150) $ (3,880) $ (6,042)
---------- --------- ---------
Reconciliation of Aggregate Pro Forma
Core Company Information to GAAP Results
-----------------------------------------
Three Months Ended
-----------------------------------------
Mar 31, Jun 30, Sep 30, Dec 31,
2006 2006 2006 2006
-----------------------------------------
Revenue
Aggregate Pro Forma Core
Company Revenue $ 41,248 $ 44,775 $ 45,818 $ 49,998
Non-consolidated partner
companies (26,073) (28,789) (29,242) (32,986)
--------- --------- --------- ---------
Consolidated Revenue $ 15,175 $ 15,986 $ 16,576 $ 17,012
Net Income (Loss)
Aggregate Pro Forma Core
Company EBITDA (loss) $ (6,976) $ (8,768) $ (8,037) $ (8,154)
Interest, Taxes,
Depreciation/ Amortization (2,218) (2,313) (2,831) (2,250)
--------- --------- --------- ---------
Aggregate Pro Forma Core
Company Net Income (Loss) (9,194) (11,081) (10,868) (10,404)
Amount attributable to other
stockholders (6,285) (7,483) (7,032) (6,888)
--------- --------- --------- ---------
ICG's share of net income
(loss) of Core Partner
Companies (2,909) (3,598) (3,836) (3,516)
Other holdings/ disposed
equity method companies 151 (10) (737) 723
Corporate general and
administrative (3,153) (3,284) (3,519) (3,293)
Corporate stock-based
compensation (2,100) (1,911) (1,852) (1,761)
Corporate interest income
(expense), net 1,797 1,243 2,074 1,972
Other income(loss)/
restructuring/ impairments 135 (1,853) 15,720 20,811
Income taxes 643 1,004 (1,607) -
Income (loss) on
discontinued operations 527 639 7,120 3
--------- --------- --------- ---------
Consolidated net income
(loss) $ (4,909) $ (7,770) $ 13,363 $ 14,939
------------------------------
Three Months Ended
------------------------------
Mar 31, Jun 30, Sep 30,
2007 2007 2007
------------------------------
Revenue
Aggregate Pro Forma Core
Company Revenue $ 53,845 $ 57,052 $ 61,872
Non-consolidated partner
companies (42,063) (44,532) (47,313)
---------- --------- ---------
Consolidated Revenue $ 11,782 $ 12,520 $ 14,559
Net Income (Loss)
Aggregate Pro Forma Core
Company EBITDA (loss) $ (4,270) $ (3,794) $ (3,998)
Interest, Taxes,
Depreciation/ Amortization (1,713) (1,832) (2,115)
---------- --------- ---------
Aggregate Pro Forma Core
Company Net Income (Loss) (5,983) (5,626) (6,113)
Amount attributable to other
stockholders (1,297) (1,471) (2,796)
---------- --------- ---------
ICG's share of net income
(loss) of Core Partner
Companies (4,686) (4,155) (3,317)
Other holdings/ disposed
equity method companies (275) 584 (311)
Corporate general and
administrative (4,317) (3,567) (3,476)
Corporate stock-based
compensation (1,716) (1,738) (1,651)
Corporate interest income
(expense), net 1,114 1,036 1,359
Other income(loss)/
restructuring/ impairments (11,863) 3,586 1,547
Income taxes 2,148 494 794
Income (loss) on
discontinued operations - (220) 1,024
---------- --------- ---------
Consolidated net income
(loss) $(19,595) $ (3,980) $ (4,031)
(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.
September 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 nine months ended September 30, 2007, the Company
accounted for two of its partner companies under this method: ICG Commerce and
Investor Force. During the three and nine months ended September 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 September 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 September 30, 2007, the Company accounted for
eight of its partner companies under this method.
Certain items impacting the consolidated financial statements: ($
millions)
Q3 FYTD
------------- --------------
Gains (losses): 2007 2006 2007 2006
------ ------ ------- ------
Other gains (losses):
Loss on convertible note repurchases $-- $-- $(10.8) $(2.5)
Mark to market charge on Blackboard
hedges (2.1) -- (9.2) --
Sales of partner companies 0.6 14.6 9.2 15.7
Other, net 3.0 1.0 4.1 0.8
------ ------ ------- ------
Other Income (Loss) $1.5 $15.6 $(6.7) $14.0
------ ------ ------- ------
Income tax benefit (expense) $0.8 $(1.6) $3.4 $--
------ ------ ------- ------
ICG's share of Partner Company charges,
net $-- $-- $-- $(0.2)
------ ------ ------- ------
Discontinued Operations $1.0 $7.1 $0.8 $8.3
------ ------ ------- ------
$3.3 $21.1 $(2.5) $22.1
====== ====== ======= ======
Stock-based compensation $(1.8) $(1.9) $(5.5) $(5.9)
====== ====== ======= ======
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 to exclude 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 September 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 $14.7 million.
Corporate interest income (expense), net related primarily to the interest
income on cash balances during the three and nine months ended September 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 which was held in escrow was received in 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