##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For Fiscal Year Ended December 31, 2009.
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from  to .
 Commission File Number 001-16249
 
 INTERNET CAPITAL GROUP, INC.
 (Exact Name of
Registrant as Specified in Its Charter)
 Delaware
(State or Other Jurisdiction of 
Incorporation or Organization)
    
    23-2996071
(I.R.S. Employer
Identification Number)690 Lee Road, Suite 310, Wayne, PA
(Address of Principal Executive Offices)
    
    19087
(Zip Code)
 (610) 727-6900
(Registrants telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the Act: 
Common stock, par value $.001 per share
(Title of Class)
    
    The NASDAQ Stock Market LLC
(The NASDAQ Global Market)
(Name of Each Exchange on Which Registered)
  Yes
o
No þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



INTERNET CAPITAL GROUP, INC.
FORM 10-K
DECEMBER 31, 2009
INDEX
  
 PageNumberPART I
    
    
    4ITEM 1. Business
    
    
    4ITEM 1A. Risk Factors
    
    
    9ITEM 1B. Unresolved Staff Comments
    
    
    16ITEM 2. Properties
    
    
    17ITEM 3. Legal Proceedings
    
    
    17ITEM 4. (Removed and Reserved)
    
    
    18PART II
    
    
    19ITEM 5. Market for Registrants Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
    
    
    19ITEM 6. Selected Financial Data
    
    
    22ITEM 7. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    23ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    34ITEM 8. Financial Statements and Supplementary Data
    
    
    35ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures
    
    
    77ITEM 9A. Controls and Procedures
    
    
    77ITEM 9B. Other Information
    
    
    79PART III
    
    
    79ITEM 10. Directors, Executive Officers and Corporate Governance
    
    
    79ITEM 11. Executive Compensation
    
    
    79ITEM 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
    
    
    79ITEM 13. Certain Relationships and Related Transactions, and Director
Independence
    
    
    79ITEM 14. Principal Accountant Fees and Services
    
    
    79PART IV
    
    
    80ITEM 15. Exhibits and Financial Statement Schedules
    
    
    80SIGNATURES
    
    
    85Exhibit 21.1Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2Exhibit 99.1
   2




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Forward-Looking Statements
   
    
    economic conditions generally;
    
    capital spending by our partner companies customers;
    
    our partner companies collective ability to compete successfully against their
respective competitors;
    
    rapid technological developments in the respective markets in which our partner
companies operate and our partner companies collective ability to respond to such changes
in a timely and effective manner;
    
    our ability to deploy capital effectively and on acceptable terms;
    
    our ability to maximize value in connection with divestitures;
    
    our ability to retain key personnel; and
    
    our ability to have continued access to capital and to manage capital resources
effectively.
   3




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PART I
  
 ITEM 1.
    
    Business
 Overview
     4




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
    
    automate complex workflow processes, with focus on the white space between companies;
    
    are comprehensive, meaning that they include software, content data and transaction
capabilities (with content being a long-term differentiator);
    
    have the ability to generate recurring revenue streams and allow their providers to
retain fixed costs;
    
    are delivered to clients through long-term relationships; and
    
    have the potential to evolve into ecosystems.
   Our Partner Companies
  Channel Intelligence, Inc. (Channel Intelligence)
   5




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Freeborders, Inc. (Freeborders)
  GovDelivery Holdings, Inc. (GovDelivery)
  ICG Commerce Holdings, Inc. (ICG Commerce)
  Investor Force Holdings, Inc. (InvestorForce)
  Metastorm Inc. (Metastorm)
  StarCite, Inc. (StarCite)
  WhiteFence, Inc. (WhiteFence)
   6




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Acquirgy, Inc. (Acquirgy)
 TM
 Anthem Ventures Fund, L.P. (Anthem)
  ClickEquations, Inc. (f/k/a Commerce360, Inc.) (ClickEquations)
  GoIndustry-DoveBid plc (GoIndustry) (LSE.AIM:GOI)
  SeaPass Solutions Inc. (SeaPass)
  Concentration of Customer Base and Credit Risk
   7




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Competition Facing Our Partner Companies
    Employees
  Financial Information About Geographic Areas
  Availability of Reports and Other Information
     8




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ITEM 1A.
    
    Risk Factors
  Numerous
external forces, including ongoing weak economic conditions, have
negatively affected our
and our partner companies respective businesses, results of
operations and financial condition and continued weak economic
conditions could result in additional declines in our revenues and
operating results.
  If we are not able to deploy capital effectively and on acceptable terms, we may not be able to
execute our business strategy.
   9




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If our partner companies are unable to attract new customers or retain customers, including certain
significant customers, our and our partner companies respective businesses, results of operations
and financial conditions could be negatively affected.
   The inability of our partner companies customers to pay their obligations to them in a timely
manner, or at all, could have an adverse effect on our partner companies.
  Our partner companies may not be able to compete successfully.
   We may compete with some of our partner companies, and our partner companies may compete with each
other, which could deter companies from partnering with us and may limit future business
opportunities.
   10




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Our operations and growth and that of our partner companies could be impaired by limitations on our
and/or their ability to raise capital or borrow money on favorable terms.
  Adverse changes in economic conditions and reduced information technology spending may adversely
impact our business.
  Acquisitions by our partner companies could result in operating difficulties, dilution and other
harmful consequences.
  Our inability to maintain or be able to increase our ownership stakes in partner
companies with significant growth opportunities could negatively impact our ability to execute our strategy.
   11




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If
we do not participate in follow-on financings at our partner companies, our stakes in such
companies will be diluted, which could materially reduce the value of those stakes.
  We may have to buy, sell or retain assets when we would otherwise choose not to buy, sell or retain
in order to avoid registration under the Investment Company Act, which would impact our business
strategy.
  Our partner companies could make financial or other business decisions that are not in our best
interests or that we do not agree with, which could impair the value of our partner company
interests.
   12




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We may not be able to extract cash from those partner companies that achieve profitability and may
need to continue to rely on existing cash, liquidity events and additional capital raises to fund
our operations.
  We may be unable to obtain maximum value in connection with the divesture of partner company and
marketable security interests.
   Our accounting estimates with respect to the ultimate recoverability of our basis in our partner
companies could change materially in the near term.
   13




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Our stock price has been volatile in the past and may continue to be volatile in the future.
   
    
    general economic conditions, such as a recession or interest rate or currency rate
fluctuations;
    
    the reluctance of enterprises to increase spending on new products or services;
    
    actual or anticipated variations in our quarterly results and those of our partner
companies;
    
    changes in the market valuations of our partner companies and other similar
companies;
    
    conditions or trends related to Internet software and services companies;
    
    changes in our financial estimates and those of our partner companies by securities
analysts;
    
    new products or services offered by us, our partner companies and their
competitors;
    
    announcements by our partner companies and their competitors of technological
innovations;
    
    announcements by us, our partner companies or our competitors of significant
acquisitions, strategic partnerships or joint ventures;
    
    additional sales or repurchases of our securities; and
    
    additions to or departures of our key personnel or the key personnel of our partner
companies.
  Fluctuations in our quarterly results may adversely affect our stock price.
  
    
    the acquisition of interests in partner companies;
    
    the operating results of our partner companies;
    
    sales of our ownership interests in our partner companies, which could cause us to
recognize gains or losses under applicable accounting rules;
    
    significant fluctuations in the financial results of Internet software and services
companies generally;
    
    changes in estimated quarterly equity losses or income;
    
    changes in our methods of accounting for our partner company interests, which may
result from changes in our ownership percentages of our partner companies;
    
    the pace of development or a decline in growth of the Internet software and
services markets; and
    
    competition for the goods and services offered by our partner companies.
   14




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Fluctuations in the price of the common stock of our publicly-traded holdings may affect the price
of our Common Stock.
  We have had a general history of operating losses and expect continued operating losses in the foreseeable future.
  Certain of our partner companies have a limited operating history and may never be profitable.
  The loss of our or our partner companies executive officers or other key personnel or our or our
partner companies inability to attract additional key personnel could disrupt our business and
operations.
   15




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Our partner companies success depends on the integrity of their systems and infrastructure.
Interruptions in their information systems may adversely affect their businesses.
  We and our partner companies may be subject to litigation proceedings or government regulation that
could harm our respective businesses.
   We have implemented certain anti-takeover provisions that could make it more difficult for a third
party to acquire us.
  
 ITEM 1B.
    
    Unresolved Staff Comments
   16




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##### Table of Contents



ITEM 2.
    
    Properties
  Corporate Offices
  Partner Company Properties
  
 ITEM 3.
    
    Legal Proceedings
   17




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ITEM 4.
    
    (Removed and Reserved)
  18




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PART II
 
 ITEM 5.
    
    Market For Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 Market Information.
 2009
    
    
    2008March 31
    
    
    June 30
    
    
    Sept. 30
    
    
    Dec. 31
    
    
    March 31
    
    
    June 30
    
    
    Sept. 30
    
    
    Dec. 31(1st)
    
    
    (2nd)
    
    
    (3rd)
    
    
    (4th)
    
    
    (1st)
    
    
    (2nd)
    
    
    (3rd)
    
    
    (4th)High
    
    $
    5.95
    
    
    $
    6.85
    
    
    $
    8.62
    
    
    $
    8.43
    
    
    $
    11.82
    
    
    $
    11.35
    
    
    $
    9.84
    
    
    $
    8.00Low
    
    $
    3.25
    
    
    $
    3.85
    
    
    $
    6.17
    
    
    $
    5.76
    
    
    $
    7.66
    
    
    $
    7.71
    
    
    $
    6.79
    
    
    $
    3.04
 Holders
 Dividends
  19




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Stock Performance Graph
   COMPARISON OF CUMULATIVE TOTAL RETURN* SINCE DECEMBER 31, 2004
AMONG INTERNET CAPITAL GROUP, INC.,
THE NASDAQ COMPOSITE INDEX AND
THE GSTI INTERNET INDEX
 
 *
    
    $100 invested at closing prices on December 31, 2004 in ICG shares or in a
stock index, including reinvestment of dividends.  20




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Issuer Purchases of Equity Securities
  Total Number of
    
    
    Approximate DollarShares Purchased as
    
    
    Value That May YetPart of Publicly
    
    
    Be PurchasedTotal Number of
    
    
    Average Price Paid
    
    
    Announced
    
    
    Under theMonthly Period
    
    Shares Purchased(1)
    
    
    per Share(2)
    
    
    Program(1)
    
    
    ProgramRepurchased as of 12/31/08
    
    
    1,948,158
    
    
    $
    4.75
    
    
    
    1,948,158
    
    
    $
    15.7 million1/1/09 to 1/31/09
    
    
    25,042
    
    
    $
    3.98
    
    
    
    25,042
    
    
    $
    15.6 million2/1/09 to 2/28/09
    
    
    67,200
    
    
    $
    3.96
    
    
    
    67,200
    
    
    $
    15.4 million3/1/09 to 3/31/09
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    $
    15.4 million4/1/09 to 4/30/09
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    $
    15.4 million5/1/09 to 5/31/09
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    $
    15.4 million6/1/09 to 6/30/09
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    $
    15.4 million7/1/09 to 7/31/09
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    $
    15.4 million8/1/09 to 8/30/09
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    $
    15.4 million9/1/09 to 9/30/09
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    $
    15.4 million10/1/09 to 10/31/09
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    $
    15.4 million11/1/09 to 11/30/09
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    $
    15.4 million12/1/09 to 12/31/09
    
    
    400,000
    
    
    $
    5.79
    
    
    
    400,000
    
    
    $
    13.1 million1/1/10 to 1/31/10
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    $
    13.1 million2/1/10 to 2/28/10
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    $
    13.1 million3/1/10 to 3/15/10
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    $
    13.1 millionTotal
    


2,440,400
    
    
    $
    4.89
    
    
    
    2,440,400
    
    
    $
    13.1 million
 
 (1)
    
    All shares purchased in open market transactions.(2)
    
    Average price paid per share excludes commissions.  21




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ITEM 6.
    
    Selected Financial Data
  Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006(1)
    
    
    2005(1)(in thousands, except per share data)Consolidated Statements of Operations Data:Revenues
    
    $
    90,252
    
    
    $
    71,181
    
    
    $
    52,923
    
    
    $
    64,749
    
    
    $
    47,568Operating expensesCost of revenue
    
    
    56,920
    
    
    
    46,400
    
    
    
    39,523
    
    
    
    42,439
    
    
    
    28,460Selling, general and administrative
    
    
    34,578
    
    
    
    36,165
    
    
    
    32,781
    
    
    
    42,108
    
    
    
    40,795Research and development
    
    
    9,015
    
    
    
    10,212
    
    
    
    6,033
    
    
    
    8,755
    
    
    
    12,276Impairment related and other
    
    
    5,397
    
    
    
    10,052
    
    
    
    188
    
    
    
    1,873
    
    
    
    5,571Total operating expenses
    
    
    105,910
    
    
    
    102,829
    
    
    
    78,525
    
    
    
    95,175
    
    
    
    87,102(15,658
    )
    
    
    (31,648
    )
    
    
    (25,602
    )
    
    
    (30,426
    )
    
    
    (39,534
    )Other income (loss), net
    
    
    16,578
    
    
    
    43,225
    
    
    
    6,830
    
    
    
    34,605
    
    
    
    135,489Interest income (expense), net
    
    
    230
    
    
    
    1,516
    
    
    
    5,062
    
    
    
    7,345
    
    
    
    523Income (loss) from continuing operations before income taxes
and equity loss
    
    
    1,150
    
    
    
    13,093
    
    
    
    (13,710
    )
    
    
    11,524
    
    
    
    96,478Income tax benefit (expense)
    
    
    39,510
    
    
    
    (357
    )
    
    
    3,992
    
    
    
    40
    
    
    
    (18,640
    )Equity loss
    
    
    (12,131
    )
    
    
    (33,702
    )
    
    
    (14,416
    )
    
    
    (5,461
    )
    
    
    (6,703
    )Income (loss) from continuing operations
    
    
    28,529
    
    
    
    (20,966
    )
    
    
    (24,134
    )
    
    
    6,103
    
    
    
    71,135Income (loss) on discontinued operations
    
    
    
    
    
    
    
    
    
    
    995
    
    
    
    8,289
    
    
    
    (1,130
    )Net income (loss)
    
    
    28,529
    
    
    
    (20,966
    )
    
    
    (23,139
    )
    
    
    14,392
    
    
    
    70,005Less: Net income (loss) attributable to
non-controlling interest
    
    
    12,995
    
    
    
    1,960
    
    
    
    468
    
    
    
    (1,232
    )
    
    
    (2,513
    )Net income (loss) attributable to Internet Capital
Group, Inc.
    
    $
    15,534
    
    
    $
    (22,926
    )
    
    $
    (23,607
    )
    
    $
    15,624
    
    
    $
    72,518Basic Income (loss) Per Share Attributable to Internet Capital Group, Inc.:Income (loss) from continuing operations
    
    $
    0.42
    
    
    $
    (0.60
    )
    
    $
    (0.64
    )
    
    $
    0.20
    
    
    $
    1.98Income (loss) on discontinued operations
    
    
    
    
    
    
    
    
    
    
    0.02
    
    
    
    0.22
    
    
    
    (0.03
    )Basic income (loss) per share
    
    $
    0.42
    
    
    $
    (0.60
    )
    
    $
    (0.62
    )
    
    $
    0.42
    
    
    $
    1.95Shares used in computation of basic income (loss)
per share
    
    
    36,660
    
    
    
    38,106
    
    
    
    37,916
    
    
    
    37,570
    
    
    
    37,109Diluted Income (loss) Per Share Attributable to Internet Capital Group, Inc.:Income (loss) from continuing operations
    
    $
    0.42
    
    
    $
    (0.60
    )
    
    $
    (0.64
    )
    
    $
    0.19
    
    
    $
    1.76Income (loss) on discontinued operations
    
    
    
    
    
    
    
    
    
    
    0.02
    
    
    
    0.22
    
    
    
    (0.03
    )Diluted income (loss) per share
    
    $
    0.42
    
    
    $
    (0.60
    )
    
    $
    (0.62
    )
    
    $
    0.41
    
    
    $
    1.73Shares used in computation of diluted income
(loss) per share
    
    
    36,705
    
    
    
    38,106
    
    
    
    37,916
    
    
    
    38,106
    
    
    
    43,670Consolidated Balance Sheet Data:Cash, cash equivalents and short-term investments
    
    $
    55,528
    
    
    $
    89,527
    
    
    $
    82,031
    
    
    $
    120,808
    
    
    $
    147,912Working capital
    
    $
    71,700
    
    
    $
    83,285
    
    
    $
    78,749
    
    
    $
    78,939
    
    
    $
    140,504Total assets
    
    $
    330,087
    
    
    $
    285,580
    
    
    $
    332,431
    
    
    $
    354,427
    
    
    $
    346,532Other long-term debt, net of current portion
    
    $
    645
    
    
    $
    3,916
    
    
    $
    191
    
    
    $
    544
    
    
    $
    4,407Senior convertible notes
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    26,590
    
    
    $
    37,000Total Internet Capital Group, Inc.s
stockholders equity
    
    $
    280,665
    
    
    $
    247,509
    
    
    $
    304,658
    
    
    $
    298,538
    
    
    $
    256,245
 (1)
    
    The selected financial data tables for 2006 and 2005 are
not comparable to the periods for which audited financial
statements are provided due to the adoption of the transitional provisions of Accounting Standards
Codification (ASC) section 470,
subsection 20, Debt with Conversion and Other Options. See Note 7, Debt
in Item 8-Financial Statements and Supplementary Data of
this Report for further disclosures.  22




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ITEM 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Introduction
    Executive Summary
     23




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Liquidity and Capital Resources
  December 31, 2009
    
    
    December 31, 2008Consolidated
    
    
    
    
    
    
    
    
    
    
    ConsolidatedCorporate
    
    
    Subsidiaries
    
    
    Total
    
    
    Corporate
    
    
    Subsidiaries
    
    
    Total(in thousands)Cash and cash equivalents
    
    $
    29,443
    
    
    $
    26,038
    
    
    $
    55,481
    
    
    $
    73,208
    
    
    $
    16,087
    
    
    $
    89,295Restricted Cash
    
    
    
    
    
    
    47
    
    
    
    47
    
    
    
    
    
    
    
    232
    
    
    
    232$
    29,443
    
    
    $
    26,085
    
    
    $
    55,528
    
    
    $
    73,208
    
    
    $
    16,319
    
    
    $
    89,527Marketable securities (1)
    
    $
    72,965
    
    
    $
    
    
    
    $
    72,965
    
    
    $
    63,918
    
    
    $
    
    
    
    $
    63,918
 (1)
    
    Includes an offsetting liability of $0.5 million at December 31, 2009 and a
contributing asset of $6.5 million at December 31, 2008 related to derivative instruments
associated with our marketable securities.     24




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Summary of Statements of Cash Flows
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands)Cash used in operating activities
    
    $
    (8,979
    )
    
    $
    (12,385
    )
    
    $
    (16,174
    )Cash provided by (used in) investing activities
    
    $
    (22,245
    )
    
    $
    28,964
    
    
    $
    15,428Cash used in financing activities
    
    $
    (2,935
    )
    
    $
    (8,593
    )
    
    $
    (37,960
    )
        Contractual Cash Obligations and Commercial Commitments
  Payments due by periodLess than
    
    
    1-3
    
    
    3-5
    
    
    More thanTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 years(in thousands)Operating leases
    
    $
    12,658
    
    
    $
    2,536
    
    
    $
    4,376
    
    
    $
    2,774
    
    
    $
    2,972Capital leases
    
    
    241
    
    
    
    117
    
    
    
    109
    
    
    
    15
    
    
    
    Other debt
    
    
    785
    
    
    
    264
    
    
    
    521
    
    
    
    
    
    
    
    $
    13,684
    
    
    $
    2,917
    
    
    $
    5,006
    
    
    $
    2,789
    
    
    $
    2,972
  25




---



##### Table of Contents



Off-Balance Sheet Arrangements
  Our Partner Companies
  CORE PARTNER COMPANIES (%Voting Interest)Consolidated
    
    Equity
    

CostGovDelivery (89%)
    
    Channel Intelligence (50%)(1)
    
    (none)ICG Commerce (64%)
    
    Freeborders (31%)InvestorForce (81%)
    
    Metastorm (33%)StarCite (36%)WhiteFence (36%)VENTURE PARTNER COMPANIES (%Voting Interest)Consolidated
    
    Equity
    
    Cost(none)
    
    Acquirgy (25%)
    
    
    Anthem (9
    %)ClickEquations (33%)GoIndustry (26%) (2)SeaPass (26%)
 (1)
    
    Our ownership percentage rounds up to 50%. We do not
consolidate Channel Intelligence since we do not own a majority interest, and
additional factors support that we do not exert control over Channel
Intelligence. See Note 3, Ownership Interests in Partner Companies,
Goodwill and Intangibles, net, to our Consolidated Financial Statements.(2)
    
    As of December 31, 2009 and March 1, 2010, we owned
254,674,377 shares, or approximately 26% of the voting securities, of
GoIndustry. GoIndustrys common stock is traded on the AIM market of the
London Stock Exchange under ticker symbol GOI. See Note 3, Ownership
Interests in Partner Companies, Goodwill and Intangibles, net, to the
Consolidated Financial Statements. Results of Operations
    26




---



##### Table of Contents



Reconciling ItemsDiscontinuedTotal
    
    
    Operations and
    
    
    
    
    
    
    
    
    
    
    ConsolidatedCore
    
    
    Venture
    
    
    Segment
    
    
    Dispositions
    
    
    Corporate
    
    
    Other
    
    
    ResultsFor the Year Ended
December 31, 2009Revenues
    
    $
    90,252
    
    
    $
    
    
    
    $
    90,252
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    90,252Net income (loss) attributable to Internet Capital Group, Inc.
    
    $
    26,049
    
    
    $
    (2,845
    )
    
    $
    23,204
    
    
    $
    
    
    
    $
    (15,858
    )
    
    $
    8,188
    
    
    $
    15,534For the Year Ended
December 31, 2008Revenues
    
    $
    71,181
    
    
    $
    
    
    
    $
    71,181
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    71,181Net income (loss) attributable to Internet Capital Group, Inc.
    
    $
    (23,758
    )
    
    $
    (4,381
    )
    
    $
    (28,139
    )
    
    $
    
    
    
    $
    (18,966
    )
    
    $
    24,179
    
    
    $
    (22,926
    )For the Year Ended
December 31, 2007Revenues
    
    $
    52,923
    
    
    $
    
    
    
    $
    52,923
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    52,923Net income (loss) attributable to Internet Capital Group, Inc.
    
    $
    (18,194
    )
    
    $
    (856
    )
    
    $
    (19,050
    )
    
    $
    1,849
    
    
    $
    (17,022
    )
    
    $
    10,616
    
    
    $
    (23,607
    )
 For the Years Ended December 31, 2009, 2008 and 2007
 Results of Operations Core Partner Companies
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands)Selected data:Revenues
    
    $
    90,252
    
    
    $
    71,181
    
    
    $
    52,923Cost of revenue
    
    
    (56,920
    )
    
    
    (46,400
    )
    
    
    (39,523
    )Selling, general and administrative
    
    
    (18,321
    )
    
    
    (16,390
    )
    
    
    (11,101
    )Research and development
    
    
    (9,015
    )
    
    
    (10,212
    )
    
    
    (6,033
    )Impairment related and other
    
    
    (521
    )
    
    
    (994
    )
    
    
    (188
    )Operating expenses
    
    
    (84,777
    )
    
    
    (73,996
    )
    
    
    (56,845
    )Interest and other
    
    
    433
    
    
    
    (1,139
    )
    
    
    451Income tax benefit (expense)
    
    
    28,883
    
    
    
    (687
    )
    
    
    (309
    )Equity loss
    
    
    (8,742
    )
    
    
    (19,117
    )
    
    
    (14,414
    )Net income (loss)
    
    $
    26,049
    
    
    $
    (23,758
    )
    
    $
    (18,194
    )
 Revenues
   27




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##### Table of Contents



Operating Expenses
   Income Tax
   Equity Loss
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands)Selected data:Total revenues
    
    $
    184,309
    
    
    $
    193,328
    
    
    $
    160,985Total net loss
    
    $
    (15,733
    )
    
    $
    (44,928
    )
    
    $
    (40,973
    )Our share of total net loss
    
    $
    (6,653
    )
    
    $
    (17,705
    )
    
    $
    (14,160
    )Amortization of intangible assets
    
    
    (2,089
    )
    
    
    (1,412
    )
    
    
    (254
    )Equity loss
    
    $
    (8,742
    )
    
    $
    (19,117
    )
    
    $
    (14,414
    )
    28




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##### Table of Contents



Results of Operations  Venture Partner Companies
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands)Selected data:Our share of total net loss (Equity loss)
    
    $
    (2,845
    )
    
    $
    (4,381
    )
    
    $
    (856
    )
   Results of Operations  Reconciling Items
 Discontinued Operations and Dispositions
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands)Discontinued operations
    
    $
    
    
    
    $
    
    
    
    $
    995Equity
income (loss) of partner companies
sold/disposed of
    
    
    
    
    
    
    
    
    
    
    854Net income
    
    $
    
    
    
    $
    
    
    
    $
    1,849
    29




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##### Table of Contents



Corporate
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands)General and administrative
    
    $
    (16,257
    )
    
    $
    (19,775
    )
    
    $
    (21,680
    )Impairment related and other
    
    
    
    
    
    
    (794
    )
    
    
    Interest income (expense), net
    
    
    399
    
    
    
    1,603
    
    
    
    4,658Net loss
    
    $
    (15,858
    )
    
    $
    (18,966
    )
    
    $
    (17,022
    )
 General and Administrative
   Impairment-Related and Other
  Interest Income/Expense
  Other
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands)Other income (loss), net (excluding
impairments of cost method partner
companies)
    
    $
    15,976
    
    
    $
    49,012
    
    
    $
    6,783Impairments of cost method partner companies
    
    
    
    
    
    
    (4,735
    )
    
    
    Other income (loss), net
    
    
    15,976
    
    
    
    44,277
    
    
    
    6,783Impairment of carrying value of GoIndustry
(venture) (equity method partner company)
    
    
    (544
    )
    
    
    (10,204
    )
    
    
    Impairment of goodwill related to Vcommerce
(core) (consolidated partner company)
    
    
    (4,876
    )
    
    
    (8,264
    )
    
    
    Income tax benefit (expense)
    
    
    10,627
    
    
    
    330
    
    
    
    4,301Noncontrolling interest
    
    
    (12,995
    )
    
    
    (1,960
    )
    
    
    (468
    )Net income
    
    $
    8,188
    
    
    $
    24,179
    
    
    $
    10,616
  30




---



##### Table of Contents



Other Income (Loss), Net
     Impairment Charges
    Corporate Income Tax
   Critical Accounting Policies
    31




---



##### Table of Contents



Valuation of Goodwill, Intangible Assets and Ownership Interests in Partner Companies
  Revenue Recognition
   Equity Income/Loss
  Deferred Income Taxes
   32




---



##### Table of Contents



Commitments and Contingencies
  Recent Accounting Pronouncements
      33




---



##### Table of Contents



ITEM 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
     34




---



##### Table of Contents



ITEM 8.
    
    Financial Statements and Supplementary Data
  PageNumberReport of Independent Registered Public Accounting Firm
    
    
    36Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    37Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007
    
    
    38Consolidated Statements of Changes in  Equity for the years ended December 31, 2009,
2008 and 2007
    
    
    39Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31,
2009, 2008 and 2007
    
    
    40Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007
    
    
    41Notes to Consolidated Financial Statements
    
    
    42
  35




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     Internal ControlIntegrated Framework
 
  36




---



##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
December 31,2009
    
    
    2008(in thousands, except per share data)AssetsCurrent AssetsCash and cash equivalents
    
    $
    55,481
    
    
    $
    89,295Restricted cash
    
    
    47
    
    
    
    232Accounts receivable, net of allowance ($590-2009; $721-2008)
    
    
    19,411
    
    
    
    14,526Deferred tax assets
    
    
    8,147
    
    
    
    Income tax receivable
    
    
    11,071
    
    
    
    444Prepaid expenses and other current assets
    
    
    2,183
    
    
    
    2,624Total current assets
    
    
    96,340
    
    
    
    107,121Marketable securities
    
    
    73,512
    
    
    
    57,367Hedges of marketable securities
    
    
    
    
    
    
    6,551Fixed assets, net
    
    
    4,177
    
    
    
    1,783Ownership interests in partner companies
    
    
    97,777
    
    
    
    83,751Goodwill
    
    
    20,588
    
    
    
    26,658Intangibles, net
    
    
    15,940
    
    
    
    713Deferred tax assets
    
    
    20,724
    
    
    
    Other
    
    
    1,029
    
    
    
    1,636Total Assets
    
    $
    330,087
    
    
    $
    285,580LiabilitiesCurrent LiabilitiesCurrent maturities of other long-term debt
    
    $
    381
    
    
    $
    318Accounts payable
    
    
    1,656
    
    
    
    2,026Accrued expenses
    
    
    4,464
    
    
    
    4,461Accrued compensation and benefits
    
    
    12,227
    
    
    
    10,385Deferred revenue
    
    
    5,912
    
    
    
    6,646Total current liabilities
    
    
    24,640
    
    
    
    23,836Long-term debt
    
    
    645
    
    
    
    3,916Hedges of marketable securities
    
    
    547
    
    
    
    Deferred revenue
    
    
    83
    
    
    
    1,910Other
    
    
    1,010
    
    
    
    1,092Total Liabilities
    
    
    26,925
    
    
    
    30,754EquityInternet Capital Group, Inc.s Stockholders EquityPreferred stock, $0.01 par value; 10,000 shares authorized, none issued or
outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value; 2,000,000 shares authorized, 38,796 (2009)
and 38,703 (2008) issued
    
    
    39
    
    
    
    39Additional paid-in capital
    
    
    3,573,347
    
    
    
    3,569,919Treasury stock, at cost, 2,440 shares (2009) and 1,948 shares (2008)
    
    
    (12,031
    )
    
    
    (9,329
    )Accumulated deficit
    
    
    (3,351,888
    )
    
    
    (3,367,422
    )Accumulated other comprehensive income
    
    
    71,198
    
    
    
    54,302Total Internet Capital Group, Inc.s Stockholders Equity
    
    
    280,665
    
    
    
    247,509Noncontrolling Interest
    
    
    22,497
    
    
    
    7,317Total Equity
    
    
    303,162
    
    
    
    254,826Total Liabilities and Equity
    
    $
    330,087
    
    
    $
    285,580
   37




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands, except per share data)Revenues
    
    $
    90,252
    
    
    $
    71,181
    
    
    $
    52,923Operating expensesCost of revenue
    
    
    56,920
    
    
    
    46,400
    
    
    
    39,523Selling, general and administrative
    
    
    34,578
    
    
    
    36,165
    
    
    
    32,781Research and development
    
    
    9,015
    
    
    
    10,212
    
    
    
    6,033Impairment related and other
    
    
    5,397
    
    
    
    10,052
    
    
    
    188Total operating expenses
    
    
    105,910
    
    
    
    102,829
    
    
    
    78,525(15,658
    )
    
    
    (31,648
    )
    
    
    (25,602
    )Other income (loss), net
    
    
    16,578
    
    
    
    43,225
    
    
    
    6,830Interest income
    
    
    446
    
    
    
    1,850
    
    
    
    5,338Interest expense
    
    
    (216
    )
    
    
    (334
    )
    
    
    (276
    )Income (loss) from continuing operations before income taxes and  equity loss
    
    
    1,150
    
    
    
    13,093
    
    
    
    (13,710
    )Income tax benefit (expense)
    
    
    39,510
    
    
    
    (357
    )
    
    
    3,992Equity loss
    
    
    (12,131
    )
    
    
    (33,702
    )
    
    
    (14,416
    )Income (loss) from continuing operations
    
    
    28,529
    
    
    
    (20,966
    )
    
    
    (24,134
    )Income (loss) on discontinued operations
    
    
    
    
    
    
    
    
    
    
    995Net income (loss)
    
    
    28,529
    
    
    
    (20,966
    )
    
    
    (23,139
    )Less: Net income attributable to the noncontrolling interest
    
    
    12,995
    
    
    
    1,960
    
    
    
    468Net income (loss) attributable to Internet Capital Group, Inc.
    
    $
    15,534
    
    
    $
    (22,926
    )
    
    $
    (23,607
    )Basic income (loss) per share
attributable to Internet Capital Group, Inc.:Income (loss) from continuing operations
    
    $
    0.42
    
    
    $
    (0.60
    )
    
    $
    (0.64
    )Income (loss) on discontinued operations
    
    
    
    
    
    
    
    
    
    
    0.02Net income (loss)
    
    $
    0.42
    
    
    $
    (0.60
    )
    
    $
    (0.62
    )Shares used in computation of basic income (loss) per share
    
    
    36,660
    
    
    
    38,106
    
    
    
    37,916Diluted income (loss) per share
attributable to Internet Capital Group, Inc.:Income (loss) from continuing operations
    
    $
    0.42
    
    
    $
    (0.60
    )
    
    $
    (0.64
    )Income (loss) on discontinued operations
    
    
    
    
    
    
    
    
    
    
    0.02Net income (loss)
    
    $
    0.42
    
    
    $
    (0.60
    )
    
    $
    (0.62
    )Shares used in computation of diluted income (loss) per share
    
    
    36,705
    
    
    
    38,106
    
    
    
    37,916
   38




---



##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 CONSOLIDATED
STATEMENTS  OF CHANGES IN EQUITY
 Internet
Capital Group, Inc. Stockholders EquityAdditional
    
    
    
    
    
    
    Accumulated OtherCommon Stock
    
    
    Treasury Stock, at cost
    
    
    Paid-In
    
    
    Accumulated
    
    
    Comprehensive
    
    
    NoncontrollingShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Income
    
    
    Interest
    
    
    TotalBalance as of December 31, 2006
    
    
    38,598
    
    
    $
    39
    
    
    
    
    
    
    $
    
    
    
    $
    3,552,681
    
    
    $
    (3,317,095
    )
    
    $
    62,913
    
    
    $
    4,123
    
    
    $
    302,661Cumulative effect of change in accounting principle for convertible debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,361
    
    
    
    (3,794
    )
    
    
    
    
    
    
    
    
    
    
    4,567Balance at December 31, 2006, as adjusted
    
    
    38,598
    
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    3,561,042
    
    
    
    (3,320,889
    )
    
    
    62,913
    
    
    
    4,123
    
    
    
    307,228Reacquisition of equity (Note 7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,588
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,588
    )Share-based compensation expense related to restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,334
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,334Impact of partner company equity transactions (Note 3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,309
    
    
    
    
    
    
    
    
    
    
    
    533
    
    
    
    7,842Issuance of restricted stock
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeitures of restricted stock
    
    
    (36
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based compensation related to stock appreciation rights and stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,031
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,031Issuance of deferred stock units to Board of Directors
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    808
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    808Equity-based compensation tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    332
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    332Noncontrolling owners share of AOCI of consolidated subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    19
    
    
    
    Net unrealized appreciation in marketable securities and reclassification
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,953
    
    
    
    
    
    
    
    21,953Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,607
    )
    
    
    
    
    
    
    468
    
    
    
    (23,139
    )Balance as of December 31, 2007
    
    
    38,651
    
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    3,564,268
    
    
    
    (3,344,496
    )
    
    
    84,847
    
    
    
    5,143
    
    
    
    309,801Share-based compensation expense related to restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,577
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,577Impact of partner company equity transactions (Note 3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (629
    )
    
    
    
    
    
    
    
    
    
    
    331
    
    
    
    (298
    )Issuance of restricted stock
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Surrenders of restricted stock
    
    
    (17
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (87
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (87
    )Share-based compensation related to stock appreciation rights and stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,167
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,167Exercise of stock appreciation rights, net of surrenders
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )Issuance of deferred stock units to Board of Directors
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    616
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    616Repurchase of common stock
    
    
    
    
    
    
    
    
    
    
    (1,948
    )
    
    
    (9,329
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,329
    )Noncontrolling owners share of AOCI of consolidated subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    117
    
    
    
    (117
    )
    
    
    2008 LP capital contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Net unrealized depreciation in marketable securities and reclassification
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,662
    )
    
    
    
    
    
    
    (30,662
    )Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,926
    )
    
    
    
    
    
    
    1,960
    
    
    
    (20,966
    )Balance as of December 31, 2008
    
    
    38,703
    
    
    
    39
    
    
    
    (1,948
    )
    
    
    (9,329
    )
    
    
    3,569,919
    
    
    
    (3,367,422
    )
    
    
    54,302
    
    
    
    7,317
    
    
    
    254,826Share-based compensation expense related to restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    256
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    256Impact of partner company equity transactions (Note 3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    331
    
    
    
    
    
    
    
    
    
    
    
    2,115
    
    
    
    2,446Issuance of restricted stock
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Surrenders of restricted stock
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8
    )Share-based compensation related to stock appreciation rights and stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,633
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,633Issuance of deferred stock units to Board of Directors
    
    
    70
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    202
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    202Repurchase of common stock
    
    
    
    
    
    
    
    
    
    
    (492
    )
    
    
    (2,702
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,702
    )Noncontrolling owners share of AOCI of consolidated subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70
    )
    
    
    70
    
    
    
    2009 LP capital contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14Net unrealized depreciation in marketable securities and reclassification
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,966
    
    
    
    
    
    
    
    16,966Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,534
    
    
    
    
    
    
    
    12,995
    
    
    
    28,529Balance as of December 31, 2009
    
    
    38,796
    
    
    $
    39
    
    
    
    (2,440
    )
    
    $
    (12,031
    )
    
    $
    3,573,347
    
    
    $
    (3,351,888
    )
    
    $
    71,198
    
    
    $
    22,497
    
    
    $
    303,162
   39




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands)Net income (loss)
    
    $
    28,529
    
    
    $
    (20,966
    )
    
    $
    (23,139
    )Other comprehensive income (loss)Unrealized holding gains (losses) in marketable
securities
    
    
    38,251
    
    
    
    (30,028
    )
    
    
    22,333Reclassification adjustments/realized net
(gains) loss on marketable securities
    
    
    (21,285
    )
    
    
    (634
    )
    
    
    (380
    )Other accumulated other comprehensive income (loss)
    
    
    (70
    )
    
    
    117
    
    
    
    (19
    )Comprehensive income (loss)
    
    
    45,425
    
    
    
    (51,511
    )
    
    
    (1,205
    )Less:
Comprehensive income attributable to the noncontrolling interest
    
    
    12,925
    
    
    
    2,077
    
    
    
    449Comprehensive income (loss) attributable to Internet Capital Group, Inc.
    
    $
    32,500
    
    
    $
    (53,588
    )
    
    $
    (1,654
    )
   40




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands)Operating ActivitiesNet income (loss)
    
    $
    28,529
    
    
    $
    (20,966
    )
    
    $
    (23,139
    )Income
(loss) from discontinued operations
    
    
    
    
    
    
    
    
    
    
    995Income
(loss) on  continuing operations
    
    
    28,529
    
    
    
    (20,966
    )
    
    
    (24,134
    )Adjustments to reconcile net loss to cash used in operating activities:Depreciation and amortization
    
    
    1,747
    
    
    
    1,858
    
    
    
    1,502Impairment related and other
    
    
    5,021
    
    
    
    9,392
    
    
    
    59Equity-based compensation
    
    
    3,851
    
    
    
    7,090
    
    
    
    7,781Equity loss
    
    
    12,131
    
    
    
    33,702
    
    
    
    14,416Other (income) loss
    
    
    (16,580
    )
    
    
    (43,225
    )
    
    
    (6,830
    )Deferred income tax benefit
    
    
    (28,871
    )
    
    
    
    
    
    
    Changes in assets and liabilities, net of effect of acquisitions:Accounts receivable, net
    
    
    (4,083
    )
    
    
    (6,409
    )
    
    
    (1,452
    )Income tax receivable
    
    
    (10,627
    )
    
    
    (444
    )
    
    
    Prepaid expenses and other assets
    
    
    (71
    )
    
    
    4,130
    
    
    
    (4,526
    )Accounts payable
    
    
    (349
    )
    
    
    618
    
    
    
    486Accrued expenses
    
    
    1,786
    
    
    
    (126
    )
    
    
    (1,271
    )Deferred revenue
    
    
    (1,472
    )
    
    
    1,672
    
    
    
    (2,153
    )Other liabilities
    
    
    9
    
    
    
    323
    
    
    
    (52
    )Cash
provided by (used in) operating activities
    
    
    (8,979
    )
    
    
    (12,385
    )
    
    
    (16,174
    )Investing ActivitiesCapital expenditures
    
    
    (2,995
    )
    
    
    (1,192
    )
    
    
    (1,226
    )Advanced deposits for acquisition of fixed assets
    
    
    274
    
    
    
    (422
    )
    
    
    Proceeds from disposition of fixed assets
    
    
    
    
    
    
    30
    
    
    
    Changes in restricted cash
    
    
    172
    
    
    
    (27
    )
    
    
    99Proceeds from sales of marketable securities
    
    
    21,625
    
    
    
    60,233
    
    
    
    24Proceeds from sales of Partner Company ownership interests
    
    
    2,607
    
    
    
    3,267
    
    
    
    34,725Proceeds from sale of discontinued operations
    
    
    
    
    
    
    
    
    
    
    1,200Acquisitions of ownership interests in Partner Companies
    
    
    (46,654
    )
    
    
    (35,478
    )
    
    
    (19,394
    )Increase in cash due to consolidation of Partner Companies
    
    
    2,807
    
    
    
    2,553
    
    
    
    Reduction in cash due to sale of subsidiary assets
    
    
    (81
    )
    
    
    
    
    
    
    Cash
provided by (used in) investing activities
    
    
    (22,245
    )
    
    
    28,964
    
    
    
    15,428Financing ActivitiesRepurchase of senior convertible notes
    
    
    
    
    
    
    
    
    
    
    (37,087
    )Borrowings of long-term debt
    
    
    
    
    
    
    1,500
    
    
    
    Long term debt and capital lease obligations, net
    
    
    (150
    )
    
    
    (696
    )
    
    
    (873
    )Line of credit repayments
    
    
    (115
    )
    
    
    (68
    )
    
    
    Share repurchases
    
    
    (2,702
    )
    
    
    (9,329
    )
    
    
    Other financing activities
    
    
    32
    
    
    
    
    
    
    
    Cash provided by (used in) financing activities
    
    
    (2,935
    )
    
    
    (8,593
    )
    
    
    (37,960
    )Net increase (decrease) in Cash and Cash Equivalents
    
    
    (34,159
    )
    
    
    7,986
    
    
    
    (38,706
    )Effect of exchange rates on cash
    
    
    345
    
    
    
    (722
    )
    
    
    (71
    )Cash and Cash Equivalents at the beginning of year
    
    
    89,295
    
    
    
    82,031
    
    
    
    120,808Cash and Cash Equivalents at end of year
    
    $
    55,481
    
    
    $
    89,295
    
    
    $
    82,031Supplemental disclosures of cash flow information:Cash paid during the year for:Interest
    
    $
    164
    
    
    $
    309
    
    
    $
    539Income tax payments (refunds), net
    
    $
    794
    
    
    $
    (4,317
    )
    
    
    
   41




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. The Company
 Description of the Company
   2. Significant Accounting Policies
 Basis of Presentation
   Year Ended December 31,2009
    
    2008
    
    2007ICG Commerce
    
    ICG Commerce
    
    ICG CommerceInvestorForce
    
    InvestorForce
    
    InvestorForceVcommerce (1)
    
    Vcommerce (1)
  December 31,2009
    
    2008GovDelivery (2)
    
    ICG CommerceICG Commerce
    
    InvestorForceInvestorForce
    
    Vcommerce (1)
 (1)
    
    On May 1, 2008, Vcommerce became a consolidated partner company when the
Companys voting interest increased to 53%. Vcommerces results of operations are included in
the Companys Consolidated Statements of Operations beginning May 1, 2008. On August 28,
2009, substantially all of Vcommerces assets were sold to Channel Intelligence, and Vcommerce
is not included in the Companys Consolidated Financial Statements subsequent to that date.
See Note 3, Ownership Interests in Partner Companies, Goodwill and Intangibles, net.(2)
    
    On December 31, 2009, the Company acquired 89% of GovDelivery and began
consolidating the financial position of GovDelivery as of that date. See Note 3, Ownership
Interests in Partner Companies, Goodwill and Intangibles, net.  42




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2. Significant Accounting Policies  (Continued)
 Principles of Accounting for Ownership Interests in Partner Companies
  Consolidation.
 Equity Method.
  Cost Method.
   43




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2. Significant Accounting Policies  (Continued)
  Use of Estimates
  Ownership Interests in partner companies, Goodwill and Intangibles, net
     44




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2. Significant Accounting Policies  (Continued)
 Revenue Recognition
    Deferred Revenue
  Cash and Cash Equivalents
  Restricted Cash
   45




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2. Significant Accounting Policies  (Continued)
 Marketable Securities
  Financial Instruments
  Research and Development
  Income Taxes
  Net Income (Loss) Per Share
  Issuances of Stock by Partner Companies
   46




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2. Significant Accounting Policies  (Continued)
 Escrowed Proceeds
  Concentration of Customer Base and Credit Risk
  Equity-Based Compensation
  Comprehensive Income (Loss)
  Reclassifications
   47




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2. Significant Accounting Policies  (Continued)
 Recent Accounting Pronouncements
         48




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2. Significant Accounting Policies  (Continued)
         49




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2. Significant Accounting Policies  (Continued)
  3. Ownership Interests in Partner Companies, Goodwill and Intangibles, net
  December 31,
    
    
    December 31,2009
    
    
    2008(in thousands)Goodwill
    
    $
    20,588
    
    
    $
    26,658Intangibles,
net of accumulated amortization of $0 (2009) and $205 (2008)
    
    $
    15,940
    
    
    $
    713Ownership interests in partner
companies  Equity Method
    
    $
    97,777
    
    
    $
    83,751
  Goodwill at December 31, 2007
    
    $
    17,084Additional acquisition of Vcommerce
    
    
    17,978Impairment of Vcommerce
    
    
    (8,264
    )Reduction due to dilution of a consolidated partner companys ownership
    
    
    (140
    )Goodwill at December 31, 2008
    
    
    26,658Vcommerce activity (see subsection Impairments  Consolidated
Company)
    
    
    (9,714
    )Increase due to acquisition of GovDelivery on December 31, 2009
    
    
    3,644Goodwill at December 31, 2009
    
    $
    20,588
    2010
    
    $
    1,4562011
    
    $
    1,4562012
    
    $
    1,4562013
    
    $
    1,4562014
    
    $
    1,456Thereafter
    
    $
    8,660Remaining amortization expense
    
    $
    15,940
  50




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 3. Ownership Interests in Partner Companies, Goodwill and Intangibles, net  (Continued)
 Acquisitions  Consolidated Company
  GovDeliveryNet assets acquired:Goodwill
    
    $
    3,644Customer lists (11 year life)
    
    
    13,910Trademarks/trade names (11 year life)
    
    
    1,320Technology
(10 year life)
    
    
    710Other net assets (liabilities)
    
    
    1,50621,090Noncontrolling
interest(1)
    
    
    (1,420
    )$
    19,670
 (1)
   VcommerceNet Assets Acquired:Goodwill
    
    $
    17,978Technology
    
    
    918Other net assets (liabilities)
    
    $
    (3,651
    )$
    15,245
   51




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 3. Ownership Interests in Partner Companies, Goodwill and Intangibles, net  (Continued)
 Impairments
  Statement of Operations
    

Year Ended December 31,Presentation
    
    2009
    
    
    2008
    
    
    2007Consolidation Method
    
    Impairment related and other
    
    $
    4,876
    
    
    $
    8,264
    
    
    $
    Equity Method
    
    Equity loss
    
    
    544
    
    
    
    10,204
    
    
    
    Cost Method
(Note 13)
    
    Other income (loss), net
    
    
    
    
    
    
    4,735
    
    
    
    $
    5,420
    
    
    $
    23,203
    
    
    $
    
 Impairments  Consolidated Company
   Equity Method Companies
   52




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 3. Ownership Interests in Partner Companies, Goodwill and Intangibles, net  (Continued)
 Balance Sheets (Unaudited)
 As of December 31,2009 (1)
    
    
    2008 (2)(in thousands)Cash and cash equivalents
    
    $
    72,469
    
    
    $
    47,749Other current assets
    
    
    60,186
    
    
    
    72,732Non-current assets
    
    
    157,455
    
    
    
    163,216Total assets
    
    $
    290,110
    
    
    $
    283,697Current liabilities
    
    $
    122,762
    
    
    $
    141,510Non-current liabilities
    
    
    11,192
    
    
    
    8,791Long-term debt
    
    
    15,117
    
    
    
    1,843Stockholders equity
    
    
    141,039
    
    
    
    131,553Total liabilities and stockholders equity
    
    $
    290,110
    
    
    $
    283,697Total carrying value
    
    $
    97,777
    
    
    $
    83,751
 (1)
    
    Includes (ICG voting ownership): Acquirgy (25%), Channel Intelligence (50%),
ClickEquations (33%), Freeborders (31%), GoIndustry (26%), Metastorm (33%), SeaPass (26%), StarCite (36%) and
WhiteFence (36%).(2)
    
    Includes (ICG voting ownership): Channel Intelligence (46%), ClickEquations (30%),
Freeborders (31%), GoIndustry (29%), Metastorm (33%), StarCite (34%) and WhiteFence (36%).      53




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 3. Ownership Interests in Partner Companies, Goodwill and Intangibles, net  (Continued)
 Results of Operations (Unaudited)
 Year Ended December 31,2009(1)
    
    
    2008(2)
    
    
    2007 (3)(in thousands)Revenues
    
    $
    229,640
    
    
    $
    243,762
    
    
    $
    206,279Net income (loss)
    
    $
    (26,511
    )
    
    $
    (57,943
    )
    
    $
    (40,125
    )Equity income (loss) excluding impairments and amortization of intangible assets
    
    $
    (9,321
    )
    
    $
    (22,086
    )
    
    $
    (14,162
    )Impairment charge of GoIndustry
    
    
    (544
    )
    
    
    (10,204
    )
    
    
    Amortization of intangible assets
    
    
    (2,266
    )
    
    
    (1,412
    )
    
    
    (254
    )Total equity income (loss)
    
    $
    (12,131
    )
    
    $
    (33,702
    )
    
    $
    (14,416
    )
 (1)
    
    Includes Acquirgy (from date of acquisition), Channel Intelligence, ClickEquations, Freeborders, GoIndustry,
Metastorm, SeaPass (from date of acquisition), StarCite and WhiteFence.(2)
    
    Includes Channel Intelligence, ClickEquations, Freeborders, GoIndustry, Metastorm, StarCite, Vcommerce (to date
of consolidation) and WhiteFence.(3)
    
    Includes Channel Intelligence, Freeborders,
GoIndustry, Marketron (to date of
disposition), Metastorm, StarCite, Vcommerce and WhiteFence. Other Equity Company Information
    54




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 3. Ownership Interests in Partner Companies, Goodwill and Intangibles, net  (Continued)
   Issuances of Stock by Partner Companies
  Issuance of Stock by
    
    Year Ended December 31,Partner Company
    
    Partner Company for:
    
    2009
    
    
    2008
    
    
    2007GoIndustry
    
    Financing/Acquisition/Merger Transactions
    
    $
    
    
    
    $
    (1,344
    )
    
    $
    4,996Metastorm
    
    Financing and Acquisition Transaction
    
    
    
    
    
    
    
    
    
    
    2,224Other
    
    Restricted Stock/Stock Option Activity
    
    
    331
    
    
    
    715
    
    
    
    89Impact of partner company equity transactions
    
    $
    331
    
    
    $
    (629)
    
    
    $
    7,309
 Other Partner Company Information
   55




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 3. Ownership Interests in Partner Companies, Goodwill and Intangibles, net  (Continued)
  Escrow Information
  4. Marketable Securities and Related Derivatives
  UnrealizedCommon Shares
    
    
    
    
    
    
    HoldingOwned
    
    
    Cost
    
    
    Gains/(Losses)
    
    
    Fair Value(in thousands, except shares)December 31, 2009Blackboard
    
    
    1,619,571
    
    
    $
    2,342
    
    
    $
    71,170
    
    
    $
    73,512December 31, 2008Blackboard
    
    
    2,187,060
    
    
    $
    3,162
    
    
    $
    54,205
    
    
    $
    57,367
   56




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 4. Marketable Securities and Related Derivatives  (Continued)
      Dec. 31,
    
    
    Mar. 31,
    
    
    June. 30,
    
    
    Sep. 30,
    
    
    Dec. 31,
    
    
    Mar. 31,
    
    
    June. 30,
    
    
    Sep. 30,
    
    
    Dec. 31,2007
    
    
    2008
    
    
    2008
    
    
    2008
    
    
    2008
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2009Blackboard
closing
stock price
    
    $
    40.25
    
    
    $
    33.33
    
    
    $
    38.23
    
    
    $
    40.29
    
    
    $
    26.23
    
    
    $
    31.74
    
    
    $
    28.86
    
    
    $
    37.78
    
    
    $
    45.39
     57




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 5. Financial Instruments
 Derivative Financial Instruments
   Consolidated Balance SheetsDecember 31,
    
    
    December 31,Derivative
Instrument
    
    Classification
    
    2009
    
    
    2008(in thousands)Cashless collar contracts
    
    Hedges of marketable securities
    
    $
    (547
    )
    
    $
    6,551Foreign exchange put option
    
    Other assets, net
    
    $
    
    
    
    $
    
  Consolidated Statements of OperationsYear ended December 31,Derivative Instrument
    
Classification
    
    2009
    
    
    2008
    
    
    2007(in thousands)Cashless collar contracts
    
    Other income (loss), net
    
    $
    (7,098
    )
    
    $
    10,204
    
    
    $
    (3,651
    )Foreign
exchange instruments
    
    Other income (loss), net
    
    $
    (33
    )
    
    $
    (132
    )
    
    $
    
 Fair Value Measurements
      58




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 5 Financial Instruments  (Continued)
  Balance atDecember 31,2009
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3(in thousands)Cash equivalents (money market accounts)
    
    $
    49,972
    
    
    $
    49,972
    
    
    $
    
    
    
    $
    Marketable securities (see Note 4)
    
    
    73,512
    
    
    
    73,512
    
    
    
    
    
    
    
    Hedges of marketable securities (see Note 5)
    
    
    (547
    )
    
    
    
    
    
    
    (547
    )(a)
    
    
    $
    122,937
    
    
    $
    123,484
    
    
    $
    (547
    )
    
    $
    
 Balance atDecember 31,2008
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Cash equivalents (money market accounts)
    
    $
    84,470
    
    
    $
    84,470
    
    
    $
    
    
    
    $
    Marketable securities (see Note 4)
    
    
    57,367
    
    
    
    57,367
    
    
    
    
    
    
    
    Hedges of marketable securities (see Note 5)
    
    
    6,551
    
    
    
    
    
    
    
    6,551
    (a)
    
    
    $
    148,388
    
    
    $
    141,837
    
    
    $
    6,551
    
    
    $
    
 (a)
    
    The Companys counterparty under these arrangements provides the Company with quarterly
statements of the market values of these instruments based on significant inputs that are
observable or can be derived principally from, or corroborated by, observable market data for
substantially the full term of the asset or liability. 6. Fixed Assets
  As of December 31,Useful Life
    
    
    2009
    
    
    2008(in thousands)Computer equipment and software,
office equipment and furniture
    
    3-7 years
    
    $
    15,292
    
    
    $
    18,184Leasehold improvements
    
    3-6 years
    
    
    971
    
    
    
    1,08416,263
    
    
    
    19,268Less:
accumulated depreciation and amortization
    
    
    
    
    
    
    (12,086
    )
    
    
    (17,485
    )$
    4,177
    
    
    $
    1,783
  7. Debt
 Long-Term Debt
  As of December 31,Interest Rates
    
    
    2009
    
    
    2008(in thousands)Capital leases
    
    2.25-12.98%
    
    
    $
    241
    
    
    $
    153Other debt
    
    10.27-13.00%
    
    
    
    785
    
    
    
    4,0811,026
    
    
    
    4,234Current maturities
    
    
    
    
    
    
    (381
    )
    
    
    (318
    )Other long-term debt
    
    
    
    
    
    $
    645
    
    
    $
    3,916
  59




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 7. Debt  (Continued)
  2010
    
    $
    3812011
    
    
    3842012
    
    
    2472013
    
    
    132014
    
    
    1$
    1,026
 Loan and Credit Agreements
      60




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 7. Debt  (Continued)
 Senior Convertible Notes
    Other income (loss), as previously reported
    
    $
    (167
    )Impact of retrospective application
    
    
    6,997Other income (loss), as adjusted
    
    $
    6,830Interest expense, as previously reported
    
    $
    (300
    )Impact of retrospective application
    
    
    24Interest expense, as adjusted
    
    $
    (276
    )
 Income (loss) from continuing operations, as previously reported
    
    $
    (31,155
    )Impact of retrospective application
    
    
    7,021Income (loss) from continuing operations, as adjusted
    
    $
    (24,134
    )Net income (loss), as previously reported
    
    $
    (30,160
    )Impact of retrospective application
    
    
    7,021Net income (loss), as adjusted
    
    $
    (23,139
    )
    61




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 8. Segment Information
     Segment Information
 Reconciling ItemsDiscontinuedOperationsTotal
    
    
    and
    
    
    
    
    
    
    
    
    
    
    ConsolidatedCore
    
    
    Venture
    
    
    Segment
    
    
    Dispositions*
    
    
    Corporate
    
    
    Other**
    
    
    ResultsYear Ended December 31,
2009Revenues
    
    $
    90,252
    
    
    $
    
    
    
    $
    90,252
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    90,252Net income
(loss) attributable to Internet Capital Group, Inc.
    
    $
    26,049
    
    
    $
    (2,845
    )
    
    $
    23,204
    
    
    $
    
    
    
    $
    (15,858
    )
    
    $
    8,188
    
    
    $
    15,534Assets
    
    $
    192,786
    
    
    $
    21,832
    
    
    $
    214,618
    
    
    $
    
    
    
    $
    115,469
    
    
    $
    
    
    
    $
    330,087Year Ended December 31,
2008Revenues
    
    $
    71,181
    
    
    $
    
    
    
    $
    71,181
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    71,181Net income (loss)
 attributable to Internet Capital Group, Inc.
    
    $
    (23,758
    )
    
    $
    (4,381
    )
    
    $
    (28,139
    )
    
    $
    
    
    
    $
    (18,966
    )
    
    $
    24,179
    
    
    $
    (22,926
    )Assets
    
    $
    138,374
    
    
    $
    8,281
    
    
    $
    146,655
    
    
    $
    
    
    
    $
    138,925
    
    
    $
    
    
    
    $
    285,580Year Ended December 31,
2007Revenues
    
    $
    52,923
    
    
    $
    
    
    
    $
    52,923
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    52,923Net income (loss)
 attributable to Internet Capital Group, Inc.
    
    $
    (18,194
    )
    
    $
    (856
    )
    
    $
    (19,050
    )
    
    $
    1,849
    
    
    $
    (17,022
    )
    
    $
    10,616
    
    
    $
    (23,607
    )Assets
    
    $
    153,365
    
    
    $
    14,982
    
    
    $
    168,347
    
    
    $
    
    
    
    $
    164,084
    
    
    $
    
    
    
    $
    332,431
 *
    
    Discontinued operations represent net income of $995 for the year ended December 31, 2007. All
other amounts relate to dispositions for the year ended December 31, 2007.**
    
    Other reconciling items to net income (loss) are as follows: Year Ended December 31,2009
    
    
    2008
    
    
    2007Other income (loss) (Note 13)
    
    $
    15,976
    
    
    $
    44,277
    
    
    $
    6,783Income taxes (Note 14)
    
    
    10,627
    
    
    
    330
    
    
    
    4,301Noncontrolling interest
    
    
    (12,995
    )
    
    
    (1,960
    )
    
    
    (468
    )Impairment of GoIndustry (Venture) (Note 3)
    
    
    (544
    )
    
    
    (10,204
    )
    
    
    Impairment of Vcommerce (Core) (Note 3)
    
    
    (4,876
    )
    
    
    (8,264
    )
    
    
    $
    8,188
    
    
    $
    24,179
    
    
    $
    10,616
  62




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 9. Parent Company Financial Information
  Parent Company Balance Sheets
 As of December 31,2009
    
    
    2008(in thousands)AssetsCash and cash equivalents
    
    $
    29,443
    
    
    $
    73,208Income tax receivable
    
    
    11,071
    
    
    
    444Other current assets
    
    
    562
    
    
    
    961Current assets
    
    
    41,076
    
    
    
    74,613Ownership
interests in partner companies
    
    
    170,498
    
    
    
    113,395Marketable securities
    
    
    73,512
    
    
    
    57,367Hedges of marketable securities
    
    
    
    
    
    
    6,551Other
    
    
    881
    
    
    
    394Total assets
    
    $
    285,967
    
    
    $
    252,320Liabilities and stockholders equityCurrent liabilities
    
    $
    4,433
    
    
    $
    4,011Hedges of marketable securities
    
    
    547
    
    
    
    Non-current liabilities
    
    
    350
    
    
    
    898Stockholders equity
    
    
    280,637
    
    
    
    247,411Total liabilities and stockholders equity
    
    $
    285,967
    
    
    $
    252,320
 Parent Company Statements of Operations
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands)Revenues
    
    $
    
    
    
    $
    
    
    
    $
    Operating expensesGeneral and administrative
    
    
    16,257
    
    
    
    19,755
    
    
    
    21,680Impairment related and other
    
    
    4,876
    
    
    
    9,058
    
    
    
    Total operating expenses
    
    
    21,133
    
    
    
    28,813
    
    
    
    21,680(21,133
    )
    
    
    (28,813
    )
    
    
    (21,680
    )Other income (loss), net *
    
    
    15,976
    
    
    
    44,277
    
    
    
    6,960Interest income (expense), net
    
    
    399
    
    
    
    1,603
    
    
    
    4,682Income (loss) before income taxes and equity loss
    
    
    (4,758
    )
    
    
    17,067
    
    
    
    (10,038
    )Income tax benefit (expense)
    
    
    10,627
    
    
    
    330
    
    
    
    4,301Equity income (loss)
    
    
    9,665
    
    
    
    (40,323
    )
    
    
    (17,870
    )Net income (loss)
    
    $
    15,534
    
    
    $
    (22,926
    )
    
    $
    (23,607
    )
 *
    
    For purposes of parent company reporting, discontinued operations (see Note 15,
Discontinued Operations) are included in the Other income (loss), net line item.  63




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 9. Parent Company Financial Information  (Continued)
 Parent Company Statements of Cash Flows
 Year Ended December 312009
    
    
    2008
    
    
    2007(in thousands)Operating ActivitiesNet income (loss)
    
    $
    15,534
    
    
    $
    (22,926
    )
    
    $
    (23,607
    )Adjustments
to reconcile net income (loss) to cash used in operating activitiesDepreciation and amortization
    
    
    90
    
    
    
    133
    
    
    
    140Impairment related and other
    
    
    4,876
    
    
    
    9,058
    
    
    
    Equity-based compensation
    
    
    3,089
    
    
    
    6,298
    
    
    
    7,173Equity (income) loss
    
    
    (9,665
    )
    
    
    40,323
    
    
    
    17,870Other (income) loss
    
    
    (15,918
    )
    
    
    (44,277
    )
    
    
    (6,960
    )Changes in assets and liabilities, net of effect of acquisitions:Taxes receivable
    
    
    (10,627
    )
    
    
    4,889
    
    
    
    (4,301
    )Prepaid expenses and other assets
    
    
    299
    
    
    
    (8
    )
    
    
    (32
    )Accounts payable
    
    
    (6
    )
    
    
    6
    
    
    
    (33
    )Accrued expenses
    
    
    (51
    )
    
    
    (1,480
    )
    
    
    (254
    )Other liabilities
    
    
    (60
    )
    
    
    403
    
    
    
    Cash used in operating activities
    
    
    (12,439
    )
    
    
    (7,581
    )
    
    
    (10,004
    )Investing ActivitiesCapital expenditures, net
    
    
    (52
    )
    
    
    (47
    )
    
    
    (63
    )Proceeds from sales of marketable securities
    
    
    21,625
    
    
    
    60,233
    
    
    
    24Proceeds from sales of ownership interests in
partner companies
    
    
    2,607
    
    
    
    3,267
    
    
    
    34,925Acquisitions
of ownership interests in partner companies, net
    
    
    (52,804
    )
    
    
    (42,460
    )
    
    
    (22,919
    )Cash provided by (used in) investing activities
    
    
    (28,624
    )
    
    
    20,993
    
    
    
    11,967Financing ActivitiesRepurchase of senior convertible notes
    
    
    
    
    
    
    
    
    
    
    (37,087
    )Share repurchases
    
    
    (2,702
    )
    
    
    (9,329
    )
    
    
    Cash provided by (used in) financing activities
    
    
    (2,702
    )
    
    
    (9,329
    )
    
    
    (37,087
    )Net increase (decrease) in cash and cash equivalents
    
    
    (43,765
    )
    
    
    4,083
    
    
    
    (35,124
    )Cash and cash equivalents at beginning at year
    
    
    73,208
    
    
    
    69,125
    
    
    
    104,249Cash and cash equivalents at end of year
    
    $
    29,443
    
    
    $
    73,208
    
    
    $
    69,125
 10.
Internet Capital Group, Inc.s Stockholders Equity
    64




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INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 10.
Internet Capital Group, Inc.s Stockholders Equity  (Continued)
 Stockholder Rights Plan
    11. Equity-Based Compensation
    65




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11. Equity-Based Compensation  (Continued)
  WeightedAverage YearsRemaining ofStock-BasedUnrecognized Stock-
    
    
    CompensationBased Compensation
    
    
    Expense atYear Ended December 31,
    
    
    at December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2009Stock Appreciation Rights
    
    $
    2,629
    
    
    $
    4,138
    
    
    $
    3,909
    
    
    $
    1,825
    
    
    
    2.8Stock Options
    
    
    3
    
    
    
    29
    
    
    
    122
    
    
    
    1
    
    
    
    2.9Restricted Stock
    
    
    82
    
    
    
    1,577
    
    
    
    2,333
    
    
    
    257
    
    
    
    3.0Deferred Stock Units
    
    
    174
    
    
    
    320
    
    
    
    330
    
    
    
    24
    
    
    
    0.2Equity-Based Compensation
    
    $
    2,888
    
    
    $
    6,064
    
    
    $
    6,694
    
    
    $
    2,107Equity-Based Compensation
for Consolidated
Partner Companies:Restricted Stock
    
    
    763
    
    
    
    770
    
    
    
    559
    
    
    
    766
    
    
    
    1.8$
    3,651
    
    
    $
    6,834
    
    
    $
    7,253
    
    
    $
    2,873
 Stock Appreciation Rights (SARs) and Stock Options Fair Value Assumptions
  2009
    
    2008
    
    2007Expected volatility
    
    60%
    
    60%
    
    60%Average expected option life
    
    6.25 years
    
    6.25 years
    
    6.25 yearsRisk-free interest rate
    
    2.00-2.54%
    
    3.08%
    
    3.51-5.10%Dividend yield
    
    0.0%
    
    0.0%
    
    0.0%
   66




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11. Equity-Based Compensation  (Continued)
 SARs
   Weighted
    
    
    WeightedAverage
    
    
    AverageSARs
    
    
    Base Price
    
    
    Fair ValueIssued at December 31, 2006
    
    
    3,650,179
    
    
    $
    7.45
    
    
    $
    4.50SARs cancelled
    
    
    (134,064
    )
    
    $
    7.34
    
    
    $
    4.43SARs granted
    
    
    100,000
    
    
    $
    11.96
    
    
    $
    7.18Issued at December 31, 2007
    
    
    3,616,115
    
    
    $
    7.58
    
    
    $
    4.58SARs exercised
    
    
    (67,363
    )
    
    $
    7.34
    
    
    $
    4.43SARs cancelled
    
    
    (782
    )
    
    $
    7.34
    
    
    $
    4.43SARs granted
    
    
    322,400
    
    
    $
    8.41
    
    
    $
    4.96Issued at December 31, 2008
    
    
    3,870,370
    
    
    $
    7.65
    
    
    $
    4.61SARs granted
    
    
    100,000
    
    
    $
    7.00
    
    
    $
    4.07Issued at December 31, 2009
    
    
    3,970,370
    
    
    $
    7.63
    
    
    $
    4.60
  Weighted Average
    
    
    Aggregate IntrinsicRemaining
    
    
    Value of SARsContractual Life
    
    
    Outstanding atSARs
    
    
    SARs
    
    
    of SARs Outstanding
    
    
    December 31, 2009Grant Price
    
    Outstanding
    
    
    Exercisable
    
    
    (in years)
    
    
    (in thousands)$7.00
    
    
    100,000
    
    
    
    
    
    
    
    9.8
    
    
    $
    $7.34
    
    
    3,241,520
    
    
    
    3,241,520
    
    
    
    6.0
    
    
    $
    $8.14  $8.18
    
    
    55,000
    
    
    
    49,792
    
    
    
    6.4
    
    
    $
    $8.41
    
    
    322,400
    
    
    
    101,259
    
    
    
    8.7
    
    
    $
    $9.50  $12.01
    
    
    251,450
    
    
    
    198,565
    
    
    
    6.8
    
    
    $
    3,970,370
    
    
    
    3,591,136
    
    
    
    
    
    
    $
    
   67




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11. Equity-Based Compensation  (Continued)
 Stock Options
   Weighted
    
    
    WeightedAverage
    
    
    AverageGrant Date
    
    
    Grant DateShares
    
    
    Exercise Price
    
    
    Fair ValueOutstanding at December 31, 2006 and 2007
    
    
    637,454
    
    
    $
    37.13
    
    
    $
    29.69Options granted
    
    
    500
    
    
    $
    7.22
    
    
    $
    4.26Options forfeited
    
    
    (23,000
    )
    
    $
    19.76
    
    
    $
    15.70Outstanding at December 31, 2008
    
    
    614,954
    
    
    $
    36.58
    
    
    $
    29.81Options granted
    
    
    250
    
    
    $
    4.30
    
    
    $
    2.47Options forfeited
    
    
    (85,800
    )
    
    $
    42.75
    
    
    $
    34.35Outstanding at December 31, 2009
    
    
    529,404
    
    
    $
    35.56
    
    
    $
    29.06
   Weighted AverageRemaining
    
    
    Aggregate IntrinsicContractual Life
    
    
    Value atShares
    
    
    Shares
    
    
    of Shares Outstanding
    
    
    December 31, 2009Exercise Price
    
    Outstanding
    
    
    Vested
    
    
    (in years)
    
    
    (in thousands)$4.30  $8.00
    
    
    137,474
    
    
    
    136,588
    
    
    
    3.3
    
    
    $
    211$8.01  $12.00
    
    
    163,483
    
    
    
    163,316
    
    
    
    3.3
    
    
    $
    $12.01  $20.00
    
    
    102,699
    
    
    
    102,699
    
    
    
    2.0
    
    
    $
    $20.01  $2,210.00
    
    
    125,748
    
    
    
    125,748
    
    
    
    1.0
    
    
    $
    529,404
    
    
    
    528,351
    
    
    
    
    
    
    $
    211
   68




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11. Equity-Based Compensation  (Continued)
 Restricted Stock
  WeightedAverage GrantShares
    
    
    Date Fair ValueIssued and unvested, December 31, 2006
    
    
    818,622
    
    
    $
    7.28Granted
    
    
    15,000
    
    
    $
    12.01Vested
    
    
    (311,499
    )
    
    $
    7.22Forfeited
    
    
    (35,844
    )
    
    $
    7.23Issued and unvested December 31, 2007
    
    
    486,279
    
    
    $
    7.39Vested
    
    
    (468,729
    )
    
    $
    7.20Forfeited
    
    
    (250
    )
    
    $
    6.98Issued and unvested, December 31, 2008
    
    
    17,300
    
    
    $
    10.82Granted
    
    
    24,000
    
    
    $
    7.00Vested
    
    
    (6,775
    )
    
    $
    10.49Issued and unvested, December 31, 2009
    
    
    34,525
    
    
    $
    8.23
   Deferred Stock Units (DSUs)
   69




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11. Equity-Based Compensation  (Continued)
  Weighted AverageDSUs
    
    
    Grant Date Fair ValueIssued and unvested, December 31, 2006
    
    
    21,500
    
    
    $
    9.20Granted
    
    
    74,375
    
    
    $
    11.33Vested
    
    
    (64,375
    )
    
    $
    11.43Issued and unvested, December 31, 2007
    
    
    31,500
    
    
    $
    11.37Granted
    
    
    36,000
    
    
    $
    8.70Vested
    
    
    (31,500
    )
    
    $
    11.37Issued and unvested, December 31, 2008
    
    
    36,000
    
    
    $
    8.70Granted
    
    
    36,000
    
    
    $
    4.05Vested
    
    
    (36,000
    )
    
    $
    8.70Issued and unvested, December 31, 2009
    
    
    36,000
    
    
    $
    4.05
 Consolidated Partner Companies
    12. Commitments and Contingencies
   2010
    
    $
    2,5362011
    
    $
    2,4582012
    
    $
    1,9172013
    
    $
    1,3752014
    
    $
    1,399Thereafter
    
    $
    2,972
  70




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 12. Commitments and Contingencies  (Continued)
   13. Other Income (Loss)
 Other Income (Loss), net
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands)Sales/distributions of ownership interests in Partner
Companies (Note 3)
    
    $
    2,607
    
    
    $
    38,007
    
    
    $
    9,786Losses on debt extinguishment (Note 7)
    
    
    
    
    
    
    
    
    
    
    (3,812
    )Unrealized gain (loss) on mark-to-market of hedges (Note 4)
    
    
    (7,098
    )
    
    
    10,204
    
    
    
    (3,651
    )Realized gains (losses) on marketable securities
    
    
    21,285
    
    
    
    634
    
    
    
    23Impairments of cost method Partner Companies
    
    
    
    
    
    
    (4,735
    )
    
    
    Loss on termination of cashless collar contracts (Note 4)
    
    
    (480
    )
    
    
    
    
    
    
    Other
    
    
    (338
    )
    
    
    167
    
    
    
    4,437$
    15,976
    
    
    $
    44,277
    
    
    $
    6,783Total other income (loss) for Consolidated Partner Companies
    
    
    602
    
    
    
    (1,052
    )
    
    
    71$
    16,578
    
    
    $
    43,225
    
    
    $
    6,854
     71




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 14. Income Taxes
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands)Income tax (benefit) expense
from continuing operations:Current taxesFederal taxes
    
    $
    (10,455
    )
    
    $
    (147
    )
    
    $
    (4,252
    )State taxes
    
    
    (9
    )
    
    
    53
    
    
    
    Foreign taxes
    
    
    (175
    )
    
    
    451
    
    
    
    260Current taxes
    
    $
    (10,639
    )
    
    $
    357
    
    
    $
    (3,992
    )Deferred taxesFederal taxes
    
    
    (28,702
    )
    
    
    
    
    
    
    State taxes
    
    
    65
    
    
    
    
    
    
    
    Foreign taxes
    
    
    (234
    )
    
    
    
    
    
    
    Deferred taxes
    
    
    (28,871
    )
    
    
    
    
    
    
    Income tax
(benefit) expense
    
    $
    (39,510
    )
    
    $
    357
    
    
    $
    (3,992
    )
        72




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 14. Income Taxes  (Continued)
     As of December 31,2009
    
    
    2008(in thousands)Deferred tax assets:Net operating loss and capital loss carryforward  382 limited
    
    $
    121,103
    
    
    $
    115,641Net operating loss carryforward  not 382 limited
    
    
    8,907
    
    
    
    7,346Capital loss carryforward  not 382 limited
    
    
    2,063
    
    
    
    984Partner Company basis difference
    
    
    121,058
    
    
    
    138,199Reserves and accruals
    
    
    3,743
    
    
    
    2,007Stock-based compensation expense
    
    
    8,270
    
    
    
    6,991AMT and other credits
    
    
    406
    
    
    
    188Other, net
    
    
    2,524
    
    
    
    2,278Total deferred tax assets
    
    
    268,074
    
    
    
    273,634Valuation allowance
    
    
    (208,395
    )
    
    
    (254,663
    )Deferred tax asset
    
    
    59,679
    
    
    
    18,971Deferred tax liabilities:Intangible assets
    
    
    (5,898
    )
    
    
    Other comprehensive income
    
    
    (24,910
    )
    
    
    (18,971
    )Total deferred tax liabilities
    
    
    (30,808
    )
    
    
    (18,971
    )Total net deferred tax assets
    
    $
    28,871
    
    
    $
    
     73




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 14. Income Taxes  (Continued)
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Tax expense (benefit) at statutory rate
    
    
    (35.0
    )%
    
    
    (35.0
    )%
    
    
    (35.0
    )%IRS audit
adjustment
    
    
    (43.4
    )%
    
    
    
    
    
    
    Foreign and state taxes
    
    
    (3.2
    )%
    
    
    2.1
    %
    
    
    Non-deductible expenses and other
    
    
    (2.9
    )%
    
    
    1.2
    %
    
    
    10.9
    %Valuation allowance
    
    
    (275.3
    )%
    
    
    33.2
    %
    
    
    12.9
    %(359.8
    )%
    
    
    1.5
    %
    
    
    (11.2
    )%
 15. Discontinued Operations
    16. Net Income (Loss) per Share
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands, except shares and per share data)Income
(loss) attributable to Internet Capital Group, Inc.:Income (loss) from continuing operations
    
    $
    15,534
    
    
    $
    (22,926
    )
    
    $
    (24,602
    )Income (loss) on discontinued operations
    
    
    
    
    
    
    
    
    
    
    995Net income (loss)
    
    $
    15,534
    
    
    $
    (22,926
    )
    
    $
    (23,607
    )Basic
income (loss) per share attributable to Internet Capital Group, Inc.:Income
(loss) from continuing operations per share
    
    $
    0.42
    
    
    $
    (0.60
    )
    
    $
    (0.64
    )Income (loss) on discontinued operations per share
    
    
    
    
    
    
    
    
    
    
    0.02Net income (loss) per share
    
    $
    0.42
    
    
    $
    (0.60
    )
    
    $
    (0.62
    )Diluted
income (loss) per share attributable to Internet Capital Group, Inc.:Income
(loss) from continuing operations per share
    
    $
    0.42
    
    
    $
    (0.60
    )
    
    $
    (0.64
    )Income (loss) on discontinued operations per share
    
    
    
    
    
    
    
    
    
    
    0.02Net income (loss) per share
    
    $
    0.42
    
    
    $
    (0.60
    )
    
    $
    (0.62
    )Basic weighted average common shares outstanding
    
    
    36,660,158
    
    
    
    38,105,583
    
    
    
    37,915,626Incremental Diluted Shares Impact:Stock options
    
    
    22,776
    
    
    
    
    
    
    
    Restricted stock
    
    
    241
    
    
    
    
    
    
    
    DSUs
    
    
    21,801
    
    
    
    
    
    
    
    SARs
    
    
    
    
    
    
    
    
    
    
    Diluted weighted average common shares outstanding
    
    
    36,704,976
    
    
    
    38,105,583
    
    
    
    37,915,626
  74




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 16. Net Income (Loss) per Share  (Continued)
  Weighted AverageShares
    
    
    Price per ShareYear ended December 31, 2009Stock options
    
    
    406,730
    
    
    $
    46.57SARs
    
    
    3,970,370
    
    
    $
    7.63Restricted stock
    
    
    32,025
    
    
    $
    8.23Year ended December 31, 2008Stock options
    
    
    614,954
    
    
    $
    36.58SARs
    
    
    3,870,370
    
    
    $
    7.65Restricted stock
    
    
    17,300
    
    
    $
    10.82DSUs
    
    
    36,000
    
    
    $
    8.70Year Ended December 31, 2007Stock options
    
    
    637,454
    
    
    $
    37.13SARs
    
    
    3,616,115
    
    
    $
    7.58Restricted stock
    
    
    486,279
    
    
    $
    7.39DSUs
    
    
    31,500
    
    
    $
    11.37Warrants
    
    
    12,500
    
    
    $
    6.00
 17. Share Repurchase Program
  18. Related Parties
    75




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 19. Selected Quarterly Financial Information (Unaudited)
  Fiscal 2009 Quarter Ended
    
    
    Fiscal 2008 Quarter EndedMar. 31
    
    
    Jun. 30
    
    
    Sep. 30
    
    
    Dec. 31
    
    
    Mar. 31
    
    
    Jun. 30
    
    
    Sep. 30
    
    
    Dec. 31(in thousands, except per share data)Revenues
    
    $
    21,652
    
    
    $
    22,077
    
    
    $
    22,572
    
    
    $
    23,951
    
    
    $
    16,022
    
    
    $
    17,581
    
    
    $
    17,104
    
    
    $
    20,474Operating ExpensesCost of revenue
    
    
    13,205
    
    
    
    14,598
    
    
    
    14,402
    
    
    
    14,715
    
    
    
    11,371
    
    
    
    11,575
    
    
    
    11,687
    
    
    
    11,767Selling, general &
administrative
    
    
    9,216
    
    
    
    9,158
    
    
    
    8,347
    
    
    
    7,857
    
    
    
    8,662
    
    
    
    9,830
    
    
    
    8,336
    
    
    
    9,337Research and development
    
    
    2,648
    
    
    
    2,592
    
    
    
    2,178
    
    
    
    1,597
    
    
    
    1,465
    
    
    
    2,771
    
    
    
    3,112
    
    
    
    2,864Impairment related and other
    
    
    107
    
    
    
    3,867
    
    
    
    1,295
    
    
    
    128
    
    
    
    75
    
    
    
    117
    
    
    
    197
    
    
    
    9,663(3,524
    )
    
    
    (8,138
    )
    
    
    (3,650
    )
    
    
    (346
    )
    
    
    (5,551
    )
    
    
    (6,712
    )
    
    
    (6,228
    )
    
    
    (13,157
    )Other income (loss), net
    
    
    (2,247
    )
    
    
    3,246
    
    
    
    10,226
    
    
    
    5,353
    
    
    
    5,847
    
    
    
    (359
    )
    
    
    34,368
    
    
    
    3,369Interest income
    
    
    142
    
    
    
    98
    
    
    
    98
    
    
    
    108
    
    
    
    829
    
    
    
    404
    
    
    
    317
    
    
    
    298Interest expense
    
    
    (84
    )
    
    
    (73
    )
    
    
    (49
    )
    
    
    (10
    )
    
    
    (13
    )
    
    
    (64
    )
    
    
    (129
    )
    
    
    (128
    )Income
(loss) before income taxes and equity loss
    
    
    (5,713
    )
    
    
    (4,867
    )
    
    
    6,625
    
    
    
    5,105
    
    
    
    1,112
    
    
    
    (6,731
    )
    
    
    28,328
    
    
    
    (9,618
    )Income tax (expense) benefit
    
    
    53
    
    
    
    (421
    )
    
    
    (516
    )
    
    
    40,394
    
    
    
    (54
    )
    
    
    (239
    )
    
    
    224
    
    
    
    (288
    )Equity loss
    
    
    (4,953
    )
    
    
    (2,924
    )
    
    
    (2,761
    )
    
    
    (1,493
    )
    
    
    (7,081
    )
    
    
    (4,741
    )
    
    
    (6,020
    )
    
    
    (15,860
    )Net income (loss)
    
    
    (10,613
    )
    
    
    (8,212
    )
    
    
    3,348
    
    
    
    44,006
    
    
    
    (6,023
    )
    
    
    (11,711
    )
    
    
    22,532
    
    
    
    (25,766
    )Less: Net
income attributable to the noncontrolling interest
    
    
    392
    
    
    
    337
    
    
    
    277
    
    
    
    11,989
    
    
    
    530
    
    
    
    584
    
    
    
    34
    
    
    
    812Net income (loss) attributable to Internet
Capital Group, Inc.
    
    $
    (11,005
    )
    
    $
    (8,549
    )
    
    $
    3,071
    
    
    $
    32,017
    
    
    $
    (6,553
    )
    
    $
    (12,295
    )
    
    $
    22,498
    
    
    $
    (26,578
    )Basic income (loss) per share(1)Net income (loss) attributable to
Internet Capital Group, Inc.
    
    $
    (0.30
    )
    
    $
    (0.23
    )
    
    $
    0.08
    
    
    $
    0.87
    
    
    $
    (0.17
    )
    
    $
    (0.32
    )
    
    $
    0.59
    
    
    $
    (0.71
    )Shares used in computation
of basic income (loss)
per share (1)
    
    
    36,676
    
    
    
    36,666
    
    
    
    36,676
    
    
    
    36,623
    
    
    
    38,221
    
    
    
    38,383
    
    
    
    38,437
    
    
    
    37,386Diluted income (loss) per share(1)Net income (loss) attributable to
Internet Capital Group, Inc.
    
    $
    (0.30
    )
    
    $
    (0.23
    )
    
    $
    0.08
    
    
    $
    0.87
    
    
    $
    (0.17
    )
    
    $
    (0.32
    )
    
    $
    0.58
    
    
    $
    (0.71
    )Shares used in computation
of diluted income (loss)
per share (1)
    
    
    36,676
    
    
    
    36,666
    
    
    
    36,740
    
    
    
    36,692
    
    
    
    38,221
    
    
    
    38,383
    
    
    
    38,784
    
    
    
    37,386
 
 (1)
    
    The sum of quarterly income (loss) per share differs from the full year amount due to
changes in the number of shares outstanding during the year.  76




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##### Table of Contents



ITEM 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
  
 ITEM 9A.
    
    Controls and Procedures
 Disclosure Controls and Procedures
  Managements Report on Internal Control Over Financial Reporting
  Internal
Control-Integrated Framework.
  Changes
in Internal Control over Financial Reporting
  Inherent Limitations on Effectiveness of Controls
   77




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal
ControlIntegrated Framework
    Internal ControlIntegrated Framework
  
  78




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##### Table of Contents



ITEM 9B.
    
    Other Information
  
 PART III
 
 ITEM 10.
    
    Directors, Executive Officers and Corporate Governance
   
 ITEM 11.
    
    Executive Compensation
  
 ITEM 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 ITEM 13.
    
    Certain Relationships and Related Transactions, and Director Independence
  
 ITEM 14.
    
    Principal Accountant Fees and Services
   79




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##### Table of Contents



PART IV
 
 ITEM 15.
    
    Exhibits and Financial Statement Schedules
 1. Consolidated Financial Statements
   2. Financial Statement Schedule
 Report of Independent Registered Public Accounting Firm
 
     
  INTERNET CAPITAL GROUP
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2007, 2008 and 2009
(in thousands)
 Balance at the
    
    
    Charged to
    
    
    Charged to
    
    
    
    
    
    
    Balance at thebeginning of
    
    
    costs and
    
    
    other
    
    
    
    
    
    
    end ofthe year
    
    
    expenses
    
    
    accounts
    
    
    Write-offs
    
    
    the yearAllowance for Doubtful Accounts:December 31, 2007
    
    $
    137
    
    
    $
    (45
    )
    
    $
    
    
    
    $
    (48
    )
    
    $
    44December 31, 2008
    
    $
    44
    
    
    $
    750
    (a)
    
    $
    
    
    
    
    (73
    )
    
    $
    721December 31, 2009
    
    $
    721
    
    
    $
    (166
    )(b)
    
    $
    343
    
    
    
    (308
    )
    
    $
    590
 (a)
    
    Reserve of $411 was established upon acquisition of partner company during 2008.(b)
    
    Reserve of $79 was established upon acquisition of partner company during 2009; reserve of
$92 was eliminated upon sale of subsidiary assets during 2009.  80




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##### Table of Contents



3. List of Exhibits
  Exhibit Number
    
    Document2.1
    
    
    Agreement of Merger, dated February 2, 1999, between Internet
Capital Group, L.L.C. and Internet Capital Group, Inc. (incorporated
by reference to Exhibit 2.1 to the Companys Registration Statement
on Form S-1, filed May 11, 1999 (File No. 333-78193)).3.1.1
    
    
    Restated Certificate of Incorporation of Internet Capital Group,
Inc. (incorporated by reference to Exhibit 2.1 to the Companys
Registration Statement on Form 8-A, filed August 4, 1999 (File No.
000-26989)).3.1.2
    
    
    Certificate of Amendment of Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.3 to the Companys Annual
Report on Form 10-K for the year ended December 31, 2002, filed
March 31, 2003 (File No. 001-16249)).3.1.3
    
    
    Second Amendment of Restated Certificate of Incorporation of
Internet Capital Group, Inc. (incorporated by reference to Exhibit
3.1 to the Companys Quarterly Report on Form 10-Q for the quarter
ended June 30, 2004, filed August 9, 2004 (File No. 001-16249)).3.2
    
    
    Amended and Restated By-laws of Internet Capital Group, Inc.
(incorporated by reference to Exhibit 3.1 to the Companys Current
Report on Form 8-K, filed March 5, 2007 (File No. 001-16249)).4.1
    
    
    Form of Certificate for Internet Capital Group, Inc. Common Stock
(incorporated by reference to Exhibit 4.1 to the Companys Annual
Report on Form 10-K for the year ended December 31, 2004, filed
March 16, 2005 (File No. 001-16249)).4.2
    
    
    Rights Agreement, dated as of November 22, 2000, between Internet
Capital Group, Inc. and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent, including Form of Rights Certificate (incorporated by
reference to Exhibit 1.1 to the Companys Registration Statement on
Form 8-A, filed December 1, 2000 (File No. 001-16249)).10.1
    
    
    Internet Capital Group, Inc. Amended and Restated 1999 Equity
Compensation Plan (incorporated by reference to Exhibit 10.6 to the
Companys Current Report on Form 8-K, filed March 5, 2007 (File No.
001-16249)).*10.2
    
    
    Internet Capital Group, Inc. Second Amended and Restated 2005
Omnibus Equity Compensation Plan (incorporated by reference to
Appendix A to the Companys definitive proxy statement relative to
the Companys 2009 Annual Meeting of Stockholders, filed April 29,
2009).*10.3
    
    
    Internet Capital Group, Inc. Amended and Restated Non-Management
Director Compensation Plan (incorporated by reference to Exhibit
10.4 to the Companys Current Report on Form 8-K, filed March 5,
2007 (File No. 001-16249)).*10.4
    
    
    Internet Capital Group, Inc. Amended and Restated Director Deferred
Stock Unit Program (incorporated by reference to Exhibit 10.5 to the
Companys Current Report on Form 8-K, filed December 18, 2008 (File
No. 001-16249)).*10.5.1
    
    
    Logistics.com, Inc. 2001 Equity Compensation Plan (incorporated by
reference to Exhibit 10.3 to the Companys Annual Report on Form
10-K for the year ended December 31, 2002, filed March 31, 2003
(File No. 001-16249)).*
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Exhibit Number
    
    Document10.5.2
    
    
    Amendment No. 1 to the Logistics.com, Inc. 2001 Equity Compensation
Plan (incorporated by reference to Exhibit 10.3.1 to the Companys
Annual Report on Form 10-K for the year ended December 31, 2002,
filed March 31, 2003 (File No. 001-16249)).*10.6
    
    
    Internet Capital Group 2009 Performance Plan (incorporated by
reference to Exhibit 10.1 of the Companys Current Report on Form
8-K, filed March 4, 2009 (File No. 001-16249)).*10.7
    
    
    Internet Capital Group 2010 Performance Plan (incorporated by
reference to Exhibit 10.1 to the Companys Current Report on Form
8-K, filed March 3, 2010 (File No. 001-16249)).*10.8
    
    
    Form of Internet Capital Group, Inc. Restricted Stock Grant Without
Performance Acceleration (incorporated by reference to Exhibit 10.32
to the Companys Annual Report on Form 10-K for the year ended
December 31, 2004, filed March 16, 2005 (File No. 001-16249)).*10.9
    
    
    Form of Internet Capital Group, Inc. Restricted Stock Grant With
Performance Acceleration (incorporated by reference to Exhibit 10.33
to the Companys Annual Report on Form 10-K for the year ended
December 31, 2004, filed March 16, 2005 (File No. 001-16249)).*10.10
    
    
    Form of Internet Capital Group, Inc. Stock Option Grant Without
Performance Acceleration (incorporated by reference to Exhibit 10.34
to the Companys Annual Report on Form 10-K for the year ended
December 31, 2004, filed March 16, 2005 (File No. 001-16249)).*10.11
    
    
    Form of Internet Capital Group, Inc. Stock Option Grant With
Performance Acceleration (incorporated by reference to Exhibit 10.35
to the Companys Annual Report on Form 10-K for the year ended
December 31, 2004, filed March 16, 2005 (File No. 001-16249)).*10.12
    
    
    Form of Internet Capital Group, Inc. Non-Employee Director Initial
Stock Option Grant (incorporated by reference to Exhibit 10.36 to
the Companys Annual Report on Form 10-K for the year ended December
31, 2004, filed March 16, 2005 (File No. 001-16249)).*10.13
    
    
    Form of Internet Capital Group, Inc. Non-Employee Director Annual
Stock Option Grant (incorporated by reference to Exhibit 10.37 to
the Companys Annual Report on Form 10-K for the year ended December
31, 2004, filed March 16, 2005 (File No. 001-16249)).*10.14
    
    
    Form of Internet Capital Group, Inc. Stock Unit Award Agreement
(incorporated by reference to Exhibit 10.1 to the Companys Current
Report on Form 8-K, filed July 28, 2005 (File No. 001-16249)).*10.15
    
    
    Form of Internet Capital Group, Inc. Stock Appreciation Rights
Certificate (incorporated by reference to Exhibit 10.2 to the
Companys Current Report on Form 8-K, filed July 28, 2005 (File No.
001-16249)).*10.16.1
    
    
    Employment Agreement, dated February 28, 2007, by and among Internet
Capital Group Operations, Inc., Internet Capital Group, Inc. and
Walter W. Buckley, III (incorporated by reference to Exhibit 10.1 to
the Companys Current Report on Form 8-K, filed March 5, 2007 (File
No. 001-16249)).*10.16.2
    
    
    Amendment 2008-1 to the Employment Agreement, dated as of December
18, 2008, by and between Internet Capital Group Operations, Inc. and
Walter W. Buckley, III (incorporated by reference to Exhibit 10.2 to
the Companys Current Report on Form 8-K, filed December 18, 2008
(File No. 001-16249)).*
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Exhibit Number
    
    Document10.17
    
    
    Letter Agreement, dated December 18, 2008, by and between Internet
Capital Group and R. Kirk Morgan (incorporated by reference to
Exhibit 10.4 to the Companys Current Report on Form 8-K, filed
December 18, 2008 (File No. 001-16249)).*10.18.1
    
    
    Employment Agreement, dated April 18, 2007, by and between Internet
Capital Group and Douglas A. Alexander (incorporated by reference to
Exhibit 10.1 to the Companys Current Report on Form 8-K, filed
April 18, 2007 (File No. 001-16249)).*10.18.2
    
    
    Amendment 2008-1 to the Employment Agreement, dated as of December
18, 2008, by and between Internet Capital Group Operations, Inc. and
Douglas A. Alexander (incorporated by reference to Exhibit 10.3 to
the Companys Current Report on Form 8-K, filed December 18, 2008
(File No. 001-16249)).*10.19
    
    
    Form of Restrictive Covenant Agreement (incorporated by reference to
Exhibit 10.4 to the Companys Current Report on Form 8-K, filed July
28, 2005 (File No. 001-16249)).*10.20
    
    
    Amended and Restated Letter of Credit Agreement, dated as of
December 18, 2009, by and between Comerica Bank, Internet Capital
Group, Inc., ICG Holdings, Inc. and Internet Capital Group
Operations, Inc. (incorporated by reference to Exhibit 10.1 to the
Companys Current Report on Form 8-K, filed December 22, 2009 (File
No. 001-16249)).10.21
    
    
    Letter Agreement, dated December 16, 2005, by and between ICG
Holdings, Inc. and Credit Suisse First Boston Capital LLC
(incorporated by reference to Exhibit 10.31 to the Companys Annual
Report on Form 10-K for the year ended December 31, 2005, filed
March 15, 2006 (File No. 001-16249)).10.22
    
    
    Form of Loan Agreements, each dated as of May 8, 2008, by and
between ICG Holdings, Inc. and Credit Suisse Capital LLC
(incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q for the quarter ended March 31, 2008,
filed May 12, 2008 (File No. 001-16249)).10.23
    
    
    Form of Promissory Note by ICG Holdings, Inc. in favor of Credit
Suisse Capital LLC (incorporated by reference to Exhibit 10.2 to the
Companys Quarterly Report on Form 10-Q for the quarter ended March
31, 2008, filed May 12, 2008 (File No. 001-16249)).10.24.1
    
    
    Agreement of Lease, dated June 30, 2003, between FV Office Partners,
L.P. and Internet Capital Group Operations, Inc. (incorporated by
reference to Exhibit 10.1 to the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 2003, filed August 14, 2003
(File No. 001-16249)).10.24.2
    
    
    First Amendment to Lease, dated November 20, 2003, between FV Office
Partners, L.P. and Internet Capital Group Operations, Inc.
(incorporated by reference to Exhibit 10.37 to the Companys Annual
Report on Form 10-K for the year ended December 31, 2003, filed
March 15, 2004 (File No. 001-16249)).10.24.3
    
    
    Second Amendment to Lease, dated August 21, 2006, by and between
Chesterbrook Partners, L.P. (as successor-in-interest to FV Office
Partners, L.P.) and Internet Capital Group Operations, Inc.
(incorporated by reference to Exhibit 10.33.3 to the Companys
Annual Report on Form 10-K for the year ended December 31, 2006,
filed March 16, 2007 (File No. 001-16249)).
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Exhibit Number
    
    Document10.25
    
    
    Form of Agreement of Limited Partnership for Internet Capital Group,
Inc. Carried Interest Long-Term Incentive Plan (incorporated by
reference to Exhibit 10.2 to the Companys Current report on Form
8-K, filed December 13, 2007 (File No. 001-16249)).*10.26
    
    
    Form of Limited Partnership Interest Grant (incorporated by
reference to Exhibit 10.3 to the Companys Current Report on Form
8-K, filed December 13, 2007 (File No. 001-16249)).*11.1
    
    
    Statement Regarding Computation of Per Share Earnings (included
herein at Note 2-Significant Accounting Policies in the subsection
Net Income (Loss) Per Share to the Consolidated Financial
Statements and Note 16-Net Income (Loss) Per Share to the
Consolidated Financial Statements).14.1
    
    
    Internet Capital Group Corporate Code of Conduct (incorporated by
reference to Exhibit 10.2 to the Companys Current Report on Form
8-K, filed March 4, 2009 (File No. 001-16249)).21.1
    
    
    Subsidiaries of Internet Capital Group, Inc. (filed herewith).23.1
    
    
    Consent of KPMG LLP (filed herewith).23.2
    
    
    Consent of Grant Thornton LLP/Metastorm Inc. (filed herewith).31.1
    
    
    Certification of Chief Executive Officer required by Section 302 of
the Sarbanes-Oxley Act of 2002 (filed herewith).31.2
    
    
    Certification of Chief Financial Officer required by Section 302 of
the Sarbanes-Oxley Act of 2002 (filed herewith).32.1
    
    
    Certification of the Chief Executive Officer required by Section 906
of the Sarbanes-Oxley Act of 2002 (filed herewith).32.2
    
    
    Certification of the Chief Financial Officer required by Section 906
of the Sarbanes-Oxley Act of 2002 (filed herewith).99.1
    
    
    Consolidated Financial Statements of Metastorm Inc. (filed herewith).
 *
    
Management
contract or compensatory plan or arrangement  84




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##### Table of Contents



SIGNATURES
  Date: March 16, 2010
    INTERNET CAPITAL GROUP, INC.By:
    /s/ R. KIRK MORGANName:
    R. Kirk MorganTitle:
    Chief Financial Officer  Signature
    
    Title/s/ WALTER W. BUCKLEY, III
    
    Chief Executive Officer and Chairman of the BoardWalter W. Buckley, III
    
    of
Directors (Principal Executive Officer)/s/ R. KIRK MORGAN
    
    Chief Financial OfficerR. Kirk Morgan
    
    (Principal
Financial and Accounting Officer)/s/ DAVID J. BERKMAN

David J. Berkman
    
    Director/s/ THOMAS A. DECKER

Thomas A. Decker
    
    Director/s/ DAVID K. DOWNES

David K. Downes
    
    DirectorThomas P. Gerrity
    
    Director/s/ MICHAEL J. HAGAN

Michael J. Hagan
    
    Director/s/ ROBERT E. KEITH, JR.

Robert E. Keith, Jr.
    
    Director/s/ WARREN V. MUSSER

Warren V. Musser
    
    Director/s/ PHILIP J. RINGO

Philip J. Ringo
    
    Director
  85