##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the Fiscal Year Ended December 31, 2007
 Commission File Number 001-16249
 
 INTERNET CAPITAL GROUP, INC.
 (Exact Name of Registrant as Specified in Its Charter)
 Delaware
(State of 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 Exchange on Which Registered)
  o þ
 o þ
 þ 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, 2007
INDEX
 PageNumberPART I
    
    
    4ITEM 1. Business
    
    
    4ITEM 1A. Risk Factors
    
    
    11ITEM 1B. Unresolved Staff Comments
    
    
    19ITEM 2. Properties
    
    
    19ITEM 3. Legal Proceedings
    
    
    20ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    20PART II
    
    
    21ITEM 5. Market for Registrants Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
    
    
    21ITEM 6. Selected Consolidated Financial Data
    
    
    23ITEM 7. Managements Discussion and Analysis of Financial Condition
and Results
of Operations
    
    
    24ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    35ITEM 8. Financial Statements and Supplementary Data
    
    
    36ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures
    
    
    74ITEM 9A. Controls and Procedures
    
    
    75ITEM 9B. Other Information
    
    
    76PART III
    
    
    77ITEM 10. Directors and Executive Officers of the Registrant
    
    
    77ITEM 11. Executive Compensation
    
    
    77ITEM 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
    
    
    77ITEM 13. Certain Relationships and Related Transactions
    
    
    77ITEM 14. Principal Accountant Fees and Services
    
    
    77PART IV
    
    
    78ITEM 15. Exhibits and Financial Statement Schedules
    
    
    78SIGNATURES
    
    
    84Subsidiaries of Internet Capital Group, Inc.Consent of KPMG LLPCertification of Chief Executive Officer required by Section 302Certification of Chief Financial Officer required by Section 302Certification of Chief Executive Officer required by Section 906Certification of Chief Financial Officer required by Section 906
  2




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Forward-Looking Statements
   
    
    capital spending by enterprises and 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 effectively manage existing capital resources.
  3




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PART I
   
 ITEM 1. Business
 Business Overview
     4




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Industry Overview
   
    
    expand access to new and existing customers and suppliers;
    
    increase efficiency and reduce costs; and
    
    focus on core competencies and outsource non-core, non-strategic processes.
 Expand access to new and existing customers and suppliers
  Increase efficiency and reduce costs
  Focus on core competencies and outsource non-core, non-strategic processes
   5




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Our Solution and Strategy
    
    
    delivery through a Web-enabled software platform (ASP model);
    
    automation of a complex workflow process, with focus on the white space between
companies;
    
    provision of a comprehensive solution, which includes software, content data and transaction
capabilities (with content being a long-term differentiator);
    
    ability to generate recurring revenue streams and to retain fixed costs;
    
    delivery to clients through long-term relationships; and
    
    potential to evolve into an ecosystem.
    6




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ICG Commerce Holdings, Inc. (ICG Commerce)
  Investor Force Holdings, Inc. (Investor Force)
   Channel Intelligence
  Freeborders, Inc. (Freeborders)
  Metastorm Inc. (Metastorm)
  StarCite, Inc. (StarCite)
  7




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Vcommerce
  WhiteFence
   Anthem Ventures Fund, L.P. (Anthem)
  Blackboard, Inc. (Blackboard) (Nasdaq:BBBB)
  Captive Capital Corporation (Captive Capital)
  Creditex Group Inc. (Creditex)
  Emptoris, Inc. (Emptoris)
  Entegrity Solutions Corporation (Entegrity Solutions)
  8




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GoIndustry plc (GoIndustry) (LSE.AIM:GOI)
  Jamcracker, Inc. (Jamcracker)
  Tibersoft Corporation (Tibersoft)
  Concentration of Customer Base and Credit Risk
  Competition
 Competition Facing our Partner Companies
    9




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Competition From Within our Network
  Employees
  Financial Information About Segments and Geographic Areas
  Availability of Reports and Other Information
   10




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ITEM 1A. Risk Factors
  If general economic conditions are unfavorable, our partner companies may be unable to attract or
retain customers, and the condition of our business may be adversely affected.
  We may not be able to deploy capital effectively and on acceptable terms.
  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, and the reluctance of enterprises to increase spending on new
technologies;
    
    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 technology and
internet companies;
    
    conditions or trends in the information technology and e-commerce industries;
    
    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 key personnel of our partner
companies.
  11




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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 information technology and
e-commerce companies generally;
    
    changes in 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 information technology and
e-commerce markets;
    
    competition for the goods and services offered by our partner companies; and
    
    our ability to effectively manage our growth and the growth of our partner
companies.
  Fluctuation in the price of the common stock of our publicly-traded partner companies may affect
the price of our Common Stock.
  Our business depends upon the performance of our partner companies, which is uncertain.
  
    
    fluctuations in the market price of the stock of Blackboard and GoIndustry, our
publicly-traded partner companies, which are likely to affect the price of our Common
Stock;
    
    the fact that many of our partner companies have limited operating histories, have
not yet attained significant revenues, are operating at or near break-even and may not
achieve profitability in the near-term or at all;
    
    decreased spending on information technology software and services and elongated
sales cycles, which may prevent our partner companies from succeeding; and
 12




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
    
    intensifying competition for the products and services our partner companies offer,
which could lead to the failure of some of our partner companies.
  The companies that we have identified as core partner companies may not succeed.
  We have had a general history of losses and expect continued losses in the foreseeable future.
  Certain of our partner companies have a limited operating history and may never be profitable.
  Even if a number of our partner companies achieve profitability, we may not be able to extract cash
from such companies, which could have a negative impact on our operations.
  13




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Our partner companies may not be able to compete successfully.
    Our partner companies may fail to retain significant customers.
  The inability of our partner companies customers to pay their obligations to them in a timely
manner, if at all, could have an adverse effect on our partner companies.
  When we divest partner company interests, we may be unable to obtain maximum value for such
interests.
  14




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We may not maintain or be able to increase our ownership stakes in high growth partner companies.
  We may have to buy, sell or retain assets when we would otherwise choose not to in order to avoid
registration under the Investment Company Act, which would impact our business strategy.
  Our accounting estimates with respect to the ultimate recoverability of our basis in our partner
companies could change materially in the near term.
  15




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The loss of any 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.
  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.
   Our stakes in some partner companies have been and are likely to be diluted, which could materially
reduce the value of our stake in such partner companies.
  16




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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.
  We have implemented certain anti-takeover provisions that could make it more difficult for a third
party to acquire us.
  Some of our partner companies may be unable to protect their proprietary rights and may infringe on
the proprietary rights of others.
  Government regulation of the internet and e-commerce may harm our partner companies businesses.
  17




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Our partner companies that publish or distribute content over the internet may be subject to legal
liability.
  Our partner companies computer and communications systems may fail, which may discourage parties
from using our partner companies systems.
  Our partner companies businesses may be disrupted if they are unable to upgrade their systems to
meet increased demand.
  Our partner companies may be unable to acquire or maintain easily identifiable website addresses or
prevent third parties from acquiring website addresses similar to theirs
  18




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If public and private capital markets are not favorable for the information technology and
e-commerce sectors, we may not be able to execute on our strategy.
  Our operations and growth could be impaired by limitations on our and our partner companies
ability to raise money.
  Because we have limited resources to dedicate to our partner companies, some of our partner
companies may not be able to raise sufficient capital to sustain their operations.
  
 ITEM 1B. Unresolved Staff Comments
  
 ITEM 2. Properties
  Corporate Offices
  Partner Company Properties
  19




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ITEM 3. Legal Proceedings
  
 ITEM 4. Submission of Matters to a Vote of Security Holders
  20




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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.
 2007
    
    2006March 31
    
    June 30
    
    Sept. 30
    
    Dec. 31
    
    March 31
    
    June 30
    
    Sept. 30
    
    Dec. 31(1st)
    
    (2nd)
    
    (3rd)
    
    (4th)
    
    (1st)
    
    (2nd)
    
    (3rd)
    
    (4th)High
    
    $
    12.54
    
    
    $
    12.53
    
    
    $
    13.30
    
    
    $
    13.94
    
    
    $
    10.04
    
    
    $
    9.66
    
    
    $
    9.65
    
    
    $
    11.26Low
    
    $
    9.81
    
    
    $
    10.50
    
    
    $
    10.15
    
    
    $
    10.51
    
    
    $
    7.90
    
    
    $
    7.57
    
    
    $
    8.05
    
    
    $
    9.04
 Holders
 Dividends
 21




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Stock Performance Graph
   COMPARISON OF CUMULATIVE TOTAL RETURN* SINCE DECEMBER 31, 2002
AMONG INTERNET CAPITAL GROUP, INC.,
THE NASDAQ COMPOSITE INDEX AND
THE GSTI INTERNET INDEX
 
 
 *
    
    $100 invested at closing prices on December 31, 2002 in ICGE shares or in a
stock index, including reinvestment of dividends. 22




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ITEM 6. Selected Consolidated Financial Data
  Year Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(in thousands, except per share data)Consolidated Statements of Operations Data:Revenues
    
    $
    52,923
    
    
    $
    64,749
    
    
    $
    47,568
    
    
    $
    41,857
    
    
    $
    57,915Operating ExpensesCost of revenue
    
    
    39,523
    
    
    
    42,439
    
    
    
    28,460
    
    
    
    21,464
    
    
    
    33,565Selling, general and administrative
    
    
    32,781
    
    
    
    42,108
    
    
    
    40,795
    
    
    
    31,239
    
    
    
    43,138Research and development
    
    
    6,033
    
    
    
    8,755
    
    
    
    12,276
    
    
    
    8,660
    
    
    
    13,705Amortization of intangibles
    
    
    129
    
    
    
    1,695
    
    
    
    2,123
    
    
    
    2,711
    
    
    
    7,955Impairment related and other
    
    
    59
    
    
    
    178
    
    
    
    3,448
    
    
    
    758
    
    
    
    (1,777
    )Total operating expenses
    
    
    78,525
    
    
    
    95,175
    
    
    
    87,102
    
    
    
    64,832
    
    
    
    96,586(25,602
    )
    
    
    (30,426
    )
    
    
    (39,534
    )
    
    
    (22,975
    )
    
    
    (38,671
    )Other income (loss), net
    
    
    (167
    )
    
    
    34,605
    
    
    
    135,489
    
    
    
    (106,178
    )
    
    
    (58,706
    )Interest income (expense), net
    
    
    5,038
    
    
    
    7,345
    
    
    
    523
    
    
    
    (3,630
    )
    
    
    (15,301
    )Income (loss) before income taxes, minority
interest and equity loss
    
    
    (20,731
    )
    
    
    11,524
    
    
    
    96,478
    
    
    
    (132,783
    )
    
    
    (112,678
    )Income tax benefit (expense)
    
    
    3,992
    
    
    
    40
    
    
    
    (18,640
    )
    
    
    
    
    
    
    Minority interest
    
    
    (468
    )
    
    
    1,232
    
    
    
    2,513
    
    
    
    771
    
    
    
    2,384Equity loss
    
    
    (14,416
    )
    
    
    (5,461
    )
    
    
    (6,703
    )
    
    
    (5,893
    )
    
    
    (14,540
    )Income (loss) from continuing operations
    
    
    (31,623
    )
    
    
    7,335
    
    
    
    73,648
    
    
    
    (137,905
    )
    
    
    (124,834
    )Income (loss) on discontinued operations
    
    
    995
    
    
    
    8,289
    
    
    
    (1,130
    )
    
    
    2,588
    
    
    
    (11,050
    )Net income (loss)
    
    $
    (30,628
    )
    
    $
    15,624
    
    
    $
    72,518
    
    
    $
    (135,317
    )
    
    $
    (135,884
    )Basic Income (loss) Per Share:Income (loss) from continuing operations
    
    $
    (0.83
    )
    
    $
    0.20
    
    
    $
    1.98
    
    
    $
    (3.86
    )
    
    $
    (8.25
    )Income (loss) on discontinued operations
    
    
    0.02
    
    
    
    0.22
    
    
    
    (0.03
    )
    
    
    0.07
    
    
    
    (0.73
    )Basic income (loss) per share
    
    $
    (0.81
    )
    
    $
    0.42
    
    
    $
    1.95
    
    
    $
    (3.79
    )
    
    $
    (8.98
    )Shares used in computation of basic income
(loss) per share
    
    
    37,916
    
    
    
    37,570
    
    
    
    37,109
    
    
    
    35,713
    
    
    
    15,130Diluted Income (loss) Per Share:Income (loss) from continuing operations
    
    $
    (0.83
    )
    
    $
    0.19
    
    
    $
    1.76
    
    
    $
    (3.86
    )
    
    $
    (8.25
    )Income (loss) on discontinued operations
    
    
    0.02
    
    
    
    0.22
    
    
    
    (0.03
    )
    
    
    0.07
    
    
    
    (0.73
    )Diluted income (loss) per share
    
    $
    (0.81
    )
    
    $
    0.41
    
    
    $
    1.73
    
    
    $
    (3.79
    )
    
    $
    (8.98
    )Shares used in computation of diluted
income (loss) per share
    
    
    37,916
    
    
    
    38,106
    
    
    
    43,670
    
    
    
    35,713
    
    
    
    15,130Consolidated Balance Sheet Data:Cash, cash equivalents and short-term investments
    
    $
    82,031
    
    
    $
    120,808
    
    
    $
    147,912
    
    
    $
    86,951
    
    
    $
    77,590Working capital (deficit)
    
    $
    78,749
    
    
    $
    78,939
    
    
    $
    140,504
    
    
    $
    72,932
    
    
    $
    (124,479
    )Total assets
    
    $
    332,431
    
    
    $
    354,427
    
    
    $
    346,532
    
    
    $
    277,606
    
    
    $
    231,163Other long-term debt, net of current portion
    
    $
    191
    
    
    $
    544
    
    
    $
    4,407
    
    
    $
    11
    
    
    $
    30Senior convertible notes
    
    $
    
    
    
    $
    26,590
    
    
    $
    37,000
    
    
    $
    60,000
    
    
    $
    Convertible subordinated notes
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    173,919Total stockholders equity (deficit)
    
    $
    304,658
    
    
    $
    298,538
    
    
    $
    256,245
    
    
    $
    165,107
    
    
    $
    (19,294
    )
 23




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ITEM 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Introduction
    Executive Summary
    24




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Liquidity and Capital Resources
  December 31, 2007
    
    
    December 31, 2006Consolidated
    
    
    
    
    
    
    
    
    
    
    ConsolidatedCorporate
    
    
    Subsidiaries
    
    
    Total
    
    
    Corporate
    
    
    Subsidiaries
    
    
    Total(in thousands)Cash and cash equivalents
    
    $
    69,125
    
    
    $
    12,906
    
    
    $
    82,031
    
    
    $
    104,249
    
    
    $
    16,559
    
    
    $
    120,808Restricted Cash (1)
    
    
    
    
    
    
    5
    
    
    
    5
    
    
    
    
    
    
    
    33
    
    
    
    33$
    69,125
    
    
    $
    12,911
    
    
    $
    82,036
    
    
    $
    104,249
    
    
    $
    16,592
    
    
    $
    120,841Marketable securities (2)
    
    $
    84,376
    
    
    $
    
    
    
    $
    84,376
    
    
    $
    66,075
    
    
    $
    
    
    
    $
    66,075Senior convertible notes due April
2009 (3)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (26,590
    )
    
    $
    
    
    
    $
    (26,590
    )
 
 (1)
    
    Restricted cash at December 31, 2007 and 2006 does not include $0.2 million and $0.3
million, respectively, of long-term restricted cash included in Other assets on the Companys
consolidated balance sheets.(2)
    
    Includes an offsetting liability of $3.7 million at December 31, 2007 and a
contributing asset of $0.4 million at December 31, 2006 related to derivative instruments
associated with the Companys marketable securities.(3)
    
    ICG repurchased all outstanding senior convertible notes on February 12, 2007 for
approximately $37.1 million in cash plus accrued interest.   25




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Summary of Statements of Cash Flows
 Year Ended December 31,2007
    
    2006
    
    2005(in thousands)Cash used in operating activities
    
    $
    (16,075
    )
    
    $
    (7,203
    )
    
    $
    (51,055
    )Cash provided by (used in) investing activities
    
    $
    15,329
    
    
    $
    (7,141
    )
    
    $
    192,693Cash provided by (used in) financing activities
    
    $
    (37,960
    )
    
    $
    (9,454
    )
    
    $
    (29,179
    )
     Contractual Cash Obligations and Commercial Commitments
  Payments due by periodLessthan 1
    
    
    
    
    
    3-5
    
    
    More thanTotal
    
    
    year
    
    
    1-3 years
    
    
    years
    
    
    5 years(in thousands)Operating leases
    
    $
    3,793
    
    
    $
    1,227
    
    
    $
    1,713
    
    
    $
    853
    
    
    $
    Capital leases
    
    
    226
    
    
    
    106
    
    
    
    120
    
    
    
    
    
    
    
    Other borrowings
    
    
    578
    
    
    
    507
    
    
    
    40
    
    
    
    31
    
    
    
    $
    4,597
    
    
    $
    1,840
    
    
    $
    1,873
    
    
    $
    884
    
    
    $
    
 Off-Balance Sheet Arrangements
  26




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##### Table of Contents



Our Partner Companies
  CORE PARTNER COMPANIES (%Voting Interest)Consolidated
    
    Equity
    
    CostICG Commerce (65%)
    
    Channel Intelligence (41%)
    
    (none)Investor Force (80%)
    
    Freeborders (32%)Metastorm (32%)StarCite (26%)Vcommerce (48%)WhiteFence (35%)
 OTHER HOLDINGS COMPANIES (%Voting Interest)Consolidated
    
    Equity
    
    Cost(none)
    
    GoIndustry (31%) (2)
    
    Anthem (9%)Blackboard (1)Captive Capital (5%)Creditex (13%)Emptoris (5%)Entegrity Solutions (2%)Jamcracker (2%)Tibersoft (5%)
 
 (1)
    
    As of February 29, 2008, we own 2,187,060 shares of Blackboard
(NASDAQ:BBBB) See Note 4  Marketable Securities to Consolidated Financial
Statements.(2)
    
    As of February 29, 2008, we own 133,832,852 shares, or approximately
29% 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
Consolidated Financial Statements. Results of Operations
   27




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Reconciling ItemsDiscontinuedOther
    
    Total
    
    Operations and
    
    
    
    
    
    
    
    
    
    ConsolidatedCore
    
    Holdings
    
    Segment
    
    Dispositions
    
    Corporate
    
    Other
    
    ResultsFor the Year Ended
December 31, 2007Revenues
    
    $
    52,923
    
    
    $
    
    
    
    $
    52,923
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    52,923Net income (loss)
    
    $
    (18,194
    )
    
    $
    (856
    )
    
    $
    (19,050
    )
    
    $
    1,849
    
    
    $
    (17,022
    )
    
    
    3,595
    
    
    $
    (30,628
    )For the Year Ended
December 31, 2006Revenues
    
    $
    64,749
    
    
    $
    
    
    
    $
    64,749
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    64,749Net income (loss)
    
    $
    (15,089
    )
    
    $
    592
    
    
    $
    (14,497
    )
    
    $
    7,824
    
    
    $
    (13,788
    )
    
    
    36,085
    
    
    $
    15,624For the Year Ended
December 31, 2005Revenues
    
    $
    47,568
    
    
    $
    
    
    
    $
    47,568
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    47,568Net income (loss)
    
    $
    (21,386
    )
    
    $
    (5,597
    )
    
    $
    (26,983
    )
    
    $
    195
    
    
    $
    (18,473
    )
    
    $
    117,779
    
    
    $
    72,518
 For the Years Ended December 31, 2007, 2006 and 2005
 Results of Operations  Core Companies
  Year Ended December 31,Selected data:
    
    2007
    
    
    2006
    
    
    2005(in thousands)Revenues
    
    $
    52,923
    
    
    $
    64,749
    
    
    $
    47,568Cost of revenue
    
    
    (39,523
    )
    
    
    (42,840
    )
    
    
    (28,460
    )Selling, general and administrative
    
    
    (11,101
    )
    
    
    (20,809
    )
    
    
    (22,420
    )Research and development
    
    
    (6,033
    )
    
    
    (8,779
    )
    
    
    (12,276
    )Amortization of intangibles
    
    
    (129
    )
    
    
    (1,695
    )
    
    
    (2,123
    )Impairment related and other
    
    
    (59
    )
    
    
    (178
    )
    
    
    (347
    )Operating expenses
    
    
    (56,845
    )
    
    
    (74,301
    )
    
    
    (65,626
    )Interest and other
    
    
    451
    
    
    
    51
    
    
    
    (897
    )Income taxes
    
    
    (309
    )
    
    
    
    
    
    
    Equity loss
    
    
    (14,414
    )
    
    
    (5,588
    )
    
    
    (2,431
    )Net loss
    
    $
    (18,194
    )
    
    $
    (15,089
    )
    
    $
    (21,386
    )
 Revenues
   28




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##### Table of Contents



Operating Expenses
   Equity Loss
  Year Ended December 31,Selected data:
    
    2007
    
    
    2006
    
    
    2005(in thousands)Total revenues
    
    $
    167,161
    
    
    $
    74,887
    
    
    $
    25,867Total net loss
    
    $
    (35,874
    )
    
    $
    (17,900
    )
    
    $
    (7,443
    )Our share of total net loss (equity loss)
    
    $
    (14,414
    )
    
    $
    (5,588
    )
    
    $
    (2,431
    )
  Results of Operations  Other Holdings Companies
  Year Ended December 31,Selected data:
    
    2007
    
    
    2006
    
    
    2005(in thousands)Revenues
    
    $
    
    
    
    $
    
    
    
    $
    Operating expenses
    
    
    
    
    
    
    
    
    
    
    Interest and other
    
    
    
    
    
    
    
    
    
    
    Equity income (loss)
    
    
    (856
    )
    
    
    592
    
    
    
    (5,597
    )Net income (loss)
    
    $
    (856
    )
    
    $
    592
    
    
    $
    (5,597
    )
 29




---



##### Table of Contents



Results of Operations  Reconciling Items
 Discontinued Operations and Dispositions
  Year Ended December 31,2007
    
    
    2006
    
    
    2005(in thousands)Discontinued operations
    
    $
    995
    
    
    $
    8,289
    
    
    $
    (1,130
    )Equity income (loss) of partner
companies sold/disposed of
    
    
    854
    
    
    
    (465
    )
    
    
    1,325Net income
    
    $
    1,849
    
    
    $
    7,824
    
    
    $
    195
    30




---



##### Table of Contents



Corporate
 Year Ended December 31,2007
    
    
    2006
    
    
    2005(in thousands)General and administrative
    
    $
    (21,680
    )
    
    $
    (20,874
    )
    
    $
    (18,779
    )Interest income (expense), net
    
    
    4,658
    
    
    
    7,086
    
    
    
    306Net loss
    
    $
    (17,022
    )
    
    $
    (13,788
    )
    
    $
    (18,473
    )
 General and Administrative
   Interest Income/Expense
   Other
 Year Ended December 31,2007
    
    
    2006
    
    
    2005(in thousands)Other income (loss), net
    
    $
    (238
    )
    
    $
    34,813
    
    
    $
    136,603Income tax benefit (expense)
    
    
    4,301
    
    
    
    40
    
    
    
    (18,640
    )Impairments
    
    
    
    
    
    
    
    
    
    
    (2,697
    )Minority interest
    
    
    (468
    )
    
    
    1,232
    
    
    
    2,513Net income (loss)
    
    $
    3,595
    
    
    $
    36,085
    
    
    $
    117,779
 Other Income (Loss), Net
   31




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##### Table of Contents



Income Tax
    Impairment Charges
  Critical Accounting Policies
   Valuation of Goodwill, Intangible Assets and Ownership Interests in Partner Companies
  32




---



##### Table of Contents



Revenue Recognition
    Deferred Income Taxes
  Commitments and Contingencies
  33




---



##### Table of Contents



Recent Accounting Pronouncements
      34




---



##### Table of Contents



ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
    35




---



##### Table of Contents



ITEM 8. Financial Statements and Supplementary Data
  PageNumberReport of Independent Registered Public Accounting Firm
    
    
    37Consolidated Balance Sheets as of December 31, 2007 and 2006
    
    
    38Consolidated Statements of Operations for the years ended December 31, 2007, 2006 and 2005
    
    
    39Consolidated Statements of Stockholders Equity for the years ended December 31, 2007, 2006 and 2005
    
    
    40Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2007, 2006 and 2005
    
    
    41Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005
    
    
    42Notes to Consolidated Financial Statements
    
    
    43
 36




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Share-Based Payment
 Internal ControlIntegrated Framework
  
 37




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    December 31,2007
    
    
    2006(in thousands, except per share data)AssetsCurrent AssetsCash and cash equivalents
    
    $
    82,031
    
    
    $
    120,808Restricted cash
    
    
    5
    
    
    
    33Accounts receivable, net of allowance ($44-2007; $137-2006)
    
    
    7,769
    
    
    
    6,273Prepaid expenses and other current assets
    
    
    6,883
    
    
    
    2,557Total current assets
    
    
    96,688
    
    
    
    129,671Marketable securities
    
    
    88,029
    
    
    
    65,718Fixed assets, net
    
    
    1,723
    
    
    
    1,847Ownership interests in Partner Companies
    
    
    127,888
    
    
    
    137,911Goodwill
    
    
    17,084
    
    
    
    17,084Intangibles, net
    
    
    139
    
    
    
    182Other
    
    
    880
    
    
    
    2,014Total Assets
    
    $
    332,431
    
    
    $
    354,427Liabilities and Stockholders EquityCurrent LiabilitiesSenior convertible notes
    
    $
    
    
    
    $
    26,590Current maturities of other long-term debt
    
    
    613
    
    
    
    947Accounts payable
    
    
    1,624
    
    
    
    4,123Accrued expenses
    
    
    2,871
    
    
    
    4,420Accrued compensation and benefits
    
    
    9,554
    
    
    
    9,222Deferred revenue
    
    
    3,277
    
    
    
    5,430Total current liabilities
    
    
    17,939
    
    
    
    50,732Other long-term debt
    
    
    191
    
    
    
    544Hedges of marketable securities
    
    
    3,653
    
    
    
    Other
    
    
    847
    
    
    
    490Minority interests
    
    
    5,143
    
    
    
    4,12327,773
    
    
    
    55,889Stockholders 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, 38,651 (2007)
and 38,598 (2006) issued and outstanding
    
    
    39
    
    
    
    39Additional paid-in capital
    
    
    3,567,495
    
    
    
    3,552,681Accumulated deficit
    
    
    (3,347,723
    )
    
    
    (3,317,095
    )Accumulated other comprehensive income
    
    
    84,847
    
    
    
    62,913Total Stockholders Equity
    
    
    304,658
    
    
    
    298,538Total Liabilities and Stockholders Equity
    
    $
    332,431
    
    
    $
    354,427
  38




---



##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Year Ended December 31,2007
    
    
    2006
    
    
    2005(in thousands, except per share data)Revenues
    
    $
    52,923
    
    
    $
    64,749
    
    
    $
    47,568Operating expensesCost of revenue
    
    
    39,523
    
    
    
    42,439
    
    
    
    28,460Selling, general and administrative
    
    
    32,781
    
    
    
    42,108
    
    
    
    40,795Research and development
    
    
    6,033
    
    
    
    8,755
    
    
    
    12,276Amortization of intangibles
    
    
    129
    
    
    
    1,695
    
    
    
    2,123Impairment related and other
    
    
    59
    
    
    
    178
    
    
    
    3,448Total operating expenses
    
    
    78,525
    
    
    
    95,175
    
    
    
    87,102(25,602
    )
    
    
    (30,426
    )
    
    
    (39,534
    )Other income (loss), net
    
    
    (167
    )
    
    
    34,605
    
    
    
    135,489Interest income
    
    
    5,338
    
    
    
    9,519
    
    
    
    3,890Interest expense
    
    
    (300
    )
    
    
    (2,174
    )
    
    
    (3,367
    )Income (loss) before income taxes,
minority interest and equity loss
    
    
    (20,731
    )
    
    
    11,524
    
    
    
    96,478Income tax benefit (expense)
    
    
    3,992
    
    
    
    40
    
    
    
    (18,640
    )Minority interest
    
    
    (468
    )
    
    
    1,232
    
    
    
    2,513Equity loss
    
    
    (14,416
    )
    
    
    (5,461
    )
    
    
    (6,703
    )Income (loss) from continuing operations
    
    
    (31,623
    )
    
    
    7,335
    
    
    
    73,648Income (loss) on discontinued operations
    
    
    995
    
    
    
    8,289
    
    
    
    (1,130
    )Net income (loss)
    
    $
    (30,628
    )
    
    $
    15,624
    
    
    $
    72,518Basic income (loss) per share:Income (loss) from continuing operations
    
    $
    (0.83
    )
    
    $
    0.20
    
    
    $
    1.98Income (loss) on discontinued operations
    
    
    0.02
    
    
    
    0.22
    
    
    
    (0.03
    )$
    (0.81
    )
    
    $
    0.42
    
    
    $
    1.95Shares used in computation of basic
income (loss) per share
    
    
    37,916
    
    
    
    37,570
    
    
    
    37,109Diluted income (loss) per share:Income (loss) from continuing operations
    
    $
    (0.83
    )
    
    $
    0.19
    
    
    $
    1.76Income (loss) on discontinued operations
    
    
    0.02
    
    
    
    0.22
    
    
    
    (0.03
    )$
    (0.81
    )
    
    $
    0.41
    
    
    $
    1.73Shares used in computation of diluted
income (loss) per share
    
    
    37,916
    
    
    
    38,106
    
    
    
    43,670
  39




---



##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 Additional
    
    
    
    
    
    
    Unamortized
    
    
    Notes
    
    
    Accumulated OtherCommon Stock
    
    
    Paid-In
    
    
    Accumulated
    
    
    Deferred
    
    
    Receivable-
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Compensation
    
    
    Stockholders
    
    
    Income
    
    
    Total(in thousands)Balance as of December 31, 2004
    
    
    38,388
    
    
    $
    38
    
    
    $
    3,525,596
    
    
    $
    (3,405,237
    )
    
    $
    (3,634
    )
    
    $
    (300
    )
    
    $
    48,644
    
    
    $
    165,107Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,507
    
    
    
    
    
    
    
    
    
    
    
    3,507Impact of partner company equity
transactions (Note 3)
    
    
    
    
    
    
    
    
    
    
    2,271
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,271Issuance of restricted stock
    
    
    819
    
    
    
    1
    
    
    
    6,013
    
    
    
    
    
    
    
    (6,014
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of stock appreciation rights
    
    
    
    
    
    
    
    
    
    
    824
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    824Issuance of deferred stock units to
Board of Directors
    
    
    109
    
    
    
    
    
    
    
    809
    
    
    
    
    
    
    
    (543
    )
    
    
    
    
    
    
    
    
    
    
    266Repurchase of Common Stock from
former employees
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation tax benefit
    
    
    
    
    
    
    
    
    
    
    133
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    133Net unrealized appreciation in
marketable securities and
reclassification adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,619
    
    
    
    11,619Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,518
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,518Balance as of December 31, 2005
    
    
    39,314
    
    
    
    39
    
    
    
    3,535,646
    
    
    
    (3,332,719
    )
    
    
    (6,684
    )
    
    
    (300
    )
    
    
    60,263
    
    
    
    256,245Reclassification of unamortized deferred
compensation upon adoption of SFAS No.
123R
    
    
    
    
    
    
    
    
    
    
    (6,684
    )
    
    
    
    
    
    
    6,684
    
    
    
    
    
    
    
    
    
    
    
    Share-based compensation expense related
to restricted stock
    
    
    
    
    
    
    
    
    
    
    2,559
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,559Impact of partner company equity
transactions (Note 3)
    
    
    
    
    
    
    
    
    
    
    15,169
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,169Issuance of restricted stock
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeitures of restricted stock
    
    
    (37
    )
    
    
    
    
    
    
    (129
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (129
    )Share-based compensation related to stock
appreciation rights and stock options
    
    
    
    
    
    
    
    
    
    
    4,716
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,716Issuance of deferred stock units to
Board of Directors
    
    
    56
    
    
    
    
    
    
    
    674
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    674Repurchase of Common Stock from current and
former employees
    
    
    (785
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128
    
    
    
    
    
    
    
    128Stockholder loans principal payments
    
    
    
    
    
    
    
    
    
    
    730
    
    
    
    
    
    
    
    
    
    
    
    125
    
    
    
    
    
    
    
    855Forgiveness of stockholder loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47
    
    
    
    
    
    
    
    47Net unrealized appreciation in
marketable securities and
reclassification adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,650
    
    
    
    2,650Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,624
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,624Balance as of December 31, 2006
    
    
    38,598
    
    
    
    39
    
    
    
    3,552,681
    
    
    
    (3,317,095
    )
    
    
    
    
    
    
    
    
    
    
    62,913
    
    
    
    298,538Share-based compensation expense related
to restricted stock
    
    
    
    
    
    
    
    
    
    
    2,334
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,334Impact of partner company equity
transactions (Note 3)
    
    
    
    
    
    
    
    
    
    
    7,309
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,309Issuance 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    332Minority owners share of AOCI of
consolidated subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    (19
    )Net unrealized appreciation in
marketable securities and
reclassification adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,953
    
    
    
    21,953Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,628
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,628
    )Balance as of December 31, 2007
    
    
    38,651
    
    
    $
    39
    
    
    $
    3,567,495
    
    
    $
    (3,347,723
    )
    
    $
    
    
    
    $
    
    
    
    $
    84,847
    
    
    $
    304,658
  40




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 Year Ended December 31,2007
    
    
    2006
    
    
    2005(in thousands)Net income (loss)
    
    $
    (30,628
    )
    
    $
    15,624
    
    
    $
    72,518Other comprehensive income (loss)Unrealized holding gains in marketable
securities
    
    
    22,333
    
    
    
    7,674
    
    
    
    25,940Reclassification adjustments/realized net
(gains) loss on marketable securities
    
    
    (380
    )
    
    
    (5,024
    )
    
    
    (14,567
    )Other accumulated other comprehensive income
(loss)
    
    
    (19
    )
    
    
    
    
    
    
    246Sub-total
    
    
    21,934
    
    
    
    2,650
    
    
    
    11,619Comprehensive income (loss)
    
    $
    (8,694
    )
    
    $
    18,274
    
    
    $
    84,137
  41




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31,2007
    
    
    2006
    
    
    2005(in thousands)Operating ActivitiesNet income (loss)
    
    $
    (30,628
    )
    
    $
    15,624
    
    
    $
    72,518Adjustments to reconcile net loss to cash used in operating activities:(Income) loss from discontinued operations
    
    
    (995
    )
    
    
    (8,289
    )
    
    
    1,130Depreciation and amortization
    
    
    1,502
    
    
    
    3,395
    
    
    
    3,691Impairment related and other
    
    
    59
    
    
    
    373
    
    
    
    2,941Equity-based compensation
    
    
    7,781
    
    
    
    7,680
    
    
    
    4,339Equity loss
    
    
    14,416
    
    
    
    5,461
    
    
    
    6,703Other (income) loss
    
    
    167
    
    
    
    (34,605
    )
    
    
    (135,489
    )Minority interest
    
    
    468
    
    
    
    (1,232
    )
    
    
    (2,513
    )Changes in assets and liabilities, net of effect of acquisitions:Restricted cash
    
    
    99
    
    
    
    122
    
    
    
    156Accounts receivable, net
    
    
    (1,452
    )
    
    
    (1,395
    )
    
    
    (4,631
    )Prepaid expenses and other assets
    
    
    (4,526
    )
    
    
    6,990
    
    
    
    949Accounts payable
    
    
    486
    
    
    
    (3,019
    )
    
    
    (6,711
    )Accrued expenses
    
    
    (1,247
    )
    
    
    1,075
    
    
    
    2,506Deferred revenue
    
    
    (2,153
    )
    
    
    (762
    )
    
    
    600Other liabilities
    
    
    (52
    )
    
    
    3,261
    
    
    
    3,553Cash flows provided by (used in) operating activities of continuing operations
    
    
    (16,075
    )
    
    
    (5,321
    )
    
    
    (50,258
    )Cash flows from operating activities of discontinued operations
    
    
    
    
    
    
    (1,882
    )
    
    
    (797
    )Cash used in operating activities
    
    
    (16,075
    )
    
    
    (7,203
    )
    
    
    (51,055
    )Investing ActivitiesCapital expenditures, net
    
    
    (1,226
    )
    
    
    (2,265
    )
    
    
    (965
    )Purchases of short-term investments
    
    
    
    
    
    
    
    
    
    
    (10,597
    )Proceeds of short-term investments
    
    
    
    
    
    
    5,000
    
    
    
    63,537Proceeds from sales of marketable securities
    
    
    24
    
    
    
    5,554
    
    
    
    19,153Proceeds from sales of partner company ownership interests
    
    
    34,725
    
    
    
    40,720
    
    
    
    141,719Proceeds from sale of discontinued operations
    
    
    1,200
    
    
    
    9,125
    
    
    
    Acquisitions of ownership interests in Partner Companies, net
    
    
    (19,394
    )
    
    
    (63,292
    )
    
    
    (22,471
    )Other acquisitions, net
    
    
    
    
    
    
    (536
    )
    
    
    Increase in cash due to consolidation of Partner Companies
    
    
    
    
    
    
    
    
    
    
    2,331Reduction in cash due to deconsolidation of partner company
    
    
    
    
    
    
    (1,447
    )
    
    
    Cash flows provided by (used in) investing activities of continuing operations
    
    
    15,329
    
    
    
    (7,141
    )
    
    
    192,707Cash flows from investing activities of discontinued operations
    
    
    
    
    
    
    
    
    
    
    (14
    )Cash provided by (used in) investing activities
    
    
    15,329
    
    
    
    (7,141
    )
    
    
    192,693Financing ActivitiesRepurchase of senior convertible notes
    
    
    (37,087
    )
    
    
    (12,768
    )
    
    
    (28,405
    )Long term debt and capital lease obligations, net
    
    
    (873
    )
    
    
    (1,310
    )
    
    
    (774
    )Repayments of loans from employees
    
    
    
    
    
    
    4,624
    
    
    
    Cash flows provided by (used in) financing activities of continuing operations
    
    
    (37,960
    )
    
    
    (9,454
    )
    
    
    (29,179
    )Cash flows from financing activities of discontinued operations
    
    
    
    
    
    
    
    
    
    
    Cash provided by (used in) financing activities
    
    
    (37,960
    )
    
    
    (9,454
    )
    
    
    (29,179
    )Net increase (decrease) in Cash and Cash Equivalents
    
    
    (38,706
    )
    
    
    (23,798
    )
    
    
    112,459Effect of exchange rates on cash
    
    
    (71
    )
    
    
    65
    
    
    
    496Cash and Cash Equivalents at the beginning of year
    
    
    120,808
    
    
    
    144,541
    
    
    
    31,586Cash and Cash Equivalents at end of year
    
    
    82,031
    
    
    
    120,808
    
    
    
    144,541Less Cash and Cash Equivalents of discontinued operations at the end of year
    
    
    
    
    
    
    
    
    
    
    1,882Cash and Cash Equivalents of continuing operations at the end of year
    
    $
    82,031
    
    
    $
    120,808
    
    
    $
    142,659
  42




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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 31,2007
    
    2006
    
    2005ICG Commerce
    
    ICG Commerce
    
    ICG CommerceInvestor Force
    
    Investor Force
    
    CommerceQuest (2)StarCite (1)
    
    Investor Force (3)StarCite (4)
  December 31,2007
    
    2006ICG Commerce
    
    ICG CommerceInvestor Force
    
    Investor Force
 
 (1)
    
    On December 29, 2006, StarCite completed a transaction in which it merged with
OnVantage, Inc. Beginning on December 29, 2006, the Companys ownership interest in the
combined entity is accounted for under the equity method of accounting. See Note 3.(2)
    
    In October 2005, CommerceQuest, a consolidated Partner Company, was acquired by
Metastorm in exchange for an equity interest in Metastorm. Beginning October 1, 2005 (see
Note 3), Metastorm was accounted for as an equity method Partner Company.(3)
    
    Investor Force became a consolidated Partner Company on January 1, 2005.(4)
    
    StarCite became a consolidated Partner Company on June 8, 2005. The results of
operations of StarCite from June 8, 2005 to June 30, 2005 were not material and were not
included in the Consolidated Statements of Operations through June 30, 2005. StarCites
results of operations are included in the Consolidated Statements of Operations beginning July
1, 2005. 43




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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.
  44




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2. Significant Accounting Policies  (Continued)
 Cost Method.
   Ownership Interests in Partner Companies, Goodwill and Intangibles, net
    45




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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
  46




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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
  Cash and Cash Equivalents
  Restricted Cash
  Short-term Investments
  Marketable Securities
  Financial Instruments
  Research and Development
  47




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2. Significant Accounting Policies  (Continued)
 Income Taxes
  Net Income (Loss) Per Share
   Issuances of Stock by Partner Companies
  Escrowed Proceeds
  Concentration of Customer Base and Credit Risk
  48




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2. Significant Accounting Policies  (Continued)
 Stock Based Compensation
    Year Ended December 31, 2005(in thousands, except per share data)Net income (loss), as reported
    
    $
    72,518Stock-based employee compensation expense included
in reported net income (loss)
    
    
    4,339Total stock-based employee compensation expense determined
under fair-value-based method for all awards
    
    
    (8,305
    )Pro forma net income (loss)
    
    $
    68,552Net income (loss) per basic share, as reported
    
    $
    1.95Net income (loss) per diluted share, as reported
    
    $
    1.73Pro forma net income (loss) per basic share
    
    $
    1.85Pro forma net income (loss) per diluted share
    
    $
    1.64
  49




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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
      50




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2. Significant Accounting Policies  (Continued)
  Comprehensive Income (Loss)
  Reclassifications
  3. Ownership Interests in Partner Companies, Goodwill and Intangibles, net
  December 31,
    
    
    December 31,2007
    
    
    2006(in thousands)Goodwill
    
    $
    17,084
    
    
    $
    17,084Intangibles, net
    
    $
    139
    
    
    $
    182Ownership interests in Partner
Companies  Equity Method
    
    $
    98,144
    
    
    $
    109,288Ownership interests in Partner
Companies  Cost Method
    
    
    29,744
    
    
    
    28,623$
    127,888
    
    
    $
    137,911
   Goodwill at December 31, 2005
    
    $
    17,794Additional acquisition of ICG Commerce
    
    
    697Deconsolidation of StarCite
    
    
    (2,102
    )Additional acquisition of Investor Force
    
    
    695Goodwill at December 31, 2006
    
    
    17,084No 2007 activity
    
    
    Goodwill at December 31, 2007
    
    $
    17,084
  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)
  As of December 31, 2007(in thousands)Useful
    
    Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingIntangible Assets
    
    Life
    
    Amount
    
    
    Amortization
    
    
    AmountTechnology(1)
    
    3 years
    
    $
    7,580
    
    
    $
    (7,441
    )
    
    $
    139
 
 (1)
    
    Net carrying amount primarily represents purchased software  As of December 31, 2006(in thousands)Useful
    
    Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingIntangible Assets
    
    Life
    
    Amount
    
    
    Amortization
    
    
    AmountTechnology(1)
    
    1.5-5 years
    
    $
    18,051
    
    
    $
    (17,869
    )
    
    $
    182
 
 (1)
    
    Net carrying amount primarily represents purchased software   December 31, 2008
    
    $
    97December 31, 2009
    
    
    31December 31, 2010
    
    
    11Remaining amortization expense
    
    $
    139
 Other Consolidated Company Information
  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)
 Acquisitions  Consolidated Companies
  Investor Force
    
    
    ICG Commerce
    
    
    StarCiteNet Assets Acquired:Goodwill
    
    $
    695
    
    
    $
    697
    
    
    $
    2,102Customer base
    
    
    
    
    
    
    
    
    
    
    2,513Technology
    
    
    
    
    
    
    
    
    
    
    75Tradename
    
    
    
    
    
    
    
    
    
    
    179Other net assets (liabilities)
    
    
    (695
    )
    
    
    233
    
    
    
    (1,659
    )$
    
    
    
    $
    930
    
    
    $
    3,210
  Deconsolidation/Disposition
    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)
 Equity Method Companies
  Balance Sheets (Unaudited)
 As of December 31,2007 (1)
    
    
    2006 (2)(in thousands)Cash, cash equivalents and short-term investments
    
    $
    41,317
    
    
    $
    52,170Other current assets
    
    
    85,806
    
    
    
    50,763Other non-current assets
    
    
    171,609
    
    
    
    128,946Total assets
    
    $
    298,732
    
    
    $
    231,879Current liabilities
    
    $
    105,158
    
    
    $
    81,145Non-current liabilities
    
    
    11,584
    
    
    
    13,470Long-term debt
    
    
    15,992
    
    
    
    14,377Stockholders equity
    
    
    165,998
    
    
    
    122,887Total liabilities and stockholders equity
    
    $
    298,732
    
    
    $
    231,879Total carrying value
    
    $
    98,144
    
    
    $
    109,288
 
 (1)
    
    Includes (ICG voting ownership): Channel Intelligence (41%), Freeborders (32%),
GoIndustry (31%), Metastorm (32%), StarCite (26%), Vcommerce (48%) and WhiteFence (35%).(2)
    
    Includes (ICG voting ownership): Channel Intelligence (40%), Freeborders (34%),
GoIndustry (35%), Marketron (38%), Metastorm (41%), StarCite (26%), Vcommerce (43%) and WhiteFence
(36%).   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)
 Results of Operations (Unaudited)
 Year Ended December 31,2007(1)
    
    
    2006(2)
    
    
    2005 (3)(in thousands)Revenues
    
    $
    212,457
    
    
    $
    203,547
    
    
    $
    210,635Net income (loss)
    
    $
    (35,027
    )
    
    $
    (22,640
    )
    
    $
    (8,514
    )Total equity income (loss)
    
    $
    (14,416
    )
    
    $
    (5,461
    )
    
    $
    (6,703
    )
 
 (1)
    
    Includes Channel Intelligence, Freeborders, GoIndustry, Marketron (to date of
disposition), Metastorm, StarCite, Vcommerce and WhiteFence.(2)
    
    Includes Channel Intelligence (from date of acquisition), ComputerJobs (to
date of disposition), eCredit (to date of disposition), Freeborders, GoIndustry, Marketron,
Metastorm, Vcommerce (from date of acquisition) and WhiteFence.(3)
    
    Includes ComputerJobs, Co-nect (to date of disposition), CreditTrade (to date
of disposition), eCredit, Freeborders, GoIndustry, LinkShare (to date of disposition), Marketron,
Metastorm (from date of acquisition) and WhiteFence (from date of acquisition). Other Equity 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)
    4. Marketable Securities and Related Derivatives
  UnrealizedCommon Shares
    
    
    
    
    
    
    HoldingOwned
    
    
    Cost
    
    
    Gains/(Losses)
    
    
    Fair Value(in thousands, except shares)December 31, 2007Blackboard
    
    
    2,187,060
    
    
    $
    3,162
    
    
    $
    84,867
    
    
    $
    88,029$
    3,162
    
    
    $
    84,867
    
    
    $
    88,029December 31, 2006Blackboard
    
    
    2,187,060
    
    
    $
    3,162
    
    
    $
    62,536
    
    
    $
    65,698Other
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    20$
    3,162
    
    
    $
    62,556
    
    
    $
    65,718
  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)
    5. Debt
 Senior Convertible Notes
     57




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 5. Debt  (Continued)
  Other Long-Term Debt
  As of December 31,Interest Rates
    
    2007
    
    
    2006(in thousands)Capital leases
    
    10.1 -11.5%
    
    $
    226
    
    
    $
    168Other Debt
    
    5.0-10.3%
    
    
    578
    
    
    
    1,323804
    
    
    
    1,491Current maturities
    
    
    
    
    (613
    )
    
    
    (947
    )Other long-term debt
    
    
    
    $
    191
    
    
    $
    544
  Loan and Credit Agreements
  58




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 6. Fixed Assets
  As of December 31,Useful Life
    
    2007
    
    
    2006(in thousands)Computer equipment and software,
office equipment and furniture
    
    3-10 years
    
    $
    15,808
    
    
    $
    14,768Leasehold improvements
    
    1-5 years
    
    
    787
    
    
    
    67716,595
    
    
    
    15,445Less: accumulated depreciation
and amortization
    
    
    
    
    (14,872
    )
    
    
    (13,598
    )$
    1,723
    
    
    $
    1,847
  7. Discontinued Operations
      59




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 8. Segment Information
     Segment Information(in thousands)Reconciling ItemsDiscontinuedOperationsOther
    
    Total
    
    and
    
    
    
    
    
    
    
    
    
    ConsolidatedCore
    
    Holdings
    
    Segment
    

Dispositions*
    
    Corporate
    

Other**
    
    ResultsYear Ended
December 31, 2007Revenues
    
    $
    52,923
    
    
    $
    
    
    
    $
    52,923
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    52,923Net income (loss)
    
    $
    (18,194
    )
    
    $
    (856
    )
    
    $
    (19,050
    )
    
    $
    1,849
    
    
    $
    (17,022
    )
    
    $
    3,595
    
    
    $
    (30,628
    )Assets
    
    $
    153,365
    
    
    $
    14,982
    
    
    $
    168,347
    
    
    $
    
    
    
    $
    164,084
    
    
    $
    
    
    
    $
    332,431Capital
Expenditures, net
    
    $
    (1,163
    )
    
    $
    
    
    
    $
    (1,163
    )
    
    $
    
    
    
    $
    (63
    )
    
    $
    
    
    
    $
    (1,226
    )Year Ended
December 31, 2006Revenues
    
    $
    64,749
    
    
    $
    
    
    
    $
    64,749
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    64,749Net income (loss)
    
    $
    (15,089
    )
    
    $
    592
    
    
    $
    (14,497
    )
    
    $
    7,824
    
    
    $
    (13,788
    )
    
    $
    36,085
    
    
    $
    15,624Assets
    
    $
    149,594
    
    
    $
    9,781
    
    
    $
    159,375
    
    
    $
    22,535
    
    
    $
    172,517
    
    
    $
    
    
    
    $
    354,427Capital
Expenditures, net
    
    $
    (2,037
    )
    
    $
    
    
    
    $
    (2,037
    )
    
    $
    
    
    
    $
    (228
    )
    
    $
    
    
    
    $
    (2,265
    )Year Ended
December 31, 2005Revenues
    
    $
    47,568
    
    
    $
    
    
    
    $
    47,568
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    47,568Net income (loss)
    
    $
    (21,386
    )
    
    $
    (5,597
    )
    
    $
    (26,983
    )
    
    $
    195
    
    
    $
    (18,473
    )
    
    $
    117,779
    
    
    $
    72,518Assets
    
    $
    97,483
    
    
    $
    3,836
    
    
    $
    101,319
    
    
    $
    36,102
    
    
    $
    209,111
    
    
    $
    
    
    
    $
    346,532Capital
Expenditures, net
    
    $
    (830
    )
    
    $
    
    
    
    $
    (830
    )
    
    $
    
    
    
    $
    (135
    )
    
    $
    
    
    
    $
    (965
    )
 
 *
    
    Discontinued operations represents net income of $995 and
$8,289 for the years ended December 31, 2007 and 2006, respectively, and
net loss of $(1,130) for the year ended December 31, 2005. All other
amounts relate to dispositions for the years ended December 31, 2007,
2006 and 2005.**
    
    Other reconciling items to net income (loss) are as follows: Year Ended December 31,2007
    
    
    2006
    
    
    2005Other income (loss) (Note 15)
    
    $
    (238
    )
    
    $
    34,813
    
    
    $
    136,603Taxes
    
    
    4,301
    
    
    
    40
    
    
    
    (18,640
    )Minority interest
    
    
    (468
    )
    
    
    1,232
    
    
    
    2,513Impairment of consolidated Partner Companies
    
    
    
    
    
    
    
    
    
    
    (2,697
    )$
    3,595
    
    
    $
    36,085
    
    
    $
    117,779
 60




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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
 December 31,2007
    
    
    2006(in thousands)AssetsCash and cash equivalents
    
    $
    69,125
    
    
    $
    104,249Other current assets
    
    
    6,286
    
    
    
    1,904Current assets
    
    
    75,411
    
    
    
    106,153Ownership interests in Partner Companies
    
    
    149,407
    
    
    
    159,356Marketable securities
    
    
    88,029
    
    
    
    65,718Other
    
    
    644
    
    
    
    1,837Total assets
    
    $
    313,491
    
    
    $
    333,064Liabilities and stockholders equityCurrent portion of senior convertible notes
    
    $
    
    
    
    $
    26,590Current liabilities
    
    
    4,666
    
    
    
    7,936Hedges of marketable securities
    
    
    3,653
    
    
    
    Non-current liabilities
    
    
    495
    
    
    
    Stockholders equity
    
    
    304,677
    
    
    
    298,538Total liabilities and stockholders equity
    
    $
    313,491
    
    
    $
    333,064
 Parent Company Statements of Operations
 Year Ended December 31,2007
    
    
    2006
    
    
    2005(in thousands)Revenues
    
    $
    
    
    
    $
    
    
    
    $
    Operating expensesGeneral and administrative
    
    
    21,680
    
    
    
    20,874
    
    
    
    18,779Impairment related and other
    
    
    
    
    
    
    
    
    
    
    2,697Total operating expenses
    
    
    21,680
    
    
    
    20,874
    
    
    
    21,476(21,680
    )
    
    
    (20,874
    )
    
    
    (21,476
    )Other income (loss), net *
    
    
    (37
    )
    
    
    42,059
    
    
    
    136,603Interest income (expense), net
    
    
    4,658
    
    
    
    7,086
    
    
    
    306Income (loss) before income taxes and equity loss
    
    
    (17,059
    )
    
    
    28,271
    
    
    
    115,433Income tax benefit (expense)
    
    
    4,301
    
    
    
    40
    
    
    
    (18,640
    )Equity loss
    
    
    (17,870
    )
    
    
    (12,687
    )
    
    
    (24,275
    )Net income (loss)
    
    $
    (30,628
    )
    
    $
    15,624
    
    
    $
    72,518
 
 *
    
    For purposes of Parent Company reporting, discontinued operations (see Note 7) are included in
the Other income (loss), net line item. 61




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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 312007
    
    
    2006
    
    
    2005(in thousands)Operating ActivitiesNet income (loss)
    
    $
    (30,628
    )
    
    $
    15,624
    
    
    $
    72,518Adjustments to reconcile net loss to cash used in operating activitiesDepreciation and amortization
    
    
    140
    
    
    
    138
    
    
    
    144Impairment related and other
    
    
    
    
    
    
    
    
    
    
    2,697Equity-based compensation
    
    
    7,173
    
    
    
    7,624
    
    
    
    4,331Equity loss
    
    
    17,870
    
    
    
    12,687
    
    
    
    24,275Other income (loss)
    
    
    37
    
    
    
    (42,059
    )
    
    
    (136,603
    )Changes in assets and liabilities, net of effect of acquisitions:Taxes receivable
    
    
    (4,301
    )
    
    
    8,020
    
    
    
    (8,392
    )Prepaid expenses and other assets
    
    
    (32
    )
    
    
    1,523
    
    
    
    (73
    )Accounts payable
    
    
    (33
    )
    
    
    (4,149
    )
    
    
    62Accrued expenses
    
    
    (230
    )
    
    
    (199
    )
    
    
    1,362Cash used in operating activities
    
    
    (10,004
    )
    
    
    (791
    )
    
    
    (39,679
    )Investing ActivitiesCapital expenditures, net
    
    
    (63
    )
    
    
    (228
    )
    
    
    (135
    )Proceeds from sales of marketable securities
    
    
    24
    
    
    
    5,554
    
    
    
    19,153Proceeds from sales of ownership interests in Partner Companies
    
    
    34,925
    
    
    
    44,845
    
    
    
    141,719Acquisitions of ownership interests in Partner Companies, net
    
    
    (22,919
    )
    
    
    (66,542
    )
    
    
    (30,383
    )Purchase of short-term investments
    
    
    
    
    
    
    
    
    
    
    (4,922
    )Proceeds from maturities of short-term investments
    
    
    
    
    
    
    
    
    
    
    62,862Cash provided by (used in) investing activities
    
    
    11,967
    
    
    
    (16,371
    )
    
    
    188,294Financing ActivitiesRepurchase of senior convertible notes
    
    
    (37,087
    )
    
    
    (12,768
    )
    
    
    (28,405
    )Repayment of loans from employees
    
    
    
    
    
    
    4,624
    
    
    
    Cash provided by (used in) financing activities
    
    
    (37,087
    )
    
    
    (8,144
    )
    
    
    (28,405
    )Net increase (decrease) in cash and cash equivalents
    
    
    (35,124
    )
    
    
    (25,306
    )
    
    
    120,210Cash and cash equivalents at beginning at year
    
    
    104,249
    
    
    
    129,555
    
    
    
    9,345Cash and cash equivalents at end of year
    
    $
    69,125
    
    
    $
    104,249
    
    
    $
    129,555
 10. Stockholders Equity
   Stockholder Rights Plan
  62




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 10. Stockholders Equity  (Continued)
    11. Stock Option Plans
   63




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11. Stock Option Plans  (Continued)
  WeightedAverage YearsRemaining ofStock-BasedCompensationUnrecognized Stock-
    
    
    Expense atYear Ended
    
    
    Based Compensation
    
    
    December 31,December 31,
    
    
    at December 31, 2007
    
    
    20072007
    
    
    2006
    
    
    2005Stock Appreciation Rights
    
    $
    3.9
    
    
    $
    4.2
    
    
    $
    0.8
    
    
    $
    6.7
    
    
    
    1.6Stock Options
    
    $
    0.1
    
    
    $
    0.5
    
    
    $
    0.2
    
    
    $
    0.1
    
    
    
    1.0Restricted Stock
    
    $
    2.3
    
    
    $
    2.6
    
    
    $
    2.9
    
    
    $
    1.7
    
    
    
    0.7Deferred Stock Units
    
    $
    0.3
    
    
    $
    0.3
    
    
    $
    0.4
    
    
    $
    0.1
    
    
    
    0.2Equity-Based Compensation
    
    $
    6.6
    
    
    $
    7.6
    
    
    $
    4.3
    
    
    $
    8.6Equity-Based Compensation for Consolidated Partner Companies:Restricted Stock
    
    $
    0.6
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    1.5
    
    
    
    2.9$
    7.2
    
    
    $
    7.7
    
    
    $
    4.3
    
    
    $
    10.1
 Stock Appreciation Rights (SARs) and Stock Options Fair Value Assumptions
  2007
    
    2006
    
    2005Expected volatility
    
    60%
    
    60%
    
    60-70%Average expected option life
    
    6.25 years
    
    6.25 years
    
    6.25 yearsRisk-free interest rate
    
    3.51-5.10%
    
    4.55-5.10%
    
    3.91-4.26%Dividend yield
    
    0.0%
    
    0.0%
    
    0.0%
  64




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11. Stock Option Plans  (Continued)
 SARs
   Weighted
    
    WeightedAverage
    
    AverageSARs
    
    Base Price
    
    Fair ValueSARs granted in 2005
    
    
    3,605,500
    
    
    $
    7.34
    
    
    $
    4.43Issued at December 31, 2005
    
    
    3,605,500
    
    
    $
    7.34
    
    
    $
    4.43SARs cancelled
    
    
    (156,771
    )
    
    $
    7.34
    
    
    $
    4.43SARs granted
    
    
    201,450
    
    
    $
    9.25
    
    
    $
    5.66Issued 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
    
    
    $
    4.58
  Aggregate IntrinsicWeighted Average
    
    
    Value of SARsRemaining Contractual Life
    
    
    Outstanding atSARs
    
    
    SARs
    
    
    of SARs Outstanding
    
    
    December 31, 2007Grant Price
    
    Outstanding
    
    
    Exercisable
    
    
    (in years)
    
    
    (in thousands)$7.34
    
    
    3,309,665
    
    
    
    2,068,584
    
    
    
    7.6
    
    
    $
    14,563$8.14  $12.01
    
    
    306,450
    
    
    
    109,857
    
    
    
    8.8
    
    
    $
    5183,616,115
    
    
    
    2,178,441
    
    
    
    
    
    
    $
    15,081
  65




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11. Stock Option Plans  (Continued)
 Stock Options
   Weighted
    
    WeightedAverage
    
    AverageGrant Date
    
    Grant DateShares
    
    Exercise Price
    
    Fair ValueOutstanding at December 31, 2004
    
    
    790,829
    
    
    $
    37.19
    
    
    $
    30.51Options granted
    
    
    12,000
    
    
    $
    7.73
    
    
    $
    5.06Options forfeited
    
    
    (75,942
    )
    
    $
    32.10
    
    
    $
    27.16Outstanding at December 31, 2005
    
    
    726,887
    
    
    $
    37.24
    
    
    $
    30.44Options granted
    
    
    250
    
    
    $
    9.34
    
    
    $
    5.74Options forfeited
    
    
    (89,683
    )
    
    $
    38.01
    
    
    $
    35.73Outstanding at December 31, 2006 and 2007
    
    
    637,454
    
    
    $
    37.13
    
    
    $
    29.69
   Weighted AverageRemaining
    
    
    Aggregate IntrinsicContractual Life
    
    
    Value atShares
    
    
    Shares
    
    
    of Shares Outstanding
    
    
    December 31, 2007Exercise Price
    
    Outstanding
    
    
    Vested
    
    
    (in years)
    
    
    (in thousands)$4.59  $8.00
    
    
    137,224
    
    
    
    129,963
    
    
    
    5.3
    
    
    $
    893$8.01  $12.00
    
    
    186,483
    
    
    
    186,232
    
    
    
    5.1
    
    
    $
    504$12.01  $20.00
    
    
    127,199
    
    
    
    127,199
    
    
    
    3.6
    
    
    $
    $20.01  $2,210.00
    
    
    186,548
    
    
    
    186,543
    
    
    
    2.8
    
    
    $
    637,454
    
    
    
    629,937
    
    
    
    
    
    
    $
    1,397
   66




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11. Stock Option Plans  (Continued)
 Restricted Stock
  WeightedAverage GrantShares
    
    Date Fair ValueIssued and unvested, December 31, 2004
    
    
    627,828
    
    
    $
    6.89Granted
    
    
    819,300
    
    
    $
    7.34Vested
    
    
    (314,063
    )
    
    $
    7.02Issued and unvested, December 31, 2005
    
    
    1,133,065
    
    
    $
    7.15Granted
    
    
    49,620
    
    
    $
    9.28Vested
    
    
    (326,563
    )
    
    $
    7.12Forfeited
    
    
    (37,500
    )
    
    $
    7.34Issued 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
    
    
    $
    7.39
   Deferred Stock Units (DSUs)
  67




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11. Stock Option Plans  (Continued)
  Weighted Average Grant DateDSUs
    
    Fair ValueIssued and unvested, January 1, 2005
    
    
    
    
    
    
    Granted
    
    
    108,843
    
    
    $
    7.44Vested
    
    
    (34,781
    )
    
    $
    7.65Issued and unvested, December 31, 2005
    
    
    74,062
    
    
    $
    7.34Granted
    
    
    56,494
    
    
    $
    9.08Vested
    
    
    (109,056
    )
    
    $
    7.87Issued and unvested, December 31, 2006
    
    
    21,500
    
    
    $
    9.20Granted
    
    
    74,375
    
    
    $
    11.33Vested
    
    
    (64,375
    )
    
    $
    11.43Issued and unvested, December 31, 2007
    
    
    31,500
    
    
    $
    11.37
 Consolidated Partner Companies
    Other
    68




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 11. Stock Option Plans  (Continued)
    12. Income Taxes
  Year Ended December 31,2007
    
    
    2006
    
    
    2005(in thousands)Income tax expense (benefit) from continuing operations:Federal taxes
    
    $
    (4,252
    )
    
    $
    (40
    )
    
    $
    18,640Foreign taxes
    
    
    260
    
    
    
    
    
    
    
    Total
    
    $
    (3,992
    )
    
    $
    (40
    )
    
    $
    18,640
  Year Ended December 31,2007
    
    
    2006
    
    
    2005(in thousands)Current
    
    $
    (3,992
    )
    
    $
    (40
    )
    
    $
    18,640Deferred
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    (3,992
    )
    
    $
    (40
    )
    
    $
    18,640
  69




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 12. Income Taxes  (Continued)
   As of December 31,2007
    
    
    2006(in thousands)Net operating loss carry forward
    
    $
    184,084
    
    
    $
    183,988Capital loss carry forward
    
    
    163,433
    
    
    
    233,544Other comprehensive income
    
    
    (29,703
    )
    
    
    (22,019
    )Reserves and accruals
    
    
    1,693
    
    
    
    3,246Stock-based compensation expense
    
    
    5,119
    
    
    
    4,139Other, net
    
    
    629
    
    
    
    329Partner Company basis difference
    
    
    151,503
    
    
    
    170,164Valuation allowance
    
    
    (476,758
    )
    
    
    (573,391
    )Net deferred tax asset (liability)
    
    $
    
    
    
    $
    
  As of December 31,2007
    
    2006
    
    2005Tax expense (benefit) at statutory rate
    
    
    (35.0
    )%
    
    
    35.0
    %
    
    
    35.0
    %Non-deductible expenses and other
    
    
    10.9
    %
    
    
    5.1
    %
    
    
    1.6
    %Valuation allowance
    
    
    12.9
    %
    
    
    (40.4
    )%
    
    
    (16.2
    )%(11.2
    )%
    
    
    (0.3
    )%
    
    
    20.4
    %
 13. Related Parties
   70




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 14. Other Supplemental Non-Cash Financing and Investing Activities
    15. Other Income (Loss)
 Other Income (Loss), net
  Year Ended December 31,2007
    
    
    2006
    
    
    2005(in thousands)Sales/distributions of ownership interests in Partner
Companies (Note 3)
    
    $
    9,786
    
    
    $
    31,034
    
    
    $
    125,255Losses on debt extinguishment (Note 5)
    
    
    (10,833
    )
    
    
    (2,490
    )
    
    
    (5,881
    )Realized gains (losses) on marketable securities (Note 4)
    
    
    (3,628
    )
    
    
    5,484
    
    
    
    15,911Other than temporary impairment of marketable securities
    
    
    
    
    
    
    
    
    
    
    (1,342
    )Gains (losses) on warrants
    
    
    1,408
    
    
    
    (83
    )
    
    
    2,596Other
    
    
    3,029
    
    
    
    868
    
    
    
    64$
    (238
    )
    
    $
    34,813
    
    
    $
    136,603Total other income (loss) for Consolidated Partner Companies
    
    
    71
    
    
    
    (208
    )
    
    
    (1,114
    )$
    (167
    )
    
    $
    34,605
    
    
    $
    135,489
   16. Commitments and Contingencies
   2008
    
    $
    1,2272009
    
    $
    1,0262010
    
    $
    6872011
    
    $
    6062012
    
    $
    247Thereafter
    
    $
    
 71




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 16. Commitments and Contingencies  (Continued)
   17. Net Income (Loss) per Share
  Year Ended December 31,2007
    
    
    2006
    
    
    2005(in thousands, except shares and per share data)Basic and Diluted:Income (loss) from continuing operations
    
    $
    (31,623
    )
    
    $
    7,335
    
    
    $
    73,648Income (loss) on discontinued operations
    
    
    995
    
    
    
    8,289
    
    
    
    (1,130
    )Net income (loss)  basic
    
    $
    (30,628
    )
    
    $
    15,624
    
    
    $
    72,518Interest expense  convertible debt
    
    
    
    
    
    
    
    
    
    
    3,104Net income (loss)  diluted
    
    $
    (30,628
    )
    
    $
    15,624
    
    
    $
    75,622Basic:Income (loss) from continuing operations per share
    
    $
    (0.83
    )
    
    $
    0.20
    
    
    $
    1.98Income (loss) on discontinued operations per share
    
    
    0.02
    
    
    
    0.22
    
    
    
    (0.03
    )Net income (loss) per share
    
    $
    (0.81
    )
    
    $
    0.42
    
    
    $
    1.95Diluted:Income (loss) from continuing operations per share
    
    $
    (0.83
    )
    
    $
    0.19
    
    
    $
    1.76Income (loss) on discontinued operations per share
    
    
    0.02
    
    
    
    0.22
    
    
    
    (0.03
    )Net income (loss) per share
    
    $
    (0.81
    )
    
    $
    0.41
    
    
    $
    1.73Basic weighted average common shares outstanding
    
    
    37,915,626
    
    
    
    37,569,795
    
    
    
    37,108,750Incremental Diluted Shares Impact:Stock options
    
    
    
    
    
    
    52,245
    
    
    
    42,177Restricted stock
    
    
    
    
    
    
    460,550
    
    
    
    327,713Warrants
    
    
    
    
    
    
    4,352
    
    
    
    2,466DSUs
    
    
    
    
    
    
    15,662
    
    
    
    10,397SARs
    
    
    
    
    
    
    3,618
    
    
    
    30,957Convertible debt
    
    
    
    
    
    
    
    
    
    
    6,147,253Diluted weighted average common shares outstanding
    
    
    37,915,626
    
    
    
    38,106,222
    
    
    
    43,669,713
 72




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 17. Net Income (Loss) per Share  (Continued)
  Weighted AverageShares
    
    Price per ShareYear 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
    
    
    $
    6.00Year Ended December 31, 2006Stock options
    
    
    381,997
    
    
    $
    57.31Stock options (exercised with partial recourse loans)
    
    
    508,028
    
    
    $
    41.70SARs
    
    
    3,483,124
    
    
    $
    7.42Senior convertible notes
    
    
    3,337,705
    
    
    $
    9.11Warrants
    
    
    3,150
    
    
    $
    100.00Year Ended December 31, 2005Stock options
    
    
    602,913
    
    
    $
    43.88Stock options (exercised with partial recourse loans)
    
    
    754,135
    
    
    $
    41.70Warrants
    
    
    9,450
    
    
    $
    100.00
 73




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##### Table of Contents



INTERNET CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 18. Selected Quarterly Financial Information (Unaudited)
  Fiscal 2007 Quarter Ended
    
    
    Fiscal 2006 Quarter EndedMar.31
    
    
    Jun.30
    
    
    Sep.30
    
    
    Dec.31
    
    
    Mar.31
    
    
    Jun.30
    
    
    Sep.30
    
    
    Dec.31(in thousands, except per share data)Revenues
    
    $
    11,782
    
    
    $
    12,520
    
    
    $
    14,559
    
    
    $
    14,062
    
    
    $
    15,175
    
    
    $
    15,986
    
    
    $
    16,576
    
    
    $
    17,012Operating ExpensesCost of revenue
    
    
    9,025
    
    
    
    10,381
    
    
    
    10,029
    
    
    
    10,088
    
    
    
    9,235
    
    
    
    9,996
    
    
    
    10,452
    
    
    
    12,756Selling, general &
administrative
    
    
    9,115
    
    
    
    7,756
    
    
    
    8,342
    
    
    
    7,568
    
    
    
    10,114
    
    
    
    10,039
    
    
    
    11,317
    
    
    
    10,638Research and development
    
    
    1,568
    
    
    
    1,562
    
    
    
    1,532
    
    
    
    1,371
    
    
    
    2,431
    
    
    
    2,465
    
    
    
    2,112
    
    
    
    1,747Amortization of intangibles
    
    
    32
    
    
    
    34
    
    
    
    31
    
    
    
    32
    
    
    
    557
    
    
    
    558
    
    
    
    293
    
    
    
    287Impairment related and other
    
    
    20
    
    
    
    20
    
    
    
    6
    
    
    
    13
    
    
    
    93
    
    
    
    32
    
    
    
    24
    
    
    
    29(7,978
    )
    
    
    (7,233
    )
    
    
    (5,381
    )
    
    
    (5,010
    )
    
    
    (7,255
    )
    
    
    (7,104
    )
    
    
    (7,622
    )
    
    
    (8,445
    )Other income (loss), net
    
    
    (11,869
    )
    
    
    3,678
    
    
    
    1,646
    
    
    
    6,378
    
    
    
    98
    
    
    
    (1,953
    )
    
    
    15,671
    
    
    
    20,789Interest income
    
    
    1,478
    
    
    
    1,148
    
    
    
    1,462
    
    
    
    1,250
    
    
    
    2,532
    
    
    
    1,913
    
    
    
    2,444
    
    
    
    2,630Interest expense
    
    
    (246
    )
    
    
    (22
    )
    
    
    (19
    )
    
    
    (13
    )
    
    
    (654
    )
    
    
    (579
    )
    
    
    (431
    )
    
    
    (510
    )Income (loss) before minority
interest and equity loss
    
    
    (18,615
    )
    
    
    (2,429
    )
    
    
    (2,292
    )
    
    
    2,605
    
    
    
    (5,279
    )
    
    
    (7,723
    )
    
    
    10,062
    
    
    
    14,464Income tax (expense) benefit
    
    
    2,148
    
    
    
    494
    
    
    
    794
    
    
    
    556
    
    
    
    643
    
    
    
    1,004
    
    
    
    (1,607
    )
    
    
    Minority interest
    
    
    388
    
    
    
    (19
    )
    
    
    (487
    )
    
    
    (351
    )
    
    
    (64
    )
    
    
    47
    
    
    
    514
    
    
    
    735Equity loss
    
    
    (3,516
    )
    
    
    (1,806
    )
    
    
    (3,070
    )
    
    
    (6,023
    )
    
    
    (736
    )
    
    
    (1,737
    )
    
    
    (2,726
    )
    
    
    (262
    )Income (loss) from continuing
operations
    
    
    (19,595
    )
    
    
    (3,760
    )
    
    
    (5,055
    )
    
    
    (3,213
    )
    
    
    (5,436
    )
    
    
    (8,409
    )
    
    
    6,243
    
    
    
    14,937Income (loss) on discontinued
operations
    
    
    
    
    
    
    (220
    )
    
    
    1,024
    
    
    
    191
    
    
    
    527
    
    
    
    639
    
    
    
    7,120
    
    
    
    3Net income (loss)
    
    $
    (19,595
    )
    
    $
    (3,980
    )
    
    $
    (4,031
    )
    
    $
    (3,022
    )
    
    $
    (4,909
    )
    
    $
    (7,770
    )
    
    $
    13,363
    
    
    $
    14,940Basic income (loss) per share(1)Income (loss) from continuing
operations
    
    $
    (0.52
    )
    
    $
    (0.10
    )
    
    $
    (0.14
    )
    
    $
    (0.08
    )
    
    $
    (0.14
    )
    
    $
    (0.23
    )
    
    $
    0.17
    
    
    $
    0.40Discontinued operations
    
    
    
    
    
    
    (0.01
    )
    
    
    0.03
    
    
    
    
    
    
    
    0.01
    
    
    
    0.02
    
    
    
    0.19
    
    
    
    $
    (0.52
    )
    
    $
    (0.11
    )
    
    $
    (0.11
    )
    
    $
    (0.08
    )
    
    $
    (0.13
    )
    
    $
    (0.21
    )
    
    $
    0.36
    
    
    $
    0.40Shares used in computation
of basic income (loss)
per share (1)
    
    
    37,803
    
    
    
    37,846
    
    
    
    37,925
    
    
    
    38,086
    
    
    
    37,401
    
    
    
    37,470
    
    
    
    37,535
    
    
    
    37,703Diluted income (loss) per share(1)Income (loss) from continuing
operations
    
    $
    (0.52
    )
    
    $
    (0.10
    )
    
    $
    (0.14
    )
    
    $
    (0.08
    )
    
    $
    (0.14
    )
    
    $
    (0.23
    )
    
    $
    0.16
    
    
    $
    0.37Discontinued operations
    
    
    
    
    
    
    (0.01
    )
    
    
    0.03
    
    
    
    
    
    
    
    0.01
    
    
    
    0.02
    
    
    
    0.18
    
    
    
    $
    (0.52
    )
    
    $
    (0.11
    )
    
    $
    (0.11
    )
    
    $
    (0.08
    )
    
    $
    (0.13
    )
    
    $
    (0.21
    )
    
    $
    0.34
    
    
    $
    0.37Shares used in computation
of diluted income (loss)
per share (1)
    
    
    37,803
    
    
    
    37,846
    
    
    
    37,925
    
    
    
    38,086
    
    
    
    37,401
    
    
    
    37,470
    
    
    
    40,986
    
    
    
    41,184
 
 (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. 
 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
  74




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##### Table of Contents



ITEM 9A. Controls and Procedures
 Disclosure Controls and Procedures
  Managements Report on Internal Control Over Financial Reporting
  Internal
Control-Integrated Framework.
   Inherent Limitations on Effectiveness of Controls
  75




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal
ControlIntegrated Framework
    Internal ControlIntegrated Framework
  
 
 ITEM 9B. Other Information
  76




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##### Table of Contents



PART III
 
 ITEM 10. Directors and Executive Officers of the Registrant
   
 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
  77




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PART IV
 
 ITEM 15. Exhibits and Financial Statement Schedules
 1. Consolidated Financial Statements
  2. Financial Statement Schedule
 Report of Independent Registered Public Accounting Firm
 
   Share-Based Payment
  
  INTERNET CAPITAL GROUP
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2005, 2006 and 2007
(in thousands)
 Balance at the
    
    Charged to
    
    
    
    
    
    Balance at thebeginning of
    
    costs and
    
    
    
    
    
    end ofthe year
    
    expenses
    
    Write-offs
    
    the yearAllowance for Doubtful Accounts:December 31, 2005
    
    $
    776
    
    
    $
    241
    (a)
    
    $
    (418
    ) (b)
    
    $
    599December 31, 2006
    
    $
    599
    
    
    $
    641
    
    
    $
    (1,103
    ) (c)
    
    $
    137December 31, 2007
    
    $
    137
    
    
    $
    (45
    )
    
    $
    (48
    )
    
    $
    44
 
 (a)
    
    Reserve of $138 was established upon acquisitions of partner companies during 2005.(b)
    
    Reserve of $221 was eliminated upon deconsolidation of partner company during 2005.(c)
    
    Reserve of $656 was eliminated upon deconsolidation of partner company during 2006. 78




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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. Amended and Restated 2005
Omnibus Equity Compensation Plan (incorporated by reference
to Exhibit 10.7 to the Companys Current Report on Form
8-K, filed March 5, 2007 (File No. 001-16249)).10.3
    
    Internet Capital Group, Inc. Amended and Restated Executive
Deferred Compensation Plan (incorporated by reference to
Exhibit 10.2.2 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)).10.4
    
    Internet Capital Group, L.L.C. Membership Profit Interest
Plan (incorporated by reference to Exhibit 10.3 to the
Companys Registration Statement on Form S-1, filed May 11,
1999 (File No. 333-78193)).10.5
    
    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)).
 79




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##### Table of Contents



Exhibit Number
    
    Document10.6
    
    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 March 5, 2007 (File No. 001-16249)).10.7.1
    
    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)).10.7.2
    
    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)).10.8
    
    Internet Capital Group 2007 Performance Plan (incorporated
by reference to Exhibit 10.3 to the Companys Current
Report on Form 8-K, filed March 5, 2007 (File No.
001-16249)).10.9
    
    Internet Capital Group 2008 Performance Plan (incorporated
by reference to Exhibit 10.1 of the Companys Current
Report on Form 8-K, filed March 5, 2008 (File No.
001-16249)).10.10
    
    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)).10.11
    
    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)).10.12
    
    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)).10.13
    
    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)).10.14
    
    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)).10.15
    
    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)).10.16
    
    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)).
 80




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##### Table of Contents



Exhibit Number
    
    Document10.17
    
    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)).10.18
    
    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)).10.19
    
    Letter Agreement, dated February 28, 2007, by and between
Internet Capital Group and R. Kirk Morgan (incorporated by
reference to Exhibit 10.2 to the Companys Current Report
on Form 8-K, filed March 5, 2007 (File No. 001-16249)).10.20
    
    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)).10.21
    
    Letter Agreement, dated July 28, 2005, by and between
Internet Capital Group and Anthony P. Dolanski
(incorporated by reference to Exhibit 10.3 to the Companys
Current Report on Form 8-K, filed July 28, 2005 (File No.
001-16249)).10.22
    
    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)).10.23.1
    
    Letter of Credit Agreement, dated as of September 30, 2002,
by and between Comerica Bank-California and Internet
Capital Group, Inc., ICG Holdings, Inc. 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 September 30, 2002, filed
November 14, 2002 (File No. 001-16249)).10.23.2
    
    First Amendment to Letter of Credit Agreement, dated as of
October 20, 2003, 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 Quarterly Report on Form
10-Q for the quarter ended September 30, 2003, filed
November 14, 2003 (File No. 001-16249)).10.23.3
    
    Second Amendment to Letter of Credit Agreement, dated as of
December 15, 2004, by and between Comerica Bank, Internet
Capital Group, Inc., ICG Holdings, Inc. and Internet
Capital Group Operations, Inc. (incorporated by reference
to Exhibit 10.14.2 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)).
 81




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##### Table of Contents



Exhibit Number
    
    Document10.23.4
    
    Third Amendment to Letter of Credit Agreement, dated as of
December 15, 2005, 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 15, 2005 (File No. 001-16249)).10.23.5
    
    Fourth Amendment to Letter of Credit Agreement, dated as of
December 5, 2006, 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 19, 2006 (File No. 001-16249)).10.23.6
    
    Fifth Amendment to Letter of Credit Agreement, dated as of
December 7, 2007, 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 13, 2007 (File No. 001-16249)).10.24
    
    Note Purchase Agreement, dated February 12, 2007, by and
between Mason Capital Management, LLC (and its affiliates
and advisory clients named therein) and Internet Capital
Group, Inc. (incorporated by reference to the Companys
Current Report on Form 8-K, filed February 12, 2007 (File
No. 001-16249)).10.25
    
    Note Purchase Agreement, dated February 12, 2007, by and
between Sonoma Capital, LP and Internet Capital Group, Inc.
(incorporated by reference to the Companys Current Report
on Form 8-K, filed February 12, 2007 (File No. 001-16249)).10.26
    
    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)).10.27.1
    
    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)).10.27.2
    
    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)).10.27.3
    
    Second Amendment to Lease, dated August 21, 2006, by and
between Chesterbrook Partners, L.P. (as
successor-in-interest to FV 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)).10.28
    
    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 13,2
007 (File No. 001-16249)).10.29
    
    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)).
 82




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Exhibit Number
    
    Document11.1
    
    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 17-Net Income
(Loss) Per Share to the Consolidated Financial Statements).21.1
    
    Subsidiaries of Internet Capital Group, Inc. (filed herewith).23.1
    
    Consent of KPMG LLP (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).
 83




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##### Table of Contents



SIGNATURES
  Date: March 17, 2008
    
    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, President 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
    
    DirectorDavid J. Berkman/s/ THOMAS A. DECKER
    
    DirectorThomas A. Decker/s/ DAVID K. DOWNES
    
    DirectorDavid K. Downes/s/ THOMAS P. GERRITY
    
    DirectorThomas P. Gerrity/s/ MICHAEL J. HAGAN
    
    DirectorMichael J. Hagan/s/ ROBERT E. KEITH, JR.
    
    DirectorRobert E. Keith, Jr./s/ WARREN V. MUSSER
    
    DirectorWarren V. Musser/s/ PHILIP J. RINGO
    
    DirectorPhilip J. Ringo
 84