Consolidated Core Companies

9 Months Ended

Sep. 30, 2012

Consolidated Core Companies [Abstract]

Consolidated Core Companies

4. Consolidated Core Companies

During the nine months ended September 30, 2012, ICG and its consolidated subsidiaries completed several acquisitions:

(1) On March 30, 2012, ICG acquired 96% of the equity of MSDSonline; the acquisition was accounted for under the acquisition method. Accordingly, ICG allocated the purchase price to the acquired tangible and identifiable intangible assets and liabilities based upon their respective fair values at the date of acquisition.

(2) On July 11, 2012, ICG acquired additional equity ownership interests in Channel Intelligence for aggregate consideration of $2.0 million, increasing ICG’s ownership interest in that company to greater than 50%. ICG began consolidating the financial results of Channel Intelligence as of that date and accounted for the transaction as a business combination. Accordingly, ICG allocated the enterprise value of Channel Intelligence to its tangible and identifiable intangible assets and liabilities based upon their respective fair values at the date of acquisition. Additionally, ICG recorded a gain on the transaction of $26.6 million, representing the excess of ICG’s portion, $42.7 million, of the enterprise value of Channel Intelligence over its carrying value. The primary valuation technique used to measure the acquisition date fair value of Channel Intelligence immediately before the business combination was the backsolve option-pricing method. That gain is included in the line item “Other income (loss), net” in ICG’s Consolidated Statements of Operations for the three- and nine-month periods ended September 30, 2012.

(3) On June 29, 2012, Procurian acquired Media IQ, LLC (“Media IQ”), a media audit and benchmarking services provider, for consideration consisting of (a) $11.5 million in cash paid at closing, (b) Procurian common stock valued at $4.0 million, which is classified as a liability and included in the line items “Accrued Expenses” and “Other Liabilities” in ICG’s Consolidated Balance Sheets as of September 30, 2012, and (c) a $2.0 million deferred cash payment that is due in $1.0 million increments on the one- and two-year anniversaries of the closing date of the acquisition. Procurian has estimated the allocation of the purchase price to the acquired tangible and identifiable intangible assets and liabilities based upon their respective fair values at the date of acquisition. The acquisition accounting related to Procurian’s acquisition of Media IQ will be complete by December 31, 2012.

(4) On July 30, 2012, Procurian acquired Utilities Analyses, Inc. (“UAI”), an energy procurement specialist, for $6.7 million in cash. Procurian has estimated the allocation of the purchase price to the acquired tangible and identifiable intangible assets and liabilities based upon their respective fair values at the date of acquisition. The acquisition accounting related to Procurian’s acquisition of UAI will be complete by December 31, 2012.

The allocation of the purchase price for each of the above acquisitions (including allocations that are not yet finalized as of September 30, 2012) and the allocation of the enterprise value of Channel Intelligence is as follows (in thousands):

	MSDSonline			Channel Intelligence			Media IQ		UAI
Net assets acquired:
Goodwill	$	15,847		$	47,055		$	9,491	$	3,676
Customer lists (8-11 year life)		20,440			11,000			6,200		1,750
Technology (5-10 year life)		1,900			5,530			900		—
Trademarks, trade names and domain names (11-15 year life)		6,800			7,600			600		—
Non-compete agreements (3-5 year life)		3,580			—			268		200
Licensing Agreements (2-10 year life)		—			4,140			—		—
Other net assets (liabilities)		1,170			2,927			316		1,101
		49,737			78,252			17,775		6,727
Noncontrolling interest (1)		(1,355	)		(33,589	)		—		—
	$	48,382		$	44,663		$	17,775	$	6,727

⁽¹⁾  ICG estimated the fair value of the noncontrolling interest of MSDSonline and Channel Intelligence with consideration of discounts for lack of control and lack or marketability. See Note 13, “Redeemable Noncontrolling Interest” with respect to MSDSonline. The amount of noncontrolling interest for Channel Intelligence is reflected in the line item “Impact of consolidated subsidiaries transactions” on ICG’s Consolidated Statements of Changes in Equity at September 30, 2012.

The information in the following table represents revenue, net income (loss) attributable to ICG Group, Inc. and net income (loss) per diluted share attributable to ICG Group, Inc. for the relevant periods had ICG consolidated MSDSonline and Channel Intelligence for the nine-month period ended September 30, 2012 and the three and nine-month periods ended September 30, 2011. The pro forma information in the following table also includes the effect of Procurian’s acquisitions of Media IQ and UAI had these two acquired businesses been included in Procurian’s results for the nine-month period ended September 30, 2012 and the three and nine-month periods ended September 30, 2011.

	Three Months Ended September 30,					Nine Months Ended September  30,
	2012		2011			2012		2011
	(in millions, except per share data)
Revenue	$	52.2	$	46.7		$	153.3	$	138.0
Net income (loss) attributable to ICG Group, Inc.	$	21.3	$	(2.6	)	$	8.6	$	10.2
Net income (loss) per diluted share attributable to ICG Group, Inc.	$	0.59	$	(0.07	)	$	0.24	$	0.27

Periodically, ICG acquires additional equity ownership interests in its consolidated companies. Equity ownership interests purchased from a consolidated company’s existing shareholders results in an increase in ICG’s controlling interest in that company and a corresponding decrease in noncontrolling interest ownership. Those transactions are accounted for as a decrease to “Noncontrolling Interest” in ICG’s Consolidated Balance Sheets and a decrease to “Additional paid-in capital” in ICG’s Consolidated Balance Sheets for the relevant period. ICG may also acquire additional equity ownership interests in its consolidated companies as a result of share issuances by those companies. An issuance of equity securities by a consolidated company that results in a decrease in ICG’s equity ownership interests is accounted for in accordance with the policy for “Issuances of Equity Securities by Consolidated Subsidiaries and Equity Method Companies” described in Note 2, “Significant Accounting Policies.”

For the nine months ended September 30, 2012, as reflected on the “Impact of Consolidated Subsidiaries Transactions” on ICG’s Consolidated Statements of Changes in Equity, non-controlling interests increased by $35.4 million primarily driven by the ownership increase and consolidation of Channel Intelligence as described above. Additionally, for the nine months ended September 30, 2012, the “Impact of Consolidated Subsidiaries Transactions” on ICG’s Consolidated Statements of Changes in Equity for Additional Paid-in Capital decreased by $3.1 million primarily from ICG’s acquisition of additional equity ownership

interests in Procurian through the purchase of Procurian common stock from former Procurian employees, ICG’s additional acquisition of equity ownership interests in Channel Intelligence through the purchase of Channel Intelligence preferred stock from existing shareholders, and from the Media IQ acquisition, where Procurian issued additional shares of common stock to both Media IQ and ICG that, together, resulted in a reduction to ICG’s equity ownership interest in Procurian. That transaction was accounted for as a disposition of shares and resulted in a dilution loss of $1.1 million that was recorded as a decrease to “Additional paid-in capital” in ICG’s Consolidated Balance Sheets in the relevant period.