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Ownership Interests and Cost Method Investments
 9 Months Ended
Sep. 30, 2012
Ownership Interests and Cost Method Investments [Abstract]  
Ownership Interests and Cost Method Investments

5. Ownership Interests and Cost Method Investments

Equity Method Companies

The following unaudited summarized financial information relates to ICG’s companies accounted for under the equity method of accounting as of September 30, 2012 and December 31, 2011 and for the three and nine month periods ended September 30, 2012 and 2011. This aggregate information has been compiled from the financial statements of those companies.

Balance Sheets (Unaudited)

 

                 
    September 30,
2012 (1)		     December 31,
2011 ( 2)		  
    (in thousands)  

Cash and cash equivalents

   $ 5,435     $ 13,687  

Other current assets

     14,206       28,767  

Non-current assets

     15,805       69,218  
   

 

 

    

 

 

  

Total assets

   $ 35,446     $ 111,672  
   

 

 

    

 

 

  

Current liabilities

   $ 24,395     $ 47,125  

Non-current liabilities

     2,123       10,770  

Long-term debt

     15,259       18,959  

Stockholders’ equity

     (6,331 )      34,818  
   

 

 

    

 

 

  

Total liabilities and stockholders’ equity

   $ 35,446     $ 111,672  
   

 

 

    

 

 

  

Total carrying value

   $ 25,365     $ 39,052  
   

 

 

    

 

 

  

 

(1)

Includes (ICG voting ownership): Acquirgy (25%), Freeborders (31%), SeaPass (38%) and WhiteFence (36%).

(2) 

Includes (ICG voting ownership): Acquirgy (25%), Channel Intelligence (49%), Freeborders (31%), GoIndustry-DoveBid plc (“GoIndustry”) (26%), SeaPass (26%) and WhiteFence (36%).

As of September 30, 2012, ICG’s aggregate carrying value in equity method companies exceeded ICG’s share of the net assets of those equity method companies by approximately $27.8 million. Of that excess, $24.5 million was allocated to equity method goodwill, which is not amortized, and $3.3 million was allocated to equity method intangibles, which are generally amortized over periods ranging from three to seven years. As of December 31, 2011, ICG’s aggregate carrying value in equity method companies exceeded ICG’s share of the net assets of these equity method companies by approximately $28.4 million. Of that excess, $24.6 million was allocated to equity method goodwill, which is not amortized, and $3.8 million was allocated to equity method intangibles, which are generally amortized over periods ranging from three to seven years.

Results of Operations (Unaudited)

 

                                 
    Three Months Ended
September 30,		     Nine Months Ended
September 30,		  
        2012  (1)             2011  (2)             2012  (1)             2011  (3)      
    (in thousands)  

Revenue

   $ 16,049     $ 39,808     $ 75,154     $ 132,377  
   

 

 

    

 

 

    

 

 

    

 

 

  

Net income (loss)

   $ (2,993 )    $ (8,765 )    $ (15,554 )    $ (26,579 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  

Equity income (loss) excluding impairments and amortization of intangible assets

   $ (1,325 )    $ (2,797 )    $ (6,272 )    $ (8,436 ) 

Amortization of intangible assets

     (283 )      (448 )      (875 )      (1,570 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  

Total equity income (loss)

   $ (1,608 )    $ (3,245 )    $ (7,147 )    $ (10,006 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) 

Includes Acquirgy, Channel Intelligence (to July 11, 2012, the date of consolidation), Freeborders, GoIndustry (to July 5, 2012, the date of disposition), SeaPass and WhiteFence.

(2) 

Includes Acquirgy, Channel Intelligence, Freeborders, GoIndustry, SeaPass, StarCite, Inc. (“StarCite”) and WhiteFence.

(3) 

Includes Acquirgy, Channel Intelligence, ClickEquations (to June 14, 2011, the date of disposition), Freeborders, GoIndustry, Metastorm Inc. (“Metastorm”) (to February 17, 2011, the date of disposition), SeaPass, StarCite and WhiteFence.

Impairment – Equity Companies

ICG performs ongoing business reviews of its equity method companies to determine whether ICG’s carrying value in those companies is impaired. ICG has determined its carrying value in its equity method companies was not impaired during the three and nine-month periods ended September 30, 2012 and 2011.

Other Equity Company Information

On July 5, 2012, GoIndustry was sold to Liquidity Services, Inc. (“Liquidity Services”). ICG’s portion of the proceeds was $2.9 million of cash, which was received in July 2012. During the three-month period ended September 30, 2012, ICG recorded its share of the sale transaction costs incurred by GoIndustry, and, accordingly, ICG’s carrying value of GoIndustry was reduced to zero as of the date of the transaction. ICG recorded a gain of $2.9 million for the proceeds received during the three and nine months ended September 30, 2012, which is included in the line item “Other income (loss)” in ICG’s Consolidated Statements of Operations.

During the nine months ended September 30, 2012, ICG purchased shares of SeaPass preferred stock in an equity financing transaction. In connection with that transaction, ICG acquired $9.0 million of SeaPass preferred stock during the period, increasing its ownership in SeaPass from 26% to 38%. ICG completed a purchase price allocation related to this transaction, which resulted in an allocation of the purchase price to equity method intangible assets that will be amortized over five years and equity method goodwill.

On February 17, 2011, Metastorm, one of ICG’s equity core companies, was sold to Open Text Corporation. ICG’s portion of the sale proceeds was $53.0 million; $51.3 million of those proceeds were received at closing on February 17, 2011, and the remaining proceeds were placed in escrow in connection with a customary indemnification holdback. As a result of that transaction, ICG recorded a gain of $24.9 million that is included in the line item “Other income (loss)” in ICG’s Consolidated Statements of Operations for the nine months ended September 30, 2011. In November 2011, ICG received $1.1 million of escrowed proceeds, which ICG recorded as a gain during the year ended December 31, 2011. In March 2012, ICG received $0.2 million of escrowed proceeds, representing the final distribution of escrowed proceeds. ICG recorded that amount as a gain during the nine months ended September 30, 2012, which is included in the line item “Other income (loss)” in ICG’s Consolidated Statements of Operations.

 

On June 14, 2011, Channel Intelligence acquired substantially all of the assets of ClickEquations, primarily in exchange for Channel Intelligence preferred stock that was distributed to ClickEquations’ stockholders, including ICG. The transaction diluted ICG’s ownership in Channel Intelligence and, accordingly, ICG recorded a dilution gain of $0.5 million. Based on the excess of the specified value of the Channel Intelligence preferred stock received by ICG in the transaction over ICG’s carrying value of ClickEquations on the transaction date, ICG recorded a loss on the sale of ClickEquations in the amount of $0.8 million. Both the dilution gain and the loss on the sale transaction are included in “Other income (loss)” in ICG’s Consolidated Statements of Operations for the nine months ended September 30, 2011.

On December 30, 2011, StarCite, one of ICG’s equity method companies, was sold to The Active Network, Inc. (NYSE: ACTV) (“Active”) for consideration to ICG consisting of $15.8 million of cash and 615,862 shares of Active common stock valued at $8.4 million, based on the $13.60 closing price of the stock on December 30, 2011. Approximately $0.1 million of the cash consideration and 102,199 shares of the stock consideration were placed in escrow to satisfy potential indemnity claims.

As of December 31, 2011, ICG had not received the consideration from the StarCite transaction. Accordingly, ICG recorded a receivable in the amount of $22.7 million that is reflected in the line item “Other receivables” in ICG’s Consolidated Balance Sheets as of December 31, 2011. That amount represented cash of $15.7 million and Active common stock valued at $7.0 million, based on the $13.60 closing stock price of Active on December 30, 2011. During the nine months ended September 30, 2012, ICG received both the cash consideration of $15.7 million and the 513,663 shares of Active common stock that were not placed in escrow on the closing date.

Marketable Securities

Marketable securities represent ICG’s holdings of publicly-traded equity securities and are accounted for as available-for-sale securities. When the shares of Active common stock issued in connection with the StarCite acquisition were registered with the SEC on April 5, 2012, ICG recorded an adjustment to increase the value of the Active common stock. ICG also recorded an offsetting increase to other comprehensive income in ICG’s Consolidated Balance Sheets, to reflect the Active shares at fair value based on the closing price of Active common stock on that date. During the nine months ended September 30, 2012, ICG sold 447,057 shares of Active common stock at an average price per share of $16.88. ICG received total proceeds of $7.5 million and recognized a gain on the sale of those securities in the amount of $1.4 million, which is included in the line item “Other income (loss), net” in ICG’s Consolidated Statements of Operations and Comprehensive Income (Loss) for the nine months ended September 30, 2012. The fair value of the remaining shares of Active common stock is reflected in the line item “Marketable Securities” on ICG’s Consolidated Balance Sheets as of September 30, 2012.

During the three and nine months ended September 30, 2012, ICG received shares of Intercontinental Exchange, Inc. (NYSE: ICE) (“ICE”) common stock in connection with an escrow release related to the sale of a former company. See Note 10, “Other Income.”

Cost Method Investments

ICG’s carrying values of its holdings of cost method companies were $11.3 million and $10.8 million as of September 30, 2012 and December 31, 2011, respectively. Those amounts are reflected in the line item “Cost method investments” in ICG’s Consolidated Balance Sheets as of the relevant dates.

ICG owns approximately 9% of Anthem Ventures Fund, L.P. (formerly eColony, Inc.) and Anthem Ventures Annex Fund, L.P. (collectively, “Anthem”), which invest in technology companies. ICG acquired its interest in Anthem in 2000. ICG

currently has no carrying value in Anthem. Accordingly, the receipt of distributions from Anthem by ICG, if any, would result in a gain at the time ICG receives those distributions.

ICG performs ongoing business reviews of its cost method companies to determine whether ICG’s carrying value in those companies is impaired. ICG determined its carrying value in its cost method companies was not impaired during the three- and nine-month periods ended September 30, 2012 and 2011.

Escrow Information

As of September 30, 2012, the following amounts of ICG’s potential proceeds from sales of former equity method and cost method companies remained in escrow to satisfy potential or ongoing indemnification claims: (1) 95,277 shares of Active common stock, valued at $1.2 million (based on the stock’s September 30, 2012 closing price) and (2) $0.8 million of cash. The release of any of those escrowed proceeds to ICG would result in additional gains at the time ICG is entitled to such proceeds, the amount is fixed or determinable and realization is assured.