Operating Segments

6 Months Ended

Jun. 30, 2013

Operating Segments

9. Operating Segments

In the fourth quarter of 2012, the Company expanded its focus within the former Life Sciences segment to include companies in the HealthTech sector and renamed that segment “Healthcare.” The HealthTech sector had previously been included in the Company’s Technology segment. AdvantEdge Healthcare Solutions, a provider of physician billing and practice management services and software, which had previously been reported within the Technology segment, is now reported under the Healthcare segment. As a result of the change, the Company has restated its previously reported segment disclosure information, to include the results of AdvantEdge Healthcare Solutions within the Healthcare segment.

As of June30, 2013, the Company held interests in 20 non-consolidated partner companies which are included in the Healthcare and Technology segments. Included in the Penn Mezzanine segment are the Company’s interests in the Penn Mezzanine management company and general partner and the Company’s participations in mezzanine loans and equity interests initiated by Penn Mezzanine.

The Company’s active partner companies by segment were as follows as of June30, 2013:

Healthcare
Partner Company	SafeguardPrimaryOwnership asofJune30,2013		AccountingMethod
AdvantEdge Healthcare Solutions, Inc.	40.2	%	Equity
Alverix, Inc.	49.2	%	Equity
Crescendo Bioscience, Inc.	12.6	%	Cost
Good Start Genetics, Inc.	30.0	%	Equity
Medivo, Inc.	34.5	%	Equity
NovaSom, Inc.	30.3	%	Equity
NuPathe, Inc.	16.6	%	Fairvalue(1)
PixelOptics, Inc.	24.6	%	Equity
Putney, Inc.	27.6	%	Equity
Sotera Wireless, Inc.	7.4	%	Cost

Technology
Partner Company	SafeguardPrimaryOwnership asofJune30,2013		AccountingMethod
AppFirst, Inc.	35.0	%	Equity
Beyond.com, Inc.	38.3	%	Equity
Bridgevine, Inc.	22.5	%	Equity
DriveFactor, Inc.	35.4	%	Equity
Hoopla Software, Inc.	25.3	%	Equity
Lumesis, Inc.	44.2	%	Equity
MediaMath, Inc.	22.2	%	Equity
Pneuron, Inc.	27.6	%	Equity
Spongecell, Inc.	23.1	%	Equity
ThingWorx, Inc.	39.8	%	Equity

(1) The Company's ownership interest in NuPathe was accounted for as available-for-sale securities following NuPathe’s completion of an initial public offering in August 2010. In October 2012, the Company participated in a private placement of NuPathe preferred stock units, and in conjunction with this financing, the Company placed two persons on NuPathe's board of directors. As a result, the Company determined that it exercised significant influence over NuPathe which madethe equity method of accounting applicable to its ownership interests. Instead, the Company elected the fair value option beginning in October 2012. Prior to August 2010, the Company accounted for NuPathe under the equity method.

As of June30, 2013, in the Penn Mezzanine segment, the Company has a 36% ownership interest in the management company and general partner of Penn Mezzanine L.P. The Company accounts for its interest under the equity method.

Results of the Healthcare and Technology segments reflect the equity income (loss) of their respective equity method partner companies, other income (loss) associated with fair value method and cost method partner companies and the gains or losses on the sale of their respective partner companies. Results of the Penn Mezzanine segment includes interest, dividends and participation fees earned on the mezzanine interests in which the Company participates as well as equity income (loss) associated with the Company’s management company and general partner interest in the Penn Mezzanine platform.

Management evaluates the Healthcare and Technology segments’ performance based on net income (loss) which is based on the number of partner companies accounted for under the equity method, the Company’s voting ownership percentage in these partner companies and the net results of operations of these partner companies, any impairment charges or gain (loss) on the sale of equity and cost method partner companies.

Management evaluates the Penn Mezzanine segment performance based on the performance of the mezzanine interests in which the Company participates. This includes an evaluation of the current and future cash flows associated with interest and dividend payments as well as estimated losses based on evaluating known and inherent risks in the investments in which the Company participates.

Other Items include certain expenses which are not identifiable to the operations of the Company’s operating business segments. Other Items primarily consist of general and administrative expenses related to corporate operations, including employee compensation, insurance and professional fees, including legal and finance, interest income, interest expense and other income (loss) and equity income (loss) related to certain private equity fund ownership interests. Other Items also include income taxes, which are reviewed by management independent of segment results.

As of June30, 2013 and December31, 2012, all of the Company’s assets were located in the United States.

Segment assets in Other Items included primarily cash, cash equivalents, cash held in escrow, and marketable securities of $180.1 million and $212.5million, at June30, 2013 and December31, 2012, respectively.

	Three Months Ended June 30, 2013
	Healthcare			Technology			Penn Mezzanine			Total Segments				Other Items				Total
		(In thousands)
		(Unaudited)
Operating loss	$	-		$	-		$	(4	)	$	(4	)	$		(6,711	)	$		(6,715	)
Interest income		-			-			380			380				410				790
Equity loss		(14,850	)		(3,399	)		(94	)		(18,343	)			(57	)			(18,400	)
Net loss		(17,275	)		(3,399	)		(13	)		(20,687	)			(7,436	)			(28,123	)
Segment Assets:
June 30, 2013		75,154			61,266			13,186			149,606				186,512				336,118
December 31, 2012		83,500			58,753			12,153			154,406				219,738				374,144

	Three Months Ended June 30, 2012
	Healthcare			Technology			Penn Mezzanine			Total Segments			Other Items				Total
		(In thousands)
		(Unaudited)
Operating loss	$	-		$	-		$	(2	)	$	(2	)	$	(5,146	)	$		(5,148	)
Interest income		-			-			277			277			318				595
Equity loss		(8,820	)		(56	)		(69	)		(8,945	)		(2	)			(8,947	)
Net loss		(3,270	)		(56	)		(533	)		(3,859	)		(6,278	)			(10,137	)

	Six Months Ended June 30, 2013
	Healthcare			Technology			Penn Mezzanine			Total Segments			Other Items			Total
		(In thousands)
		(Unaudited)
Operating loss	$	-		$	-		$	(9	)	$	(9	)	$	(12,080	)	$	(12,089	)
Interest income		-			-			724			724			800			1,524
Equity (loss) income		(20,750	)		(4,500	)		(164	)		(25,414	)		27			(25,387	)
Net (loss) income		(22,340	)		(4,500	)		328			(26,512	)		(13,550	)		(40,062	)

	Six Months Ended June 30, 2012
	Healthcare			Technology			Penn Mezzanine			Total Segments				Other Items				Total
		(In thousands)
		(Unaudited)
Operating loss	$	-		$	-		$	(4	)	$	(4	)	$		(9,887	)	$		(9,891	)
Interest income		-			-			848			848				646				1,494
Equity loss		(15,159	)		(1,045	)		(188	)		(16,392	)			(3	)			(16,395	)
Net loss		(6,180	)		(1,045	)		(83	)		(7,308	)			(12,489	)			(19,797	)