Summary of INTERNET CAPITAL GROUP INC

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Introduction; Forward-Looking Statements The Consolidated Financial Statements include the consolidated accounts of Internet Capital Group, Inc., a company incorporated in Delaware, and its subsidiaries, both wholly-owned and consolidated (Internet Capital Group, Inc. and all such subsidiaries, are hereinafter referred to as "we," "ICG," the "Company" or "Internet Capital Group"), and have been prepared in accordance with GAAP.
Although we refer in this Report to companies in which we have acquired a convertible debt or an equity ownership interest as our "partner companies" and indicate that we have a "partnership" with these companies, we do not act as an agent or legal representative for any of our partner companies, we do not have the power or authority to legally bind any of our partner companies, and we do not have the types of liabilities in relation to our partner companies that a general partner of a partnership would have.
Forward-looking statements made with respect to our financial condition and results of operations and business in this Report and those made from time to time by us through our senior management are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations and projections about future events but are subject to known and unknown risks, uncertainties and assumptions about us and our partner companies that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause our actual results, levels of activity, performance or achievements to differ materially from those anticipated in forward-looking statements include, but are not limited to, factors discussed elsewhere in this Report and include, among other things:
• capital spending by enterprises and customers;

• our ability to effectively manage existing capital resources;

• 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; and

• our ability to retain key personnel.

In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue" or the negative of such terms or other similar expressions. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this Report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Report might not occur.

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Executive Summary
The Company acquires and builds internet software and services companies that drive business productivity and reduce transaction costs between firms. The Company devotes its expertise and capital to maximizing the success of these platform companies, which are delivering software and service applications to customers worldwide. We view the Company as primarily having two components:
corporate and our partner companies. Corporate primarily holds our cash, marketable securities and ownership interests in partner companies. Our partner companies are grouped into two operating segments consisting of the core segment and the other holdings segment. The core operating segment includes those partner companies in which the Company's management takes a very active role in providing strategic direction and management assistance. The other holdings operating segment includes holdings in partner companies over which, in general, we have less influence due to the fact that they are public and/or we have a relatively small ownership stake. From time to time, partner companies are disposed of by ICG or cease operations.
The various interests that we acquire in our partner companies are accounted for under one of three accounting methods: the consolidation method, the equity method or the cost method. The applicable accounting method is generally determined based on our voting interest in a partner company. Generally, if we own more than 50% of the outstanding voting securities of a partner company in which other stockholders do not possess the right to affect significant management decisions, a partner company's accounts are reflected within our consolidated financial statements. Generally, if we own between 20% and 50% of the outstanding voting securities, a partner company's accounts are not reflected within our consolidated financial statements; however, our share of the earnings or losses of the partner company is reflected in the caption "Equity loss" in our consolidated statements of operations. Partner companies not accounted for under either the consolidation or the equity method of accounting are accounted for under the cost method of accounting. Under this method, our share of the earnings or losses of these companies is not included in our consolidated statements of operations.
Because we own significant interests in information technology and e-commerce companies, many of which have generated net losses, we have experienced, and expect to continue to experience, significant volatility in our quarterly results. While many of our partner companies have consistently reported losses, we have recorded net income in certain periods and experienced significant volatility from period to period due to infrequently occurring transactions and other events relating to our ownership interests in partner companies. These transactions and events are described in more detail in our Notes to consolidated financial statements and include dispositions of, and changes to, our partner company ownership interests, dispositions of our holdings of marketable securities and debt repurchases.

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Liquidity and Capital Resources
The following table summarizes our and our consolidated subsidiaries' cash and
cash equivalents, restricted cash and marketable securities as of September 30,
2008 and December 31, 2007:

                                              September 30, 2008                                        December 31, 2007
                                                  Consolidated                                              Consolidated
                               Corporate          Subsidiaries           Total           Corporate          Subsidiaries          Total
                                                                              (in thousands)
Cash and cash equivalents      $   51,685        $       16,575        $  68,260        $    69,125        $       12,906        $ 82,031
Restricted cash (1)                     -                   219              219                  -                     5               5

                               $   51,685        $       16,794        $  68,479        $    69,125        $       12,911        $ 82,036

Marketable securities (2)      $  113,284        $            -        $ 113,284        $    84,376        $            -        $ 84,376

(1) Restricted cash at December 31, 2007 does not include $0.2 million of long-term restricted cash included in "Other" assets on the Company's Consolidated balance sheets.

(2) Includes an offsetting liability of $3.1 million and $3.7 million at September 30, 2008 and December 31, 2007, respectively, related to derivative instruments associated with the Company's marketable securities. Between
September 30,
2008 and the
date of the
filing of
this Report,
the Company
sold its
remaining
350,000
freely
tradable
shares of ICE
common stock
for
approximately
$30.0 million
of cash
proceeds.

In lieu of selling 1,625,000 of the shares of Blackboard common stock that are included in the marketable securities summarized in the table above, we have the ability, under a series of loan agreements with Credit Suisse Capital LLC, to borrow funds secured by the cashless collar contracts that we previously entered into with respect to such shares of Blackboard common stock. The aggregate available borrowing capacity under the loan agreements was approximately $37 million and $38 million as of September 30, 2008 and November 3, 2008, respectively. See Note 6 to our Consolidated Financial Statements for a further description of these loan agreements.
We believe existing cash and cash equivalents, our borrowing facilities and proceeds from the potential sales of all or a portion of our interests in certain marketable securities and partner companies to be sufficient to fund our cash requirements for the foreseeable future, including any future commitments to partner companies, debt obligations, share repurchases and general operations requirements. At September 30, 2008, as well as the date of this filing, we were not obligated for any significant funding and guarantee commitments to existing partner companies. We will continue to evaluate acquisition opportunities and may acquire additional ownership interests in new and existing partner companies in the next twelve months; however, such acquisitions will generally be made at our discretion.
In July 2008, our Board of Directors authorized a share repurchase program pursuant to which we may repurchase shares of our common stock in an aggregate amount not to exceed $20 million. During the three months ended September 30, 2008, the Company repurchased 29,800 shares of its common stock at an average price of $7.96 per share. Additionally, in October 2008, the Company repurchased 468,993 shares of its common stock at an average price of $6.36 per share. See the subsection of Part II, Item 2 entitled "Issuer Purchases of Equity Securities" for more information regarding the repurchases of Company common stock.
In October 2008, the Company received a $4.9 million federal tax refund related to the carryback of the 2007 net operating loss to 2005.
Consolidated working capital decreased by $15.0 million from December 31, 2007 to September 30, 2008, primarily due to fundings to partner companies.