Attached files
| file | filename |
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| 8-K - ACACIA RESEARCH CORPORATION - ACACIA RESEARCH CORP | acacia_8k-021810.htm |
Exhibit 99.1
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Contacts:
Rob Stewart
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Investor
Relations
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FOR
RELEASE
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Tel
(949) 480-8300
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February
18, 2010
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Fax
(949) 480-8301
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ACACIA
RESEARCH REPORTS FOURTH QUARTER
AND
RECORD YEAR END FINANCIAL RESULTS
Newport
Beach, Calif. – (BUSINESS WIRE) – February 18, 2010 – Acacia Research
Corporation (1)
(Nasdaq: ACTG) today reported results for the three months and year ended
December 31, 2009.
“Acacia
Research revenues were a record $67,340,000, up 40%, for the year ended December
31, 2009, compared to $48,227,000 for 2008. Acacia's operating
subsidiaries acquired control of 30 new patent portfolios during 2009 for
future licensing and ended the year with 138 patent portfolios,” commented
Acacia Research Chairman and CEO, Paul Ryan.
“Acacia
Research fourth quarter 2009 revenues were $19,858,000, our second highest
revenue quarter to date, compared to $18,267,000 in the year ago period.
Acacia generated revenues from 32 new licensing agreements, covering 21
different technologies, including initial revenues from 4 new licensing
programs. Cash and investments increased during the quarter by $8,603,000
to $53,887,000 at the end of the year.”
“Acacia
Research reported a 2009 net loss of $11,290,000, or $0.38 per share, including
non-cash patent amortization and non-cash stock compensation charges totaling
$11,699,000. Marketing, general and administrative expenses for 2009
decreased to $21,070,000 from $21,130,000 in the comparable 2008 period.
Litigation and licensing expense increased to $14,055,000 versus $6,900,000 in
the prior year.”
“We
entered 2010 with the largest number of licensing opportunities in our
history. Acacia expects continued growth in new licensing programs and the
addition of new patent portfolios for future licensing, as we continue to build
our leadership position in patent licensing. Quarterly revenues will
continue to be uneven.”
“Acacia’s
success in completing over 740 licensing agreements, covering 60 different
technologies, is generating interest from technology companies, universities and
research centers wanting to partner with us and have us take over the licensing
of their patented technologies.”
“We have
also begun to expand our patent licensing business by partnering with large
companies and have entered into 6 recent agreements covering patents issued to
major technology companies,” concluded Mr. Ryan.
Acacia
Research Corporation Consolidated Financial Results
For
the Three Months Ended December 31, 2009 and 2008
Fourth
quarter 2009 license fee revenues were $19,858,000 versus $18,267,000 in the
comparable 2008 period. Fourth quarter 2009 revenues included
license fees from 32 new licensing agreements covering 21 of our technology
licensing programs, including initial license fee revenues for our
Mutli-Dimensional Database Compression technology, Document Generation
technology, Internet Radio Advertising technology and Virtual Server
technology. Fourth quarter 2009 license fee revenues also included
fees from the licensing of our DMT® technology, Telematics technology, Pop-up
Internet Advertising technology, Audio Communications Fraud Detection
technology, Picture Archiving & Communication Systems technology, Projector
technology, Rule Based Monitoring technology, Lighting Ballast
technology, High Performance Computer Architecture
technology, Location Based Services technology, Online
Auction Guarantee technology, Database Access technology, Vehicle maintenance
technology, Heated Surgical Blades technology, Storage technology, Authorized
Spending Accounts technology and Credit Card Fraud Protection
technology. To date, on a consolidated basis, our operating
subsidiaries have generated revenues from 60 technology licensing
programs.
Trailing
twelve-month revenues totaled $67.3 million as of December 31, 2009, as compared
to $65.7 million at September 30, 2009, $63.4 million as of June 30, 2009, $56.1
million as of March 31, 2009, and $48.2 million as of December 31,
2008. One licensee accounted for 52% of the license fee revenues
recognized during the three months ended December 31, 2009. Three
licensees accounted for 36%, 11% and 10% of the license fee revenues recognized
during the three months ended December 31, 2008.
Acacia
Research Corporation reported a fourth quarter 2009 net loss of $4,670,000
versus $1,807,000 in the comparable 2008 period. Included in the
fourth quarter 2009 net loss are non-cash charges totaling $2,756,000, comprised
of non-cash stock compensation charges of $1,492,000 and non-cash patent
amortization charges of $1,264,000. Fourth quarter 2008 results
from operations included non-cash charges of $3,951,000, comprised of non-cash
stock compensation charges of $1,639,000 and non-cash patent amortization
charges of $2,312,000. Non-cash stock compensation charges decreased
in the fourth quarter of 2009 due primarily to a decrease in the average fair
value of equity-based incentive awards expensed in the fourth quarter of 2009,
as compared to the prior year period. During the fourth quarter of
2008, pursuant to the terms of the respective inventor agreement, our operating
subsidiary elected to terminate its rights to exclusively license a patent
portfolio, resulting in the acceleration of amortization expense for the patent
related asset and a decrease in amortization expense in the fourth quarter of
2009, as compared to the fourth quarter of 2008.
Fourth
quarter 2009 marketing, general and administrative expenses increased to
$5,235,000 (including non-cash stock compensation charges of $1,492,000) from
$4,828,000 (including non-cash stock compensation charges of $1,639,000) in the
comparable 2008 period. Excluding the impact of the decrease in
non-cash stock compensation described above, marketing, general and
administrative expenses increased $554,000 in the fourth quarter of 2009, as
compared to the prior year period, primarily due to an increase in personnel
related costs and an increase in corporate, general and
administrative costs.
Inventor
royalties expenses for the fourth quarter of 2009 and 2008 were $3,604,000 and
$6,399,000, respectively. In addition, net income attributable to
noncontrolling interests in operating subsidiary, representing the portion of
net proceeds from the licensing and enforcement activities of a majority-owned
operating subsidiary that are distributable to the operating subsidiary’s
noncontrolling interest holders pursuant to the underlying operating agreement,
totaled $2,507,000 in the fourth quarter of 2009.
Contingent
legal fees expenses for the fourth quarter of 2009 and 2008 were $5,424,000 and
$3,926,000, respectively.
2
The
economic terms of the inventor agreements, operating agreements and contingent
legal fee arrangements, if any, including royalty rates, contingent fee rates
and other terms, vary across the patent portfolios owned or controlled by our
operating subsidiaries. As such, inventor royalties, payments to
noncontrolling interests and contingent legal fees expenses fluctuate period to
period, based on the amount of revenues recognized each period and the mix of
specific patent portfolios with varying economic terms generating revenues each
period.
Contingent
legal fees expenses increased 38% during the fourth quarter of 2009, as compared
to the fourth quarter of 2008, versus an increase of 9% in related license fee
revenues for the same periods, due to certain patent portfolios with lower
contingent fee rates generating revenues during the fourth quarter of 2008, as
compared to the patent portfolios generating revenues in the fourth quarter of
2009. In the aggregate, inventor royalties and noncontrolling
interests in operating subsidiary decreased 5% during the fourth quarter of
2009, as compared to the fourth quarter of 2008, versus the 9% increase in
related license fee revenues for the same periods, due to certain patent
portfolios with lower inventor royalty rates generating revenues during the
fourth quarter of 2009, as compared to the patent portfolios generating revenues
in the comparable 2008 period.
Fourth
quarter 2009 litigation and licensing expenses-patents were $5,637,000 versus
$2,234,000 in the comparable 2008 period. Litigation and licensing
expenses-patents include patent-related prosecution and enforcement costs
incurred by outside patent attorneys engaged on an hourly basis and the
out-of-pocket expenses incurred by law firms engaged on a contingent fee
basis. Litigation and licensing expenses-patents also includes
licensing and enforcement related third-party patent research, development,
consulting, and other costs incurred in connection with the licensing and
enforcement of patent portfolios. Litigation and licensing
expenses-patents fluctuate from period to period based on patent enforcement and
prosecution activity associated with ongoing licensing and enforcement programs
and the timing of the commencement of new licensing and enforcement programs in
each period. The increase in litigation and licensing
expenses-patents is due to an increase in litigation and licensing support
related out of pocket expenses, third party technical consulting expenses,
professional expert expenses and other litigation support and administrative
costs incurred in connection with our investment in certain of our licensing and
enforcement programs that went to trial and concluded in 2009, licensing and
enforcement programs with trial dates scheduled for 2010, and a net increase in
costs related to new licensing and enforcement programs commenced since the end
of the prior year period. We expect litigation and licensing
expenses-patents to continue to fluctuate period to period based on the factors
summarized above, in connection with upcoming scheduled trial dates and our
current and future patent acquisition, development, licensing and enforcement
activities.
Business
development related research, consulting and other expenses for the fourth
quarter of 2009 were $516,000, as compared to $221,000 in the fourth quarter of
2008. Research, consulting and other expenses include third-party
business development related research, development, consulting, and other costs
incurred in connection with business development activities. These
costs fluctuate period to period based on business development related
activities in each period.
For
the Year Ended December 31, 2009 and 2008
License
fee revenues recognized in 2009 totaled $67,340,000 versus $48,227,000 in
2008. 2009 revenues included license fees from 117 new licensing
agreements covering 30 of our technology licensing programs, including initial
license fee revenues from 12 technology licensing programs. Two
licensees accounted for 15% and 12% of the license fee revenues recognized
during the year ended December 31, 2009. Two licensees accounted for
13% and 12% of the license fee revenues recognized during the year ended
December 31, 2008.
Acacia
Research Corporation reported a 2009 net loss of $11,290,000 versus $13,757,000
in 2008. Included in the 2009 results from operations are non-cash
charges totaling $11,699,000, comprised of non-cash stock compensation charges
of $7,065,000 and non-cash patent amortization charges of
$4,634,000. The 2008 results from continuing operations included
non-cash charges totaling $13,398,000, comprised of non-cash stock compensation
charges of $7,355,000 and non-cash patent amortization charges of
$6,043,000. The decrease in non-cash stock compensation charges was
due primarily to a decrease in the average fair value of equity-based incentive
awards expensed in 2009, as compared to 2008. The decrease in
amortization expense in 2009, as compared to 2008, is due to the acceleration of
amortization on a patent portfolio in 2008, as described in the summary of
quarterly results above.
3
Marketing,
general and administrative expenses for 2009 decreased to $21,070,000 (including
non-cash stock compensation charges of $7,065,000) from $21,130,000 (including
non-cash stock compensation charges of $7,355,000) in the comparable 2008
period. Excluding the impact of the decrease in non-cash stock
compensation described above, marketing, general and administrative expenses
remained relatively flat year to year.
Inventor
royalties expenses for 2009 and 2008 were $15,673,000 and $14,995,000,
respectively. In addition, net income attributable to noncontrolling
interests in operating subsidiary, representing the portion of net proceeds from
the licensing and enforcement activities of a majority-owned operating
subsidiary that are distributable to the operating subsidiary’s noncontrolling
interest holders pursuant to the underlying operating agreement, totaled
$5,657,000 in 2009.
Contingent
legal fees expenses for 2009 and 2008 were $15,945,000 and $12,429,000,
respectively.
Inventor
royalties, payments to noncontrolling interests and contingent legal fees
expenses fluctuate period to period, based on the amount of revenues recognized
each period and the mix of specific patent portfolios with varying economic
terms generating revenues each period.
Contingent
legal fees expenses increased 28% during 2009, as compared to 2008, versus a 40%
increase in license fee revenues for the same periods, due to certain patent
portfolios with lower contingent fee rates generating revenues in 2009, as
compared to the patent portfolios generating revenues in the comparable 2008
period. In the aggregate, inventor royalties and noncontrolling
interests in operating subsidiary increased 42% during 2009, as compared to
2008, consistent with the 40% increase in license fee revenues for the same
periods.
Litigation
and licensing expenses-patents for 2009 were $14,055,000 versus $6,900,000 in
2008. Litigation and licensing expenses-patents include
patent-related prosecution and enforcement costs incurred by outside patent
attorneys engaged on an hourly basis and the out-of-pocket expenses incurred by
law firms engaged on a contingent fee basis. Litigation and licensing
expenses-patents also includes licensing and enforcement related third-party
patent research, development, consulting, and other costs incurred in connection
with the licensing and enforcement of patent portfolios. Litigation
and licensing expenses-patents fluctuate from period to period based on patent
enforcement and prosecution activity associated with ongoing licensing and
enforcement programs and the timing of the commencement of new licensing and
enforcement programs in each period. The increase in litigation and
licensing expenses-patents is due to an increase in litigation and licensing
support related out of pocket expenses, third party technical consulting
expenses, professional expert expenses and other litigation support and
administrative costs incurred in connection with our investment in certain of
our licensing and enforcement programs that went to trial and concluded in 2009,
licensing and enforcement programs with trial dates scheduled for 2010, and a
net increase in costs related to new licensing and enforcement programs
commenced since the end of the prior year period. We expect
litigation and licensing expenses-patents to continue to fluctuate period to
period based on the factors summarized above, in connection with upcoming
scheduled trial dates and our current and future patent acquisition,
development, licensing and enforcement activities.
Business
development related research, consulting and other expenses for 2009 were
$1,689,000, as compared to $933,000 in 2008. Research, consulting and
other expenses include third-party business development related research,
development, consulting, and other costs incurred in connection with business
development activities. These costs fluctuate period to period based
on business development related activities in each period.
Investments
in Patent Portfolios
During
the year ended December 31, 2009, certain of our operating subsidiaries
continued to execute their business strategy in the area of patent portfolio
acquisitions. Patent portfolio acquisition costs for 2009 totaled
$9.6 million, as compared to $2.1 million during 2008. Several of the
patent portfolios acquired in 2009 were acquired in connection with partnering
arrangements executed with major technology companies, reflecting our continued
identification of opportunities to partner not only with individual inventors
and small to medium size technology companies, but also major well established
technology companies with larger patent portfolios.
4
Of the
$9.6 million in patent acquisition costs invested during 2009, we have a
contractual guarantee to receive a minimum of $5.0 million in net proceeds,
which significantly reduces the risk associated with these initial
investments. The majority of remaining acquisition costs incurred are
subject to contractual provisions providing for higher percentage returns to our
operating subsidiaries early on in the licensing and enforcement program until
such initial upfront acquisition costs are fully recovered.
The
higher level of acquisition costs incurred in the current quarter reflects our
continued identification of opportunities to partner with major technology
companies and exchange up front, advanced royalty payments to patent owners, for
a reduced future inventor royalty percentage, resulting in the potential for
higher returns on our investments for our shareholders, in connection with
future licensing and enforcement activities.
Financial
Condition
Total
assets were $78,256,000 as of December 31, 2009 compared to $73,074,000 as of
December 31, 2008. Cash and cash equivalents and investments totaled
$53,887,000 as of December 31, 2009 compared to $51,518,000 as of December 31,
2008.
Refer to
the section below entitled “Summary Financial Information” for summary
consolidated balance sheet, income statement and cash flow information as of and
for the three months and year ended December 31, 2009.
Change
in Accounting Policy
Effective
October 1, 2009, Acacia Research Corporation elected to change its method of
accounting for its term license agreements to recognize revenue when delivery of
the license has occurred, which is typically at the time of execution of the
related license agreement, or upon receipt of the applicable minimum annual
upfront renewal license fee payment, and when all other revenue recognition
criteria have been met. Prior to the change in method of
accounting, license fees for term license agreements were deferred and amortized
to revenue on a straight-line basis over the applicable contractual license
term. The new method was adopted as it provides a consistent approach
to accounting for all of our license arrangements with similar significant terms
and conditions and more closely reflects the culmination of the earnings process
associated with these revenue arrangements.
In the
event of a change in accounting policy, Rule 10-01(b)(6) of Regulation S-X
requires that the registrant file a letter from its independent accountants
stating whether the change in accounting is preferable in the
circumstances. Our independent registered public accounting firm,
Grant Thornton LLP (“Grant Thornton”) has indicated that they expect to be able
to issue a preferability letter with respect to the change in accounting policy,
subject to completion of their audit procedures for the year ended December 31,
2009. In accordance with item 601(b)(18) of Regulation S-K we expect
to file Grant Thornton’s preferability letter as an exhibit to our 2009 Annual
Report on Form 10-K.
The
change was accounted for through retrospective application of the new accounting
policy as of January 1, 2009. The effect of applying the new
accounting policy to term licenses in periods prior to fiscal 2009 was not
material. Accordingly, our consolidated financial statements for
years ending prior to January 1, 2009 have not been retroactively adjusted for
this change in accounting policy.
5
The
effect of the change in accounting policy on our consolidated financial
statement line items for the applicable quarterly reporting periods in 2009 was
as follows (in thousands, except per share data):
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As
of and for the Three Months
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As
of and for the Three Months
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As
of and for the Three Months
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Ended
March 31, 2009
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Ended
June 30, 2009
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Ended
September 30, 2009
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As Reported
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As Adjusted
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Effect
of Change |
As Reported
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As Adjusted
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Effect
of Change |
As Reported
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As Adjusted
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Effect
of Change |
||||||||||||||||||||||||||||
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Statement
of Operations:
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License
fee revenues
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$ | 12,650 | $ | 16,957 | $ | 4,307 | $ | 15,031 | $ | 14,356 | $ | (675 | ) | $ | 12,831 | $ | 16,169 | $ | 3,338 | |||||||||||||||||
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Inventor
royalties
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3,528 | 5,377 | 1,849 | 2,352 | 2,019 | (333 | ) | 3,010 | 4,673 | 1,663 | ||||||||||||||||||||||||||
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Contingent
legal fees
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3,163 | 3,532 | 369 | 3,257 | 3,190 | (67 | ) | 3,470 | 3,799 | 329 | ||||||||||||||||||||||||||
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Operating
loss
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(2,606 | ) | (517 | ) | 2,089 | (535 | ) | (810 | ) | (275 | ) | (3,923 | ) | (2,577 | ) | 1,346 | ||||||||||||||||||||
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Net
loss attributable to Acacia Research Corporation
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(2,357 | ) | (268 | ) | 2,089 | (2,648 | ) | (2,923 | ) | (275 | ) | (4,775 | ) | (3,429 | ) | 1,346 | ||||||||||||||||||||
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Basic
and diluted loss per share
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(0.08 | ) | (0.01 | ) | 0.07 | (0.09 | ) | (0.10 | ) | (0.01 | ) | (0.16 | ) | (0.11 | ) | 0.04 | ||||||||||||||||||||
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Balance
Sheet:
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Deferred
costs
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$ | 2,219 | $ | - | $ | (2,219 | ) | $ | 1,819 | $ | - | $ | (1,819 | ) | $ | 3,811 | $ | - | $ | (3,811 | ) | |||||||||||||||
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Total
assets
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78,529 | 76,310 | (2,219 | ) | 75,579 | 73,760 | (1,819 | ) | 76,074 | 72,263 | (3,811 | ) | ||||||||||||||||||||||||
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Deferred
revenues
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4,319 | 10 | (4,309 | ) | 3,644 | 10 | (3,634 | ) | 6,982 | 10 | (6,972 | ) | ||||||||||||||||||||||||
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Total
liabilities
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20,419 | 16,110 | (4,309 | ) | 16,873 | 13,239 | (3,634 | ) | 21,727 | 14,755 | (6,972 | ) | ||||||||||||||||||||||||
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Accumulated
deficit
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(111,309 | ) | (109,220 | ) | 2,089 | (113,957 | ) | (112,143 | ) | 1,814 | (118,732 | ) | (115,572 | ) | 3,160 | |||||||||||||||||||||
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Total
stockholders' equity
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58,110 | 60,199 | 2,089 | 58,706 | 60,520 | 1,814 | 54,347 | 57,507 | 3,160 | |||||||||||||||||||||||||||
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For
the Six Months
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For
the Nine Months
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|||||||||||||||||||||||
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Ended
June 30, 2009
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Ended
September 30, 2009
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|||||||||||||||||||||||
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Effect
of
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Effect
of
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|||||||||||||||||||||||
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As
Reported
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As
Adjusted
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Change
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As
Reported
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As
Adjusted
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Change
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|||||||||||||||||||
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Statement
of Operations:
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||||||||||||||||||||||||
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License
fee revenues
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$ | 27,681 | $ | 31,313 | $ | 3,632 | $ | 40,512 | $ | 47,482 | $ | 6,970 | ||||||||||||
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Inventor
royalties
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5,880 | 7,396 | 1,516 | 8,890 | 12,069 | 3,179 | ||||||||||||||||||
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Contingent
legal fees
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6,420 | 6,722 | 302 | 9,890 | 10,521 | 631 | ||||||||||||||||||
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Operating
loss
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(3,141 | ) | (1,327 | ) | 1,814 | (7,064 | ) | (3,904 | ) | 3,160 | ||||||||||||||
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Net
loss attributable to Acacia Research Corporation
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(5,005 | ) | (3,191 | ) | 1,814 | (9,780 | ) | (6,620 | ) | 3,160 | ||||||||||||||
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Basic
and diluted loss per share
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(0.17 | ) | (0.11 | ) | 0.06 | (0.33 | ) | (0.22 | ) | 0.11 | ||||||||||||||
6
Business Highlights and
Recent Developments
Business
highlights of the fourth quarter and recent developments include the
following:
(Note: Acacia
Patent Acquisition LLC, Aldav LLC, Data Detection Systems LLC, Data Network
Storage LLC, Database Structures, Inc., Diagnostic Systems
Corporation, Document Generation Corporation, Hospital Systems
Corporation, Lighting Ballast Control LLC, Optimum Processing Solutions LLC,
Restricted Spending Solution LLC, Service Reminder LLC, Creative Internet
Advertising Corporation and Thermal Scalpel LLC are all wholly owned operating
subsidiaries of Acacia Research Corporation):
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●
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Aldav
LLC entered into a settlement and license agreement with Cox Radio,
Inc. The agreement partially resolves patent litigation, Civil
Action Case No. 6:09-cv-170, pending in the United States District Court
for the Eastern District of Texas. Aldav LLC also entered into
a settlement and license agreement with Regent Communication,
Inc. The agreement resolves patent litigation, Civil Action
Case No. 6:09-cv-170, pending in the United States District Court for the
Eastern District of Texas. This patented technology generally relates to
advertisement replacement for Internet radio. This technology
can be used by radio stations to replace broadcast advertisements for
distribution over the Internet.
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|
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●
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Data
Detection Systems LLC entered into a license and settlement agreement with
BMC Software, Inc. The agreement resolves patent
litigation, Civil Action No. 4:09-cv-01204, in the United States District
Court for the Southern District of
Texas.
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|
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●
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Data
Network Storage LLC has entered into a settlement and license agreement
with Buffalo Technology (USA), Inc. and Nimbus Data Systems, Inc. covering
a patent portfolio that relates to storage area network
technology. This agreement resolves patent litigation that was
pending in the United States District Court for the Southern District of
California.
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|
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●
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Database
Structures, Inc. resolved a dispute that was pending in the District Court
for the Southern District of California with Oracle
Corporation.
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●
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Diagnostic
Systems Corporation resolved a dispute that was pending in the District
Court for the Central District of California with Oracle
Corporation.
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●
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Document
Generation Corporation entered into a settlement agreement with Sage
Software Healthcare, LLC covering patents relating to document generation
software. The agreement resolves litigation that was pending in
the United States District Court for the Eastern District of
Texas.
|
|
|
●
|
Document
Generation Corporation entered into an agreement with McKesson Information
Solutions LLC covering a portfolio of patents that apply to document
generation technology. This agreement resolves the parties’
disputes pending in the District Courts for the Southern District of
Illinois and the Eastern District of
Texas.
|
|
|
●
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Document
Generation Corporation entered into a settlement agreement with Eclipsys
Corporation covering patents relating to document generation
software. The agreement resolves litigation that was pending in
the United States District Court for the Southern District of Illinois and
the United States District Court for the Eastern District of Texas with
respect to certain Eclipsys
products.
|
|
|
●
|
Hospital
Systems Corporation entered into license agreements with Aspyra, Inc.,
General Electric Company, NovaRad Corporation, Sage Software Healthcare
LLC, Stryker Corporation and Stryker Imaging Corporation covering a
portfolio of patents that apply to medical picture archiving and
communication system (PACS) technology. This agreement resolves the
parties’ dispute that was pending in the District Court for the Eastern
District of Texas.
|
7
|
|
●
|
Lighting
Ballast Control LLC entered into a license agreement with Fulham Co., Inc.
covering patents relating to lighting ballasts. The agreement
resolves litigation that was pending in the United States District Court
for the Northern District of Texas with respect to certain Fulham Co.,
Inc. products. The technology generally relates to controlling power to
fluorescent lamps. The technology may be used in lighting ballasts for
industrial applications.
|
|
|
●
|
Optimum
Processing Solutions LLC (OPS) entered into a settlement agreement with
International Business Machines Corporation (IBM). This
agreement resolves all claims between OPS and IBM arising out of the
patent litigation captioned Optimum Processing Solutions, LLC v. Advanced
Micro Devices, Inc., et al., Civil Action Case No. 1:09-cv-1098, pending
in the United States District Court for the Northern District of
Georgia. Optimum Processing Solutions LLC also entered into a
settlement agreement with Freescale Semiconductor, Inc. The
agreement resolves patent litigation, Civil Action Case No. 1:09-cv-1098,
pending in the United States District Court for the Northern District of
Georgia.
|
|
|
●
|
Restricted
Spending Solutions LLC entered into settlement and license agreements with
PNC Financial Services Group, Inc. and Bank of America Corp covering a
patent portfolio that relates to restricted spending
accounts. This agreement resolves patent litigation that was
pending in the United States District Court for the Northern District of
Illinois.
|
|
|
●
|
Service
Reminder, LLC and BMW North America, LLC, filed a joint stipulation of
dismissal of their patent litigation that had been pending in the United
States District Court for the District of New Jersey, bearing Docket No.
08-4979 (SDW) (MCA).
|
|
|
●
|
Software
Tree, LLC, a majority-owned operating subsidiary of Acacia Research
Corporation, entered into a license agreement with Genuitec L.L.C.
covering a portfolio of patents that apply to object-relational mapping.
This resolves a dispute that was pending in the District Court for the
Eastern District of Texas. Software Tree, LLC also resolved a
dispute that was pending in the District Court for the Eastern District of
Texas with Oracle Corporation.
|
|
|
●
|
Thermal
Scalpel LLC entered into an agreement with Boston Scientific
Corporation. The agreement resolves litigation that was pending
in the United States District Court for the Eastern District of
Texas.
|
|
|
●
|
Creative
Internet Advertising Corporation received a $12.4 million final judgment
stemming from its May 15th, 2009 trial verdict and corresponding $6.6
million damages award in its patent lawsuit with Yahoo! Inc. In
the final judgment, signed on February 1st, 2010, the District Court for
the Eastern District of Texas awarded enhanced damages for willful
infringement of $4.5 million. The District Court also awarded
prejudgment interest of $1.1 million as well as supplemental damages
bringing the total award to approximately $12.4 million. In
addition, the District Court’s final judgment awarded a post-verdict
ongoing royalty rate of 23% for all of Yahoo’s IMVironments
sales. On May 15th, 2009, a federal court jury decided that
Yahoo! Inc.’s messenger program with IMVironments infringes United States
Patent Number 6,205,432 both literally and under the Doctrine of
Equivalents.
|
8
|
|
●
|
Acacia
Patent Acquisition LLC continued its patent and patent rights acquisition
activities, acquiring a total of five new patent portfolios in the fourth
quarter of 2009, including the
following:
|
|
|
●
|
In
October 2009, acquired rights to two patent portfolios from a leading
international research institute. The first patent portfolio generally
relates to micromechanical components which can be integrated with
electronic circuits to form microelectromechanical systems known as MEMS.
This technology can be used in automobiles, medical devices, mobile phones
and other consumer products. The second portfolio generally relates to
chip-stacking technology that facilitates 3-D integration of wafers and
can provide higher device yields.
|
|
|
●
|
In
December 2009, acquired three patent portfolios comprised of
48 US patents, 49 foreign counterparts, and associated
applications from a major semiconductor company. The patent portfolios
include patents relating to dynamic random access memory (DRAM), digital
signal processing (DSP) and microprocessor technologies. These
technologies may be used in computers, mobile devices (such as
smart phones, cameras, etc.) and other
electronics.
|
|
|
●
|
In
December 2009, acquired patents for software installation
technology. This patented technology generally relates to creating and
maintaining desired configurations of
software.
|
|
|
●
|
In
December 2009, acquired the rights to a patent for distributed data
management and synchronization technology. This patented technology
generally relates to the distributed management and synchronization of
select data elements between applications based on pre-defined
permissions.
|
__________
(1) As used
herein, “Acacia Research Corporation,” “we,” “us,” and “our” refer to Acacia
Research Corporation and/or its wholly and majority-owned operating
subsidiaries. All intellectual property acquisition, development,
licensing and enforcement activities are conducted solely by certain of Acacia
Research Corporation’s wholly and majority-owned operating
subsidiaries.
______________________________________________
A
conference call is scheduled for today. The Acacia Research
presentation and Q&A will start at 1:30 p.m. Pacific Time (4:30 p.m.
Eastern).
To listen
to the presentation by phone, dial (888) 646-0797 for domestic callers and (706)
758-6764 for international callers, both of whom will need to enter the
conference ID 49908261 when prompted. A replay of the audio
presentation will be available for 30 days at (800) 642-1687 for domestic
callers and (706) 645-9291 for international callers, both of whom will need to
enter the Conference ID 49908261 when prompted.
The call
is being webcast by CCBN and can be accessed at Acacia’s website at www.acaciaresearch.com.
ABOUT
ACACIA RESEARCH CORPORATION
Acacia
Research’s subsidiaries partner with inventors and patent owners, license the
patents to corporate users, and share the revenue. Acacia Research’s
subsidiaries control over 140 patent portfolios, covering technologies used in a
wide variety of industries.
Information
about Acacia Research is available at www.acaciatechnologies.com and
www.acaciaresearch.com.
Safe Harbor Statement under the
Private Securities Litigation Reform Act of 1995
This
news release may contain forward-looking statements within the meaning of the
“safe harbor” provisions of the Private Securities Litigation Reform Act of
1995. Such statements are based upon our current expectations and speak
only as of the date hereof. Our actual results may differ materially and
adversely from those expressed in any forward-looking statements as a result of
various factors and uncertainties, including the recent economic slowdown
affecting technology companies, our ability to successfully develop products,
rapid technological change in our markets, changes in demand for our future
products, legislative, regulatory and competitive developments and general
economic conditions. Our Annual Report on Form 10-K, recent and
forthcoming Quarterly Reports on Form 10-Q, recent Current Reports on Forms 8-K
and 8-K/A, and other SEC filings discuss some of the important risk factors that
may affect our business, results of operations and financial condition. We
undertake no obligation to revise or update publicly any forward-looking
statements for any reason.
9
ACACIA RESEARCH
CORPORATION
SUMMARY
FINANCIAL INFORMATION
(In
thousands, except share and per share information)
(Unaudited)
CONDENSED
CONSOLIDATED BALANCE SHEET INFORMATION
|
December
31,
|
December
31,
|
|||||||
|
2009
|
2008
|
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
|
Cash and cash equivalents
|
$ | 51,735 | $ | 48,279 | ||||
|
Accounts receivable
|
5,110 | 7,436 | ||||||
|
Prepaid expenses and other current assets
|
1,081 | 1,255 | ||||||
|
Total
current assets
|
57,926 | 56,970 | ||||||
|
Property
and equipment, net of accumulated depreciation
|
163 | 221 | ||||||
|
Patents,
net of accumulated amortization
|
17,510 | 12,419 | ||||||
|
Investments
- noncurrent
|
2,152 | 3,239 | ||||||
|
Other
assets
|
505 | 225 | ||||||
| $ | 78,256 | $ | 73,074 | |||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts payable and accrued expenses
|
$ | 8,006 | $ | 3,240 | ||||
|
Royalties and contingent legal fees payable
|
12,402 | 10,770 | ||||||
|
Deferred revenues
|
1,510 | 318 | ||||||
|
Total current liabilities
|
21,918 | 14,328 | ||||||
|
Other liabilities
|
369 | 199 | ||||||
|
Total liabilities
|
22,287 | 14,527 | ||||||
|
Total stockholders' equity
|
55,969 | 58,547 | ||||||
| $ | 78,256 | $ | 73,074 | |||||
10
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(3)
ACACIA
RESEARCH CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In
thousands, except share and per share information)
|
For
the Three Months Ended
|
For
the Years Ended
|
|||||||||||||||
|
December
31, 2009
|
December
31, 2008
|
December
31, 2009
|
December
31, 2008
|
|||||||||||||
|
License
fee revenues
|
$ | 19,858 | $ | 18,267 | $ | 67,340 | $ | 48,227 | ||||||||
|
Operating
costs and expenses:
|
||||||||||||||||
|
Cost
of revenues:
|
||||||||||||||||
|
Inventor
royalties
|
3,604 | 6,399 | 15,673 | 14,995 | ||||||||||||
|
Contingent
legal fees
|
5,424 | 3,926 | 15,945 | 12,429 | ||||||||||||
|
Litigation
and licensing expenses - patents
|
5,637 | 2,234 | 14,055 | 6,900 | ||||||||||||
|
Amortization
of patents
|
1,264 | 2,312 | 4,634 | 6,043 | ||||||||||||
|
Marketing,
general and administrative expenses (including non-cash stock compensation
expense of $1,492 and $7,065 for the three and twelve months ended
December 31, 2009 and$1,639 and $7,355 for the three and twelve months
ended December 31, 2008)
|
5,235 | 4,828 | 21,070 | 21,130 | ||||||||||||
|
Research,
consulting and other expenses - business development
|
516 | 221 | 1,689 | 933 | ||||||||||||
|
Total
operating costs and expenses
|
21,680 | 19,920 | 73,066 | 62,430 | ||||||||||||
|
Operating
loss
|
(1,822 | ) | (1,653 | ) | (5,726 | ) | (14,203 | ) | ||||||||
|
Total
other income (expense)
|
(256 | ) | (115 | ) | 302 | 570 | ||||||||||
|
Loss
from operations before provision for income taxes
|
(2,078 | ) | (1,768 | ) | (5,424 | ) | (13,633 | ) | ||||||||
|
Provision
for income taxes
|
(85 | ) | (39 | ) | (209 | ) | (124 | ) | ||||||||
|
Net
loss including noncontrolling interests in operating
subsidiary
|
(2,163 | ) | (1,807 | ) | (5,633 | ) | (13,757 | ) | ||||||||
|
Net
income attributable to noncontrolling interests in operating
subsidiary
|
(2,507 | ) | - | (5,657 | ) | - | ||||||||||
|
Net
loss attributable to Acacia Research Corporation
|
$ | (4,670 | ) | $ | (1,807 | ) | $ | (11,290 | ) | $ | (13,757 | ) | ||||
|
Net
loss per common share attributable to Acacia Research
Corporation:
|
||||||||||||||||
|
Basic
and diluted net loss per share
|
(0.15 | ) | (0.06 | ) | (0.38 | ) | (0.47 | ) | ||||||||
|
Weighted
average number of shares outstanding, basic and diluted
|
30,199,211 | 29,599,602 | 29,914,801 | 29,423,998 | ||||||||||||
11
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
For
the Three Months Ended
|
For
the Years Ended
|
|||||||||||||||
|
December
31, 2009
|
December
31, 2008
|
December
31, 2009
|
December
31, 2008
|
|||||||||||||
|
Net
cash provided by (used in):
|
||||||||||||||||
|
Operating
activities
|
$ | 10,222 | $ | 6,775 | $ | 16,118 | $ | 2,600 | ||||||||
|
Investing
activities
|
(420 | ) | 794 | (8,652 | ) | 5,070 | ||||||||||
|
Financing
activities (2)
|
(867 | ) | - | (4,010 | ) | 142 | ||||||||||
|
Increase
in cash and cash equivalents
|
8,935 | 7,569 | 3,456 | 7,812 | ||||||||||||
|
Cash
and cash equivalents, beginning
|
42,800 | 40,710 | 48,279 | 40,467 | ||||||||||||
|
Cash
and cash equivalents, ending
|
$ | 51,735 | $ | 48,279 | $ | 51,735 | $ | 48,279 | ||||||||
Note:
|
|
(1)
- Certain operating costs and expenses previously reported for the three
and twelve months ended December 31, 2008 have been reclassified to
conform with the current period
presentation.
|
|
|
(2)
- Includes $1,028,000 and $3,150,000 in payments to noncontrolling
interests in operating subsidiary for the three months and year ended
December 31, 2009, respectively.
|
|
|
(3)
- Reflects adjustments to the first, second and third quarters of 2009 for
change in accounting policy.
|
12