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Acacia Research Reports Record Fourth Quarter And Record Year End Financial Results

Stocks in this article: ACTG

Information about Acacia Research Corporation and its subsidiaries is available at www.acaciaresearchgroup.com and www.acaciaresearch.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This news release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. Our ability to become the licensing partner for companies, and 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 effect of the global economic downturn on technology companies, the ability to successfully develop licensing programs and attract new business, rapid technological change in relevant markets, changes in demand for current and future intellectual property rights, legislative, regulatory and competitive developments addressing licensing and enforcement of patents and/or intellectual property in general 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.

The results achieved in the most recent quarter are not necessarily indicative of the results to be achieved by us in any subsequent quarters, as it is currently anticipated that Acacia Research Corporation’s financial results will vary, and may vary significantly, from quarter to quarter. This variance is expected to result from a number of factors, including risk factors affecting our results of operations and financial condition referenced above, and the particular structure of our licensing transactions, which may impact the amount of inventor royalties and contingent legal fees expenses we incur period to period.

     

ACACIA RESEARCH CORPORATION

SUMMARY FINANCIAL INFORMATION

(In thousands, except share and per share information)

(Unaudited)

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (3)

 
Three Months Ended   Years Ended
December 31, December 31,
2012   2011 2012   2011
 
Revenues $ 66,264   $ 20,795   $ 250,727   $ 172,256  
 
Operating costs and expenses:
Cost of revenues:
Inventor royalties 3,829 6,458 26,028 43,727
Contingent legal fees 5,463 5,547 24,651 40,281
Litigation and licensing expenses - patents 6,969 2,205 21,591 13,005
Amortization of patents 18,088 1,427 39,019 9,745
Verdict insurance proceeds - - - (12,451 )
Verdict insurance proceeds related costs - - - 7,661

Marketing, general and administrative expenses (including non-cash stock compensation expense of $8,282 and $25,657 for the three months and year ended December 31, 2012, respectively, and $3,688 and $13,579 for the three months and year ended December 31, 2011, respectively)

16,535 8,662 54,083 35,693
Research, consulting and other expenses - business development   721     1,445     4,943     4,338  
 

Total operating costs and expenses

  51,605     25,744     170,315     141,999  
Operating income (loss) 14,659 (4,949 ) 80,412 30,257
Total other income   820     18     937     96  
Income (loss) from operations before provision for income taxes 15,479 (4,931 ) 81,349 30,353
Benefit from (provision for) income taxes  

(5,757

)   635    

(22,060

)   (8,708 )
Net income (loss) including noncontrolling interests in operating subsidiary

9,722

(4,296 )

59,289

21,645
Net (income) loss attributable to noncontrolling interests in operating subsidiaries   101     107     164     (539 )
Net income (loss) attributable to Acacia Research Corporation $

9,823

  $ (4,189 ) $

59,453

  $ 21,106  
Net income (loss) per common share attributable to Acacia Research Corporation:
Basic earnings (loss) per share $

0.20

  $ (0.10 ) $

1.26

  $ 0.53  

Diluted earnings (loss) per share

$

0.20

  $ (0.10 ) $

1.24

  $ 0.51  
Weighted average number of shares outstanding, basic   48,335,865     41,418,470     47,251,061     39,743,433  
Weighted average number of shares outstanding, diluted   48,797,304     41,418,470     48,060,647     41,258,297  
 

Reconciliation of GAAP Net Income (Loss) and EPS to Non-GAAP Net Income (Loss) and EPS

(In thousands, except share and per share data)

 
      Three Months Ended   Years Ended
December 31, December 31,
2012   2011 2012   2011
 

GAAP net income (loss)

$

9,823

$ (4,189 ) $

59,453

$ 21,106
 
Non-cash stock compensation 8,282 3,688 25,657 13,579
Non-cash patent amortization 18,088 1,427 39,019 9,745

Excess tax benefits related non-cash tax expense

 

5,656

  (1,147 )  

13,210

  583

Non-GAAP net income (loss)

$

41,849

$ (221 ) $

137,339

$ 45,013
 
Pro forma non-GAAP net earnings (loss) per common share — basic $

0.87

$ (0.01 ) $

2.91

$ 1.13
Pro forma non-GAAP net earnings (loss) per common share — diluted $

0.86

$ (0.01 ) $

2.86

$ 1.09
GAAP weighted-average shares — basic   48,335,865   41,418,470     47,251,061   39,743,433
GAAP weighted-average shares — diluted   48,797,304   41,418,470     48,060,647   41,258,297
 
 

ACACIA RESEARCH CORPORATION

SUMMARY FINANCIAL INFORMATION, (CONTINUED)

(In thousands)

(Unaudited)

 

CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION

 
      December 31,   December 31,
2012 2011
 
ASSETS
 
Current assets:
Cash and cash equivalents $ 221,804 $ 314,733
Short-term investments 89,475 6,597
Accounts receivable 9,843 2,915

Prepaid expenses and other current assets

 

3,441

  803
Total current assets

324,563

325,048
 
Property and equipment, net of accumulated depreciation and amortization 339 220
Patents, net of accumulated amortization 313,529 25,188
Goodwill

30,149

-
Investments - noncurrent - 1,956
Other assets   137   465
 
$

668,717

$ 352,877
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
Accounts payable and accrued expenses / costs $ 9,485 $ 6,625

Royalties and contingent legal fees payable

  12,508   23,508
Total current liabilities 21,993 30,133
 
Deferred income taxes

27,831

-
Other liabilities   415   632
Total liabilities

50,239

30,765
Total stockholders' equity  

618,478

  322,112
$

668,717

$ 352,877
 
 

ACACIA RESEARCH CORPORATION

SUMMARY FINANCIAL INFORMATION, (CONTINUED)

(In thousands)

(Unaudited)

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 
      Three Months Ended   Years Ended
December 31, December 31,
2012   2011 2012 2011
Cash flows from operating activities:
Net income (loss) including noncontrolling interests in operating subsidiary $

9,722

$ (4,296 ) $

59,289

$ 21,645

Adjustments to reconcile net income (loss) including noncontrolling interests in operating subsidiary to net cash provided by operating activities :

Depreciation and amortization 18,134 1,457 39,168 9,850
Non-cash stock compensation 8,282 3,688 25,657 13,579
Change in valuation allowance

(121

)

-

(10,358

) -
Other

451

-

941

(15 )
 
Changes in assets and liabilities:
Accounts receivable 6,792 29,645 (6,928 ) 5,072

Prepaid expenses and other assets

191 126 (1,294 ) 1,075
Accounts payable and accrued expenses / costs 238 (627 ) 2,928 (1,364 )
Royalties and contingent legal fees payable (8,970 ) (13,542 ) (11,000 ) 10,748

Deferred income tax

  -     -     6,546     -  
 
Net cash provided by operating activities  

34,719

    16,451    

104,949

    60,590  
 
Cash flows from investing activities:
Purchase of property and equipment (68 ) (18 ) (268 ) (190 )
Purchase of available-for-sale investments (97,493 ) - (402,500 ) (8,427 )

Maturities and sales of available-for-sale investments

152,874 - 321,890 60
Purchase of ADAPTIX, Inc., net of cash acquired - - (150,000 ) -
Patent acquisition costs   (113,300 )   (11,875 )   (178,260 )   (14,680 )
 
Net cash used in investing activities   (57,987 )   (11,893 )   (409,138 )   (23,237 )
 
Cash flows from financing activities:
Proceeds from sale of common stock, net of issuance costs (22 ) (3 ) 218,961 175,229
Repurchase of common stock (26,732 ) - (26,732 ) -
Distributions to noncontrolling interests in operating subsidiary - - (312 ) (2,897 )
Contributions from noncontrolling interests in operating subsidiary 1,953 662 5,793 1,539
Excess tax benefits from stock-based compensation

5,656

(1,147 )

13,210

583
Proceeds from the exercise of stock options   66     -     340     411  
 
Net cash provided by (used in) financing activities  

(19,079

)   (488 )  

211,260

    174,865  
 
(Decrease) increase in cash and cash equivalents (42,347 ) 4,070 (92,929 ) 212,218
 
Cash and cash equivalents, beginning   264,151     310,663     314,733     102,515  
 
Cash and cash equivalents, ending $ 221,804   $ 314,733   $ 221,804   $ 314,733  
 

Business Highlights and Recent Developments (2)

Business highlights of the fourth quarter of 2012 and recent developments include the following:

11 of 12

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