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

Stocks in this article: ACTG

Income Taxes:

The income tax provision for the three months and year ended December 31, 2012 is preliminary and subject to adjustment resulting from finalization of the income tax provision in connection with the completion of our year end audit and the filing of our 2012 annual report on form 10-K. We do not expect any final adjustments to be material to the financial information contained herein.

       
Three Months Ended Years Ended
December 31, December 31,
2012   2011 2012   2011
 
Benefit from (provision for) income taxes (in thousands) $

(5,757

) $ 635 $

(22,060

) $ (8,708 )
Effective tax rate

37

% 13 %

27

% 29 %
 

Fourth Quarter 2012 compared to Fourth Quarter 2011. The fourth quarter 2012 increase in our effective tax rate primarily reflects the increase in pre-tax income, as compared to the prior year quarter.

Fiscal Year 2012 compared to Fiscal Year 2011. The effective tax rate for fiscal 2012 was relatively flat, compared with fiscal 2011.

Tax expense for the periods presented primarily reflects the impact of the following:

  • For financial reporting purposes, tax expense is calculated without the excess tax benefits related to the exercise and vesting of equity-based incentive awards. Under U.S. generally accepted accounting principles, if a deduction reported on a tax return for an equity-based incentive award exceeds the cumulative compensation cost for those instruments recognized for financial reporting purposes, any excess tax benefit is recognized as a credit to additional paid-in capital, as the expense does not reflect cash taxes payable. The deductions related to the exercise and vesting of equity-based incentive awards are available to offset taxable income on our consolidated tax returns. Accordingly, the noncash tax expense calculated without the excess tax benefits, totaling approximately $5.7 million and ($1.1 million) for the fourth quarter of 2012 and 2011, respectively, and $13.2 million and $583,000 for fiscal year 2012 and 2011, respectively, was credited (debited) to additional paid-in capital, not taxes payable.
  • Foreign withholding taxes withheld by the applicable foreign tax authority on payments in connection with certain licensing arrangements executed in fiscal year 2012 and 2011, totaling $11.9 million and $7.5 million, respectively. The tax provisions for the periods presented reflects utilization of foreign taxes withheld as a credit against income tax expense calculated for financial statement purposes.

Financial Condition (in thousands)

Summary Balance Sheet Information:

       
December 31, December 31,
2012 2011
 
Cash & cash equivalents and investments $ 311,279 $ 323,286
Accounts receivable 9,843 2,915
Total assets

668,717

352,877
Accounts payable and accrued expenses / costs 9,485 6,625
Royalties and contingent legal fees payable 12,508 23,508
Total liabilities

50,239

30,765
 

Summary Cash Flow Information:

       
Three Months Ended Years Ended
December 31, December 31,
2012   2011 2012   2011
 
Net cash provided by (used in):
Operating activities $

34,719

$ 16,451 $

104,949

$ 60,590
Investing activities (57,987 ) (11,893 ) (409,138 ) (23,237 )
Financing activities  

(19,079

)   (488 )  

211,260

    174,865  
(Decrease) increase in cash and cash equivalents $ (42,347 ) $ 4,070   $ (92,929 ) $ 212,218  
 

Patent Acquisition Costs. Patent related acquisition costs in the fourth quarter of 2012 totaled $113,300,000, as compared to $11,875,000 during the comparable prior year quarter.

Patent related acquisition costs in fiscal year 2012 totaled $328,260,000 (including the $150,000,000 purchase of ADAPTIX, Inc., net of cash acquired), as compared to $14,680,000 during the prior year.

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