[April 17, 2014] |
|
Acacia Research Reports First Quarter Financial Results and Announces Payment of Quarterly Dividend
NEWPORT BEACH, Calif. --(Business Wire)--
Acacia Research Corporation(1) (Nasdaq: ACTG) today reported
results for the three months ended March 31, 2014.
-
Revenues in the first quarter of 2014 were $12,578,000, as compared to
$76,861,000 in the comparable prior year quarter.
-
GAAP net loss in the first quarter of 2014 was $24,421,000, or $0.51
per diluted share, as compared to GAAP net income of $5,113,000, or
$0.10 per diluted share for the comparable prior year quarter.
-
Non-GAAP net loss in the first quarter of 2014 was $5,184,000, or
$0.11 per diluted share, as compared to non-GAAP net income of
$22,710,000, or $0.46 per diluted share for the comparable prior year
quarter. See below for information regarding non-GAAP measures.
-
During the first quarter of 2014 we invested in 3 additional patent
portfolios.
-
Trailing twelve-month revenues as of the end of the first quarter of
2014 were $66,273,000, as compared to $228,548,000 as of the end of
the prior year quarter.
-
Cash and cash equivalents and investments totaled $228,993,000 as of
March 31, 2014 compared to $256,702,000 as of December 31, 2013.
Approval of Quarterly Dividend. Acacia Research Corporation also
announced today that its Board of Directors has approved a quarterly
cash dividend, payable in the amount of $0.125 per share, which will be
paid on May 30, 2014, to shareholders of record at the close of business
on May 1, 2014. Future cash dividends are expected to be paid on a
quarterly basis and will be at the discretion of the Board of Directors.
Consolidated Financial Results - Overview
Financial highlights and operating activities during the periods
presented included the following:
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
Revenues (in thousands)
|
|
|
|
|
$
|
12,578
|
|
|
|
|
|
$
|
76,861
|
Net income (loss) (in thousands)
|
|
|
|
|
$
|
(24,421
|
)
|
|
|
|
|
$
|
5,113
|
Non-GAAP net income (loss) (in thousands)
|
|
|
|
|
$
|
(5,184
|
)
|
|
|
|
|
$
|
22,710
|
Diluted earnings (loss) per share
|
|
|
|
|
$
|
(0.51
|
)
|
|
|
|
|
$
|
0.10
|
Pro forma non-GAAP net earnings (loss) per common share - diluted
|
|
|
|
|
$
|
(0.11
|
)
|
|
|
|
|
$
|
0.46
|
New agreements executed
|
|
|
|
|
20
|
|
|
|
|
|
29
|
Licensing and enforcement programs generating revenues
|
|
|
|
|
21
|
|
|
|
|
|
31
|
Licensing and enforcement programs with initial revenues
|
|
|
|
|
3
|
|
|
|
|
|
11
|
New patent portfolios
|
|
|
|
|
3
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2014, trailing twelve-month revenues were as follows (in
thousands):
|
|
|
|
|
As of Date:
|
|
Trailing Twelve-Month Revenues
|
|
% Change
|
|
|
|
|
|
March 31, 2014
|
|
$
|
66,273
|
|
(49
|
)%
|
December 31, 2013
|
|
$
|
130,556
|
|
(28
|
)%
|
September 30, 2013
|
|
$
|
181,755
|
|
(10
|
)%
|
June 30, 2013
|
|
$
|
201,174
|
|
(12
|
)%
|
March 31, 2013
|
|
$
|
228,548
|
|
-
|
%
|
|
|
Summary Financial Results
|
For the Three Months Ended March 31, 2014 and 2013
|
|
Revenues (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
Change
|
|
|
|
2014
|
|
|
2013
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
12,578
|
|
|
$
|
76,861
|
|
|
$
|
(64,283
|
)
|
|
|
(84
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New revenue agreements
|
|
|
20
|
|
|
29
|
|
|
-
|
|
|
|
-
|
|
Licensing and enforcement programs generating revenues
|
|
|
21
|
|
|
31
|
|
|
-
|
|
|
|
-
|
|
Licensing and enforcement programs with initial revenues
|
|
|
3
|
|
|
11
|
|
|
-
|
|
|
|
-
|
|
|
Revenues in the first quarter of 2014 decreased $64,283,000, or 84%, to
$12,578,000, as compared to $76,861,000 in the comparable prior year
quarter. In the first quarter of 2014, one licensee individually
accounted for 39% of revenues recognized, as compared to three licensees
individually accounting for 65%, 14% and 13% of revenues recognized
during the first quarter of 2013.
Cost of Revenues (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
Change
|
|
|
|
2014
|
|
|
2013
|
|
|
$
|
|
|
%
|
|
|
|
|
Inventor royalties
|
|
|
$
|
951
|
|
|
$
|
18,481
|
|
|
$
|
(17,530
|
)
|
|
|
(95
|
)%
|
Contingent legal fees
|
|
|
|
1,527
|
|
|
15,032
|
|
|
(13,505
|
)
|
|
|
(90
|
)%
|
|
First quarter 2014 total revenues, less inventor royalties expense and
contingent legal fees expense was $10,100,000, or 80% of first quarter
2014 revenues, as compared to $43,348,000, or 56% of revenues in the
comparable prior year quarter. The increase in total revenues, less
inventor royalties and contingent legal fees expense as a percentage of
total revenues was primarily due to, on average, a higher percentage of
revenues recognized during the three months ended March 31, 2014 having
no inventor royalty or contingent legal fee obligations and lower
overall average inventor royalty rates, as compared to the revenues
recognized during the three months ended March 31, 2013.
|
|
|
Three Months Ended March 31,
|
|
|
Change
|
|
|
|
2014
|
|
|
2013
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
Litigation and licensing expenses - patents
|
|
|
$
|
8,994
|
|
|
$
|
9,648
|
|
|
$
|
(654
|
)
|
|
|
(7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter 2014 litigation and licensing expenses decreased due
primarily to a minor decrease in litigation costs incurred, including
litigation support and third-party technical consulting expenses,
associated with ongoing and new licensing and enforcement programs
commenced since the end of the comparable prior year quarter. We expect
litigation and licensing expenses to continue to fluctuate period to
period in connection with our current and future patent partnering,
prosecution, licensing and enforcement activities.
|
|
|
Three Months Ended March 31,
|
|
|
Change
|
|
|
|
2014
|
|
|
2013
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
Amortization of patents
|
|
|
$
|
14,472
|
|
|
$
|
11,730
|
|
|
$
|
2,742
|
|
|
23
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter 2014 non-cash patent amortization charges increased due to
accelerated amortization related to patent portfolio write-downs
totaling $2,565,000 and an increase in quarterly amortization expense
for patent portfolios acquired since the end of the prior year period
totaling $981,000. The increase was partially offset by a decrease in
accelerated amortization related to the recoupment of upfront advances
to partners of $435,000 and scheduled amortization of $369,000.
Marketing, General and Administrative Expenses (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
Change
|
|
|
|
2014
|
|
|
2013
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
Marketing, general and administrative expenses
|
|
|
$
|
6,928
|
|
|
$
|
8,693
|
|
|
$
|
(1,765
|
)
|
|
|
(20
|
)%
|
Non-cash stock compensation expense - MG&A
|
|
|
4,765
|
|
|
5,158
|
|
|
(393
|
)
|
|
|
(8
|
)%
|
Total marketing, general and administrative expenses
|
|
|
$
|
11,693
|
|
|
$
|
13,851
|
|
|
$
|
(2,158
|
)
|
|
|
(16
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter 2014 marketing, general and administrative expenses
decreased due primarily to a decrease in variable performance-based
compensation costs and a decrease in other corporate, general and
administrative costs.
Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
Change
|
|
|
|
2014
|
|
|
2013
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
Benefit from (provision for) income taxes (in thousands)
|
|
|
$
|
1,372
|
|
|
|
$
|
(3,272
|
)
|
|
|
$
|
4,644
|
|
|
(142
|
)%
|
Effective tax rate
|
|
|
5
|
%
|
|
|
39
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The tax benefit for the first quarter of 2014 reflects the application
of an estimated annual effective tax rate to the GAAP pre-tax net loss
reported for the first quarter of 2014 and the impact of a valuation
allowance recorded for certain tax assets as of March 31, 2014.
Financial Condition (in thousands)
|
Summary Balance Sheet Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2014
|
|
|
December 31, 2013
|
|
|
|
|
|
|
|
Cash and cash equivalents and investments
|
|
|
|
|
$
|
228,993
|
|
|
$
|
256,702
|
Accounts receivable
|
|
|
|
|
13,540
|
|
|
6,341
|
Total assets
|
|
|
|
|
574,726
|
|
|
593,393
|
Accounts payable and accrued expenses
|
|
|
|
|
12,295
|
|
|
11,555
|
Accrued patent acquisition costs
|
|
|
|
|
19,250
|
|
|
4,000
|
Royalties and contingent legal fees payable
|
|
|
|
|
3,895
|
|
|
10,447
|
Total liabilities
|
|
|
|
|
39,506
|
|
|
31,195
|
|
|
|
|
|
|
|
|
|
Summary Cash Flow Information:
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
$
|
(20,432
|
)
|
|
|
|
|
$
|
16,825
|
|
Investing activities
|
|
|
|
|
|
33,315
|
|
|
|
|
|
|
(48,214
|
)
|
Financing activities
|
|
|
|
|
|
(6,165
|
)
|
|
|
|
|
|
2,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patent Acquisition Costs. Patent related acquisition costs paid
in the first quarter of 2014 totaled $987,000, as compared to $4,010,000
during the comparable prior year quarter. As of March 31, 2014, accrued
patent acquisition costs related to patent portfolios acquired during
the first quarter of 2014 totaled $15,250,000, which was paid in the
second quarter of 2014.
Quarterly Dividends Paid. Cash outflows from financing activities
for the first quarter of 2014 included a quarterly cash dividend of
$0.125 per share, paid on March 31, 2014 to shareholders of record at
close of business on March 3, 2014, totaling $6,255,000.
See "Business Highlights and Recent Developments" below for a summary of
patent portfolio acquisitions during the current quarter.
Refer to the section below entitled "Summary Financial Information" for
additional summary consolidated balance sheet, statements of operations
and cash flow information as of and for the applicable periods presented.
INFORMATION ABOUT NON-GAAP FINANCIAL MEASURES
As used herein, "GAAP" refers to accounting principles generally
accepted in the United States of America. To supplement our consolidated
financial statements prepared and presented in accordance with GAAP,
this earnings release includes financial measures, including (1)
non-GAAP net income and (2) non-GAAP Earnings Per Share ("EPS"), that
are considered non-GAAP financial measures as defined in Rule 101 of
Regulation G promulgated by the Securities and Exchange Commission.
Generally, a non-GAAP financial measure is a numerical measure of a
company's historical or future performance, financial position, or cash
flows that either excludes or includes amounts that are not normally
excluded or included in the most directly comparable measure calculated
and presented in accordance with GAAP. The presentation of this non-GAAP
financial information is not intended to be considered in isolation or
as a substitute for, or superior to, the financial information prepared
and presented in accordance with GAAP.
We use these non-GAAP financial measures for internal financial and
operational decision making purposes and as a means to evaluate
period-to-period comparisons of the performance and results of
operations of our core business. Our management believes that these
non-GAAP financial measures provide meaningful supplemental information
regarding the performance of our core business by excluding non-cash
stock compensation charges, non-cash patent amortization charges and
excess benefit related non-cash tax expense, that may not be indicative
of our recurring core business operating results. These non-GAAP
financial measures also facilitate management's internal planning and
comparisons to our historical performance and liquidity. We believe
these non-GAAP financial measures are useful to investors as they allow
for greater transparency with respect to key metrics used by management
in its financial and operational decision making and are used by our
institutional investors and the analyst community to help them analyze
the performance and operational results of our core business.
Non-GAAP Net income and EPS. We define non-GAAP net income as net
income calculated in accordance with GAAP, plus non-cash stock
compensation charges, non-cash patent amortization charges and excess
benefit related non-cash tax expense. Non-GAAP EPS is defined as
non-GAAP net income divided by the weighted average outstanding shares,
on a fully-diluted basis, calculated in accordance with GAAP, for the
respective reporting period.
Due to the inherent volatility in stock prices, the use of estimates and
assumptions in connection with the valuation and expensing of
share-based awards and the variety of award types that companies can
issue under FASB ASC Topic 718, management believes that providing a
non-GAAP financial measure that excludes non-cash stock compensation
allows investors to make meaningful comparisons between our recurring
core business operating results and those of other companies, as well as
providing our management with a critical tool for financial and
operational decision making and for evaluating our own period-to-period
recurring core business operating results. Similarly, due to the
variability associated with the timing and amount of patent acquisition
payments and estimates inherent in the capitalization and amortization
of patent acquisition costs, management believes that providing a
non-GAAP financial measure that excludes non-cash patent amortization
charges allows investors to make meaningful comparisons between our
recurring core business operating results and those of other companies,
and also provides our management with a useful tool for financial and
operational decision making and for evaluating our own period-to-period
recurring core business operating results. Lastly, for financial
reporting purposes, tax expense is required to be calculated without the
excess tax benefit related to the exercise and vesting of equity-based
incentive awards, however, the deduction related to the exercise and
vesting of equity-based incentive awards is available to offset taxable
income on our consolidated tax returns. Accordingly, the non-cash tax
expense calculated without the excess benefit for financial statement
purposes is credited to additional paid-in capital, not taxes payable,
and does not represent a cash tax obligation. Management believes that
providing a non-GAAP financial measure that excludes excess benefit
related non-cash tax expense allows investors to assess our net results
and the economic impact of income taxes based largely on cash tax
obligations, make more meaningful comparisons between our recurring core
business net results and those of other companies, and also provides our
management with a useful tool for financial and operational decision
making and for evaluating our own period-to-period recurring core
business net results.
There are a number of limitations related to the use of non-GAAP net
income and EPS versus net income and EPS calculated in accordance with
GAAP. For example, non-GAAP net income excludes significant non-cash
stock compensation charges, non-cash patent amortization charges and
excess benefit related non-cash tax expense that are recurring, and will
continue to be recurring for the foreseeable future. In addition,
non-cash stock compensation is a critical component of our employee
compensation programs and non-cash patent amortization reflects the cost
of certain patent portfolio acquisitions, amortized on a straight-line
basis over the estimated economic useful life of the respective patent
portfolio, and may reflect the acceleration of amortization related to
recoupable up-front patent portfolio acquisition costs. Management
compensates for these limitations by providing specific information
regarding the GAAP amounts excluded from non-GAAP net income and EPS and
evaluating non-GAAP net income and EPS in conjunction with net income
and EPS calculated in accordance with GAAP.
The accompanying table below provides a reconciliation of the non-GAAP
financial measures presented to the most directly comparable financial
measures prepared in accordance with GAAP.
______________________________________________
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 (877) 419-6594 for domestic
callers and (719) 325-4841 for international callers, both of whom will
need to enter the conference ID 2173616 when prompted. A replay of the
audio presentation will be available for 30 days at (888) 203-1112 for
domestic callers and (719) 457-0820 for international callers, both of
whom will need to enter the Conference ID 2173616 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
Founded in 1993, Acacia Research Corporation (ACTG) is the industry
leader in patent licensing. An intermediary in the patent marketplace,
Acacia partners with inventors and patent owners to unlock the financial
value in their patented inventions. Acacia bridges the gap between
invention and application, facilitating efficiency and delivering
monetary rewards to the patent owner.
Information about Acacia Research Corporation and its subsidiaries is
available at 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
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
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
Revenues
|
|
|
|
|
$
|
12,578
|
|
|
|
|
|
$
|
76,861
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
Inventor royalties
|
|
|
|
|
|
951
|
|
|
|
|
|
|
18,481
|
|
Contingent legal fees
|
|
|
|
|
|
1,527
|
|
|
|
|
|
|
15,032
|
|
Litigation and licensing expenses - patents
|
|
|
|
|
|
8,994
|
|
|
|
|
|
|
9,648
|
|
Amortization of patents
|
|
|
|
|
|
14,472
|
|
|
|
|
|
|
11,730
|
|
Marketing, general and administrative expenses (including non-cash
stock compensation expense of $4,765 for the three months ended
March 31, 2014, and $5,158 for the three months ended March 31, 2013)
|
|
|
|
|
|
11,693
|
|
|
|
|
|
|
13,851
|
|
Research, consulting and other expenses - business development
|
|
|
|
|
|
992
|
|
|
|
|
|
|
1,024
|
|
Total operating costs and expenses
|
|
|
|
|
|
38,629
|
|
|
|
|
|
|
69,766
|
|
Operating income (loss)
|
|
|
|
|
|
(26,051
|
)
|
|
|
|
|
|
7,095
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income
|
|
|
|
|
|
109
|
|
|
|
|
|
|
1,290
|
|
Income (loss) before benefit from (provision for) income taxes
|
|
|
|
|
|
(25,942
|
)
|
|
|
|
|
|
8,385
|
|
Benefit from (provision for) income taxes
|
|
|
|
|
|
1,372
|
|
|
|
|
|
|
(3,272
|
)
|
Net income (loss) including noncontrolling interests in operating
subsidiaries
|
|
|
|
|
|
(24,570
|
)
|
|
|
|
|
|
5,113
|
|
Net loss attributable to noncontrolling interests in operating
subsidiaries
|
|
|
|
|
|
149
|
|
|
|
|
|
|
-
|
|
Net income (loss) attributable to Acacia Research Corporation
|
|
|
|
|
$
|
(24,421
|
)
|
|
|
|
|
$
|
5,113
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common stockholders - basic
|
|
|
|
|
$
|
(24,628
|
)
|
|
|
|
|
$
|
4,973
|
|
Net income (loss) attributable to common stockholders - diluted
|
|
|
|
|
$
|
(24,628
|
)
|
|
|
|
|
$
|
4,974
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common share
|
|
|
|
|
$
|
(0.51
|
)
|
|
|
|
|
$
|
0.10
|
|
Diluted income (loss) per common share
|
|
|
|
|
$
|
(0.51
|
)
|
|
|
|
|
$
|
0.10
|
|
Weighted average number of shares outstanding, basic
|
|
|
|
|
|
48,329,375
|
|
|
|
|
|
|
47,859,774
|
|
Weighted average number of shares outstanding, diluted
|
|
|
|
|
|
48,329,375
|
|
|
|
|
|
|
48,104,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 March 31,
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss)
|
|
|
|
|
$
|
(24,421
|
)
|
|
|
|
|
$
|
5,113
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash stock compensation
|
|
|
|
|
4,765
|
|
|
|
|
|
5,158
|
Non-cash patent amortization
|
|
|
|
|
14,472
|
|
|
|
|
|
11,730
|
Excess benefit related non-cash tax expense
|
|
|
|
|
-
|
|
|
|
|
|
709
|
Non-GAAP net income (loss)
|
|
|
|
|
$
|
(5,184
|
)
|
|
|
|
|
$
|
22,710
|
Pro forma non-GAAP net earnings (loss) per common share - diluted
|
|
|
|
|
$
|
(0.11
|
)
|
|
|
|
|
$
|
0.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACACIA RESEARCH CORPORATION
|
SUMMARY FINANCIAL INFORMATION, (CONTINUED)
|
(In thousands)
|
(Unaudited)
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2014
|
|
|
|
|
December 31, 2013
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
133,403
|
|
|
|
|
|
$
|
126,685
|
Short-term investments
|
|
|
|
|
95,590
|
|
|
|
|
|
130,017
|
Accounts receivable
|
|
|
|
|
13,540
|
|
|
|
|
|
6,341
|
Deferred income tax
|
|
|
|
|
3,139
|
|
|
|
|
|
3,139
|
Prepaid expenses and other current assets
|
|
|
|
|
7,617
|
|
|
|
|
|
7,546
|
Total current assets
|
|
|
|
|
253,289
|
|
|
|
|
|
273,728
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net of accumulated depreciation and
amortization
|
|
|
|
|
782
|
|
|
|
|
|
766
|
Patents, net of accumulated amortization
|
|
|
|
|
290,197
|
|
|
|
|
|
288,432
|
Goodwill
|
|
|
|
|
30,149
|
|
|
|
|
|
30,149
|
Other assets
|
|
|
|
|
309
|
|
|
|
|
|
318
|
|
|
|
|
|
$
|
574,726
|
|
|
|
|
|
$
|
593,393
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
|
|
$
|
12,295
|
|
|
|
|
|
$
|
11,555
|
Accrued patent acquisition costs
|
|
|
|
|
19,250
|
|
|
|
|
|
4,000
|
Royalties and contingent legal fees payable
|
|
|
|
|
3,895
|
|
|
|
|
|
10,447
|
Total current liabilities
|
|
|
|
|
35,440
|
|
|
|
|
|
26,002
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
|
|
3,747
|
|
|
|
|
|
4,874
|
Other liabilities
|
|
|
|
|
319
|
|
|
|
|
|
319
|
Total liabilities
|
|
|
|
|
39,506
|
|
|
|
|
|
31,195
|
Total stockholders' equity
|
|
|
|
|
535,220
|
|
|
|
|
|
562,198
|
|
|
|
|
|
$
|
574,726
|
|
|
|
|
|
$
|
593,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACACIA RESEARCH CORPORATION
|
SUMMARY FINANCIAL INFORMATION, (CONTINUED)
|
(In thousands)
|
(Unaudited)
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) including noncontrolling interests in operating
subsidiaries
|
|
|
|
|
$
|
(24,570
|
)
|
|
|
|
|
$
|
5,113
|
|
Adjustments to reconcile net income (loss) including noncontrolling
interests in operating subsidiaries to net cash provided by (used
in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
14,552
|
|
|
|
|
|
11,774
|
|
Non-cash stock compensation
|
|
|
|
|
4,765
|
|
|
|
|
|
5,158
|
|
Excess tax benefits from stock-based compensation
|
|
|
|
|
-
|
|
|
|
|
|
(709
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
|
(7,199
|
)
|
|
|
|
|
(35,508
|
)
|
Prepaid expenses and other assets
|
|
|
|
|
(62
|
)
|
|
|
|
|
(1,661
|
)
|
Accounts payable and accrued expenses
|
|
|
|
|
740
|
|
|
|
|
|
8,430
|
|
Royalties and contingent legal fees payable
|
|
|
|
|
(6,552
|
)
|
|
|
|
|
24,228
|
|
Deferred taxes, net
|
|
|
|
|
(2,106
|
)
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
|
|
(20,432
|
)
|
|
|
|
|
16,825
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
|
(96
|
)
|
|
|
|
|
(241
|
)
|
Purchase of available-for-sale investments
|
|
|
|
|
(14,234
|
)
|
|
|
|
|
(97,225
|
)
|
Maturities and sales of available-for-sale investments
|
|
|
|
|
48,632
|
|
|
|
|
|
53,262
|
|
Patent acquisition costs paid
|
|
|
|
|
(987
|
)
|
|
|
|
|
(4,010
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used) in investing activities
|
|
|
|
|
33,315
|
|
|
|
|
|
(48,214
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
Dividends paid to shareholders
|
|
|
|
|
(6,255
|
)
|
|
|
|
|
-
|
|
Contributions from noncontrolling interests in operating subsidiary
|
|
|
|
|
-
|
|
|
|
|
|
1,920
|
|
Excess tax benefits from stock-based compensation
|
|
|
|
|
-
|
|
|
|
|
|
709
|
|
Proceeds from exercises of stock options
|
|
|
|
|
90
|
|
|
|
|
|
117
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
|
|
(6,165
|
)
|
|
|
|
|
2,746
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
|
|
6,718
|
|
|
|
|
|
(28,643
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning
|
|
|
|
|
126,685
|
|
|
|
|
|
221,804
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, ending
|
|
|
|
|
$
|
133,403
|
|
|
|
|
|
$
|
193,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Highlights and Recent Developments(2)
Business highlights of the first quarter of 2014 and recent developments
include the following:
Revenues for the three months ended March 31, 2014 included fees from
the following technology licensing and enforcement programs:
•
|
|
3G & 4G Wireless Patents
|
|
|
•
|
|
Messaging technology
|
•
|
|
4G Wireless technology
|
|
|
•
|
|
Online Gaming technology
|
•
|
|
Audio Communications Fraud Detection technology
|
|
|
•
|
|
Reflective and Radiant Barrier Insulation technology
|
•
|
|
Broadband Communications technology
|
|
|
•
|
|
Semiconductor Packaging technology
|
•
|
|
Computer-Aided Design technology*
|
|
|
•
|
|
Software Activation technology
|
•
|
|
Core Fiber Optic Network Architectures technology
|
|
|
•
|
|
Super Resolutions Microscopy technology*
|
•
|
|
DMT technology
|
|
|
•
|
|
Suture Anchors technology
|
•
|
|
Electronic Access Control technology*
|
|
|
•
|
|
Telematics technology
|
•
|
|
Gas Modulation Control Systems technology
|
|
|
•
|
|
Video Analytics for Security technology
|
•
|
|
Improved Lighting technology
|
|
|
•
|
|
Wireless Monitoring technology
|
•
|
|
Interstitial and Pop-Up Internet Advertising technology
|
|
|
|
|
|
________________________________________ * Initial revenues
recognized during the three months ended March 31, 2014.
-
3D Design Solutions LLC settled litigation with Cadence Design
Systems, Inc. that was pending in the United States District Court for
the Northern District of Texas.
-
Adaptix, Inc. resolved the dispute with Motorola Mobility LLC and
Motorola obtained certain limited rights to the Adaptix patent
portfolio. This agreement resolved the dispute between the parties
currently pending in the United States District Court for the Northern
District of California, Civil Action No. 5:13-cv-01774.
-
Body Science LLC entered into a settlement agreement with Koninklijke
Philips N.V. regarding wireless medical diagnostic and monitoring
systems. The agreement resolved litigation that was pending in the
United States District Court for the District of Massachusetts.
-
Bonutti Skeletal Innovations LLC entered into a settlement and patent
license agreement with Biomet, Inc., Biomet Sports Medicine LLC,
Biomet Manufacturing LLC (formerly doing business as Biomet
Manufacturing Corp.). The agreement resolved litigation pertaining to
suture anchors and platelet concentration that was pending in the
United States District Court for the Northern District of Indiana.
-
Brandywine Communications Technologies LLC entered into a settlement
and patent license agreement with CenturyTel Broadband Services LLC,
and Qwest Corporation. The agreement resolved all disputes between
Brandywine and certain Century Link affiliates pending in the United
States District Court for the Middle District of Florida, Civil Action
No. 6:12-cv-286-CEH-DAB.
-
Brandywine Communications Technologies LLC entered into a settlement
and patent license agreement with Windstream Corporation and Allworx
Corporation. The agreement resolved litigation that was pending in the
United States District Court for the District of Delaware.
-
Brandywine Communications Technologies LLC entered into a patent
license and settlement agreement with Toshiba Corporation. The
agreement resolved litigation that was pending in the United States
Court for the Central District of California.
-
Brilliant Optical Solutions LLC entered into a settlement and patent
license agreement with Fairpoint Communications, Inc. The agreement
resolved litigation that was pending in the United States District
Court for the Western District of Missouri.
-
All disputes and issues between Cell and Network Selection LLC and
Motorola Mobility LLC have been resolved.
-
Cell and Network Selection LLC entered into a settlement and patent
license agreement with Huawei Technologies Co., Ltd. This agreement
resolved all disputes between Cell and Network Selection LLC and
certain Huawei Technologies Co., Ltd. affiliates pending in the United
States District Court for the Eastern District of Texas, Civil Action
No. 6:13-cv-00404.
-
Chip Packaging Solutions LLC entered into a settlement and patent
license agreement with Sandisk Corporation. The agreement resolved
litigation that was pending in the United States District Court for
the Central District of California.
-
Computer Software Protection LLC entered into a settlement and patent
license agreement with Nuance Communications, Inc. The agreement
resolves litigation that was pending in the United States District
Court for the District of Delaware.
-
Criminal Activity Surveillance LLC dismissed the litigation pending in
the United States District Court for the Southern District of Texas
against Behavioral Recognition Systems, Inc. covering patents directed
to video analytics used in the field of security.
-
GT Gaming LLC entered into settlement and patent license agreements
with Big Viking Games, Inc., CIE Games, Inc., and Digital Chocolate,
Inc. The agreement resolved litigation that was pending in the United
States District Court for the Southern District of California.
-
Light Transformation Technologies LLC entered into a settlement and
patent license agreement with Feit Electric Company, Inc. The
agreement resolved litigation that was pending in the United States
District Court for the Eastern District of Texas.
-
O.S. Security LLC entered into a settlement and patent license
agreement with Videx, Inc. The agreement resolves litigation that was
pending in the United States District Court for the Northern District
of Illinois.
-
Super Resolution Technologies LLC entered into a settlement and patent
license agreement with GE Healthcare Biosciences Corp. The agreement
resolved litigation that was pending in the United States District
Court for the Northern District of Texas.
-
Unified Messaging Solutions LLC subsidiary has entered into a
settlement agreement with PNC Bank, N.A. The agreement resolves
litigation that was pending in the United States District Court for
the Northern District of Illinois.
-
Acacia Research Group LLC and its affiliates continued their patent
and patent rights partnering and acquisition activities adding 3 new
patent portfolios in the first quarter of 2014, including the
following:
-
In February 2014, partnered with a leading research institute to
monetize the institute's patents relating to ceramics and
associated manufacturing processes for medical devices.
-
In March 2014, acquired US patents and foreign counterparts
related to the use of shared memory in multimedia processing
systems such as mobile phones, tablets and other consumer
electronic devices.
_______________________
(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.
|
|
(2)
|
|
Acacia Research Group LLC, 3D Design Solutions LLC, Adaptix, Inc.,
Body Science LLC, Bonutti Skeletal Innovations LLC, Brandywine
Communications Technologies LLC, Brilliant Optical Solutions LLC,
Cell and Network Selection LLC, Chip Packaging Solutions LLC,
Computer Software Protection LLC, Criminal Activity Surveillance
LLC, GT Gaming LLC, Light Transformation Technologies LLC, O.S.
Security LLC, Super Resolution Technologies LLC, Unified Messaging
Solutions LLC are wholly and majority-owned operating subsidiaries
of Acacia Research Corporation.
|
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