Acacia Research Reports Third Quarter 2008 Financial Results

Business Wire, Oct 23, 2008

NEWPORT BEACH, Calif. -- Acacia Research Corporation (Nasdaq: ACTG) today reported results for the three months ended September 30, 2008.

"Acacia Research consolidated revenues for the third quarter of 2008 were $13,796,000 compared to $9,544,000 in the year ago period. Trailing 12-month revenues were $41,963,000 compared to $47,907,000 at the end of the third quarter of 2007. Acacia Research reported a third quarter GAAP net loss from continuing operations of $2,420,000 or $0.08 per share, including non-cash charges of $3,101,000," commented Acacia Research Chairman and CEO, Paul Ryan.

"Acacia Research's subsidiaries entered into 20 new licensing agreements in the third quarter and generated revenues from 18 different licensing programs, including 8 new licensing programs. We have now generated revenues from 43 licensing programs. Acacia also acquired control of 5 new patent portfolios in the quarter for future licensing and ended the quarter controlling 99 patent portfolios."

"Acacia continues to grow its base of future revenue by adding new patent portfolios. As our licensing success grows, more companies are selecting us as their partner for the licensing of their patented technologies," concluded Mr. Ryan.

Acacia Research Corporation Consolidated Financial Results

For the Three Months Ended September 30, 2008 and 2007

Results from Continuing Operations

Acacia Research Corporation reported consolidated third quarter 2008 license fee revenues of $13,796,000, compared to $9,544,000 in the third quarter of 2007. Third quarter 2008 license fee revenues included license fees from 20 new licensing agreements and revenues from 18 of the Company's technology licensing programs, including initial license fee revenues for our Vehicle Anti-Theft Parking Systems technology, Online Auction Guarantee technology, Projector technology, Web Personalization technology, Vehicle maintenance technology, Physical Access Control technology, High Resolution Optics technology, and Software License Management technology. Third quarter 2008 license fee revenues also included fees from the licensing of our Audio Communications Fraud Detection technology, DMT[R] technology, Pop-up Internet Advertising technology, Portable Storage Devices with Links technology, Remote Management of Imaging Devices technology, Rule-Based Monitoring technology, Telematics technology, Image Resolution Enhancement technology, Electronic Address List Management technology and High Quality Image Processing technology. Third quarter 2007 revenues included license fees from 27 new licensing agreements and revenues from 7 of our technology licensing programs. To date, the Company has generated revenues from 43 of its technology licensing programs.

Trailing twelve-month license fee revenues were $42.0 million as of September 30, 2008, as compared to $37.7 million as of June 30, 2008, $36.5 million as of March 31, 2008, $52.6 million as of December 31, 2007 and $47.9 million as of September 30, 2007.

Acacia Research Corporation reported a third quarter 2008 GAAP net loss from continuing operations of $2,420,000, as compared to $4,674,000 in the third quarter of 2007. Included in third quarter 2008 results from continuing operations are non-cash charges totaling $3,101,000, comprised of non-cash stock compensation charges of $1,949,000 and non-cash patent amortization charges of $1,152,000. Third quarter 2007 results from continuing operations included non-cash charges of $3,555,000, comprised of non-cash stock compensation charges of $1,869,000, a write-off of a patent-related intangible asset of $235,000 and non-cash patent amortization charges of $1,451,000.

Marketing, general and administrative expenses include employee compensation and related personnel costs, including non-cash stock compensation expenses, office and facilities costs, legal and accounting professional fees, public relations, marketing, stock administration and other corporate costs, and patent related development, commercialization, research, consulting and maintenance costs. Third quarter 2008 marketing, general and administrative expenses increased to $5,865,000, including non-cash stock compensation charges of $1,949,000, from $5,454,000, including non-cash stock compensation charges of $1,869,000, in the comparable 2007 period. Excluding non-cash stock compensation charges, marketing, general and administrative expenses increased $331,000. The net increase was due primarily to the addition of licensing, business development and engineering personnel since the end of the comparable 2007 period, an increase in business development and licensing related consulting costs and an increase in corporate, general and administrative costs, all of which are reflective of the continued growth and expansion of our operating subsidiaries' intellectual property acquisition, licensing and enforcement businesses and related ongoing operations.

Operating expenses for the third quarter of 2008 and 2007 included inventor royalties expenses of $4,329,000 and $2,672,000, respectively, and contingent legal fees expenses of $3,934,000 and $2,997,000, respectively. The majority of our operating subsidiaries' patent portfolios are subject to agreements containing provisions granting to the original patent owner the right to receive inventor royalties based on future net revenues, as defined in the respective agreements, and may also be subject to contingent legal fee arrangements with external law firms engaged on a contingent fee basis. The economic terms of the inventor and contingent arrangements, if any, vary across the patent portfolios owned or controlled by our licensing subsidiaries. As such, inventor royalties 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 generating revenues each period. The third quarter 2008 increase in inventor royalties expense and contingent legal fees expense, as compared to the third quarter of 2007, was primarily due to the increase in license fee revenues recognized in the third quarter of 2008, as compared to the third quarter of 2007, as described above.