Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 5-May-14 | |
Entity Information [Line Items] | ' | ' |
Entity Registrant Name | 'ACACIA RESEARCH CORP | ' |
Entity Central Index Key | '0000934549 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Amendment Flag | 'false | ' |
Entity Common Stock, Shares Outstanding | ' | 50,062,790 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
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 |
Total assets | 574,726 | 593,393 |
Current liabilities: | ' | ' |
Accounts payable and accrued expenses | 12,295 | 11,555 |
Accrued patent investment 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 |
Commitments and contingencies (Note 5) | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 50,041,123 and 49,385,057 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively | 50 | 49 |
Treasury stock, at cost, 1,729,408 shares as of March 31, 2014 and December 31, 2013 | -34,640 | -34,640 |
Additional paid-in capital | 650,934 | 653,314 |
Accumulated comprehensive loss | -976 | -947 |
Accumulated deficit | -86,487 | -62,066 |
Total Acacia Research Corporation stockholders' equity | 528,881 | 555,710 |
Noncontrolling interests in operating subsidiaries | 6,339 | 6,488 |
Total stockholders' equity | 535,220 | 562,198 |
Total liabilities and stockholders' equity | $574,726 | $593,393 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Stockholders' Equity: | ' | ' |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 50,041,123 | 49,385,057 |
Common stock, shares outstanding | 50,041,123 | 49,385,057 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Treasury Stock, Shares | 1,729,408 | 1,729,408 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Revenues | $12,578 | $76,861 |
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 |
Interest income | 556 | 442 |
Net gain (loss) on investments | -447 | 848 |
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 | 0 |
Net income (loss) attributable to Acacia Research Corporation | -24,421 | 5,113 |
Net income (loss) available to common stockholders, basic | -24,628 | 4,973 |
Net income (loss) available 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 |
Common Stock, Dividends, Per Share, Cash Paid | $0.13 | $0 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (Parenthetical) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Non-cash stock compensation | $4,765 | $5,158 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Loss) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Net income (loss) attributable to Acacia Research Corporation | $24,421 | ($5,113) |
Other comprehensive income (loss): | ' | ' |
Unrealized gain (loss) on short-term investments, net of tax of $0 | -476 | 1,697 |
Reclassification adjustment for (gains) losses included in net income | 447 | -848 |
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest | -24,450 | 5,962 |
Comprehensive (Income) Loss, Net of Tax, Attributable to Noncontrolling Interest | 0 | 0 |
Comprehensive income (loss) attributable to Acacia Research Corporation | ($24,450) | $5,962 |
Consolidated_Statements_of_Com1
Consolidated Statements of Comprehensive Income (Loss) (Parentheticals) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax | $0 | $0 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows Statement (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 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 | 0 | 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 / costs | 740 | 8,430 |
Royalties and contingent legal fees payable | -6,552 | 24,228 |
Deferred income tax | -2,106 | 0 |
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 sale of available-for-sale investments | 48,632 | 53,262 |
Investments in patents/ patent rights | -987 | -4,010 |
Net cash provided by (used in) investing activities | 33,315 | -48,214 |
Cash flows from financing activities: | ' | ' |
Payments of Dividends | -6,255 | 0 |
Contributions from noncontrolling interests in operating subsidiary | 0 | 1,920 |
Excess tax benefits from stock-based compensation | 0 | 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 |
Patent acquisition costs included in accrued expenses | $15,250 | $0 |
Description_of_Business_and_Ba
Description of Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2014 | |
Description of Business and Basis of Presentation [Abstract] | ' |
Description of Business and Basis of Presentation | ' |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | |
Description of Business. As used herein, “Acacia” and the “Company” refer to Acacia Research Corporation and/or its wholly and majority-owned and controlled operating subsidiaries. All patent investment, prosecution, licensing and enforcement activities are conducted solely by certain of Acacia’s wholly and majority-owned and controlled operating subsidiaries. | |
Acacia’s operating subsidiaries invest in, license and enforce patented technologies. Acacia’s operating subsidiaries partner with inventors and patent owners, applying their legal and technology expertise to patent assets to unlock the financial value in their patented inventions. Acacia is an intermediary in the patent marketplace, bridging the gap between invention and application, facilitating efficiency and delivering monetary rewards to patent owners. | |
Acacia’s operating subsidiaries generate revenues and related cash flows from the granting of intellectual property rights for the use of patented technologies that its operating subsidiaries control or own. Acacia’s operating subsidiaries assist patent owners with the prosecution and development of their patent portfolios, the protection of their patented inventions from unauthorized use, the generation of licensing revenue from users of their patented technologies and, where necessary, with the enforcement against unauthorized users of their patented technologies through the filing of patent infringement litigation. | |
Acacia’s operating subsidiaries are principals in the licensing and enforcement effort, obtaining control of the rights in the patent portfolio, or control of the patent portfolio outright. Acacia’s operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a wide variety of industries. | |
Basis of Presentation. The accompanying consolidated financial statements include the accounts of Acacia and its wholly and majority-owned and controlled subsidiaries. Material intercompany transactions and balances have been eliminated in consolidation. Noncontrolling interests in Acacia’s majority-owned and controlled operating subsidiaries (“noncontrolling interests”) are separately presented as a component of stockholders’ equity in the consolidated statements of financial position for the applicable periods presented. Consolidated net income (loss) is adjusted to include the net (income) loss attributed to noncontrolling interests in the consolidated statements of operations. Refer to the accompanying consolidated financial statements for total noncontrolling interests, net (income) loss attributable to noncontrolling interests and contributions from and distributions to noncontrolling interests, for the applicable periods presented. | |
A wholly owned subsidiary of Acacia is the general partner of the Acacia Intellectual Property Fund, L.P. (the “Acacia IP Fund”), which was formed in August 2010. The Acacia IP Fund is included in the Company’s consolidated financial statements for the periods presented, as Acacia’s wholly owned subsidiary, as the majority owner and general partner, has the ability to control the operations and activities of the Acacia IP Fund. | |
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnotes required by accounting principles generally accepted in the United States of America in annual financial statements have been omitted or condensed in accordance with quarterly reporting requirements of the Securities and Exchange Commission (“SEC”). These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2013, as reported by Acacia in its Annual Report on Form 10-K. The year-end consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. | |
The consolidated financial statements of Acacia include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of Acacia’s consolidated financial position as of March 31, 2014, and results of its operations and its cash flows for the interim periods presented. The consolidated results of operations for the three months ended March 31, 2014 are not necessarily indicative of the results to be expected for the entire fiscal year. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||||||
Summary of Significant Accounting Policies | ' | |||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||||
Revenue Recognition. Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) all obligations have been substantially performed pursuant to the terms of the arrangement, (iii) amounts are fixed or determinable, and (iv) the collectibility of amounts is reasonably assured. | ||||||||||||||||
In general, revenue arrangements provide for the payment of contractually determined fees in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by Acacia’s operating subsidiaries. These rights typically include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled by Acacia’s operating subsidiaries, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined, relatively short period of time, with the licensee possessing the right to renew the agreement at the end of each contractual term for an additional minimum upfront payment. Pursuant to the terms of these agreements, Acacia’s operating subsidiaries have no further obligation with respect to the grant of the non-exclusive retroactive and future licenses, covenants-not-to-sue, releases, and other deliverables, including no express or implied obligation on Acacia’s operating subsidiaries’ part to maintain or upgrade the technology, or provide future support or services. Generally, the agreements provide for the grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the agreement, or upon receipt of the minimum upfront payment for term agreement renewals. As such, the earnings process is complete and revenue is recognized upon the execution of the agreement, when collectibility is reasonably assured, or upon receipt of the minimum upfront fee for term agreement renewals, and when all other revenue recognition criteria have been met. | ||||||||||||||||
Cost of Revenues. Cost of revenues include the costs and expenses incurred in connection with Acacia’s patent licensing and enforcement activities, including inventor royalties paid to original patent owners, contingent legal fees paid to external patent counsel, other patent-related legal expenses paid to external patent counsel, licensing and enforcement related research, consulting and other expenses paid to third parties and the amortization of patent-related investment costs. These costs are included under the caption “Cost of revenues” in the accompanying consolidated statements of operations. | ||||||||||||||||
Inventor Royalties and Contingent Legal Expenses. Inventor royalties are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In certain instances, pursuant to the terms of the underlying inventor agreements, upfront advances paid to patent owners by Acacia’s operating subsidiaries are recoverable from future net revenues. Patent costs that are recoverable from future net revenues are amortized over the estimated economic useful life of the related patents, or as the prepaid royalties are earned by the inventor, as appropriate, and the related expense is included in amortization expense in the consolidated statements of operations. Any unamortized upfront advances recovered from net revenues are expensed in the period recovered, and included in amortization expense in the consolidated statements of operations. | ||||||||||||||||
Contingent legal fees are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal fees are paid; however, Acacia’s operating subsidiaries may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services agreement. Legal fees advanced by contingent law firms that are required to be paid in the event that no license recoveries are obtained are expensed as incurred and included in liabilities in the consolidated balance sheets. | ||||||||||||||||
Use of Estimates. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Acacia believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, stock-based compensation expense, impairment of marketable securities and intangible assets, the determination of the economic useful life of amortizable intangible assets, income taxes and valuation allowances against net deferred tax assets and the application of the acquisition method of accounting for business combinations, require its most difficult, subjective or complex judgments. | ||||||||||||||||
Concentrations. One licensee individually accounted for 39% of revenues recognized during the three months ended March 31, 2014, and three licensees individually accounted for 65%, 14% and 13% of revenues recognized during the three months ended March 31, 2013. Two licensees individually represented approximately 43% and 28% of accounts receivable at March 31, 2014. Two licensees individually represented approximately 60% and 22% of accounts receivable at December 31, 2013. For the three months ended March 31, 2014, 16% of revenues were attributable to licensees domiciled in foreign jurisdictions. For the three months ended March 31, 2013, 15% of revenues were attributable to licensees domiciled in foreign jurisdictions. | ||||||||||||||||
Stock-Based Compensation. The compensation cost for all stock-based awards is measured at the grant date, based on the fair value of the award, and is recognized as an expense, on a straight-line basis, over the employee’s requisite service period (generally the vesting period of the equity award) which is generally two to four years. The fair value of restricted stock and restricted stock unit awards is determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. Stock-based compensation expense is recorded only for those awards expected to vest using an estimated forfeiture rate. | ||||||||||||||||
Fair Value Measurements. U.S. generally accepted accounting principles define fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three-level hierarchy of valuation techniques established to measure fair value is defined as follows: | ||||||||||||||||
● | Level 1 - Observable Inputs: Quoted prices in active markets for identical investments; | |||||||||||||||
● | Level 2 - Pricing Models with Significant Observable Inputs: Other significant observable inputs, including quoted prices for similar investments, interest rates, credit risk, etc.; and | |||||||||||||||
● | Level 3 - Unobservable Inputs: Significant unobservable inputs, including the entity’s own assumptions in determining the fair value of investments. | |||||||||||||||
Whenever possible, the Company is required to use observable market inputs (Level 1 - quoted market prices) when measuring fair value. | ||||||||||||||||
Investments in Marketable Securities. Investments in securities with original maturities of greater than three months and less than one year and other investments representing amounts that are available for current operations are classified as short-term investments, unless there are indications that such investments may not be readily sold in the short term. The fair values of these investments approximate their carrying values. At March 31, 2014 and December 31, 2013, all of Acacia’s short term investments were classified as available-for-sale, which are reported at fair value on a recurring basis using significant observable inputs (Level 1), with related unrealized gains and losses in the value of such securities recorded as a separate component of comprehensive income (loss) in stockholders’ equity until realized. Realized and unrealized gains and losses are recorded based on the specific identification method. Interest on all securities is included in interest income. | ||||||||||||||||
Short-term marketable securities for the periods presented were comprised of the following (in thousands): | ||||||||||||||||
March 31, 2014 | ||||||||||||||||
Security Type | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
U.S. government fixed income securities(1) | $ | 96,573 | $ | 14 | $ | (997 | ) | $ | 95,590 | |||||||
Total short-term investments | $ | 96,573 | $ | 14 | $ | (997 | ) | $ | 95,590 | |||||||
_____________________________________ | ||||||||||||||||
(1) Maturity dates ranging from 2014 to 2015. | ||||||||||||||||
December 31, 2013 | ||||||||||||||||
Security Type | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
U.S. government fixed income securities | $ | 130,971 | $ | 21 | $ | (975 | ) | $ | 130,017 | |||||||
Total short-term investments | $ | 130,971 | $ | 21 | $ | (975 | ) | $ | 130,017 | |||||||
The gross unrealized loss can be primarily attributed to a combination of market conditions as well as the demand for and duration of the U.S. government fixed income securities. The Company has the ability to hold these securities until maturity, currently has no intent to sell, there is no requirement to sell and the Company believes that it can recover the amortized cost of these investments. The Company has found no evidence of impairment due to credit losses in its portfolio. Therefore, these unrealized losses were recorded in other comprehensive income (loss). However, the Company cannot provide any assurance that its portfolio of short-term marketable securities will not be impacted by adverse conditions in the financial markets, which may require the Company in the future to record an impairment charge for credit losses which could adversely impact its financial results. | ||||||||||||||||
Patents. Patents includes the cost of patents or patent rights (hereinafter, collectively “patents”), obtained from third-parties or obtained in connection with business combinations. Capitalized patent costs are amortized utilizing the straight-line method over their remaining economic useful lives, ranging from one to ten years. Certain patent application and prosecution costs incurred to secure additional patent claims, that based on management’s estimates are deemed to be recoverable, are capitalized and amortized over the remaining estimated economic useful life of the related patent portfolio. | ||||||||||||||||
Impairment of Long-lived Assets. Acacia reviews long-lived assets and intangible assets for potential impairment annually (quarterly for patents) and when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the event the sum of the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. | ||||||||||||||||
Fair value is generally estimated using the “Income Approach,” focusing on the estimated future net income-producing capability of the patent portfolios over the estimated remaining economic useful life. Estimates of future after-tax cash flows are converted to present value through “discounting,” including an estimated rate of return that accounts for both the time value of money and investment risk factors. Estimated cash inflows are typically based on estimates of reasonable royalty rates for the applicable technology, applied to estimated market share data. Estimated cash outflows are based on existing contractual obligations, such as contingent legal fee and inventor royalty obligations, applied to estimated license fee revenues, in addition to other estimates of out-of-pocket expenses associated with a specific patent portfolio’s licensing and enforcement program. The analysis also contemplates consideration of current information about the patent portfolio including, status and stage of litigation, periodic results of the litigation process, strength of the patent portfolio, technology coverage and other pertinent information that could impact future net cash flows. | ||||||||||||||||
Income Taxes. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in Acacia’s consolidated financial statements or consolidated tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. | ||||||||||||||||
The provision for income taxes for interim periods is determined using an estimate of Acacia’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, Acacia updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, a cumulative adjustment is made. | ||||||||||||||||
A reconciliation of the federal statutory income tax rate and the estimated effective income tax rate for the periods presented is as follows: | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Statutory federal tax rate - benefit (expense) | 35 | % | (35 | )% | ||||||||||||
Noncontrolling interests in operating subsidiaries | (1 | )% | — | % | ||||||||||||
Nondeductible permanent items | (3 | )% | (5 | )% | ||||||||||||
Other | (1 | )% | — | % | ||||||||||||
Valuation allowance | (25 | )% | 1 | % | ||||||||||||
5 | % | (39 | )% | |||||||||||||
The change in the valuation allowance for the three months ended March 31, 2014 included valuation allowances recorded for the majority of net operating loss carryfowards and certain other deferred tax assets generated during the period, due to uncertainty regarding future realizability pursuant to guidance set forth in ASC 740, "Income Taxes." In future periods, if the Company determines it will more likely than not be able to realize certain of these amounts, the applicable portion of the benefit from the release of the valuation allowance will generally be recognized in the statement of operations in the period the determination is made. |
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
Earnings Per Share | ' | ||||||||
EARNINGS (LOSS) PER SHARE | |||||||||
The Company computes net income attributable to common stockholders using the two-class method required for capital structures that include participating securities. Under the two-class method, securities that participate in non-forfeitable dividends, such as the Company’s outstanding unvested restricted stock, are considered “participating securities.” | |||||||||
In applying the two-class method, (i) basic net income (loss) per share is computed by dividing net income (less any dividends paid on participating securities) by the weighted average number of shares of common stock and participating securities outstanding for the period and (ii) diluted earnings per share may include the additional effect of other securities, if dilutive, in which case the dilutive effect of such securities is calculated by applying the two-class method and the treasury stock method to the assumed exercise or vesting of potentially dilutive common shares. The method yielding the more dilutive result is ultimately reported for the applicable period. Potentially dilutive common stock equivalents primarily consist of employee stock options, and restricted stock units for calculations utilizing the two-class method, and also include unvested restricted stock, when utilizing the treasury method. | |||||||||
The following table presents the weighted-average number of common shares outstanding used in the calculation of basic and diluted income per share: | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Numerator (in thousands): | |||||||||
Basic | |||||||||
Net income (loss) | $ | (24,421 | ) | $ | 5,113 | ||||
Undistributed earnings allocated to participating securities | — | (140 | ) | ||||||
Total dividends declared / paid | (6,255 | ) | — | ||||||
Dividends attributable to common stockholders | 6,048 | — | |||||||
Net income (loss) attributable to common stockholders – basic | $ | (24,628 | ) | $ | 4,973 | ||||
Diluted | |||||||||
Net income (loss) | $ | (24,421 | ) | $ | 5,113 | ||||
Undistributed earnings allocated to participating securities | — | (139 | ) | ||||||
Total dividends declared / paid | (6,255 | ) | — | ||||||
Dividends attributable to common stockholders | 6,048 | — | |||||||
Net income (loss) attributable to common stockholders – diluted | $ | (24,628 | ) | $ | 4,974 | ||||
Denominator: | |||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – basic | 48,329,375 | 47,859,774 | |||||||
Effect of potentially dilutive securities: | |||||||||
Common stock options and restricted stock units | — | 244,468 | |||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – diluted | 48,329,375 | 48,104,242 | |||||||
Basic net income (loss) per common share | $ | (0.51 | ) | $ | 0.1 | ||||
Diluted net income (loss) per common share | $ | (0.51 | ) | $ | 0.1 | ||||
Anti-dilutive equity-based incentive awards excluded from the computation of diluted income (loss) per share were immaterial for the applicable periods presented. | |||||||||
Revision of Prior Period Earnings (Loss) Per Share - Two-Class Method. In connection with the preparation of the Company’s Quarterly Report on Form 10-Q as of and for the three months ended September 30, 2013, the Company determined that its basic and diluted net income (loss) per share calculations should have been prepared using the “two-class method.” Previously, basic earnings (loss) per share was computed based upon the weighted-average number of common shares outstanding, excluding unvested restricted stock, and diluted income (loss) per share was computed based upon the weighted-average number of common shares outstanding, including the dilutive effect of common stock equivalents outstanding during the periods, determined by applying the treasury stock method to the assumed exercise of outstanding employee stock options, and the assumed vesting of outstanding unvested restricted stock and restricted stock units. | |||||||||
Pursuant to the guidance set forth in SAB No. 99, "Materiality," the Company concluded that the errors were not material to any of its prior period financial statements. Although the errors were immaterial to prior periods, the prior period financial statements presented herein were revised. The impact of the revision to the comparable prior period earnings (loss) per share calculations using the two-class method were as follows: | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2013 | |||||||||
Numerator (in thousands): | |||||||||
Net income attributable to common stockholders – basic and diluted - As Reported | $ | 5,113 | |||||||
Net income attributable to common stockholders – basic - As Adjusted | $ | 4,973 | |||||||
Net income attributable to common stockholders – diluted - As Adjusted | $ | 4,974 | |||||||
Denominator: | |||||||||
Weighted-average shares used in computing net income per share attributable to common stockholders – basic - As Reported | 47,859,774 | ||||||||
Weighted-average shares used in computing net income per share attributable to common stockholders – basic - As Adjusted | 47,859,774 | ||||||||
Weighted-average shares used in computing net income per share attributable to common stockholders – diluted - As Reported | 48,354,444 | ||||||||
Weighted-average shares used in computing net income per share attributable to common stockholders – diluted - As Adjusted | 48,104,242 | ||||||||
Basic net income per common share - As Reported | $ | 0.11 | |||||||
Basic net income per common share - As Adjusted | $ | 0.1 | |||||||
Diluted net income per common share - As Reported | $ | 0.11 | |||||||
Diluted net income per common share - As Adjusted | $ | 0.1 | |||||||
Patents
Patents | 3 Months Ended | |||
Mar. 31, 2014 | ||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||
Goodwill and Other Identifiable Intangible Assets | ' | |||
Acacia’s only identifiable intangible assets at March 31, 2014 and December 31, 2013 are patents. Patent-related accumulated amortization totaled $126,795,000 and $112,323,000 as of March 31, 2014 and December 31, 2013, respectively. | ||||
Acacia’s patents have remaining estimated economic useful lives ranging from one to ten years. The weighted- | ||||
average remaining estimated economic useful life of Acacia’s patents is approximately seven years. The following table presents the scheduled annual aggregate amortization expense as of March 31, 2014 (in thousands): | ||||
Remainder of 2014 | $ | 37,371 | ||
2015 | 48,586 | |||
2016 | 45,503 | |||
2017 | 44,293 | |||
2018 | 40,421 | |||
Thereafter | 74,023 | |||
Total | $ | 290,197 | ||
For the three months ended March 31, 2014 and 2013, Acacia paid patent investment costs totaling $987,000 and $4,010,000, respectively. The underlying patents have estimated economic useful lives of approximately four to ten years. Included in net additions to capitalized patent costs during the three months ended March 31, 2014 are accrued patent investment costs totaling $15,250,000, which are amortized over the estimated economic useful life of the related patents. | ||||
During the three months ended March 31, 2014 and 2013, certain operating subsidiaries recovered up-front patent portfolio advances from applicable net licensing proceeds prior to the scheduled amortization of such up-front patent portfolio advances, resulting in the acceleration of amortization expense for the applicable patent related assets. Accelerated amortization expense related to the recovery of up-front patent portfolio advances totaled $48,000 and $483,000 for the three months ended March 31, 2014 and 2013, respectively. Included in amortization of patents for the three months ended March 31, 2014 was accelerated amortization related to the partial write-down of a patent portfolio, due to a reduction in expected estimated future net cash flows, totaling $2,565,000. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
COMMITMENTS AND CONTINGENCIES | |
In February 2011, Michael Strathmann served a Complaint for Violation of the Insurance Fraud Prevention Act (California Insurance Code Section 1871.7) against Acacia Research Corporation, CombiMatrix Corporation and Dr. Amit Kumar in the Superior Court of the State of California in connection with a prior lawsuit that was settled with Nanogen, Inc. On September 22, 2011, the Superior Court entered Judgment in favor of Acacia Research Corporation, CombiMatrix and Dr. Amit Kumar, dismissed the Complaint and awarded the parties attorneys ' fees and costs. Mr. Strathmann filed an Appeal of the Judgment to the Court of Appeal for the State of California, and filed an undertaking on appeal on November 21, 2011. On October 24, 2012, the Appellate Court reversed the Superior Court's decision, permitted Mr. Strathmann to file an Amended Complaint, and remanded the matter back to the Superior Court for further proceedings. Discovery commenced in this matter, and a Motion for Summary Judgment requesting that judgment be entered in our favor was heard and denied on April 30, 2014. The case is set for trial on June 9, 2014 in the Orange County Superior Court. Acacia believes that there is no merit to Mr. Strathmann's claims and intends to vigorously defend against them. However, there can be no assurance that Acacia will ultimately be successful in this matter. Acacia believes that the results of the above noted litigation will not have a material adverse effect on Acacia’s financial condition, results of operations or liquidity. | |
Patent Enforcement and Other Litigation | |
Acacia is subject to claims, counterclaims and legal actions that arise in the ordinary course of business. Management believes that the ultimate liability with respect to these claims and legal actions, if any, will not have a material effect on Acacia’s consolidated financial position, results of operations or cash flows. | |
Certain of Acacia’s operating subsidiaries are often required to engage in litigation to enforce their patents and patent rights. In connection with any of Acacia’s operating subsidiaries’ patent enforcement actions, it is possible that a defendant may request and/or a court may rule that an operating subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against Acacia or its operating subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material. |
Stockholders_Equity
Stockholders' Equity | 3 Months Ended | |||||||||
Mar. 31, 2014 | ||||||||||
Stockholders' Equity Note [Abstract] | ' | |||||||||
Stockholders' Equity Note Disclosure [Text Block] | ' | |||||||||
STOCKHOLDERS’ EQUITY | ||||||||||
Repurchases of Common Stock. On November 15, 2013, Acacia’s Board of Directors authorized a program for repurchases of shares of Acacia’s outstanding common stock. Under the stock repurchase program, effective November 15, 2013, Acacia was authorized to purchase in the aggregate up to $70,000,000 of its of its outstanding common stock through the period ending May 14, 2014. | ||||||||||
Repurchases may be made from time to time by Acacia in the open market or in block purchases in compliance with applicable Securities and Exchange Commission rules. Repurchases to date were made using existing cash resources and occurred in the open market. The authorization to repurchase shares presented an opportunity to reduce the outstanding share | ||||||||||
count and enhance stockholder value. The following are our monthly stock repurchases for the periods presented, all of which were purchased as part of publicly announced plans or programs: | ||||||||||
Total Number of Shares Purchased | Average Price paid per Share | Approximate Dollar Value of | Plan Expiration | |||||||
Shares that May Yet be | ||||||||||
Purchased under the Program | ||||||||||
December 4, 2013 - December 11, 2013 | 600,000 | $ | 13.18 | $ | 62,074,000 | 14-May-14 | ||||
Totals for 2013 | 600,000 | |||||||||
Cash Dividends. On April 23, 2013, Acacia announced that its Board of Directors approved the adoption of a cash dividend policy that calls for the payment of an expected total annual cash dividend of $0.50 per common share, payable in the amount of $0.125 per share per quarter. Under the policy, the Company has paid quarterly cash dividends totaling $6,255,000 during the three months ended March 31, 2014. Future cash dividends are expected to be paid on a quarterly basis and will be at the discretion of the Company’s Board of Directors. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
SUBSEQUENT EVENTS | |
On April 17, 2014, Acacia announced that its Board of Directors approved a quarterly cash dividend payable in the amount of $0.125 per share. The quarterly cash dividend will be paid on May 30, 2014 to stockholders of record at 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 Company’s Board of Directors. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2014 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | ' |
Recent Accounting Pronouncements | ' |
RECENT ACCOUNTING PRONOUNCEMENTS | |
Recently Adopted Accounting Pronouncements - Adopted Effective January 1, 2013. | |
In July 2013, the FASB issued a new accounting standard addressing when unrecognized tax benefits should be presented as reductions to deferred tax assets for net operating loss carryforwards in the financial statements. This standard is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption and retrospective application is permitted. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures. | |
In March 2013, the FASB issued a new accounting standard addressing the accounting for the cumulative translation adjustment when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. This standard is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||||||
Revenue Recognition | ' | |||||||||||||||
Revenue Recognition. Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) all obligations have been substantially performed pursuant to the terms of the arrangement, (iii) amounts are fixed or determinable, and (iv) the collectibility of amounts is reasonably assured. | ||||||||||||||||
In general, revenue arrangements provide for the payment of contractually determined fees in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by Acacia’s operating subsidiaries. These rights typically include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled by Acacia’s operating subsidiaries, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined, relatively short period of time, with the licensee possessing the right to renew the agreement at the end of each contractual term for an additional minimum upfront payment. Pursuant to the terms of these agreements, Acacia’s operating subsidiaries have no further obligation with respect to the grant of the non-exclusive retroactive and future licenses, covenants-not-to-sue, releases, and other deliverables, including no express or implied obligation on Acacia’s operating subsidiaries’ part to maintain or upgrade the technology, or provide future support or services. Generally, the agreements provide for the grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the agreement, or upon receipt of the minimum upfront payment for term agreement renewals. As such, the earnings process is complete and revenue is recognized upon the execution of the agreement, when collectibility is reasonably assured, or upon receipt of the minimum upfront fee for term agreement renewals, and when all other revenue recognition criteria have been met. | ||||||||||||||||
Cost of Revenues | ' | |||||||||||||||
Cost of Revenues. Cost of revenues include the costs and expenses incurred in connection with Acacia’s patent licensing and enforcement activities, including inventor royalties paid to original patent owners, contingent legal fees paid to external patent counsel, other patent-related legal expenses paid to external patent counsel, licensing and enforcement related research, consulting and other expenses paid to third parties and the amortization of patent-related investment costs. These costs are included under the caption “Cost of revenues” in the accompanying consolidated statements of operations. | ||||||||||||||||
Inventor Royalties and Contingent Legal Expenses | ' | |||||||||||||||
Inventor Royalties and Contingent Legal Expenses. Inventor royalties are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In certain instances, pursuant to the terms of the underlying inventor agreements, upfront advances paid to patent owners by Acacia’s operating subsidiaries are recoverable from future net revenues. Patent costs that are recoverable from future net revenues are amortized over the estimated economic useful life of the related patents, or as the prepaid royalties are earned by the inventor, as appropriate, and the related expense is included in amortization expense in the consolidated statements of operations. Any unamortized upfront advances recovered from net revenues are expensed in the period recovered, and included in amortization expense in the consolidated statements of operations. | ||||||||||||||||
Contingent legal fees are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal fees are paid; however, Acacia’s operating subsidiaries may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services agreement. Legal fees advanced by contingent law firms that are required to be paid in the event that no license recoveries are obtained are expensed as incurred and included in liabilities in the consolidated balance sheets. | ||||||||||||||||
Use of Estimates | ' | |||||||||||||||
Use of Estimates. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Acacia believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, stock-based compensation expense, impairment of marketable securities and intangible assets, the determination of the economic useful life of amortizable intangible assets, income taxes and valuation allowances against net deferred tax assets and the application of the acquisition method of accounting for business combinations, require its most difficult, subjective or complex judgments. | ||||||||||||||||
Concentrations | ' | |||||||||||||||
Concentrations. One licensee individually accounted for 39% of revenues recognized during the three months ended March 31, 2014, and three licensees individually accounted for 65%, 14% and 13% of revenues recognized during the three months ended March 31, 2013. Two licensees individually represented approximately 43% and 28% of accounts receivable at March 31, 2014. Two licensees individually represented approximately 60% and 22% of accounts receivable at December 31, 2013. For the three months ended March 31, 2014, 16% of revenues were attributable to licensees domiciled in foreign jurisdictions. For the three months ended March 31, 2013, 15% of revenues were attributable to licensees domiciled in foreign jurisdictions. | ||||||||||||||||
Stock-Based Compensation | ' | |||||||||||||||
Stock-Based Compensation. The compensation cost for all stock-based awards is measured at the grant date, based on the fair value of the award, and is recognized as an expense, on a straight-line basis, over the employee’s requisite service period (generally the vesting period of the equity award) which is generally two to four years. The fair value of restricted stock and restricted stock unit awards is determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. Stock-based compensation expense is recorded only for those awards expected to vest using an estimated forfeiture rate. | ||||||||||||||||
Fair Value Measurements | ' | |||||||||||||||
Fair Value Measurements. U.S. generally accepted accounting principles define fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three-level hierarchy of valuation techniques established to measure fair value is defined as follows: | ||||||||||||||||
● | Level 1 - Observable Inputs: Quoted prices in active markets for identical investments; | |||||||||||||||
● | Level 2 - Pricing Models with Significant Observable Inputs: Other significant observable inputs, including quoted prices for similar investments, interest rates, credit risk, etc.; and | |||||||||||||||
● | Level 3 - Unobservable Inputs: Significant unobservable inputs, including the entity’s own assumptions in determining the fair value of investments. | |||||||||||||||
Whenever possible, the Company is required to use observable market inputs (Level 1 - quoted market prices) when measuring fair value. | ||||||||||||||||
Investments in and Impairment of Marketable Securities | ' | |||||||||||||||
Investments in Marketable Securities. Investments in securities with original maturities of greater than three months and less than one year and other investments representing amounts that are available for current operations are classified as short-term investments, unless there are indications that such investments may not be readily sold in the short term. The fair values of these investments approximate their carrying values. At March 31, 2014 and December 31, 2013, all of Acacia’s short term investments were classified as available-for-sale, which are reported at fair value on a recurring basis using significant observable inputs (Level 1), with related unrealized gains and losses in the value of such securities recorded as a separate component of comprehensive income (loss) in stockholders’ equity until realized. Realized and unrealized gains and losses are recorded based on the specific identification method. Interest on all securities is included in interest income. | ||||||||||||||||
Short-term marketable securities for the periods presented were comprised of the following (in thousands): | ||||||||||||||||
March 31, 2014 | ||||||||||||||||
Security Type | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
U.S. government fixed income securities(1) | $ | 96,573 | $ | 14 | $ | (997 | ) | $ | 95,590 | |||||||
Total short-term investments | $ | 96,573 | $ | 14 | $ | (997 | ) | $ | 95,590 | |||||||
_____________________________________ | ||||||||||||||||
(1) Maturity dates ranging from 2014 to 2015. | ||||||||||||||||
December 31, 2013 | ||||||||||||||||
Security Type | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
U.S. government fixed income securities | $ | 130,971 | $ | 21 | $ | (975 | ) | $ | 130,017 | |||||||
Total short-term investments | $ | 130,971 | $ | 21 | $ | (975 | ) | $ | 130,017 | |||||||
The gross unrealized loss can be primarily attributed to a combination of market conditions as well as the demand for and duration of the U.S. government fixed income securities. The Company has the ability to hold these securities until maturity, currently has no intent to sell, there is no requirement to sell and the Company believes that it can recover the amortized cost of these investments. The Company has found no evidence of impairment due to credit losses in its portfolio. Therefore, these unrealized losses were recorded in other comprehensive income (loss). However, the Company cannot provide any assurance that its portfolio of short-term marketable securities will not be impacted by adverse conditions in the financial markets, which may require the Company in the future to record an impairment charge for credit losses which could adversely impact its financial results. | ||||||||||||||||
Patents | ' | |||||||||||||||
Patents. Patents includes the cost of patents or patent rights (hereinafter, collectively “patents”), obtained from third-parties or obtained in connection with business combinations. Capitalized patent costs are amortized utilizing the straight-line method over their remaining economic useful lives, ranging from one to ten years. Certain patent application and prosecution costs incurred to secure additional patent claims, that based on management’s estimates are deemed to be recoverable, are capitalized and amortized over the remaining estimated economic useful life of the related patent portfolio. | ||||||||||||||||
Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block] | ' | |||||||||||||||
Impairment of Long-lived Assets. Acacia reviews long-lived assets and intangible assets for potential impairment annually (quarterly for patents) and when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. In the event the sum of the expected undiscounted future cash flows resulting from the use of the asset is less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. | ||||||||||||||||
Fair value is generally estimated using the “Income Approach,” focusing on the estimated future net income-producing capability of the patent portfolios over the estimated remaining economic useful life. Estimates of future after-tax cash flows are converted to present value through “discounting,” including an estimated rate of return that accounts for both the time value of money and investment risk factors. Estimated cash inflows are typically based on estimates of reasonable royalty rates for the applicable technology, applied to estimated market share data. Estimated cash outflows are based on existing contractual obligations, such as contingent legal fee and inventor royalty obligations, applied to estimated license fee revenues, in addition to other estimates of out-of-pocket expenses associated with a specific patent portfolio’s licensing and enforcement program. The analysis also contemplates consideration of current information about the patent portfolio including, status and stage of litigation, periodic results of the litigation process, strength of the patent portfolio, technology coverage and other pertinent information that could impact future net cash flows. | ||||||||||||||||
Income Taxes | ' | |||||||||||||||
Income Taxes. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in Acacia’s consolidated financial statements or consolidated tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. | ||||||||||||||||
The provision for income taxes for interim periods is determined using an estimate of Acacia’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, Acacia updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, a cumulative adjustment is made. | ||||||||||||||||
A reconciliation of the federal statutory income tax rate and the estimated effective income tax rate for the periods presented is as follows: | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Statutory federal tax rate - benefit (expense) | 35 | % | (35 | )% | ||||||||||||
Noncontrolling interests in operating subsidiaries | (1 | )% | — | % | ||||||||||||
Nondeductible permanent items | (3 | )% | (5 | )% | ||||||||||||
Other | (1 | )% | — | % | ||||||||||||
Valuation allowance | (25 | )% | 1 | % | ||||||||||||
5 | % | (39 | )% | |||||||||||||
The change in the valuation allowance for the three months ended March 31, 2014 included valuation allowances recorded for the majority of net operating loss carryfowards and certain other deferred tax assets generated during the period, due to uncertainty regarding future realizability pursuant to guidance set forth in ASC 740, "Income Taxes." In future periods, if the Company determines it will more likely than not be able to realize certain of these amounts, the applicable portion of the benefit from the release of the valuation allowance will generally be recognized in the statement of operations in the period the determination is made. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | ' | |||||||||||||||
A reconciliation of the federal statutory income tax rate and the estimated effective income tax rate for the periods presented is as follows: | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Statutory federal tax rate - benefit (expense) | 35 | % | (35 | )% | ||||||||||||
Noncontrolling interests in operating subsidiaries | (1 | )% | — | % | ||||||||||||
Nondeductible permanent items | (3 | )% | (5 | )% | ||||||||||||
Other | (1 | )% | — | % | ||||||||||||
Valuation allowance | (25 | )% | 1 | % | ||||||||||||
5 | % | (39 | )% | |||||||||||||
Concentration Risk, Credit Risk, Policy [Policy Text Block] | ' | |||||||||||||||
Concentrations. One licensee individually accounted for 39% of revenues recognized during the three months ended March 31, 2014, and three licensees individually accounted for 65%, 14% and 13% of revenues recognized during the three months ended March 31, 2013. Two licensees individually represented approximately 43% and 28% of accounts receivable at March 31, 2014. Two licensees individually represented approximately 60% and 22% of accounts receivable at December 31, 2013. For the three months ended March 31, 2014, 16% of revenues were attributable to licensees domiciled in foreign jurisdictions. For the three months ended March 31, 2013, 15% of revenues were attributable to licensees domiciled in foreign jurisdictions. | ||||||||||||||||
Marketable Securities | ' | |||||||||||||||
Short-term marketable securities for the periods presented were comprised of the following (in thousands): | ||||||||||||||||
March 31, 2014 | ||||||||||||||||
Security Type | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
U.S. government fixed income securities(1) | $ | 96,573 | $ | 14 | $ | (997 | ) | $ | 95,590 | |||||||
Total short-term investments | $ | 96,573 | $ | 14 | $ | (997 | ) | $ | 95,590 | |||||||
_____________________________________ | ||||||||||||||||
(1) Maturity dates ranging from 2014 to 2015. | ||||||||||||||||
December 31, 2013 | ||||||||||||||||
Security Type | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
U.S. government fixed income securities | $ | 130,971 | $ | 21 | $ | (975 | ) | $ | 130,017 | |||||||
Total short-term investments | $ | 130,971 | $ | 21 | $ | (975 | ) | $ | 130,017 | |||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
Schedule of Earnings Per Share, Basic and Diluted | ' | ||||||||
The following table presents the weighted-average number of common shares outstanding used in the calculation of basic and diluted income per share: | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Numerator (in thousands): | |||||||||
Basic | |||||||||
Net income (loss) | $ | (24,421 | ) | $ | 5,113 | ||||
Undistributed earnings allocated to participating securities | — | (140 | ) | ||||||
Total dividends declared / paid | (6,255 | ) | — | ||||||
Dividends attributable to common stockholders | 6,048 | — | |||||||
Net income (loss) attributable to common stockholders – basic | $ | (24,628 | ) | $ | 4,973 | ||||
Diluted | |||||||||
Net income (loss) | $ | (24,421 | ) | $ | 5,113 | ||||
Undistributed earnings allocated to participating securities | — | (139 | ) | ||||||
Total dividends declared / paid | (6,255 | ) | — | ||||||
Dividends attributable to common stockholders | 6,048 | — | |||||||
Net income (loss) attributable to common stockholders – diluted | $ | (24,628 | ) | $ | 4,974 | ||||
Denominator: | |||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – basic | 48,329,375 | 47,859,774 | |||||||
Effect of potentially dilutive securities: | |||||||||
Common stock options and restricted stock units | — | 244,468 | |||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – diluted | 48,329,375 | 48,104,242 | |||||||
Basic net income (loss) per common share | $ | (0.51 | ) | $ | 0.1 | ||||
Diluted net income (loss) per common share | $ | (0.51 | ) | $ | 0.1 | ||||
Impact of the Revision to the Comparable Prior Period Earnings (Loss) Per Share Calculations Using the Two-Class Method [Table Text Block] | ' | ||||||||
The impact of the revision to the comparable prior period earnings (loss) per share calculations using the two-class method were as follows: | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2013 | |||||||||
Numerator (in thousands): | |||||||||
Net income attributable to common stockholders – basic and diluted - As Reported | $ | 5,113 | |||||||
Net income attributable to common stockholders – basic - As Adjusted | $ | 4,973 | |||||||
Net income attributable to common stockholders – diluted - As Adjusted | $ | 4,974 | |||||||
Denominator: | |||||||||
Weighted-average shares used in computing net income per share attributable to common stockholders – basic - As Reported | 47,859,774 | ||||||||
Weighted-average shares used in computing net income per share attributable to common stockholders – basic - As Adjusted | 47,859,774 | ||||||||
Weighted-average shares used in computing net income per share attributable to common stockholders – diluted - As Reported | 48,354,444 | ||||||||
Weighted-average shares used in computing net income per share attributable to common stockholders – diluted - As Adjusted | 48,104,242 | ||||||||
Basic net income per common share - As Reported | $ | 0.11 | |||||||
Basic net income per common share - As Adjusted | $ | 0.1 | |||||||
Diluted net income per common share - As Reported | $ | 0.11 | |||||||
Diluted net income per common share - As Adjusted | $ | 0.1 | |||||||
Patents_Tables
Patents (Tables) | 3 Months Ended | |||
Mar. 31, 2014 | ||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | ' | |||
The following table presents the scheduled annual aggregate amortization expense as of March 31, 2014 (in thousands): | ||||
Remainder of 2014 | $ | 37,371 | ||
2015 | 48,586 | |||
2016 | 45,503 | |||
2017 | 44,293 | |||
2018 | 40,421 | |||
Thereafter | 74,023 | |||
Total | $ | 290,197 | ||
Stockholders_Equity_details_Ta
Stockholders' Equity details (Tables) | 3 Months Ended | |||||||||
Mar. 31, 2014 | ||||||||||
Stockholders' Equity Attributable to Parent [Abstract] | ' | |||||||||
Class of Treasury Stock [Table Text Block] | ' | |||||||||
ollowing are our monthly stock repurchases for the periods presented, all of which were purchased as part of publicly announced plans or programs: | ||||||||||
Total Number of Shares Purchased | Average Price paid per Share | Approximate Dollar Value of | Plan Expiration | |||||||
Shares that May Yet be | ||||||||||
Purchased under the Program | ||||||||||
December 4, 2013 - December 11, 2013 | 600,000 | $ | 13.18 | $ | 62,074,000 | 14-May-14 | ||||
Totals for 2013 | 600,000 | |||||||||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Summary of Significant Accounting Policies [Line Items] | ' | ' |
Effective tax rate | 5.00% | -39.00% |
Minimum [Member] | ' | ' |
Summary of Significant Accounting Policies [Line Items] | ' | ' |
Vesting period of equity awards | '2 years | ' |
Useful life of patents and patent rights | '1 year | ' |
Maximum [Member] | ' | ' |
Summary of Significant Accounting Policies [Line Items] | ' | ' |
Vesting period of equity awards | '4 years | ' |
Useful life of patents and patent rights | '10 years | ' |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies Concentration Risk (Details) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
Licensee 1 [Member] | Licensee 1 [Member] | Licensee 1 [Member] | Licensee 1 [Member] | Licensee 2 [Member] | Licensee 2 [Member] | Licensee 2 [Member] | Licensee 3 [Member] | Licensees in foreign jurisdictions [Member] | Licensees in foreign jurisdictions [Member] | |
License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | |||||
Concentrations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Concentration Risk, Percentage - Revenues | ' | ' | 39.00% | 65.00% | ' | ' | 14.00% | 13.00% | 16.00% | 15.00% |
Concentration Risk, Percentage - Accounts Receivable | 43.00% | 60.00% | ' | ' | 28.00% | 22.00% | ' | ' | ' | ' |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies Investments in Marketable Securities (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 | |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | |
Available-for-sale Securities, Amortized Cost Basis | $96,573 | $130,971 | |
Available-for-sale Securities, Gross Unrealized Gains | 14 | 21 | |
Available-for-sale Securities, Gross Unrealized Losses | -997 | -975 | |
Available-for-sale Securities, Fair Value Disclosure | 95,590 | 130,017 | |
US Government Debt Securities [Member] | ' | ' | |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | |
Available-for-sale Securities, Amortized Cost Basis | 96,573 | [1] | 130,971 |
Available-for-sale Securities, Gross Unrealized Gains | 14 | [1] | 21 |
Available-for-sale Securities, Gross Unrealized Losses | -997 | [1] | -975 |
Available-for-sale Securities, Fair Value Disclosure | $95,590 | [1] | $130,017 |
[1] | (1) Maturity dates ranging from 2014 to 2015. |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies Income tax rate reconciliation (Details) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% | -35.00% |
Effective Income Tax Rate Reconciliation, Noncontrolling Interest Income (Loss), Percent | -1.00% | 0.00% |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Percent | -3.00% | -5.00% |
Effective Income Tax Rate Reconciliation, Other Adjustments, Percent | -1.00% | 0.00% |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent | -25.00% | 1.00% |
Effective Income Tax Rate Reconciliation, Percent | 5.00% | -39.00% |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Earnings Per Share [Abstract] | ' | ' |
Net Income (Loss) Attributable to Parent | ($24,421) | $5,113 |
Undistributed Earnings, Basic | 0 | -140 |
Undistributed Earnings, Diluted | 0 | -139 |
Dividends | 6,255 | 0 |
Dividends attributable to common stockholders under the two class method | 6,048 | 0 |
Weighted-average common shares outstanding - basic | 48,329,375 | 47,859,774 |
Weighted Average Number Diluted Shares Outstanding Adjustment | 0 | 244,468 |
Net income (loss) available to common stockholders, basic | -24,628 | 4,973 |
Net income (loss) available to common stockholders, diluted | ($24,628) | $4,974 |
Weighted-average common shares outstanding - diluted | 48,329,375 | 48,104,242 |
Basic earnings (loss) per share | ($0.51) | $0.10 |
Diluted earnings (loss) per share | ($0.51) | $0.10 |
Earnings_Per_Share_Details_As_
Earnings Per Share Details As Adjusted (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Earnings Per Share [Abstract] | ' | ' |
Net Income (Loss) Attributable to Parent | ($24,421,000) | $5,113,000 |
Net income (loss) available to common stockholders, basic | -24,628,000 | 4,973,000 |
Net income (loss) available to common stockholders, diluted | -24,628,000 | 4,974,000 |
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders b basic - As Reported | ' | 47,859,774 |
Weighted average number of shares outstanding, basic | 48,329,375 | 47,859,774 |
Weighted average number of shares, diluted, as previously reported | ' | 48,354,444 |
Weighted average number of shares outstanding, diluted | 48,329,375 | 48,104,242 |
Basic net income (loss) per common share, As Reported | ' | 0.11 |
Basic earnings (loss) per share | ($0.51) | $0.10 |
Diluted net income (loss) per common share - As Reported | ' | $0.11 |
Diluted earnings (loss) per share | ($0.51) | $0.10 |
Patents_Details
Patents (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' |
Patents, accumulated amortization | $126,795,000 | ' | $112,323,000 |
Weighted average useful life of patents and patent rights | '7 years | ' | ' |
Investments in patents/ patent rights | 987,000 | 4,010,000 | ' |
Patent acquisition costs included in accrued expenses | 15,250,000 | 0 | ' |
Accelerated amortization expense - up-front payments | 48,000 | 483,000 | ' |
Accelerated amortization expense (impairment) | $2,565,000 | ' | ' |
Minimum [Member] | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' |
Useful life of patents and patent rights | '1 year | ' | ' |
Finite lived intangible asset acquired during the year, useful life | '4 years | ' | ' |
Maximum [Member] | ' | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' |
Useful life of patents and patent rights | '10 years | ' | ' |
Finite lived intangible asset acquired during the year, useful life | '10 years | ' | ' |
Patents_Future_Amortization_Ex
Patents Future Amortization Expense for Intangible Assets (Details) (USD $) | Mar. 31, 2014 |
In Thousands, unless otherwise specified | |
Finite-Lived Intangible Assets [Line Items] | ' |
For the remainder of 2013 | $37,371 |
2014 | 48,586 |
2015 | 45,503 |
2016 | 44,293 |
2017 | 40,421 |
Thereafter | 74,023 |
Total expected amortization expense | $290,197 |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 0 Months Ended | 3 Months Ended | 12 Months Ended | 6 Months Ended | ||
Dec. 11, 2013 | 30-May-13 | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | 14-May-14 | |
Subsequent Event [Member] | ||||||
Class of Stock [Line Items] | ' | ' | ' | ' | ' | ' |
Stock Repurchase Program, Authorized Amount | ' | ' | ' | ' | ' | $70,000,000 |
Treasury Stock, Shares, Acquired | 600,000 | ' | ' | ' | 600,000 | ' |
Treasury Stock Acquired, Average Cost Per Share | $13.18 | ' | ' | ' | ' | ' |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | 62,074,000 | ' | ' | ' | ' | ' |
Dividends declared, per share | ' | ' | $0.50 | ' | ' | ' |
Common Stock, Dividends, Per Share, Cash Paid | ' | $0.13 | $0.13 | $0 | ' | ' |
Dividends paid | ' | ' | $6,255,000 | $0 | ' | ' |
Subsequent_Events_Details
Subsequent Events (Details) (Subsequent Event [Member], USD $) | 3 Months Ended | |
Jun. 30, 2014 | 30-May-14 | |
Subsequent Event [Member] | ' | ' |
Subsequent Event [Line Items] | ' | ' |
Dividends payable, per share | ' | $0.13 |
Dividends payable, date to be paid | 30-May-14 | ' |
Dividends payable, record date | 1-May-14 | ' |