EXHIBIT 99.1
CONTACTS: Rob Stewart
Investor Relations
FOR RELEASE Tel (949) 480-8300
- ----------- Fax (949) 480-8301
February 25, 2003
ACACIA RESEARCH REPORTS FOURTH QUARTER
AND YEAR END FINANCIAL RESULTS
Newport Beach, Calif. - (BUSINESS WIRE) - February 25, 2003 - Acacia
Research Corporation (Nasdaq: ACTG; CBMX) today reported fourth quarter and year
end financial results. Acacia Research Corporation comprises two operating
groups, the Acacia Technologies group and the CombiMatrix group.
ACACIA RESEARCH CORPORATION
FINANCIAL RESULTS
Consolidated revenues for the fourth quarter of 2002 were $16,000
versus $1,091,000 in the comparable 2001 period. Fourth quarter 2002 revenues
were comprised of contract revenues recognized by our wholly owned subsidiary,
CombiMatrix Corporation and product sales to a Japanese government institution
recognized by CombiMatrix Corporation's Japanese subsidiary.
In addition, during the fourth quarter of 2002, CombiMatrix Corporation
received cash payments totaling $8,553,000 pursuant to its agreements with Roche
Diagnostics, GmbH ("Roche"), which have been recorded as deferred revenues.
Consolidated revenues for the year ended December 31, 2002 were
$882,000 versus $24,636,000 for the year ended December 31, 2001. Revenues were
comprised of $43,000 in television V-chip technology licensing revenues
recognized by our Acacia Technologies group, $533,000 in government grant
revenues recognized by CombiMatrix Corporation and $306,000 in product sales to
two Japanese government institutions recognized by CombiMatrix Corporation's
Japanese subsidiary.
In addition, during 2002, CombiMatrix Corporation received cash
payments totaling $11,435,000 pursuant to its agreements with Roche, which have
been recorded as deferred revenues.
The fourth quarter 2002 consolidated net loss was $22,223,000, which
includes a non-cash charge for acquired in-process research and development of
$17,237,000 related to Acacia Research Corporation's acquisition of the
outstanding interests in CombiMatrix Corporation not already owned by Acacia
Research Corporation in December 2002, versus a consolidated net loss from
operations of $5,194,000 in the comparable 2001 period.
The 2002 consolidated net loss was $58,973,000, which includes a
non-cash charge for acquired in-process research and development of $17,237,000
discussed above, and a non-cash charge of $8,334,000 after minority interests
($17,471,000 before minority interests) related to the settlement of litigation
with Nanogen Inc. in September 2002, versus a consolidated net loss of
$22,272,000 in the comparable 2001 period. Excluding non-cash stock
compensation, in-process research and development and litigation settlement
charges, the 2002 consolidated net loss was $29,607,000 versus $9,900,000 in the
comparable 2001 period. Non-cash stock compensation charges after minority
interests were $3,795,000 and $12,372,000 for 2002 and 2001, respectively, and
relate primarily to a step-up in value of our CombiMatrix subsidiary in
connection with its proposed initial public offering in 2000.
FINANCIAL CONDITION
Total consolidated assets were $97,071,000 as of December 31, 2002
compared to $110,859,000 as of December 31, 2001. Cash and short-term
investments on a consolidated basis were $54,688,000 as of December 31, 2002
compared to $84,561,000 as of December 31, 2001.
ACACIA TECHNOLOGIES GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
FINANCIAL RESULTS
There were no revenues recognized in the fourth quarter of 2002 versus
$1,000,000 in license fee revenues recognized in the comparable 2001 period.
Revenues for the year ended December 31, 2002 were $43,000 versus
$24,180,000 for the year ended December 31, 2001. Revenues were comprised of
$43,000 in television V-chip technology licensing revenues.
The fourth quarter 2002 division net loss was $831,000 versus $464,000
in the comparable 2001 period.
The 2002 division net loss was $12,755,000, which includes a non-cash
investment impairment charge of $2,748,000 versus division net income of
$5,757,000 in the comparable 2001 period.
Marketing, general and administrative expenses in the fourth quarter of
2002 and for the year ended December 31, 2002 decreased as compared to the same
periods in 2001, primarily due to a reduction of approximately $450,000 and
$11,000,000, respectively, in contingent legal fees incurred in connection with
V-chip license fee revenues recognized in 2001. Marketing, general and
administrative expenses in 2002 include increased legal and consulting costs
related to ongoing Digital Media Transmission patent marketing and
commercialization efforts, including patent claims construction, patent
prosecution and related research and engineering costs.
FINANCIAL CONDITION
Total assets for the Acacia Technologies group were $47,212,000 as of
December 31, 2002 compared to $62,926,000 as of December 31, 2001. Cash and
short-term investments were $39,792,000 as of December 31, 2002 compared to
$51,231,000 as of December 31, 2001.
COMBIMATRIX GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
FINANCIAL RESULTS
Revenues for the fourth quarter of 2002 were $16,000 versus $91,000 in
the comparable 2001 period. Fourth quarter 2002 revenues were comprised of
contract revenues and product sales to a Japanese government institution.
In addition, during the fourth quarter of 2002, the CombiMatrix group
received cash payments totaling $8,553,000 pursuant to its agreements with
Roche, which have been recorded as deferred revenues.
Revenues for the year ended December 31, 2002 were $839,000 versus
$456,000 for the year ended December 31, 2001. Revenues were comprised of
$533,000 in U.S. Department of Defense and National Institutes of Health grant
revenues and $306,000 in product sales to two Japanese government institutions.
In addition, during 2002, the CombiMatrix group received cash payments
totaling $11,435,000 pursuant to its agreements with Roche, which have been
recorded as deferred revenues.
The fourth quarter 2002 division net loss was $21,392,000 which
includes a non-cash charge for acquired in-process research and development of
$17,237,000 related to Acacia Research Corporation's acquisition of the
outstanding interests in CombiMatrix Corporation not already owned by Acacia
Research Corporation in December 2002, versus a division net loss of $4,731,000
in the comparable 2001 period.
The 2002 division net loss was $46,219,000 which includes a non-cash
charge for acquired in-process research and development of $17,237,000,
discussed above, and a non-cash charge of $8,334,000 after minority interests
($17,471,000 before minority interests) related to the settlement of litigation
with Nanogen, Inc. versus a division net loss of $28,029,000 in the comparable
2001 period. Excluding non-cash stock compensation, in-process research and
development and litigation settlement charges, the 2002 division net loss was
$16,872,000 versus $16,514,000 in the comparable 2001 period. Non-cash stock
compensation charges after minority interests were $3,776,000 and $11,515,000
for 2002 and 2001, respectively, and relate primarily to a step-up in value of
CombiMatrix Corporation in connection with its proposed initial public offering
in 2000.
Research and development costs increased in the fourth quarter of 2002
and for the year ended December 31, 2002 versus the comparable 2001 periods
primarily due to an increase in research and development activities related to
the CombiMatrix group's continuing performance under the product
commercialization phase of its license, research and development agreements with
Roche, including increases in labor, supplies and materials, development of
prototype microarrays and instruments, and the use of outside consultants for
certain engineering efforts.
Marketing, general and administrative expenses decreased in the fourth
quarter of 2002 and for the year ended December 31, 2002 versus the comparable
2001 periods, primarily due to decreases in sales and administrative staff,
decreases in sales and marketing activities and decreases in legal fees as a
result of settling the Nanogen litigation during the third quarter of 2002.
Marketing, general and administrative expenses in 2001 also include a $1,450,000
write-off of deferred initial public offering costs.
FINANCIAL CONDITION
Total assets for the CombiMatrix group were $49,973,000 as of December
31, 2002 compared to $47,963,000 as of December 31, 2001. Cash and short-term
investments were $14,896,000 as of December 31, 2002 compared to $33,330,000 as
of December 31, 2001.
BUSINESS HIGHLIGHTS
Business highlights of the fourth quarter include:
o On December 11, 2002, Acacia Research Corporation's stockholders
voted in favor of a recapitalization proposal to create two new
classes of common stock and to divide its existing common stock
into shares of the new classes of common stock. The
recapitalization became effective on December 13, 2002 when Acacia
Research Corporation issued the two new classes of common stock,
referred to as, new "Acacia Research -- CombiMatrix" stock, which
is intended to reflect the performance of its subsidiary,
CombiMatrix Corporation, and new "Acacia Research -- Acacia
Technologies" stock, which is intended to reflect the performance
of Acacia Research Corporation's media technology businesses. The
"Acacia Research -- CombiMatrix" stock and the "Acacia Research --
Acacia Technologies" stock are both classes of common stock of
Acacia Research Corporation and are not stock issued by the
respective groups. As a result of the recapitalization, Acacia
Research Corporation stockholders received 0.5582 of a share of
Acacia Research -- CombiMatrix stock, and one share of Acacia
Research -- Acacia Technologies stock, for each share of Acacia
Research Corporation common stock that they owned.
o Acacia Research stockholders and CombiMatrix Corporation
stockholders also voted in favor of a merger proposal pursuant to
which Acacia Research Corporation acquired all the shares of
CombiMatrix Corporation that it did not already own. The
acquisition was accomplished through a merger in which
stockholders of CombiMatrix Corporation other than Acacia Research
Corporation received one share of the new Acacia Research --
CombiMatrix stock in exchange for each share of CombiMatrix
Corporation common stock that they owned. The merger became
effective on December 13, 2002. Stockholders also approved related
proposals to adopt two new stock incentive plans.
o On December 16, 2002 Acacia Research Corporation's two new classes
of common stock, Acacia Research - CombiMatrix stock (Nasdaq:
CBMX) and Acacia Research - Acacia Technologies stock (Nasdaq:
ACTG), commenced trading on the Nasdaq stock market. The two new
classes of stock replace Acacia Research Corporation's common
stock that formerly traded on the Nasdaq stock market under the
symbol ACRI.
o On September 30, 2002, CombiMatrix Corporation expanded its
strategic alliance with Roche Diagnostics, GmbH. The new agreement
expands the alliance and grants Roche additional rights to
co-manufacture CombiMatrix's custom and catalog DNA microarray
chips in addition to its rights to distribute and sell
CombiMatrix's products through their worldwide sales force.
CombiMatrix will receive additional payments under the new
agreement from Roche for expanding co-manufacturing rights and for
the transfer of manufacturing know-how. CombiMatrix expects to
receive research and development payments upon completion of
certain projects as well as product royalties under its existing
revenue sharing alliance with Roche.
A conference call is scheduled for today at 1:30 p.m. Pacific Time
(4:30 p.m. Eastern). The conference call will include a review of financial
results for the fourth quarter and for the year and a discussion of business
developments. Shareholders, analysts and reporters are welcome to participate.
Paul R. Ryan, Chairman and CEO of Acacia Research, Robert "Chip" Harris,
President, and Amit Kumar, Ph.D., CEO of CombiMatrix Corporation will host the
call.
To listen to the presentation by phone, dial (800) 915-4836 for
domestic callers and (973) 317-5319 for international callers. A replay of the
audio presentation will be available for 30 days at (800) 428-6051 for domestic
callers and (973) 709-2089 for international callers, both of whom will need to
enter the code 285553 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
Acacia Research Corporation comprises two operating groups, Acacia
Technologies group and CombiMatrix group. The Acacia Technologies group licenses
its DMT and V-Chip technologies to media and electronics companies. The DMT
technology covers the transmission and receipt of digital audio and digital
video content, commonly known as audio on-demand, video on-demand, and
audio/video streaming, and is supported by 5 U.S. and 17 international patents.
The CombiMatrix group is developing a platform technology to rapidly
produce customizable active biochips, which are semiconductor-based tools for
use in identifying and determining the roles of genes, gene mutations and
proteins. The CombiMatrix group's technology has a wide range of applications,
from DNA and RNA synthesis/diagnostics to immunochemical detection. Information
about Acacia Research Corporation and the Acacia Technologies group is available
at www.acaciaresearch.com. Information about the CombiMatrix group is available
at www.combimatrix.com.
Acacia Research-Acacia Technologies (Nasdaq: ACTG) and Acacia
Research-CombiMatrix (Nasdaq:CBMX) are both classes of common stock issued by
Acacia Research Corporation and are intended to reflect the performance of the
respective operating groups and are not issued by the operating groups.
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 RECENT ECONOMIC SLOWDOWN AFFECTING TECHNOLOGY
COMPANIES, OUR ABILITY TO SUCCESSFULLY DEVELOP PRODUCTS, RAPID TECHNOLOGICAL
CHANGE IN OUR MARKETS, CHANGES IN DEMAND FOR OUR FUTURE PRODUCTS, LEGISLATIVE,
REGULATORY AND COMPETITIVE DEVELOPMENTS 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.
ACACIA RESEARCH CORPORATION
SUMMARY FINANCIAL INFORMATION
(UNAUDITED)
CONSOLIDATED BALANCE SHEET INFORMATION
(in thousands)
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ------------
Total Assets $ 97,071 $ 110,859
============ ============
Total Liabilities $ 19,041 $ 19,824
============ ============
Minority Interests $ 2,171 $ 32,303
============ ============
Total Stockholders' Equity $ 75,859 $ 58,732
============ ============
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share information)
For the Three Months Ended For the Twelve Months Ended
----------------------------- -----------------------------
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
------------- ------------- ------------- -------------
Revenues:
License fee income $ -- $ 1,000 $ 43 $ 24,180
Product revenue 9 -- 306 --
Grant revenue 7 91 533 456
------------- ------------- ------------- -------------
Total revenues 16 1,091 882 24,636
------------- ------------- ------------- -------------
Operating expenses:
Cost of sales 4 -- 263 --
Research and development expenses 4,044 1,702 18,187 11,656
In-process research and development 17,237 -- 17,237 --
Non-cash stock compensation
expense - research and development 1 1,060 1,868 7,183
Marketing, general and administrative
expenses 4,379 8,371 18,632 32,664
Non-cash stock compensation expense -
marketing, general and administrative 843 (1,048) 4,559 13,636
Amortization of patents and goodwill 312 770 1,990 2,695
Legal settlement charges -- -- 18,471 --
------------- ------------- ------------- -------------
Total operating expenses 26,820 10,855 81,207 67,834
------------- ------------- ------------- -------------
Operating loss (26,804) (9,764) (80,325) (43,198)
------------- ------------- ------------- -------------
Other income (expense) 968 1,195 (3,111) 4,166
------------- ------------- ------------- -------------
Loss from continuing operations
before income taxes and minority interests (25,836) (8,569) (83,436) (39,032)
Benefit (provision) for income taxes 426 239 857 (780)
------------- ------------- ------------- -------------
Loss from continuing operations before
minority interests (25,410) (8,330) (82,579) (39,812)
Minority interests 3,187 3,136 23,806 17,540
------------- ------------- ------------- -------------
Loss from continuing operations (22,223) (5,194) (58,773) (22,272)
Discontinued operations:
Estimated loss on disposal of Soundbreak.com -- -- (200) --
------------- ------------- ------------- -------------
Net loss $ (22,223) $ (5,194) $ (58,973) $ (22,272)
============= ============= ============= =============
For the Three Months Ended For the Twelve Months Ended
----------------------------- -----------------------------
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
------------- ------------- ------------- -------------
LOSS PER SHARE:
ATTRIBUTABLE TO THE ACACIA TECHNOLOGIES GROUP:
Loss from continuing operations $ (831) $ (12,555)
Basic and diluted per share (0.04) (0.64)
Loss from discontinued operations -- (200)
Basic and diluted per share -- (0.01)
Net loss (831) (12,755)
Basic and diluted per share (0.04) (0.65)
ATTRIBUTABLE TO THE COMBIMATRIX GROUP:
Loss from continuing operations $ (21,392) $ (46,219)
Basic and diluted per share (0.93) (2.01)
Net loss (21,392) (46,219)
Basic and diluted per share (0.93) (2.01)
ACACIA RESEARCH CORPORATION:
Loss from continuing operations $ (5,194) $ (22,272)
Basic and diluted per share (0.27) (1.16)
Net loss (5,194) (22,272)
Basic and diluted per share (0.27) (1.16)
WEIGHTED AVERAGE SHARES - BASIC AND DILUTED:
Acacia Research - Acacia Technologies stock 19,640,808 -- 19,640,808 --
============= ============= ============= =============
Acacia Research - CombiMatrix stock 22,951,324 -- 22,950,746 --
============= ============= ============= =============
Acacia Research Corporation -- 19,558,572 -- 19,259,256
============= ============= ============= =============
{Note: 2002 share and per-share information gives effect to the recapitalization
transaction described elsewhere herein as of January 1, 2002. Historical share
and per-share information for the new classes of securities is not presented as
these classes of securities were not part of Acacia Research Corporation's
capital structure during 2001 and prior periods.}
ACACIA TECHNOLOGIES GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
SUMMARY FINANCIAL INFORMATION
(UNAUDITED)
GROUP BALANCE SHEET INFORMATION
(IN THOUSANDS)
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ------------
Total Assets $ 47,212 $ 62,926
============ ============
Total Liabilities $ 5,183 $ 5,723
============ ============
Minority Interests $ 1,487 $ 2,194
============ ============
Total Stockholders' Equity $ 40,542 $ 55,009
============ ============
STATEMENTS OF OPERATIONS
(In thousands)
For the Three Months Ended For the Twelve Months Ended
----------------------------- -----------------------------
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
------------- ------------- ------------- -------------
REVENUES:
License fee income $ -- $ 1,000 $ 43 $ 24,180
------------- ------------- ------------- -------------
Total revenues -- 1,000 43 24,180
------------- ------------- ------------- -------------
OPERATING EXPENSES:
Research and development expenses -- -- -- --
Marketing, general and administrative expenses 1,595 1,162 6,884 4,853
Non-cash stock compensation - MG&A -- 12 19 856
Legal expenses - patents 274 864 1,415 11,121
Amortization of patents and goodwill 195 468 1,590 1,492
------------- ------------- ------------- -------------
Total operating expenses 2,064 2,506 9,908 18,322
------------- ------------- ------------- -------------
Operating (loss) income (2,064) (1,506) (9,865) 5,858
------------- ------------- ------------- -------------
Other income (expense) 922 834 (3,504) 2,111
------------- ------------- ------------- -------------
(Loss) income from continuing operations before
income taxes and minority interests (1,142) (672) (13,369) 7,969
Benefit (provision) for income taxes 392 199 710 (935)
------------- ------------- ------------- -------------
(Loss) income from continuing operations before
minority interests (750) (473) (12,659) 7,034
Minority interests (81) 9 104 (1,277)
------------- ------------- ------------- -------------
(Loss) income from continuing operations (831) (464) (12,555) 5,757
Discontinued operations
Estimated loss on disposal of Soundbreak.com -- -- (200) --
------------- ------------- ------------- -------------
Division net (loss) income $ (831) $ (464) $ (12,755) $ 5,757
============= ============= ============= =============
COMBIMATRIX GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
SUMMARY FINANCIAL INFORMATION
(UNAUDITED)
GROUP BALANCE SHEET INFORMATION
(IN THOUSANDS)
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ------------
Total Assets $ 49,973 $ 47,963
============ ============
Total Liabilities $ 13,972 $ 14,131
============ ============
Minority Interests $ 684 $ 30,109
============ ============
Total Stockholders' Equity $ 35,317 $ 3,723
============ ============
STATEMENTS OF OPERATIONS
(In thousands)
For the Three Months Ended For the Twelve Months Ended
----------------------------- -----------------------------
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
------------- ------------- ------------- -------------
Revenues:
Product revenue $ 9 $ -- $ 306 $ --
Grant and contract revenues 7 91 533 456
------------- ------------- ------------- -------------
Total revenues 16 91 839 456
------------- ------------- ------------- -------------
Operating expenses:
Cost of sales 4 -- 263 --
Research and development expenses 4,044 1,702 18,187 11,656
In-process research and development 17,237 -- 17,237 --
Non-cash compensation expenses - R&D 1 1,060 1,868 7,183
Marketing, general and administrative expenses 2,510 6,345 10,335 16,690
Non-cash compensation expenses - MG&A 843 (1,060) 4,539 12,780
Amortization of patents and goodwill 117 302 399 1,203
Legal settlement charges -- -- 18,471 --
------------- ------------- ------------- -------------
Total operating expenses 24,756 8,349 71,299 49,512
------------- ------------- ------------- -------------
Operating loss (24,740) (8,258) (70,460) (49,056)
------------- ------------- ------------- -------------
Other income (expense) 46 361 392 2,055
------------- ------------- ------------- -------------
Loss from operations before income taxes and
minority interests (24,694) (7,897) (70,068) (47,001)
Benefit for income taxes 34 40 147 155
------------- ------------- ------------- -------------
Loss from operations before minority interests (24,660) (7,857) (69,921) (46,846)
Minority interests 3,268 3,126 23,702 18,817
------------- ------------- ------------- -------------
Division net loss $ (21,392) $ (4,731) $ (46,219) $ (28,029)
============= ============= ============= =============