EXHIBIT 99.1
ACACIA
RESEARCH
CORPORATION
CONTACTS: Rob Stewart
Investor Relations
FOR RELEASE Tel (949) 480-8300
February 24, 2005 Fax (949)480-8301
ACACIA RESEARCH REPORTS FOURTH QUARTER
AND YEAR END FINANCIAL RESULTS
Newport Beach, Calif. - (BUSINESS WIRE) - February 24, 2005 - Acacia
Research Corporation (Nasdaq: ACTG; CBMX) today reported results for the three
months and the year ended December 31, 2004. Acacia Research Corporation
comprises two operating groups, the Acacia Technologies group and the
CombiMatrix group.
"Acacia Technologies group revenues for the year ended December 31,
2004 were $4,284,000, comprised of $2,784,000 in revenues from our Digital Media
Transmission ("DMT(R)") licensing program and the recognition of $1,500,000 in
deferred revenues from our television V-chip licensing program. During the
fourth quarter we reported $779,000 in licensing revenues from our DMT licensing
program. We entered into 103 new licenses for our DMT technology in the fourth
quarter, including 95 cable TV licenses. We signed an additional 9 licenses
since the end of the quarter and have entered into 294 DMT technology licenses
to date," commented Chairman and CEO Paul Ryan.
"Our recent acquisition of rights to 27 patent portfolios will provide
the Acacia Technologies group with the potential of multiple revenue streams
from additional licensing programs in 2005. The $19.6 million in proceeds from
the recent sale of stock brings our cash and short term investment position to
approximately $43 million and will enable us to continue to acquire additional
patent portfolios as we move toward our goal of becoming the leading technology
licensing company," concluded Mr. Ryan.
"The CombiMatrix group revenues for the year ended December 31, 2004
were $19,641,000 comprised of $17,302,000 in Roche Diagnostics, GmbH ("Roche")
related deferred contract revenues, $1,993,000 in government contract revenues
and $346,000 of CustomArray(TM) product and service revenues. The CombiMatrix
group reported revenues of $522,000 for the fourth quarter, comprised of
$390,000 of government contract revenues and $132,000 of CustomArray(TM) product
and service revenues. Our CustomArray(TM) revenues grew approximately 95% over
the previous quarter. Government contract revenues in the fourth quarter include
$73,000 related to the sale of arrays, resulting in total array product and
service revenues of $205,000. For the year, total CustomArray(TM) revenues from
third party customers as well as from our Department of Defense government
contract were $590,000," said Dr. Amit Kumar, CEO and President of CombiMatrix
Corporation.
"During the fourth quarter, we established a strategic alliance with
Science Applications International Corporation ("SAIC") to jointly develop
biothreat identification arrays and entered into an agreement to acquire equity
in Leuchemix Corporation, a developer of cancer drugs," concluded Dr. Kumar.
ACACIA RESEARCH CORPORATION CONSOLIDATED
FINANCIAL RESULTS
Consolidated revenues for the fourth quarter of 2004 were $1,301,000
versus $534,000 in the comparable 2003 period. Fourth quarter 2004 revenues were
comprised of $390,000 in government contract revenues and $132,000 in
CustomArrayTM product and service revenues, all of which were recognized by the
CombiMatrix group, and Digital Media Transmission DMT license fee revenues
totaling $779,000 recognized by the Acacia Technologies group.
Consolidated revenues for the year ended December 31, 2004 were
$23,925,000 versus $1,148,000 in 2003. 2004 revenues were comprised of
$17,302,000 in Roche related deferred contract revenues, $1,993,000 in
government contract revenues and $346,000 of CustomArrayTM product and service
revenues, all of which were recognized by the CombiMatrix group, and DMT license
fee revenues totaling $2,784,000 and V-chip license fee revenues of $1,500,000
recognized by the Acacia Technologies group.
In March 2004, the CombiMatrix group completed all phases of its
research and development agreement with Roche and as a result, recognized all
previously deferred Roche related contract revenues totaling $17,302,000, in the
first quarter of 2004.
As a result of the August 2004 final ruling of non-infringement in the
Acacia Technologies group's V-chip litigation, in the third quarter of 2004, the
Acacia Technologies group recognized $1,500,000 of V-chip related deferred
license fee revenues and $668,000 of V-chip related deferred legal costs and
recorded an impairment charge of $1,616,000 associated with the write-off of
V-chip related goodwill. The ruling has no impact on the revenues that we have
recognized to date from licensees of our patented V-chip technology.
The fourth quarter 2004 consolidated net loss was $5,677,000 versus
$5,147,000 in the comparable 2003 period. The fourth quarter 2004 results
include non-cash patent amortization, asset depreciation and stock compensation
charges totaling $702,000 versus $807,000 in the comparable 2003 period.
The consolidated net loss for the year ended December 31, 2004 was
$4,833,000 versus $24,420,000 in 2003. Results for the year ended December 31,
2004 include non-cash patent amortization, asset depreciation and stock
compensation charges totaling $3,505,000 versus $4,680,000 in 2003. The 2004
consolidated net loss also includes a non-cash legal settlement charge of
$812,000 related to the change in fair value of AR-CombiMatrix common stock
potentially issuable in connection with certain anti-dilution provisions of the
September 2002 settlement agreement with Nanogen, Inc. The anti-dilution
provisions expire in September 2005.
Consolidated research and development expenses for the year ended
December 31, 2004, comprised solely of costs incurred by the CombiMatrix group,
were $7,168,000 (including government contract costs) versus $8,098,000 in 2003.
Research and development activities for the year ended December 31, 2004
included increased costs incurred in connection with the CombiMatrix group's
commitments under its biowarfare detection contract with the Department of
Defense awarded in March 2004 and costs related to other internal research and
development efforts in the areas of genomics, drug discovery and development and
material sciences. Research and development expenses in the 2003 period related
primarily to the CombiMatrix group's research and development agreements with
Roche, which were completed in the first quarter of 2004.
Marketing, general and administrative expenses for the year ended
December 31, 2004 increased to $17,559,000 from $14,917,000 in 2003, due
primarily to the addition of licensing and business development personnel for
the Acacia Technologies group, an increase in the Acacia Technologies group's
patent related commercialization expenses, an increase in marketing and sales
costs related to the launch of the CombiMatrix group's CustomArray(TM) DNA array
platform beginning in March 2004 and an increase in corporate professional fees
related to Sarbanes-Oxley compliance projects and related efforts at both
operating groups. The Acacia Technologies group's patent related legal expenses,
excluding V-chip related legal fees described above, increased to $2,465,000 in
2004, as compared to $1,886,000 in 2003, due to an increase in costs incurred in
connection with the Acacia Technologies group's ongoing DMT patent
commercialization and enforcement programs, including increased legal costs
related to new patent claims and the identification of additional potential
licensees of our DMT technology and increased patent enforcement costs related
to ongoing DMT patent related litigation.
2
FINANCIAL CONDITION
Total consolidated assets were $88,327,000 as of December 31, 2004
compared to $90,040,000 as of December 31, 2003. Cash and cash equivalents and
short-term investments on a consolidated basis totaled $52,358,000 as of
December 31, 2004 compared to $50,500,000 as of December 31, 2003.
In February 2005, Acacia Research Corporation raised gross proceeds of
$19,600,000 through the sale of 3,500,000 shares of Acacia Research - Acacia
Technologies common stock at a price of $5.60 per share in a registered direct
offering. Net proceeds raised of approximately $19,575,000, which are net of
related issuance costs, were attributed to the Acacia Technologies group. All of
the shares of Acacia Research-Acacia Technologies common stock were offered
pursuant to an effective registration statement previously filed with the
Securities and Exchange Commission.
ACACIA TECHNOLOGIES GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
FINANCIAL RESULTS
DMT license fee revenues for the fourth quarter of 2004 were $779,000
versus $481,000 in the comparable 2003 period. DMT license fee revenues for the
year ended December 31, 2004 were $2,784,000 versus $692,000 in comparable 2003
period. To date the Acacia Technologies group has entered into 294 license
agreements for its DMT technology, including 107 cable TV licenses, 182 licenses
for online entertainment, movies, news, sports, e-learning and corporate
websites and licenses with 5 companies that provide over 90% of video-on-demand
TV entertainment to the hotel industry in the United States. All of the Acacia
Technologies group's material DMT license agreements provide for license fee
payments to be made by the respective licensees over the term of the licenses.
As a result of the August 2004 final ruling of non-infringement in the
Acacia Technologies group's V-chip litigation, in the third quarter of 2004, the
Acacia Technologies group recognized $1,500,000 of V-chip related deferred
license fee revenues and $668,000 of V-chip related deferred legal costs and
recorded an impairment charge of $1,616,000 associated with the write-off of
V-chip related goodwill. The ruling has no impact on the revenues that we have
recognized to date from licensees of our patented V-chip technology.
The fourth quarter 2004 division net loss was $1,559,000 versus
$1,082,000 in the comparable 2003 period. Included in the fourth quarter 2004
divisional results are non-cash patent amortization and depreciation charges
totaling $139,000 versus $145,000 in the comparable 2003 period.
The division net loss for the year ended December 31, 2004 was
$5,543,000 versus $5,451,000 in 2003. In addition to the non-cash V-chip related
goodwill impairment charge described above, the results for 2004 also included
non-cash patent amortization and depreciation charges totaling $550,000 versus
$616,000 in 2003. The net loss for 2003 also included a non-cash charge totaling
$207,000 related to the write-down of our investment in ADX Corporation.
Marketing, general and administrative expenses for the year ended
December 31, 2004 increased to $5,049,000 from $4,317,000 in 2003, due primarily
to the addition of licensing and business development personnel for the Acacia
Technologies group, an increase in the Acacia Technologies group's patent
related commercialization expenses and an increase in corporate professional
fees related to the group's Sarbanes-Oxley compliance projects and related
efforts. The Acacia Technologies group's patent related legal expenses,
excluding V-chip related legal fees described above, increased to $2,465,000 for
the year ended December 31, 2004 compared to $1,886,000 in 2003, due to an
increase in costs incurred in connection with the Acacia Technologies group's
ongoing DMT patent commercialization and enforcement programs, including
increased legal costs related to new patent claims and the identification of
additional potential licensees of our DMT technology and increased patent
enforcement costs related to ongoing DMT patent related litigation.
3
FINANCIAL CONDITION
Total assets for the Acacia Technologies group were $33,058,000 as of
December 31, 2004 compared to $39,978,000 as of December 31, 2003. Cash and cash
equivalents and short-term investments totaled $28,646,000 as of December 31,
2004 compared to $33,201,000 as of December 31, 2003.
In February 2005, Acacia Research Corporation raised gross proceeds of
$19,600,000 through the sale of 3,500,000 shares of Acacia Research - Acacia
Technologies common stock at a price of $5.60 per share in a registered direct
offering. Net proceeds raised of approximately $19,575,000, which are net of
related issuance costs, were attributed to the Acacia Technologies group.
COMBIMATRIX GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
FINANCIAL RESULTS
Revenues for the fourth quarter of 2004 were $522,000 versus $53,000 in
the comparable 2003 period. Fourth quarter 2004 revenues were comprised of
$390,000 of government contract revenues and $132,000 of CustomArrayTM product
and service revenues.
Revenues for the year ended December 31, 2004 were $19,641,000 versus
$456,000 in 2003. Revenues for the year ended December 31, 2004 were comprised
of $17,302,000 in Roche related deferred contract revenues, $1,993,000 in
government contract revenues and $346,000 of CustomArrayTM product and service
revenues.
Government contract revenues relate to the CombiMatrix group's
development of biowarfare detection technology under a $5.9 million Department
of Defense contract awarded in March 2004.
In March 2004, the CombiMatrix group completed all phases of its
research and development agreement with Roche and as a result, recognized all
previously deferred Roche related contract revenues totaling $17,302,000, in the
first quarter of 2004.
The fourth quarter 2004 division net loss was $4,118,000 versus
$4,065,000 in the comparable 2003 period. The fourth quarter 2004 results
include non-cash patent amortization, asset depreciation and stock compensation
charges totaling $563,000 versus $662,000 in the comparable 2003 period.
Division net income for the year ended December 31, 2004 was $710,000
versus a net loss of $18,969,000 in 2003. Results for the year ended December
31, 2004 include non-cash patent amortization, asset depreciation and stock
compensation charges totaling $2,955,000 versus $4,064,000 in 2003. The decrease
in non-cash charges is due primarily to the accelerated method of amortization
used to amortize the CombiMatrix group's deferred stock compensation balance,
which was fully amortized as of December 31, 2004. Net income for 2004 also
includes a non-cash legal settlement charge of $812,000 related to the change in
fair value of AR-CombiMatrix common stock potentially issuable in connection
with certain anti-dilution provisions of the September 2002 settlement agreement
with Nanogen, Inc. The anti-dilution provisions expire in September 2005.
Research and development expenses for the year ended December 31, 2004
were $7,168,000 (including government contract costs) versus $8,098,000 in 2003.
Research and development activities for the year ended December 31, 2004
included increased costs incurred in connection with the CombiMatrix group's
commitments under its biowarfare detection contract with the Department of
Defense awarded in March 2004 and costs related to other internal research and
development efforts in the areas of genomics, drug discovery and development and
material sciences. Research and development expenses in 2003 related primarily
to the CombiMatrix group's research and development agreements with Roche, which
were completed in the first quarter of 2004.
4
Marketing, general and administrative expenses for the year ended
December 31, 2004 increased to $9,377,000 from $8,714,000 in 2003, due primarily
to an increase in marketing and sales costs related to the launch of the
CombiMatrix group's CustomArray(TM) DNA array platform beginning in March 2004
and an increase in corporate professional fees related to the group's
Sarbanes-Oxley compliance projects and related efforts.
FINANCIAL CONDITION
Total assets for the CombiMatrix group were $55,388,000 as of December
31, 2004 compared to $50,161,000 as of December 31, 2003. Cash and cash
equivalents and short-term investments totaled $23,712,000 as of December 31,
2004 compared to $17,299,000 as of December 31, 2003.
BUSINESS HIGHLIGHTS AND RECENT DEVELOPMENTS
- -------------------------------------------
Business highlights of the fourth quarter and recent developments include:
ACACIA TECHNOLOGIES GROUP:
o On January 31, 2005, Acacia Global Acquisition Corporation
acquired the assets of Global Patent Holdings, LLC, a
privately held patent holding company based in Northbrook,
Illinois, which owned 11 patent licensing companies including
TechSearch, LLC. The purchase price included $5.0 million in
cash and the issuance of approximately 3.9 million shares of
Acacia Research--Acacia Technologies common stock. The
acquisition gives the Acacia Technologies group ownership of
companies that control 27 patent portfolios, which include 120
U.S. patents and certain foreign counterparts, and cover
technologies used in a wide variety of industries including:
AUDIO/VIDEO ENHANCEMENT AND SYNCHRONIZATION
-------------------------------------------
These patented technologies generally relate to the use of a
noise reduction filtering system for digital video
compression, and for video and audio signals received by
digital radios and video displays. Other aspects of the
technologies generally relate to the synchronization of
audio/video signals. These technologies can be used by
broadcasters, broadcast equipment manufacturers, other
electronics manufacturers, and low frame rate video
production, such as that used on the Internet.
BROADCAST DATA RETRIEVAL
------------------------
This patented technology generally relates to a system for
broadcasting and receiving programming content together with
supplemental data such as the title of a song, artist, content
description or a catalog number, which can be stored and
recalled for later viewing. This technology can be used in
satellite radio, and other broadcasting where data is
transmitted along with the content.
COMPUTER MEMORY CACHE COHERENCY
-------------------------------
This patented technology generally relates to interface
circuits used by intelligent peripheral devices with cache
memory to communicate with the main computer memory. By
synchronizing main computer memory and main cache memory,
peripheral devices such as graphics processors can operate at
much higher speeds, without costs associated with their own
memory. This technology can be used in desktop, notebook, and
server computer systems.
CREDIT CARD FRAUD PROTECTION
----------------------------
This patented technology generally relates to a computerized
system for protecting retailers and consumers engaged in
credit card, check card, and debit transactions. The system
includes an electronic card reader, and the generation and use
of a transaction number, which specifically identifies each
transaction processed within the system. As a result, the
retailer does not necessarily have to print detailed
information concerning the cardholder's identity or account
number on the customer's receipt.
5
DATABASE MANAGEMENT
-------------------
This patented technology generally relates to the improved
combination, display, and coordination of certain information
from data tables in a relational database software program.
The user is able to easily track the impact of a change to one
table, on other tables in the program through various tools
including a graphical representation.
DATA ENCRYPTION AND PRODUCT ACTIVATION
--------------------------------------
These patented technologies generally relate to accessing
clear data, and encrypted data via an identification label.
Once decrypted, the clear and decrypted data are combined to
activate software programs, and other files. Other aspects of
the technologies generally relate to the use of an operating
system to transparently create an encrypted file storage
subsystem to fully secure user files from access by anyone
other than the user.
DIGITAL VIDEO PRODUCTION
------------------------
These patented technologies generally relate to features that
can be found in production video processing equipment. They
cover improved methods of equipment interconnection, aspects
of graphical user interface displays, and automation of video
processing. These features allow ease of equipment
interconnection, clearer information display, and automation
of video production tasks previously performed manually. Other
aspects of the technologies generally relate to automatic
color correction, commonly used when transferring film to
video, and certain 3D effects, commonly used in video scene
transitions.
DYNAMIC MANUFACTURING MODELING
------------------------------
This patented technology generally relates to a modeling and
control process used to decrease costs and increase production
for factory operations. Such simulation modeling can include a
variety of parameters such as products, fabrication sequences,
collections of job sets, scheduling rules, and machine
reliability standards. This technology can be used for
exacting manufacturing processes such as semiconductor
fabrication.
ENHANCED INTERNET NAVIGATION
----------------------------
These patented technologies generally relate to enhanced
Internet navigation by retrieving a page from a hyper-linked
website for retrieval offline on a personal computer. This
enables certain website content to be saved, retrieved, and
accessed locally, without the need for Internet connectivity.
Other aspects of the technologies generally relate to
information distribution and processing via the use of a
linking reference to access sets of data. These technologies
can be used in email transmissions with links to websites,
special offers, and other information.
IMAGE RESOLUTION ENHANCEMENT
----------------------------
This patented technology generally relates to the modification
of a video or printed display to improve the perceived image
quality beyond the basic pixel resolution of the display. The
apparent improvement in the resolution of an image occurs
without requiring an increase in the resolution of the signal
or input. This technology can be used in certain CRT, plasma
and LCD televisions and displays, low resolution cameras such
as camera phones, and consumer and commercial printers.
6
INTERACTIVE DATA SHARING
------------------------
This patented technology generally relates to the real time
sharing of changes to content, enabling users to interactively
view, change and add to the content from multiple remote
terminals. This technology can be used in certain types of
conferencing such as web conferencing, interactive gaming, and
other forms of collaborative interactive communication.
INTERACTIVE TELEVISION
----------------------
These patented technologies generally relate to various
aspects of interactive television including receivers such as
set-top boxes and certain televisions used in digital
satellite and digital cable systems that permit television
viewers to access interactive television features supplied by
their satellite and cable providers as part of their digital
programming packages. Data, which is associated with the
interactive television features and is broadcast along with
the video signal, is extracted and processed by components
within the receivers, and is then made available to viewers
who choose to access the interactive television features
through their remote control. Examples of such data include
sports scores, weather information, stock updates, interactive
games, and movie listings. Other aspects of the technologies
generally relate to the scrambling or encrypting of broadcast
signals whereby the unscrambling or decryption is accomplished
through a removable card, commonly known as a "smart card."
INTERSTITIAL INTERNET ADVERTISING
---------------------------------
This patented technology generally relates to the display of
certain advertising, informational, and branding messages that
appear between or outside web pages when the user is
conducting a search, by storing the message prior to being
displayed. This technology is most commonly used by travel
based and other reservation based websites.
MICROPROCESSOR ENHANCEMENT
--------------------------
This patented technology generally relates to an architecture
employed in advanced pipeline microprocessors. This
architecture allows for conditional execution of
microprocessor instructions, and a later determination of
whether the instructions executed should be written back to
memory. By conditionally executing instructions in this
architecture, significant improvements in microprocessor speed
can be achieved. Certain pipelined processor manufacturers are
adopting this method of processing to improve processor speed.
MULTI-DIMENSIONAL BAR CODES
---------------------------
This patented technology generally relates to encoding and
reading a data matrix consisting of an array of data cells
with a border. The data matrix can contain a variety, amount,
and depth of information that would not fit on to an ordinary
bar code. This patented technology can have many applications
in the manufacturing, distribution, operations, accounting,
and security industries such as tracking the movement of
products, collection of data, improved production capabilities
and anti-counterfeiting.
NETWORK DATA BACK-UP
--------------------
This patented technology generally relates to a computer
network system for backing up data and program files listed by
users from networked work stations. User lists are stored
locally, resulting in increased speed and security. This
technology can be used by network software.
RESOURCE SCHEDULING
-------------------
This patented technology generally relates to the creation and
maintenance of a schedule through the periodic management and
monitoring of interrelated and interdependent resources from a
database. These resource management tools can be part of
scheduling software used to plan and monitor the use of
facilities, the allocation of manpower, and the use and
scheduling of other resources.
7
ROTATIONAL VIDEO IMAGING
------------------------
This patented technology generally relates to a rotational
video imaging device for viewing the interior of a cavity or
structure. This technology can be used for medical devices
such as endoscopes, and non-medical devices capable of
noninvasive surveillance and analysis.
SPREADSHEET AUTOMATION
----------------------
This patented technology generally relates to automating the
production of worksheet files for use by electronic
spreadsheet programs. Specifically, the patented technology
permits the efficient retrieval of data from external
databases by allowing the user to select specific data from a
database and import the specified data into a spreadsheet
program through uniquely streamlined spreadsheet commands. The
adaptive quality of the technology permits, among other
things, the user to retrieve updated information from an
external database without creating formatting issues in the
user's spreadsheet program.
COMBIMATRIX GROUP:
o In October 2004, the CombiMatrix group entered into an
agreement to acquire up to a one-third ownership interest in
Leuchemix, Inc. ("Leuchemix"), a private drug development
firm, which is developing several compounds for the treatment
of leukemia and other cancers. In consideration for the equity
ownership interest, the CombiMatrix group will provide
Leuchemix a total of $4,000,000 to be paid quarterly over the
next two years. Dr. Amit Kumar, CombiMatrix Corporation's CEO,
was named a director of Leuchemix.
o In December 2004, the CombiMatrix group launched
Design-on-Demand(TM) Arrays, providing researchers with the
world's largest and most comprehensive catalog of array
expression products for microbial, eukaryotic, and viral
genomes. These arrays offer scientists an affordable and
flexible tool to conduct whole-genome expression studies on a
wide range of organisms, including Influenza, HIV, Anthrax,
and SARS coronavirus. There are no minimum order requirements,
no set-up fees, and no design fees in ordering these arrays.
o In December 2004, the CombiMatrix group and its partner,
Nanomaterials Discovery Corporation (NDC), achieved a
milestone with the delivery of a prototype workstation for the
combinatorial discovery and development of new nanomaterials.
A conference call is scheduled for today. The Acacia Technologies Group
presentation and Q&A will start at 1:30 p.m. Pacific Time (4:30 p.m. Eastern).
The CombiMatrix Group presentation and Q&A session will start at 2:00 p.m.
Pacific Time (5:00 p.m. Eastern).
To listen to the presentation by phone, dial (800) 262-1292 for
domestic callers and (719) 457-2680 for international callers, both of whom will
need to provide the operator with the confirmation code 8768414. A replay of the
audio presentation will be available for 30 days at (888) 203-1112 for domestic
callers and (719) 457-0820 for international callers, both of whom will need to
enter the code 8768414 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.
8
The Acacia Technologies group develops, acquires, and licenses patented
technologies. Acacia controls 29 patent portfolios, which include 126 U.S.
patents, and certain foreign counterparts, covering technologies used in a wide
variety of industries including audio/video-on-demand, digital ad insertion,
interactive television, broadcast equipment, data transmission, cache coherency,
data file synchronization, data matrix bar codes, dynamic manufacturing models,
product activation, encryption, image resolution and enhancement, scheduling
software, interstitial Internet advertising, interactive simulation systems,
peer to peer network communications, spreadsheet programs, endoscopic cameras,
video noise reduction, and audio/video synchronization.
The CombiMatrix group is developing a platform technology to rapidly produce
customizable arrays, which are semiconductor-based tools for use in identifying
and determining the roles of genes, gene mutations and proteins. The
CombiMatrix's group's technology has a wide range of potential applications in
the areas of genomics, proteomics, biosensors, drug discovery, drug development,
diagnostics, combinatorial chemistry, material sciences and nanotechnology.
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.
Information about the Acacia Technologies group and the CombiMatrix
group is available at www.acaciaresearch.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
THIS NEWS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
"SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. THESE STATEMENTS ARE BASED UPON OUR CURRENT EXPECTATIONS AND SPEAK ONLY AS
OF THE DATE HEREOF. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY AND ADVERSELY FROM
THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS
AND UNCERTAINTIES, INCLUDING THE 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.
9
ACACIA RESEARCH CORPORATION
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)
(UNAUDITED)
CONSOLIDATED BALANCE SHEET INFORMATION
DECEMBER 31, DECEMBER 31,
2004 2003
-------- --------
Total Assets $88,327 $90,040
======== ========
Total Liabilities $11,913 $28,513
======== ========
Minority Interests $ 778 $ 1,127
======== ========
Total Stockholders' Equity $75,636 $60,400
======== ========
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FOR THE TWELVE MONTHS ENDED
------------------------------------- -------------------------------------
DECEMBER 31, 2004 DECEMBER 31, 2003 DECEMBER 31, 2004 DECEMBER 31, 2003
----------------- ----------------- ----------------- -----------------
Revenues:
Research and development contract ................. $ -- $ -- $ 17,302 $ --
License fees ...................................... 779 481 4,284 692
Government contract ............................... 390 -- 1,993 --
Service contracts ................................. 14 26 116 49
Products .......................................... 118 27 230 407
----------------- ----------------- ----------------- -----------------
Total revenues .................................. 1,301 534 23,925 1,148
----------------- ----------------- ----------------- -----------------
Operating expenses:
Cost of government contract revenues .............. 369 -- 1,874 --
Cost of product sales ............................. 92 6 173 99
Research and development expenses ................. 1,362 1,880 5,294 8,098
Non-cash stock compensation expense -
research and development ....................... -- (59) 91 466
Marketing, general and administrative
expenses ....................................... 4,938 3,577 17,559 14,917
Non-cash stock compensation expense -
marketing, general and administrative .......... 29 134 663 1,189
Goodwill impairment charge ........................ 40 -- 1,656 --
Amortization of patents ........................... 400 399 1,597 1,597
Legal settlement charges .......................... 36 -- 812 144
----------------- ----------------- ----------------- -----------------
Total operating expenses ........................ 7,266 5,937 29,719 26,510
----------------- ----------------- ----------------- -----------------
Operating loss .................................. (5,965) (5,403) (5,794) (25,362)
----------------- ----------------- ----------------- -----------------
Other income (expenses) ............................. 216 162 784 622
----------------- ----------------- ----------------- -----------------
Loss from operations before income taxes and
minority interests ............................... (5,749) (5,241) (5,010) (24,740)
Benefit for income taxes ............................ 69 77 275 273
----------------- ----------------- ----------------- -----------------
Loss from operations before minority interests ...... (5,680) (5,164) (4,735) (24,467)
Minority interests .................................. 3 17 6 47
----------------- ----------------- ----------------- -----------------
Loss from continuing operations ..................... (5,677) (5,147) (4,729) (24,420)
Discontinued operations:
Estimated loss on disposal of discontinued
operation ..................................... -- -- (104) --
----------------- ----------------- ----------------- -----------------
Net loss ............................................ $ (5,677) $ (5,147) $ (4,833) $ (24,420)
================= ================= ================= =================
Earnings (loss) per share:
Attributable to the Acacia Technologies group:
Loss from continuing operations ................... $ (1,559) $ (1,082) $ (5,439) $ (5,451)
Basic and diluted loss per share ................ (0.08) (0.05) (0.27) (0.28)
Loss from discontinued operations ................. $ -- $ -- $ (104) $ --
Basic and diluted loss per share ................ -- -- (0.01) --
Net loss .......................................... $ (1,559) $ (1,082) $ (5,543) $ (5,451)
Basic and diluted loss per share ................ (0.08) (0.05) (0.28) (0.28)
Attributable to the CombiMatrix group:
Income (loss) from continuing operations .......... $ (4,118) $ (4,065) $ 710 $ (18,969)
Basic and diluted income (loss) per share ....... (0.13) (0.16) 0.02 (0.76)
Net income (loss) ................................. $ (4,118) $ (4,065) $ 710 $ (18,969)
Basic and diluted income (loss) per share ....... (0.13) (0.16) 0.02 (0.76)
Weighted average shares:
Acacia Research - Acacia Technologies stock:
Basic and diluted ............................... 19,805,917 19,718,377 19,784,883 19,661,655
================= ================= ================= =================
Acacia Research - CombiMatrix stock:
Basic ........................................... 31,130,175 26,207,146 29,962,596 24,827,819
================= ================= ================= =================
Diluted ......................................... 31,130,175 26,207,146 30,995,663 24,827,819
================= ================= ================= =================
10
ACACIA TECHNOLOGIES GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
GROUP BALANCE SHEET INFORMATION
DECEMBER 31, DECEMBER 31,
2004 2003
-------- --------
Total Assets $33,058 $39,978
======== ========
Total Liabilities $ 3,472 $ 4,188
======== ========
Minority Interests $ 778 $ 1,127
======== ========
Total Stockholders' Equity $28,808 $34,663
======== ========
GROUP STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FOR THE TWELVE MONTHS ENDED
------------------------------------- -------------------------------------
DECEMBER 31, 2004 DECEMBER 31, 2003 DECEMBER 31, 2004 DECEMBER 31, 2003
----------------- ----------------- ----------------- -----------------
Revenues:
License fee income ............................. $ 779 $ 481 $ 4,284 $ 692
----------------- ----------------- ----------------- -----------------
Total revenues ............................... 779 481 4,284 692
----------------- ----------------- ----------------- -----------------
Operating expenses:
Marketing, general and administrative
expenses ..................................... 1,560 1,160 5,049 4,317
Legal expenses - patents ....................... 781 451 3,133 1,886
Goodwill impairment charge ..................... 40 -- 1,656 --
Amortization of patents ........................ 126 125 501 502
----------------- ----------------- ----------------- -----------------
Total operating expenses ..................... 2,507 1,736 10,339 6,705
----------------- ----------------- ----------------- -----------------
Operating loss ............................... (1,728) (1,255) (6,055) (6,013)
----------------- ----------------- ----------------- -----------------
Other income (expenses) .......................... 131 113 471 408
----------------- ----------------- ----------------- -----------------
Loss from continuing operations before
income taxes and minority interests ............ (1,597) (1,142) (5,584) (5,605)
Benefit for income taxes ......................... 35 43 139 137
----------------- ----------------- ----------------- -----------------
Loss from continuing operations before
minority interests ............................ (1,562) (1,099) (5,445) (5,468)
Minority interests ............................... 3 17 6 17
----------------- ----------------- ----------------- -----------------
Loss from continuing operations .................. (1,559) (1,082) (5,439) (5,451)
Discontinued operations:
Estimated loss on disposal of discontinued
operation .................................... -- -- (104) --
----------------- ----------------- ----------------- -----------------
Division net loss ................................ $ (1,559) $ (1,082) $ (5,543) $ (5,451)
================= ================= ================= =================
11
COMBIMATRIX GROUP
(A DIVISION OF ACACIA RESEARCH CORPORATION)
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
GROUP BALANCE SHEET INFORMATION
DECEMBER 31, DECEMBER 31,
2004 2003
--------- --------
Total Assets $ 55,388 $50,161
========= ========
Total Liabilities $ 8,560 $24,424
========= ========
Minority Interests $ -- $ --
========= ========
Total Stockholders' Equity $ 46,828 $25,737
========= ========
GROUP STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FOR THE TWELVE MONTHS ENDED
-------------------------------------- -------------------------------------
DECEMBER 31, 2004 DECEMBER 31, 2003 DECEMBER 31, 2004 DECEMBER 31, 2003
----------------- ----------------- ----------------- -----------------
Revenues:
Research and development contract ........... $ -- $ -- $ 17,302 $ --
Government contract ......................... 390 -- 1,993 --
Service contracts ........................... 14 26 116 49
Products .................................... 118 27 230 407
----------------- ----------------- ----------------- -----------------
Total revenues ............................ 522 53 19,641 456
----------------- ----------------- ----------------- -----------------
Operating expenses:
Cost of government contract revenues ........ 369 -- 1,874 --
Cost of product sales ....................... 92 6 173 99
Research and development expenses ........... 1,362 1,880 5,294 8,098
Non-cash compensation expense -
research and development .................. -- (59) 91 466
Marketing, general and administrative
expenses .................................. 2,597 1,966 9,377 8,714
Non-cash compensation expense -
marketing, general and administrative ..... 29 134 663 1,189
Amortization of patents ..................... 274 274 1,096 1,095
Legal settlement charges .................... 36 -- 812 144
----------------- ----------------- ----------------- -----------------
Total operating expenses .................. 4,759 4,201 19,380 19,805
----------------- ----------------- ----------------- -----------------
Operating income (loss) ................... (4,237) (4,148) 261 (19,349)
----------------- ----------------- ----------------- -----------------
Other income .................................. 85 49 313 214
----------------- ----------------- ----------------- -----------------
Income (loss) from operations before
income taxes and minority interests ......... (4,152) (4,099) 574 (19,135)
Benefit for income taxes ...................... 34 34 136 136
----------------- ----------------- ----------------- -----------------
Income (loss) from operations before
minority interests .......................... (4,118) (4,065) 710 (18,999)
Minority interests ............................ -- -- -- 30
----------------- ----------------- ----------------- -----------------
Division net income (loss) .................... $ (4,118) $ (4,065) $ 710 $ (18,969)
================= ================= ================= =================
12