Acacia Research Reports Third Quarter 2008 Financial Results

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

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

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

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

Acacia Research Corporation Consolidated Financial Results

For the Three Months Ended September 30, 2008 and 2007

Results from Continuing Operations

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

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

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

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

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

Third quarter 2008 patent-related legal expenses were $1,153,000,
compared to $2,027,000 in the comparable 2007 period. Patent-related
legal expenses include patent-related prosecution and enforcement
costs incurred by outside law firms engaged on an hourly basis and the
out-of-pocket expenses incurred by law firms engaged on a contingent
fee basis. Patent-related legal expenses fluctuate from period to
period based on patent enforcement and prosecution activity associated
with ongoing licensing and enforcement programs and the timing of the
commencement of new licensing and enforcement programs in each period.
We expect patent-related legal expenses to continue to fluctuate
quarter to quarter based on the factors summarized above, in
connection with our current and future patent licensing and
enforcement programs.

Financial Condition

Total assets were $72,206,000 as of September 30, 2008 compared to
$71,051,000 as of December 31, 2007. Cash and cash equivalents and
investments totaled $45,360,000 as of September 30, 2008 compared to
$51,433,000 as of December 31, 2007. License fees receivable totaled
$10,466,000 as of September 30, 2008 compared to $1,409,000 as of
December 31, 2007.

Business Highlights and Recent Developments

Business highlights of the third quarter of 2008 and recent
developments include the following:

(Note: Acacia Patent Acquisition LLC, Disc Link Corporation,
Telematics Corporation, International Printer Corporation, Credit Card
Fraud Control Corporation, Diagnostic Systems Corporation, IP
Innovation, LLC, Parking Security Systems Corporation, TransAuction
LLC, Contacts Synchronization Corporation, Light Valve Solutions LLC,
Refined Recommendations Corporation, Screentone Systems Corporation,
Priority Access Solutions Corporation, High Resolution Optics
Corporation, Secure Access Corporation and Service Reminder LLC are
all wholly owned operating subsidiaries of Acacia Research
Corporation):

-- Disc Link Corporation entered into a license agreement with
Block Financial LLC covering patents relating to portable
storage devices with links. The portable storage devices with
links technology generally relates to products sold or
distributed on CDs or DVDs that include a link to retrieve
additional data via the Internet.

-- Telematics Corporation settled litigation against Motorola,
Inc., that was pending in the United States District Court for
the Northern District of Georgia. The Telematics technology
generally relates to systems and methods for displaying mobile
vehicle information on a map. This technology can be used in
navigation and fleet management systems that combine wireless
communication with GPS tracking and map displays.

-- International Printer Corporation entered into settlement and
license agreements with the following companies, covering a
portfolio of patents that apply to remote management of
imaging devices:

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-- Brother International Corp. and Brother Industries, Ltd.

-- Hewlett-Packard Company

-- Samsung Electronics Co., Ltd. and Samsung Electronics
America, Inc.
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-- Credit Card Fraud Control Corporation entered into a
non-exclusive patent license and settlement agreement with
National A-1 Advertising, Inc., covering a patent that applies
to fraud protection technology. This resolves a dispute
between the parties which was pending before the United States
District Court for the Eastern District of Texas. This
patented technology generally relates to methods for
determining and preventing fraud when using telephonic,
computer network or other communication services to complete a
sale. The claims cover methods for preventing fraud during the
purchase of services for entertainment or technical support.
These methods help protect vendors from credit card
charge-backs and help protect consumers whose credit card
numbers may have been stolen.

-- Diagnostic Systems Corporation entered into a license
agreement with Information Builders, Inc. covering a portfolio
of patents that apply to rule-based monitoring. This resolved
a dispute that was pending in the District Court for the
Central District of California. The rule-based monitoring
technology can be used to monitor a variety of hardware and
software systems such as network nodes, servers, databases and
applications.

-- Parking Security Systems Corporation entered into a license
agreement with Affiliated Computer Services, Inc. covering a
portfolio of patents that generally relate to methods of
automatically identifying a vehicle through a characteristic,
such as a license plate number, to control vehicle access.
This patented technology is applicable to airports, hotels,
shopping centers and other parking areas that employ vehicle
access control measures.

-- TransAuction LLC entered into settlement and license
agreements with the following companies covering a patent
portfolio relating to methods for conducting guaranteed online
auctions:

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-- A license agreement with buySAFE, Inc.

-- A settlement and license agreement with WineCommune, LLC
resolving patent litigation against WineCommune that was
pending in the United States District Court for the Eastern
District of Texas.
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The patented technology generally relates to methods for securing
the performance of online auction participants such as using
guarantees and providing corresponding visual indication of guaranteed
auctions.

-- Contacts Synchronization Corporation entered into a license
agreement with Research in Motion for rights to practice
United States Patent No. 7,072,687, which discloses and claims
technologies for synchronizing addresses between one device
and another over a wireless communication network.

-- Light Valve Solutions LLC entered into a settlement and
license agreement with BenQ America Corp. and BenQ USA Corp.
covering a patent portfolio that relates to light valve
systems. This agreement resolves patent litigation that was
pending in the United States District Court for the Northern
District of Georgia.

-- Refined Recommendations Corporation entered into a settlement
and license agreement with Netflix, Inc. covering a patent
that applies to web personalization. This patented technology
generally relates to technology for learning user preferences
and automatically personalizing a user's online experience.
The technology is applicable to web sites that use categories
plus attributes to identify items, and where individual
attributes apply to multiple categories.

-- Screentone Systems Corporation entered into a settlement and
license agreement with Kyocera Mita covering a patent
portfolio of high quality image processing. This patented
technology generally relates to methods for improving print
image quality through the use of advanced signal processing
techniques for transforming continuous toned images into high
quality half toned images. This technology can be used in
printing products such as high end laser printers and image
setters.

-- Priority Access Solutions Corporation entered into a
settlement and license agreement with International Business
Machines Corporation covering a patent that applies to
software license management. This patented technology
generally relates to technology for monitoring and tracking
the use of software applications across a network. This
technology can be used to provide a system for managing
software license compliance in an enterprise environment as
well as metering actual usage levels in a
Software-as-A-Service (SaaS) environment.

-- High Resolution Optics Corporation settled its lawsuit against
the U.S. Government and Raytheon covering a patent portfolio
relating to advanced optics and optical systems. This patented
technology generally relates to refractive and diffractive
systems and methods for improving imaging capabilities in
multi-element optical systems by using fewer elements. The
patented systems and techniques have applications in imaging
systems used by the military and those used by the private
sector.

-- Secure Access Corporation settled its lawsuit against the U.S.
Government for use of smart card-based physical access
systems. This patented technology generally relates to
security systems that use smart cards to allow entry to
restricted areas. This technology may be used in military and
civilian government facilities as well as corporate
environments that require verifiable personnel access.

-- Service Reminder LLC entered into a settlement agreement with
American Honda Motor Company, Inc. The settlement agreement
resolves patent litigation that was pending in the United
States District Court for the District of New Jersey. This
patented technology generally relates to vehicle maintenance
alerts. This technology may be used to alert a driver that an
oil change or other vehicle maintenance should be performed.

-- Refined Recommendations Corporation entered into a settlement
and license agreement with Netflix, Inc. The settlement and
license agreement resolves patent litigation that was pending
in the United States District Court for the Northern District
of California. This patented technology generally relates to
technology for user preferences and automatically
personalizing a user's online experience. The technology is
applicable to web sites that use categories plus attributes to
identify items, and where individual attributes apply to
multiple categories.

-- Acacia Patent Acquisition LLC continued its patent and patent
rights acquisition activities, including the following:

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-- In July 2008, acquired rights to patents relating to
automated database retrieval. This patented technology
generally relates to automatically retrieving database
information stored in a plurality of formats, including
structural and/or relational information.

-- In August 2008, acquired rights to patents relating to
optical switching technology. This patented technology
generally relates to the optical switching equipment used
in fiber optic communications, such as dense wave division
multiplexing (DWDM). This technology may be used in
equipment such as reconfigurable optical add/drop
multiplexers (ROADM's) that aggregate data and voice
traffic for transport over fiber optic networks.

-- In September 2008, acquired patents relating to
manufacturing data transfer technology. This patented
technology generally relates to integrating manufacturing
computer systems with CAD systems.

-- In September 2008, acquired patents relating to network
remote access technology. This patented technology
generally relates to remote access to local or wide area
networks and includes architectures and methods for
converting time division multiplexed (TDM) data to packet-
based data. The technology may be used in equipment such as
gateways, DSL add/drop multiplexers (DSLAM's) and voice-
over-IP (VoIP) phone adapters.

-- In September 2008, acquired rights to patents relating to
lighting ballast technology. This patented technology
generally relates to controlling power to fluorescent
lamps. The technology may be used in lighting ballasts for
industrial applications.
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A conference call is scheduled for today. The Acacia Research
Corporation presentation and Q&A will start at 1:30 p.m. Pacific Time
(4:30 p.m. Eastern).

To listen to the presentation by phone, dial (888) 674-0222 for
domestic callers and (201) 604-0498 for international callers. A
replay of the audio presentation will be available for 30 days at
(888) 346-3949 for domestic callers and (404) 260-5385 for
international callers, both of whom will need to enter the PIN code
4322297# when prompted, dial 4 to listen to replays and enter the
Confirmation code 20081002188535#.

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's subsidiaries develop, acquire, and license
patented technologies. Acacia Research's subsidiaries control 100
patent portfolios, which include U.S. patents and certain foreign
counterparts, covering technologies used in a wide variety of
industries.

Information about Acacia Research is available at
www.acaciatechnologies.com and 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 the
credit markets and 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. We also note
that our reported financial performance and period to period
comparisons are not necessarily indicative of the results that may be
expected in the future and we believes that such comparisons cannot be
relied upon as indicators of future performance. Our Annual Report on
Form 10-K, recent and forthcoming Quarterly Reports on Form 10-Q,
recent Current Reports on Forms 8-K, and other reports we file with
the Securities and Exchange Commission 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

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ACACIA RESEARCH CORPORATION
CONSOLIDATED SUMMARY FINANCIAL INFORMATION
(In thousands, except share and per share information)
(Unaudited)

CONSOLIDATED BALANCE SHEET INFORMATION

September 30, December 31,
2008 2007
------------- -------------

Total Assets $72,206 $71,051
====== ======
Total Liabilities $13,491 $ 6,247
====== ======
Total Stockholders' Equity $58,715 $64,804
====== ======
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CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three For the Nine
Months Ended Months Ended
------------------------- -------------------------
September September September September
30, 2008 30, 2007 30, 2008 30, 2007
------------ ------------ ------------ ------------

License fee
revenues $ 13,796 $ 9,544 $ 29,960 $ 40,594
------------ ------------ ------------ ------------

Operating
expenses:
Marketing,
general and
administrative
expenses
(including non-
cash stock
compensation
expense of
$1,949 and
$5,716 for the
three and nine
months ended
September 30,
2008 and $1,869
and $3,776 for
the three and
nine months
ended September
30, 2007) 5,865 5,454 18,438 13,972
Inventor
royalties and
contingent
legal fees
expense -
patents 8,263 5,669 17,099 23,197
Legal expenses -
patents 1,153 2,027 3,242 4,463
Amortization of
patents 1,152 1,451 3,731 4,081
Write-off of
patent-related
intangible
asset - 235 - 235
------------ ------------ ------------ ------------

Total
operating
expenses 16,433 14,836 42,510 45,948
------------ ------------ ------------ ------------

Operating loss (2,637) (5,292) (12,550) (5,354)

Other income
(expense):
Interest income 242 647 935 1,704
Loss on
investments 13 - (250) -
------------ ------------ ------------ ------------

Total other
income
(expense) 255 647 685 1,704
------------ ------------ ------------ ------------

Loss from
continuing
operations before
income taxes (2,382) (4,645) (11,865) (3,650)

Provision for
income taxes (38) (29) (85) (177)
------------ ------------ ------------ ------------

Loss from
continuing
operations (2,420) (4,674) (11,950) (3,827)

Discontinued
operations:
Loss from
discontinued
operations -
Split-off of
CombiMatrix
Corporation - (2,286) - (8,086)
------------ ------------ ------------ ------------

Net loss $ (2,420) $ (6,960) $ (11,950) $ (11,913)
============ ============ ============ ============

Income (loss) per
common share:
Acacia Research
Corporation
common stock:
Net loss $ (2,420) $ (4,674) $ (11,950) $ (3,827)
Basic and
diluted loss
per share (0.08) (0.16) (0.41) (0.14)

Acacia Research -
CombiMatrix stock
- Discontinued
Operations -
Split-off of
CombiMatrix
Corporation:
Loss from
discontinued
operations -
Split-off of
CombiMatrix
Corporation $ - $ (2,286) $ - $ (8,086)
Basic and
diluted loss
per share - (0.04) - (0.14)

Weighted average
shares:
Acacia Research
Corporation
common stock:
Basic and
diluted 29,553,609 28,739,499 29,365,035 28,296,328
============ ============ ============ ============
Acacia Research
- CombiMatrix
stock:
Basic and
diluted - 59,875,769 - 55,862,707
============ ============ ============ ============
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Acacia Research Corporation
Rob Stewart, Investor Relations, 949-480-8300
Fax: 949-480-8301

Copyright Business Wire 2008