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Business Combinations | 12 Months Ended
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Dec. 31, 2019
Business Combinations [Abstract] |
Business Combinations | Business Combinations On April 6, 2017, we acquired substantially all of the net assets of Residential Control Systems, Inc. ("RCS"), a U.S.-based designer and manufacturer of energy management and control products for the residential, small commercial and hospitality markets. The purchase price of $12.6 million was comprised of $8.9 million in cash and $3.7 million of contingent consideration. Additionally, we incurred $0.1 million in acquisition costs, consisting primarily of accounting related expenses, which are included within selling, general and administrative expenses for the year ended December 31, 2017. The acquisition of these assets allows us to expand our product offering of home sensing, monitoring and control solutions to include smart thermostat, sensing and monitoring products previously sold and marketed by RCS. Our consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017 include net sales of $3.9 million, $5.1 million, and $3.5 million, respectively; and net losses of $2.4 million, $0.2 million, and $0.4 million, respectively, attributable to RCS. Contingent Consideration We are required to make additional earnout payments of up to $10.0 million upon the achievement of certain operating income levels attributable to RCS over the period commencing on the acquisition date through June 30, 2022. The amount of contingent consideration is calculated at the end of each calendar year and is based on the agreed upon percentage of operating income as defined in the Asset Purchase Agreement (the "APA"). Operating income is calculated using certain revenues, costs and expenses directly attributable to RCS as specified in the APA. At the acquisition date, the value of earnout contingent consideration was estimated using a valuation methodology based on projections of future operating income calculated in accordance with the APA. Such projections were then discounted using an average discount rate of 24.8% to reflect the risk in achieving the projected operating income levels as well as the time value of money. The fair value measurement of the earnout contingent consideration was based primarily on significant inputs not observable in an active market and thus represents a Level 3 measurement as defined under U.S. GAAP. At December 31, 2018, the fair value of the earnout contingent consideration attributable to RCS was $0.7 million. During the year ended December 31, 2019, the fair value of earnout contingent consideration attributable to RCS decreased $0.5 million to $0.2 million. Changes in the fair value of earnout contingent consideration primarily reflect adjustments to the timing and amount of payments as well as the related accretion driven by the time value of money. These adjustments are recorded within selling, general and administrative expenses. At December 31, 2019, the fair value of earnout contingent consideration attributable to RCS is presented within long-term contingent consideration in our consolidated balance sheet. Pro Forma Results (Unaudited) The unaudited pro forma financial information presents the combined results of our operations and the operations of RCS as if the RCS acquisition had occurred on January 1, 2017. This unaudited pro forma financial information is not intended to represent or be indicative of the consolidated results of operations that would have been achieved had the acquisition actually been completed as of January 1, 2017, and should not be taken as a projection of the future consolidated results of our operations. For the year ended December 31, 2017, pro forma net sales were $696.4 million; pro forma net loss was $10.5 million; pro forma basic and diluted loss per share was $0.73. For purposes of determining pro forma net loss, adjustments were made, as follows, to derive the information presented above. The pro forma net loss assumes that amortization of acquired intangible assets began at January 1, 2017 rather than on April 6, 2017. The result is a net increase in amortization expense of $25 thousand for the year ended December 31, 2017. Additionally, acquisition costs totaling $0.1 million are excluded from pro forma net loss. All adjustments have been made net of their related tax effects.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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