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Business Combinations
 9 Months Ended
Sep. 30, 2015
Business Acquisition [Line Items]  
Business Combination Disclosure [Text Block]
Business Combination

Acquisition of Sabine

On March 7, 2014, the Company completed the acquisition of Sabine, Inc. ("Sabine") through a stock purchase agreement ("SPA"). Through the acquisition, the Company now manufactures, designs and sells professional wireless microphone systems for live and installed audio under the Sacom and ClearOne brand. It also makes an FBX Feedback Exterminator for reliable automatic feedback control. With the addition of Sabine, the Company now has reliable and exclusive access to the supply of wireless microphones that are a critical component of its complete microphone portfolio.

Pursuant to the SPA, the Company (i) paid initial consideration of $8,141 in cash, (ii) accrued for possible additional earn-out payments over the next two years, estimated to be $657, and (iii) issued 150,000 shares of restricted common stock of the Company, valued at $1,679 (determined on the basis of the closing market price of the Company's stock on the acquisition date). The purchase price was paid out of cash on hand. The SPA contains representations, warranties and indemnifications customary for a transaction of this type.

The following table summarizes the consideration paid for the acquisition:
 
Consideration
Cash
$
8,141

Common stock
1,679

Contingent consideration
657

Total
$
10,477



The fair values of Sabine assets acquired and liabilities assumed are based on the information that was available during the measurement period of twelve months from the date of acquisition. The fair value of identified assets and liabilities acquired and goodwill is as follows:

 
Fair value
Cash
$
125

Accounts receivable
255

Inventories
844

Prepaid and other
105

Intangibles
3,970

Property, plant and equipment
292

Other long-term assets
11

Goodwill
5,510

Deferred tax asset
245

Trade accounts payable
(420
)
Accrued liabilities
(405
)
Stock registration costs
(55
)
Total
$
10,477



The goodwill of $5,510 related to the acquisition of Sabine is composed of expected synergies in utilizing Sabine technology in ClearOne product offerings, reduction in future combined research and development expenses, and intangible assets including acquired workforce that do not qualify for separate recognition. The goodwill balance of $5,510 related to the acquisition of Sabine is expected to be deductible for tax purposes.

Supplemental Pro Forma Information:

1) Revenue and net loss from the Sabine business from March 8, 2014 to September 30, 2014 were $2,887 and $374 respectively.
2) Revenue and earnings of the combined entity as of September 30, 2014 as though the business combination occurred as of January 1, 2014 were as follows:
 
Three months ended September 30, 2014
 
Nine months ended September 30, 2014
 
 
 
2014
Revenue
$
15,739

 
$
42,827

Earnings
1,646

 
2,830

Basic earnings per common share
$
0.18

 
$
0.31

Diluted earnings per common share
$
0.17

 
$
0.29



3) There were no material, nonrecurring pro forma adjustments directly attributable to the acquisition included in this Supplemental Pro Forma Information.

Acquisition of Spontania Business of Spain-based Dialcom Networks, S.L.

On April 1, 2014 ClearOne, Inc. closed on the acquisition of the Spontania business of Spain-based Dialcom Networks, S.L. The Spontania cloud-based service empowers customers to deploy HD video conferencing, web collaboration, and more with equipment most businesses have and use every day - video-conferencing endpoints, desktops, laptops, web browsers, tablets, and smartphones. With Spontania there is no hardware investment and the service operates off of a reservation-less model, enabling on-demand video communications from virtually anywhere, anytime, with anyone on any device.

The aggregate purchase price under the terms of the transaction was approximately €3.66 million in cash (approximately US$5.1 million ), after certain closing adjustments. ClearOne did not assume any debt or cash. The cash purchase price was paid out of cash on hand. The addition of this technology was an integral part of the company’s strategy to build an all-inclusive video collaboration portfolio.



The fair value of identified assets and liabilities acquired from the Spontania acquisition was as follows:
 
Fair value
Intangibles
$
1,335

Property and equipment
47

Goodwill
3,741

Accrued liabilities
(71
)
Total
$
5,052



The goodwill of $3,741 relates to the acquisition of Spontania cloud-based technology and intangible assets including acquired workforce that does not qualify for separate recognition. The goodwill of $3,741 from the Spontania acquisition is expected to be deductible for tax purposes.

Supplemental Pro Forma Information:

Revenue and earnings of the combined entity as though the business combination occurred as of January 1, 2014 is not available. The Spontania business was part of a business unit of Dialcom Networks, S.L., and thus separate stand-alone financial information for Spontania is not available.

Acquisition Expenses:

During the nine months ended September 30, 2015 and 2014, the Company incurred $302 and $459 in total acquisition related expenses for the Sabine and Spontania acquisitions, all of which are categorized under general and administrative expenses in the Condensed Consolidated Statement of Income and Comprehensive Income.

Retroactive Restatement:

Following the completion of the valuation process for the acquisition of Sabine we reported intangible amortization to reflect the final adjusted values in our Form 10-K, as amended, for the year ended December 31, 2014. For the quarter and nine months ended September 30, 2015 we reported amortization based on the final valuation of intangible items. For the comparative quarter and nine months ended September 30, 2014 we have retroactively adjusted net income to reflect the inclusion of the revised amortization applicable to those periods. Net income changed from $1,646 and $3,070 originally reported for the three and nine months ended September 30, 2014 to $1,594 and $2,962, respectively. The reported retained earnings balance of $30,135 at September 30, 2014 retroactively adjusted would be $30,082. The retroactive adjustment resulted in changes in basic and diluted earnings per share for the three months ended September 30, 2014 from $0.18 and $0.17 to $0.17 and $0.17, respectively. The retroactive adjustment resulted in changes in basic and diluted earnings per share for the nine months ended September 30, 2014 from $0.33 and $0.32 to $0.32 and $0.31, respectively.