View Filing Data

Document and Entity Information	3 Months Ended
Document and Entity Information	Mar. 31, 2012 USD ($) shares
Document and Entity Information
Entity Registrant Name	CLEARONE COMMUNICATIONS INC
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Entity Central Index Key	0000840715
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding \| shares	9,098,152
Entity Public Float \| $	$ 27,894,700
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1

ClearOne Communications, Inc. - Consolidated Statement of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Revenue, net	$ 10,154	$ 10,701
Cost of goods sold	4,046	4,399
Gross profit	6,108	6,302
Operating expense:
Sales and marketing	2,134	1,983
Research and product development	2,008	1,637
General and administrative	1,505	1,472
Proceeds from litigation	(250)	0
Total operating expenses	5,397	5,092
Operating income	711	1,210
Other income (expense), net	16	11
Income before income taxes	727	1,221
Provision (benefit) for income taxes	274	409
Net income	$ 453	$ 812
Basic Earnings per common shares	$ 0.05	$ 0.09
Diluted Earnings per common share	$ 0.05	$ 0.09
Basic weighted average number of shares outstanding	9,098,152	8,931,504
Diluted weighted average Number of shares outstanding	9,246,310	9,122,671

ClearOne Communications, Inc. - Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 10,577	$ 16,683
Receivables net of allowance for doubtful accounts	7,100	8,457
Inventories	14,475	12,565
Deferred income taxes	3,025	2,987
Prepaid Expenses and other assets	1,846	740
Total current assets	37,023	41,432
Long-term inventories, net	2,449	1,905
Property and equipment, net	2,210	2,338
Goodwill	1,939	1,153
Intangible assets, net	6,063	2,690
Other assets	67	41
Total assets	49,751	49,559
Current Liabilities:
Accounts Payable	1,830	2,814
Accrued Liabilities	2,753	2,534
Deferred product revenue	3,822	3,404
Total current liabilities	8,405	8,752
Deferred income taxes	129	101
Deferred rent	486	494
Other long-term liabilities	563	548
Total liabilities	9,583	9,895
Shareholders' equity:
Common stock	9	9
Additional paid in capital	40,124	40,073
Retained earnings (accumulated deficit)	35	(418)
Total shareholders' equity	40,168	39,664
Total liabilities and shareholders' equity	$ 49,751	$ 49,559
Stockholders' Equity, Number of Shares, Par Value and Other Disclosures
Common Stock, Shares Authorized	50,000,000	50,000,000
Common Stock, Shares Issued	9,098,152	9,098,152
Common Stock, Shares Outstanding	9,098,152	9,098,152

ClearOne Communications, Inc. - Consolidated Statement of Cashflows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Cash flows from operating activities:
Net income	$ 453	$ 812
Adjustments to reconcile net income to cash provided by (used in) operating activities
Depreciation and Amortization	337	295
Stock-based Compensation	51	39
Provision for Doubtful Accounts	(59)	(58)
Increase (decrease) in reserves against inventory	90	(214)
Changes in operating assets and liabilities:
Change in accounts receivable	1,416	1,396
Change in inventories	(2,224)	(379)
Chane in deferred income taxes	(10)	117
Change in prepaid expense and other assets	(1,132)	(54)
Change in accounts payable	(984)	1,082
Change in income taxes payable	(89)	121
Change in accrued liabilities	309	(1,269)
Change in deferred product revenue	418	258
Change in other long-term liabilities	15	53
Net Cash Provided by (Used in) Operating Activities	(1,409)	2,199
Cash flows from investing activities:
Payment towards acquisition of VCON business	(4,632)	0
Purchase of property and equipment	(65)	(175)
Net Cash used in investing activities	(4,697)	(175)
Cash flows from financing activities:
Proceeds from issuance of common stock - options	0	21
Net cash provided by (used in) financing activities	0	21
Net increase in cash and cash equivalents	(6,106)	2,045
Cash and cash equivalents at the beginning of the period	16,683	11,431
Cash and cash equivalents at the end of the period	$ 10,577	$ 13,476

Basis of Presentation

3 Months Ended

Mar. 31, 2012

Basis of Presentation

Basis of Presentation [Text Block]

The fiscal year for ClearOne Communications, Inc. and its subsidiaries (collectively, ClearOne or the Company) is the 12 months ending on December 31st. The consolidated financial statements include the accounts of ClearOne and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.

The accompanying interim consolidated financial statements for the three months ended March 31, 2012 and 2011 respectively have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and are not audited. Certain information and footnote disclosures, that are usually included in financial statements prepared in accordance with generally accepted accounting principles in the United States (GAAP) have been either condensed or omitted in accordance with SEC rules and regulations. The accompanying consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial position as of March 31, 2012 and December 31, 2011, the results of operations for the three months ended March 31, 2012 and 2011, and the statements of cash flows for the three months ended March 31, 2012 and 2011. The results of operations for the three months ended March 31, 2012 and 2011 are not necessarily indicative of the results for a full-year period. These interim consolidated financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC.

- Definition

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

+ References

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-Name Accounting Research Bulletin (ARB)
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+ Details

Business Combinations

3 Months Ended

Mar. 31, 2012

Business Combinations

Business Combination Disclosure [Text Block]

2. Business Combination

On February 16, 2012, the Company completed the acquisition of the video conferencing business of Israel based VCON Video Conferencing, Ltd. (“VCON”) through an asset purchase agreement. VCON is a pioneer in software based video conferencing solutions with product offerings that include group video conferencing endpoints, desktop video conferencing endpoints, video conferencing infrastructure solutions and software development kits. This acquisition and the combination of streaming and digital signage technologies will provide us with complimentary technology opportunities allowing us to enter new growth markets.

Pursuant to the asset purchase agreement, the Company paid initial consideration of $4,632 in cash. This initial consideration is subject to a final working capital adjustment.

The estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed. The Company believes that such information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is waiting for additional information necessary to finalize those fair values. The measurement period for purchase price allocation ends as soon as information on the facts and circumstances becomes available, but will not exceed twelve months from the date of acquisition. Adjustments in the purchase price allocation may require a recasting of the amounts allocated to intangible assets and possible allocation to goodwill, retroactive to the period in which the acquisition occurred. Therefore, the provisional measurements of fair value reflected are subject to change and such changes could be significant.

The fair value of identified assets and liabilities acquired and goodwill was as follows:

Inventory	$ 320
Property and equipment	34
Product warranty liability	(8)
Tradename	500
Patents and technological know-how	2,300
Proprietary software	500
In-process research and development	200
Goodwill	786
Cash paid	$ 4,632

The Company incurred $187 towards acquisition related expenses, all of which are categorized under General and administrative expenses in the Consolidated Statement of Operations for the period ended March 31, 2012.

Supplemental Pro Forma information

1) Revenue and net loss from VCON business from February 16, 2012 to March 31, 2012 was $77 and ($152) respectively.

2) Revenue and earnings of the combined entity as though the business combination occurred as of January 1, 2011:

	Three months ended March 31,
	2012	2011
Revenue	$ 10,367	$10,803
Earnings	409	647
Basic and diluted earnings per common share	0.04	0.07

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

- 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

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+ Details

Intangible Assets, Goodwill and Other

3 Months Ended

Mar. 31, 2012

Intangible Assets, Goodwill and Other

Intangibles and Goodwill Disclosure [Text Block]

3. Goodwill and Intangibles

Goodwill

The goodwill of $786 related to the acquisition of VCON is composed of expected synergies in utilizing VCON 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 $786 related to the acquisition of VCON business is deductible for tax purposes.

Intangible Assets

Intangible assets as of March 31, 2012 and December 31, 2011 consisted of the following:

	Estimated useful lives	As of March 31, 2012	As of December 31, 2011
Tradename	7 years	$ 935	$ 435
Patents and technological Know-how	10 years	4,370	2,070
Proprietary software	3 to 5 years	894	394
In-process research and development	Indefinite	759	559
Other	5	49	49
		7,007	3,507
Accumulated Amortization		(944)	(817)
		$ 6,063	$ 2,690

During the three months ended March 31, 2012 and 2011, amortization of intangible assets were $127 and $88, respectively.

The estimated future amortization expense of intangible assets is as follows:

Years ending December 31,
2012	$ 635
2013	799
2014	782
2015	598
2016	560
2017	508
Thereafter	1,422
	$ 5,304

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Inventories

3 Months Ended

Mar. 31, 2012

Inventories {1}

Inventories Disclosure [Text Block]

4. Inventories

Inventories, net of reserves, consisted of the following:

	As of March 31, 2012	As of December 31, 2011
Current:
Raw materials	$ 927	$ 1,091
Finished goods	13,548	11,474
	$ 14,475	$ 12,565

Long-term:
Raw materials	$ 827	$ 444
Finished goods	1,622	1,461
	$ 2,449	$ 1,905

Long-term inventory represents inventory held in excess of our current requirements based on our recent sales and forecasted level of sales. We expect to sell the above inventory, net of reserves, at or above the stated cost and believe that no loss will be incurred on its sale.

Current finished goods include consigned inventory in the amounts of approximately $1,441 and $1,199 as of March 31, 2012 and December 31, 2011, respectively. Consigned inventory represents inventory at distributors and other customers where revenue recognition criteria have not been achieved.

During the three months ended March 31, 2012, losses amounting to $90 were incurred on valuation of inventory at lower of cost or market value and write-off of obsolete inventory.

Share Based Compensation

3 Months Ended

Mar. 31, 2012

Share Based Compensation

Disclosure of Share Based Compensation [Text Block]

5. Share-based Compensation

Share-based compensation expense has been allocated as follows:

	Three months ended March 31,
	2012	2011
Cost of goods sold	$ 1	$ -
Sales and marketing	13	4
Research and development	7	4
General and administrative	30	31
	$ 51	$ 39

As of March 31, 2012 the total remaining unrecognized compensation cost related to non-vested stock options, net of forfeitures, was approximately $530.

During the three months ended March 31, 2012 and 2011, we granted 30,000 and 0 stock options respectively. We use judgment in determining the fair value of the share-based payments on the date of grant using an option-pricing model with assumptions regarding a number of highly complex and subjective variables. These variables include the risk-free interest rate of the awards, the expected life of the awards, the expected volatility over the term of the awards, the expected dividends of the awards, and an estimate of the amount of awards that are expected to be forfeited. We use the Black-Scholes option pricing model to determine the fair value of share-based payments granted under ASC Topic 718.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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+ Details

Shareholders' Equity

3 Months Ended

Mar. 31, 2012

Shareholders' Equity

Shareholders' Equity Note Disclosure [Text Block]

6. Shareholders’ Equity

The following table summarizes the change in shareholders’ equity during the three months ended March 31, 2012 and 2011, respectively:

	Three months ended March 31,
	2012	2011
Balance at the beginning of the period	$ 39,664	$ 31,735
Net income during the period	453	812
Stock based compensation	51	39
Exercise of stock options	-	21
Balance at end of the period	$ 40,168	$ 32,607

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

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+ Details

Proceeds from litigation	3 Months Ended
Proceeds from litigation	Mar. 31, 2012
Proceeds from litigation {1}
Proceeds from litigation	<!--egx--><font style="LINE-HEIGHT:115%"> <p style="LINE-HEIGHT:115%; MARGIN:0in 0in 10pt"><strong>7. Proceeds from litigation</strong></p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt; TEXT-AUTOSPACE:">During the three months ended March 31, 2011, $250 was received as a settlement of amounts due from a defendant in our litigation related to the “Theft of ClearOne’s Intellectual Property and related cases” described in detail in Form 10-K for the year ended December 31, 2011. </p> <p style="LINE-HEIGHT:115%; MARGIN:0in 0in 10pt"></p></font>

Income Taxes

3 Months Ended

Mar. 31, 2012

Income Taxes

Income Tax Disclosure [Text Block]

8. Income Taxes

The total outstanding balance for liabilities related to unrecognized tax benefits at March 31, 2012 was approximately $563, of which $35 was associated with interest and penalties. We account for interest expense and penalties for unrecognized tax benefits as part of our income tax provision.

Accrued liabilities as of March 31, 2012 and December 31, 2011 include accrued income taxes payable of $211 and $300, respectively.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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+ Details

Commitments and Contingencies

3 Months Ended

Mar. 31, 2012

Commitments and Contingencies {1}

Commitments and Contingencies Disclosure [Text Block]

9. Commitments and Contingencies

The Company entered in to a consulting arrangement for a period of 12 months. The consulting arrangement provides for a fixed fee of approximately $180 with additional maximum incentive-based fees of approximately $20 associated with accomplishing specific milestones.

- Definition

The entire disclosure for commitments and contingencies.

+ References

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+ Details

Subsequent Events

3 Months Ended

Mar. 31, 2012

Subsequent Events

Subsequent Events [Text Block]

10. Subsequent Events

The Company evaluated its consolidated financial statements as of and for the three months ended March 31, 2012 for subsequent events through the date the financial statements were issued. The Company is not aware of any subsequent event which would require recognition or disclosure in the financial statements.