Goodwill And Intangible Assets

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

On October 10, 2011, Rimage completed the acquisition of Qumu and recognized $22.2 million of goodwill and $18.9 million of intangible assets attributable to the Company's enterprise content distribution software segment. The Company's policy is to test for impairment of goodwill annually, during the fourth quarter of each year, or more frequently if changes in circumstances or the occurrence of events suggest impairment exists. The Company reviews the carrying amount of its long-lived assets, including acquired intangible assets, when events or changes in circumstances such as market value, asset utilization, physical change, legal factors or other matters indicate that the carrying amount of the assets may not be recoverable.

During the Company's third quarter ended September 30, 2012, the Company concluded and disclosed that certain indicators of impairment were present, as evidenced by a sustained decrease in the Company's stock price during the third quarter resulting in a market capitalization significantly below the carrying value of its net equity and a lower than planned rate of revenue growth to-date and forecasted for its enterprise content distribution software segment. As a result, the Company performed an interim impairment test of goodwill and long-lived assets. During the three months ended September 30, 2012, the Company recorded a $22.2 million goodwill and $7.3 million intangible asset impairment charge associated with its enterprise content distribution software segment. These charges, totaling $29.5 million, are included as a separate operating expense line item, “Goodwill and intangible asset impairment charge,” in the Company's Consolidated Statements of Operations. The Company used the income approach, specifically the discounted cash flow method, in concluding the fair value of the enterprise content distribution software reporting unit and associated amount of impairment charges. The application of the income approach for both goodwill and intangible assets requires management judgment for many of the assumptions including future revenue growth rates, taking into consideration market conditions, as well as terminal values and discount rates. The Company used a discount rate that is based on a weighted average cost of capital adjusted for the relevant risk associated with the characteristics of the business and the projected cash flows.

Changes in the Company's goodwill and intangible assets consisted of the following (in thousands):



		December 31,									Other Net			December 31,
		2011			Additions			Impairments			Adjustments			2012
Goodwill		$	22,218		$	—		$	(22,218	)	$	—		$	—

	Useful	December 31,			Additions/			Impairments /			Other Net			December 31,
	Life	2011			Amortization			Disposals			Adjustments			2012
Intangible Assets:
Customer relationships	10	$	8,090		$	—		$	(5,108	)	$	—		$	2,982
Developed technology	6	6,050			—			(2,693		)	—			3,357
In-process research and development	6	1,310			—			—			—			1,310
Trademarks / trade names	15	3,420			—			(1,298		)	—			2,122
Favorable lease	0	30			—			(30		)	—			—
Software related to joint venture entity	5	1,043			—			—			8			1,051
		19,943			—			(9,129		)	8			10,822
Less accumulated amortization		(705		)	(1,950		)	1,799			(2		)	(858		)
Total intangible assets, net		$	19,238		$	(1,950	)	$	(7,330	)	$	6		$	9,964

During the three months ended September 30, 2012, the Company recorded a $7.3 million intangible asset impairment charge, net of accumulated amortization, consisting of $4.4 million for customer relationships, $1.8 million for developed technology and $1.1 million for trademarks/trade names. The intangible asset impairment charge is included as a separate operating expense line item, “Goodwill and intangible asset impairment charge,” in the Company's Consolidated Statements of Operations. Amortization expense associated with the developed technology intangible asset and software related to joint venture entity included in cost of product revenues was $998,000 and $400,000 for the years ended December 31, 2012 and 2011, respectively. Amortization expense associated with other acquired intangible assets included in operating expenses as “Amortization of purchased intangibles,” was $952,000 and $223,000 for the years ended December 31, 2012 and 2011, respectively.

The Company estimates that amortization expense associated with intangible assets will be approximately $1.2 million for each of the next five years ending December 31, 2017.

- 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.

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