8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported):  October 29, 2012

Rimage Corporation

(Exact name of Registrant as Specified in its Charter)

Minnesota

(State Or Other Jurisdiction Of Incorporation)

000-00619	41-1577970
(Commission File Number)	(I.R.S. Employer Identification No.)
7725 Washington Avenue South Minneapolis, MN	55439
(Address Of Principal Executive Offices)	(Zip Code)

(952) 944-8144

Registrant’s Telephone Number, Including Area Code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Items under Sections 1 and 3 through 8 are not applicable and therefore omitted.

ITEM 2.02      RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Rimage Corporation (the “Company”) hereby furnishes as Exhibit 99.1 a press release issued on October 29, 2012 disclosing material non-public information regarding its results of operations for the quarter ended September 30, 2012 and hereby furnishes as Exhibit 99.2 statements of Sherman L. Black, its President and Chief Executive Officer, and James R. Stewart, its Chief Financial Officer, made on October 29, 2012 at a telephone conference relating to the quarter ended September 30, 2012 results.

ITEM 9.01      FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit No.	Description
99.1	Press Release issued on October 29, 2012.
99.2	Statements of Sherman L. Black, President and Chief Executive Officer, and James R. Stewart, Chief Financial Officer at a telephone conference held on October 29, 2012.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RIMAGE CORPORATION
By:	/s/ James R. Stewart
	James R. Stewart Chief Financial Officer

Date:  October 29, 2012

EX-99.1

Exhibit 99.1

Rimage Reports Third Quarter 2012 Financial Results

Qumu Doubles Revenue from Second Quarter 2012

Software Contracted Commitment Backlog Grows 27% from Second Quarter to $8.4 Million

Board Expands Share Repurchase Authorization by 2 Million Shares

Minneapolis, MN – October 29, 2012 – Rimage Corporation (NASDAQ: RIMG) today reported its financial results for the third quarter and nine months ended September 30, 2012.

· Third quarter 2012 revenues totaled $20.9 million, a 3% increase from $20.3 million in revenues in the third quarter of 2011 and within previously established financial guidance. The increase was attributable to the revenues from Qumu, acquired October 10, 2011, partially offset by lower disc publishing revenues.

· Qumu revenues totaled $2.8 million in the recent third quarter with contracted commitments in the third quarter of $4.5 million. Qumu’s backlog of contracted revenue grew to $8.4 million at September 30, 2012 compared with $6.6 million at June 30, 2012.

· Disc publishing revenues in the recent third quarter were $18.2 million, a decrease of 10% from revenues in the third quarter of 2011. Foreign exchange impacts reduced revenues by 3% compared to the prior year’s third quarter. The remaining decline reflected lower hardware revenues in North America from the government sector.

· Gross margin for the 2012 third quarter was 48% compared with 51% in the same quarter last year and 45% in the second quarter of 2012. The decline compared to last year was mainly due to the mix of lower government hardware disc publishing revenues during the quarter.

· Operating expenses in the quarter were $41.9 million compared with $8.3 million in the third quarter last year, reflecting a $29.5 million non-cash goodwill and intangible asset impairment charge and the addition of $4.4 million of operating expenses associated with Qumu. Excluding these noncash impairment charges and the impact of Qumu, operating expenses were below last year’s third quarter.

· During the third quarter, the Company booked three non-cash charges to its financial statements. It recorded a $22.2 million goodwill impairment charge eliminating all the goodwill on the balance sheet and a $7.3 million impairment charge for the reduction in the fair market value of its amortizing intangible assets. In addition, the Company established a non-cash valuation allowance against its deferred tax assets resulting in a charge to income tax expense of $11.2 million. The total of these non-cash charges was $40.7 million.

· The net loss for the third quarter of 2012 was $42.8 million, or $(4.23) per share. Excluding the non-cash charges and the amortization of intangibles associated with the Qumu acquisition, the net loss for the quarter was $0.9 million, or $(.09) per share, within previously established financial guidance. This compares with net income of $1.5 million in the third quarter of 2011, or $0.16 per diluted share.

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· Cash and marketable securities totaled $59 million at September 30, 2012 compared with $62 million at June 30, 2012. During the third quarter, the Company paid out $1.7 million in dividends and used $0.4 million to repurchase stock. Cash used in operations during the third quarter totaled $0.3 million.

· Year to date, 2012 revenues were $58.7 million, compared with $62.0 million in the comparable period of 2011. The Company reported a net loss of $47.2 million, or $(4.64) per share, for the first nine months of 2012. Excluding the non-cash charges and the amortization of intangibles associated with the Qumu acquisition, the year to date net loss in 2012 was $4.7 million, or $(0.46) per share versus net income of $4.2 million, or $0.44 per diluted share, in the first nine months of 2011.

Sherman L. Black, president and CEO, said, “We were pleased with the progress our software business demonstrated during the quarter. Revenues doubled over last quarter and we added $4.5 million of contracted commitments resulting in a backlog of $8.4 million. This was the level of performance we anticipated when we acquired Qumu last year.”

“Rimage’s software strategy continues to evolve,” continued Mr. Black. “We are confident that we can reach beyond video communications and become a successful participant in the fast growing social enterprise ecosystem. The Signal product achieved first revenue this quarter with a win in the media and entertainment market. The combination of Qumu and Signal is a very unique offering that can greatly enhance today’s leading enterprise communication and collaboration platforms. Our customers need seamless integration with their current infrastructure. We cost effectively solve hard problems such as integrating video into existing collaboration platforms. Our on-premise and cloud offerings make it easy for our customers to securely deliver confidential content to the desktop and tablets of their employees, customers and partners.”

“Disc publishing revenues in the quarter increased from the second quarter but declined compared to last year reflecting government funding delays that reduced our hardware revenues in North America and softness in our international operations. While we expect continued softness due to technology substitution, there are use cases and workflows with high switching costs. As a result, demand for disc publishing will remain. We will continue to invest to stay current with our product offerings. In addition, we believe that properly sized, disc publishing will be a significant cash generator as we continue to transform the Company.

“Our team has made effective sales and marketing adjustments to our software business that should continue to produce solid results going forward. The engineering teams are focused on integration of Qumu and Signal, and unlocking the synergy of the combined offering. These efforts will position us well in the rapidly expanding social enterprise software market. Combining the growth of our software business along with the cash generation ability of our disc publishing business creates potential that we don’t believe is reflected in our current stock price. As a result, the Board has chosen to terminate the Company’s quarterly cash dividend and instead focus our capital distribution efforts on more aggressive repurchasing of Rimage stock under an expanded authorization approved by the Board,” Mr. Black concluded.

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Expanded Stock Repurchase Program

On October 26, 2012, the Company’s Board of Directors approved the repurchase of an additional 2,000,000 shares of the Company’s common stock under the Company’s stock repurchase program. With the approximate 182,000 shares that remain under the previous authorization by the Board, there are now approximately 2,182,000 shares authorized for repurchase. Under the stock repurchase program, shares can be purchased at prevailing market prices in private transactions or in open market transactions including block trades. Repurchases are subject to market conditions, share price, trading volume and other factors. The Company also intends to implement a Rule 10b5-1 plan in connection with the repurchase program in order to give the Company the ability to repurchase its shares at times when it otherwise might be prevented from doing so under insider trading laws or because of self-imposed blackout periods.

Non-Cash Impairment Charges

The Company is required to test for impairment annually or more frequently if a triggering event has occurred. In the third quarter, the Company experienced a triggering event with the sustained stock price decline over an extended period. In recognition of this triggering event, the Company undertook an evaluation of its goodwill and potential impairment. As a result, the Company booked three non-cash charges to its financial statements. It recorded a $22.2 million goodwill impairment charge, eliminating all the goodwill on the balance sheet from the Qumu acquisition. The Company reduced the fair market value of its amortizing intangible assets — customer relationships, developed technology and trademarks — for a charge of $7.3 million. In addition, it established a non-cash valuation allowance against its deferred tax assets resulting in a charge to income tax expense of $11.2 million related to its recent losses. The total of these three non-cash charges was $40.7 million.

Financial Guidance

For the fourth quarter 2012, the Company expects revenues of between $18 and $20 million and the net loss per share is expected to be between $(0.20) and $(0.33). Excluding amortization of Qumu intangibles, non-GAAP net loss per share is expected to be between $(0.17) and $(0.30). These loss projections reflect a minimal tax benefit due to the establishment of the tax valuation allowance for book purposes. Qumu contracted commitment backlog is expected to continue to grow in the fourth quarter compared with the level at the end of the third quarter. A significant portion of these contracted commitments will be recognized into revenue in 2013 and 2014. The Company defines contracted commitments as the dollar value of signed customer purchase commitments.

Earnings per Share and Financial Guidance Reconciliation

	Third Quarter 2012			Nine Months 2012
GAAP earnings (loss) per share	$	(4.23	)	$	(4.64	)
Impact of amortization of intangibles	$	0.03		$	0.10
Impact of non cash charges for goodwill impairment, intangible asset impairment and deferred tax valuation allowance	$	4.11		$	4.08
Non-GAAP earnings (loss) per share	$	(0.09	)	$	(0.46	)

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	Fourth Quarter 2012
Estimated GAAP earnings (loss) per share	$	(0.20) - $(0.33)
Estimated impact of amortization of intangibles	$	0.03
Estimated impact of non cash charges for goodwill impairment, intangible asset impairment and deferred tax valuation allowance	$	0.00
Estimated Non-GAAP earnings (loss) per share	$	(0.17) - $(0.30)

Note to reconcile non-GAAP financial measures to GAAP

Management believes non-GAAP financial information provides meaningful supplemental information regarding the Company’s financial performance by excluding the amortization of Qumu acquisition intangibles that may not be indicative of the core business operating results and by excluding non-cash charges relating to the impairment of goodwill, a reduction of the value of amortizing intangible assets and the establishment of a valuation allowance against its deferred tax assets that are not related to the operation of the Company’s business and such charges are non-recurring, infrequent or unusual. Rimage believes that this additional financial information is useful to management and investors in assessing the Company’s historical and future performance.

Conference Call

The Company has scheduled a conference call and webcast to review its second quarter results and recent corporate developments today, October 29, 2012 at 4:30 p.m. Eastern Time. The dial-in number for the conference call is 877-941-6009 for domestic participants and 480-629-9819 for international participants. Investors can also access a webcast of the live conference call by linking through the investor relations section of the Rimage website, www.rimagecorp.com. Webcasts will be archived on Rimage’s website.

Forward-Looking Statements

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” or “estimate” or comparable terminology are intended to identify forward-looking statements. Such forward-looking statements include, for example, statements about: the Company’s future revenue and operating performance, the integration of the Qumu business, anticipated synergies between Rimage and Qumu businesses, the effect of changes in technology, or the development and marketing of new products, or repurchases under the Company’s expanded stock repurchase program. The statements made by the Company are based upon management’s current expectations and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 and other factors set forth in the Company’s filings with the Securities and Exchange Commission.

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About Rimage Corporation

Founded in 1978, Rimage Corporation (NASDAQ: RIMG) helps businesses deliver digital content directly and securely to their customers, employees, and partners.  Rimage’s Qumu business is well established in the rapidly growing enterprise video communications market. Rimage’s Signal online publishing platform automatically pushes secure mobile content to nearly any mobile device or computer. Qumu and Signal, in combination with Rimage’s CD, DVD and Blu-ray-Disc™ publishing solutions, enable businesses to securely deliver their videos, documents, audio files and images in today’s multi-platform, multi-device world. Rimage supplies thousands of customers in North America, Europe and Asia with industry-leading solutions that increase engagement, collaboration and control. Additional information can be found at www.rimagecorp.com.

Blu-ray Disc™ is a trademark of the Blu-ray Disc Association.

Investor Contacts:
James Stewart, CFO
Rimage Corporation
952/944-8144

Doug Sherk/Jenifer Kirtland
EVC Group
415/568-9349

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RIMAGE CORPORATION
Selected Consolidated Financial Information
(In thousands except per share data)
(Unaudited)

Consolidated Statements of Operations Information:

	Three months ended September 30,					Nine months ended September 30,
	2012			2011		2012			2011
Revenues	$	20,949		$	20,321	$	58,694		$	61,971
Cost of revenues		10,811			9,905		30,686			30,892
Gross profit		10,138			10,416		28,008			31,079
Operating expenses:
Research and development		2,958			1,547		8,957			4,615
Selling, general and administrative		9,077			6,731		27,139			20,180
Goodwill and intangible asset impairment charge		29,548			—		29,548			—
Amortization of purchased intangibles		284			—		795			—
Total operating expenses		41,867			8,278		66,439			24,795
Operating income (loss)		(31,729	)		2,138		(38,431	)		6,284
Other income (expense), net		64			75		—			164
Income (loss) before income taxes		(31,665	)		2,213		(38,431	)		6,448
Income tax expense (benefit)		11,184			774		9,008			2,379
Net income (loss)		(42,849	)		1,439		(47,439	)		4,069
Net loss attributable to noncontrolling interest		81			43		216			117
Net income (loss) attributable to Rimage	$	(42,768	)	$	1,482	$	(47,223	)	$	4,186
Net income (loss) per basic share	$	(4.23	)	$	0.16	$	(4.64	)	$	0.44
Net income (loss) per diluted share	$	(4.23	)	$	0.16	$	(4.64	)	$	0.44
Basic weighted average shares outstanding		10,112			9,432		10,168			9,495
Diluted weighted average shares outstanding		10,112			9,450		10,168			9,528

Consolidated Balance Sheet Information:

	Balance as of
	September 30, 2012		December 31, 2011
Cash and marketable securities	$	59,190	$	70,161
Receivables		15,944		15,496
Inventories		5,750		6,198
Total current assets		87,721		98,437
Property and equipment, net		6,222		6,177
Total assets		107,353		157,660
Current liabilities		22,439		20,156
Long-term liabilities		5,250		5,204
Noncontrolling interest		146		360
Rimage stockholders’ equity		79,518		131,940

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EX-99.2

Exhibit 99.2

Rimage Corporation

3rd Quarter Fiscal Year 2012 Conference Call

October 29, 2012

Jenifer Kirtland

Thank you, Operator, and good afternoon everyone. Earlier this afternoon, Rimage issued a press release announcing its third quarter 2012 financial results. The release is available on the Company’s corporate website at rimagecorp.com.

Before we get started, during the course of this conference call, the company will make forward-looking statements about its future plans, objectives, beliefs, expectations and prospects. For this purpose, any statements made today that are not statements of historical fact may be deemed to be forward-looking statements. These forward-looking statements are not guarantees of future actions, outcomes, results or performance. By their nature, these forward-looking statements are subject to many risks and uncertainties that could cause actual results to differ materially from the results discussed in or implied by the forward-looking statement. A discussion of the risks and uncertainties that affect Rimage’s business is contained in the company’s SEC filings, particularly under the heading Risk Factors, and in the press release issued this afternoon. Copies of these documents are available online from the SEC or on the Rimage website. These forward-looking statements are made only as of the date this conference call was initially held and the Company assumes no obligation and does not intend to update these forward-looking statements after the date of this conference call, whether as a result of new information, future events, developments, changes in assumptions or otherwise.

In addition, to supplement the GAAP numbers, we have provided non-GAAP information that excludes the amortization of Qumu acquisition intangibles and non-cash charges related to the impairment of goodwill, a reduction of the value of amortizing intangible assets associated with the Qumu acquisition and establishment of a valuation reserve against the Company’s deferred tax assets. We believe that these non-GAAP numbers provide meaningful supplemental information and are helpful in assessing our historical and future performance. A table reconciling the GAAP loss per share information to the non-GAAP information is included in our financial release.

And with that, I’d like to turn the call over to Sherman Black, President and CEO of Rimage.

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Sherman L. Black

· Good afternoon and thank you for joining us on our third quarter 2012 conference call.

· With me today is Jim Stewart, our Chief Financial Officer.

· This afternoon we issued our third quarter press release. The operating results demonstrated successful traction in our transformation to a software focused business. Qumu had a solid quarter, characterized by growing revenue, new customers, and a growing backlog. As expected, disc publishing revenues declined in the quarter.

· I will provide a review of our third quarter performance, an update on our software strategy, and the outlook for the disc publishing market. Then, Jim will provide a more detailed look at the third quarter results and our thoughts on guidance for the fourth quarter.

· Following our remarks, we will be happy to take your questions.

· Third quarter revenues totaled $20.9 million, in line with our guidance. There were several non-cash items that had a significant impact on our bottom line results. These items relate to write-downs of goodwill and intangible asset valuations associated with our acquisition of Qumu a year ago and establishment of an allowance for deferred tax assets associated with our losses.

· Excluding these non-cash charges and the amortization of intangibles associated with Qumu, we reported a net loss per share of $0.09, within the expectations that we provided on our call in July.

· Jim will review these charges in more detail in a moment but I want to be clear that taking these accounting adjustments for Qumu goodwill and intangible asset impairment does not reflect our business view of the value of Qumu as we grow our software business. As I will discuss in a moment we have gained traction in the third quarter. In the last 120 days we have announced two multi-million dollar, multi-year deals with Global 200 companies that reaffirm the value our customers see in the Qumu solution. The growth opportunity for Qumu and our software business is strong and the opportunity to grow shareholder value as we continue implementing our transformation objectives continues to be strong as well.

· Turning now to our third quarter software business results…

· Qumu revenues totaled $2.8 million in the third quarter, more than double the $1.4 million in each of the first and second quarters of 2012.

· Qumu generated contracted commitments totaling $4.5 million in the quarter. It was a healthy mix of wins spanning multiple industries including financial services, engineering services, retail, and utilities. One of our anchor wins for the quarter included a large European telecom company that we mentioned on the last call. This is more typical of the performance we anticipated when we purchased Qumu. During the year our team has made effective sales and marketing adjustments including investments in lead generation and international expansion that should continue to produce solid results going forward. Qumu ended September with record backlog of $8.4 million, up 27% from our $6.6 million in backlog at the end of June.

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· Our software product strategy continues to evolve.

· We believe we can reach beyond video communications to become a player in the fast growing social enterprise ecosystem. By combining Signal, our secure mobile publishing technology, with our video communications capabilities from Qumu, we can provide a unique solution to customers who are seeking to seamlessly integrate emerging video applications into their existing collaboration platforms. In addition, enterprises need to deliver confidential information to their employees, customers, and partners, both inside and beyond the firewall. Our on-premise and cloud offerings enable that to be done securely and cost-effectively.

· Turning now to disc publishing…

· Revenues in the quarter declined from last year as demand in this business is getting more difficult to predict.

· Disc publishing hardware revenues decreased 15% from a year ago and recurring revenues were down 8%.

· Foreign exchange was a key factor in the decline. In addition, we had lower sales in North America to the government sector due to some government funding challenges and we experienced softness in our international business.

· Looking ahead, we expect continued softness in demand for disc publishing due to technology substitution. However, there are use cases and workflows with high switching costs, and we believe there will be a market for disc publishing for the foreseeable future.

· We will continue to stay current with our product offerings and recently introduced a product refresh with our Professional 5410 and 3410 disc publishing systems. The new systems incorporate upgraded performance enhancements and new automation features. Feedback from our partners has been positive.

· We believe that properly sized, disc publishing will be a significant cash generator with the ability to support our growth initiatives as we work to transform the Company.

· In summary, the third quarter results demonstrate that we are making progress in developing a new line of business that can transform our company.

· The transition has taken longer than we expected, but we are confident we’re on the right track and have the structure and team in place to be successful.

· We also believe we can manage our disc publishing operation to be a solid cash generator.

· Finally, we are committed to helping our shareholders recognize value. Our cash position remains solid at $59 million at the end of September.

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· Combining the growth prospects of our software business along with the cash generation ability of our disc publishing business creates potential that we don’t believe is reflected in our current stock price. As a result, the Board has chosen to terminate the Company’s quarterly cash dividend and instead focus our capital distribution efforts on more aggressive repurchasing of Rimage stock under an expanded authorization approved by the Board.

· This plan demonstrates our confidence in the future of the Company and our belief that the Company’s stock is undervalued and represents a good buying opportunity.

· In closing, I’d like to thank the Rimage employees for their hard work and dedication over the past several quarters.

· With that, I’d like to turn the call over to Jim for a review of our third quarter financial performance and our outlook for the fourth quarter.

James R. Stewart

· Thanks, Sherman.

· I’d like to begin with a more detailed discussion of our revenues.

· Qumu revenues totaled $2.8 million in the third quarter, double its revenue from the second quarter.

· Contracted commitments in the third quarter totaled $4.5 million.

· Qumu ended the quarter with record contracted commitment backlog of $8.4 million compared with $6.6 million at the end of June. Since the end of the first quarter we have grown our Qumu backlog almost $7 million. As a reminder, we define contracted commitments as the dollar value of signed customer purchase commitments.

· Disc publishing sales in the third quarter declined 11% from the third quarter of 2011. Unfavorable foreign exchange reduced these revenues by 3%.

· Disc publishing hardware sales fell 15% from last year’s third quarter, which included a significant sale to the government sector in North America that was not repeated this year. In addition, we continue to see general softness in our international business. Disc publishing equipment represented 33% of total sales in the third quarter, compared with 40% in the third quarter last year.

· Disc Publishing recurring revenues, which include sales of printer ribbons and cartridges, parts, and optical media, as well as service contracts, were down 8% from last year. These recurring revenues represented 54% of total company revenues in the recent third quarter compared with 60% in the prior year.

· Sales of consumable supplies and service revenues decreased 5% and 6%, respectively from the prior year’s third quarter. These reductions were in line with expectations and the general trends in Disc Publishing.

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· Third quarter evidence management solutions revenues were down from last year due to the lack of a significant government hardware sale in this year’s results that we already discussed.

· Including Qumu, international sales decreased 4% from the third quarter of 2011. On a constant currency basis, international revenues grew more than 5% due to the contribution of Qumu. International sales in the quarter represented 32% of total sales, compared with 34% in the third quarter of 2011.

· Including Qumu, sales in Europe grew 1%. Excluding Qumu, Europe sales fell 13%, nearly all of which was due to foreign exchange impacts.

· Sales in Asia Pacific were down 13% compared with the prior year’s quarter, due to weakness in China and Australia.

· Moving down the income statement, the gross margin was 48% in the third quarter, compared with 51% last year and 45% in the second quarter of 2012. The decrease in the margin compared with a year ago was largely due to the mix of lower disc publishing hardware revenues as a percentage of total.

· Operating expenses excluding impairment charges were $12.3 million, compared with $8.3 million a year ago. The increase reflected $4.4 million in expenses associated with Qumu.

· R&D expenses were $3.0 million in the quarter. Excluding Qumu, R&D expenses totaled $1.7 million compared with $1.5 million in the third quarter last year.

· Third quarter SG&A expenses were $9.1 million. Excluding Qumu, SG&A expenses were $6.2 million, compared with $6.7 million in the third quarter last year.

· The most significant impact to our bottom line loss in the quarter were the non-cash charges that we took, primarily related to goodwill impairment. Public companies are required to test for goodwill impairment every year or more often, if a potential triggering event occurs. In the third quarter, the Company experienced a triggering event with the sustained stock price decline over an extended period. In recognition of this we undertook an evaluation of our goodwill and potential impairment. As a result, we recorded three non-cash charges.

· We took a $22 million goodwill impairment charge, eliminating all the goodwill on the balance sheet from the Qumu acquisition.

· We reduced the fair market value of our amortized intangible assets. These assets include customer relationships, developed technology and trademarks that we acquired from Qumu. This charge was $7 million.

· Finally, we established a non-cash valuation allowance against deferred tax assets of $11 million related to our recent losses.

· The total of these non-cash charges was approximately $41 million. As Sherman stated earlier, these accounting adjustments for Qumu goodwill and intangible asset impairment do not reflect our business view of the value of Qumu and the opportunity ahead for our Software business overall.

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· The net loss in the third quarter was $43 million, or $4.23 cents per share.

· Excluding the non-cash charges and the amortization of our Qumu intangibles, the net loss for the quarter was $ 900,000, or nine cents per share, in line with our guidance.

· The third quarter tax rate was impacted by the valuation allowance as discussed. For the fourth quarter, we do not expect to book any tax benefit on the losses projected due to the establishment of the deferred tax valuation allowance.

· Now turning to our cash balance and usage…

· Cash and marketable securities totaled $59 million at the end of September compared with $62 million at the end of June. During the third quarter:

o We used $1.7 million for dividend payments

o We used $450,000 to repurchase shares

o We used $800,000 for capital expenditures.

· Third quarter cash used in operations was approximately $300,000. Through September year to date cash used in operations was $1.7 million.

· Turning now to our financial outlook for the fourth quarter…

· We expect revenues to be between $18 and $20 million.

· We expect a net loss of between $(0.20) and $(0.33) per share.

· Excluding the amortization related to Qumu intangibles, we expect the non-GAAP net loss to be between $(0.17) and $(0.30) per share.

· We expect Qumu contracted commitment backlog to continue to grow, with the majority of these commitments recognized into revenue in 2013 and 2014.

· As stated in our press release, the Company’s Board of Directors approved expanding our share repurchase authorization by 2 million shares. This combined with what we already have available means we have approximately 2,182,000 shares authorized for repurchase. The company intends to implement a Rule 10b5-1 plan in connection with our current share repurchase program and we intend to repurchase shares at prevailing market prices, in open market transactions, including significant block trades. These repurchases will be subject to market conditions, share price, trading volume and other factors.

· That concludes our formal remarks.

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