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): July 27, 2010

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):

o         Written communications pursuant to Rule 425 under the Securities Act

o         Soliciting material pursuant to Rule 14a-12 under the Exchange Act

o         Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

o         Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Items under Sections 1, 3 and 4 though 8 are not applicable and therefore omitted.

ITEM 2.02RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Rimage Corporation hereby furnishes a press release, issued on July 27, 2010, disclosing material non-public information regarding its results of operations for the quarter ended June 30, 2010 and hereby furnishes statements of Sherman L. Black, its Chief Executive Officer, and Robert M. Wolf, its Chief Financial Officer, made on July 27, 2010 at a telephone conference relating to the quarter ended June 30, 2010 results.

ITEM 9.01FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit No.	Description
99.1	Press Release issued on July 27, 2010.
99.2	Statements of Sherman L. Black, Chief Executive Officer, and Robert M. Wolf, Chief Financial Officer, at a telephone conference held on July 27, 2010.

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/ Robert M. Wolf
	Robert M. Wolf Chief Financial Officer

Date:   July 27, 2010

EX-99.1

Exhibit 99.1

Rimage Reports Improved Second Quarter Sales and Earnings

Positive Third Quarter Guidance

Minneapolis, MN—July 27, 2010—Rimage Corporation (Nasdaq: RIMG) today reported operating results for the second quarter of 2010 ended June 30.

▪ Sales totaled $22.3 million, an increase of 13% from $19.8 million in the second quarter of 2009. Second quarter revenues benefited from shipment of the initial hardware order of approximately $3.0 million related to a previously announced $11.0 million agreement for disc publishing systems for integration into the digital photography solution of a major national retailer.

▪ Operating income was $3.2 million, up 26% from $2.5 million in the year-earlier period.

▪ Net income came to $2.1 million or $0.22 per diluted share, compared to $2.0 million or $0.20 per diluted share in the second quarter of 2009.

Sherman L. Black, president and chief executive officer, commented: “Rimage’s second quarter operating results benefited not only from the large retail shipment, but also from the growing number of customers electing to replace or upgrade their existing installations. The resulting shift in our sales mix toward hardware pushed our second quarter gross margin to 48% from 46% in the year-earlier period. This mix shift is being facilitated by our recently introduced 5400N disc publishing system, which is proving ideal for a wide range of applications. We shipped hundreds of 5400s during the second quarter, making this product launch the most successful in Rimage’s history. Our second quarter performance also benefited from lower than forecasted expenditures on the growth initiatives that we are implementing to transform Rimage into a higher-performing business.”

He continued: “Our growth initiatives are on track and proceeding on schedule. We have strengthened our core disc publishing business and are maximizing opportunities available to this technology. At the same time, we are making significant progress toward our goal of transforming Rimage into a solutions-based company and generating new revenue streams by leveraging our disc publishing platform with greater software content. We also are continuing to evaluate opportunities for expanding our solutions beyond the realm of physical distribution of data.”

Following is a second quarter progress report on the initiatives that form the near and mid-term components of Rimage’s growth strategy:

Strengthening Core Disc Publishing Business

▪ Distribution: At the beginning of the second quarter, Rimage ended its relationship with distributors in its largest markets, including the U.S., Germany and the U.K. In place of distributors, Rimage is expanding its sales force, while continuing to serve customers through high-quality value-added resellers (VARs). This action, which has eliminated significant cost from our distribution system and moved us closer to our customers, was implemented without any significant negative impact on second quarter sales and product returns. The positive impact of this new sales model on sales and margins is expected to  become increasingly apparent during this year’s second half.

▪ Product Offerings: The introduction of the 5400N disc publishing system in March enabled us to reduce our line of hardware offerings from 27 to a more manageable and better differentiated 15. We expect to reduce our offerings to 13 later this year per our strategic plan. We believe the reduction in our product offerings will have an increasingly positive impact on sales and manufacturing costs.

▪ Consumable Supplies: We opened our new e-commerce system this quarter for selling our full range of consumable supplies.

▪ Global Service: Work is continuing on plans for increasing the attach rates of service contracts on system sales to maximize the revenue potential of Rimage’s worldwide service capability.

New Solutions-Based Initiatives

▪ Video Surveillance Solution

We have been steadily refining our video surveillance solution since its initial $800,000 sale in the fourth quarter of 2009. Rimage Surveillance Solutions were formally introduced in the second quarter. Developed in partnership with a major provider of surveillance software, this solution leverages our disc publishing platform, enabling users to collect, archive and publish large volumes of video surveillance data. We have developed a substantial pipeline of projects with law enforcement agencies that we expect to revenue in this year’s third quarter. We believe the surveillance market has the potential to become a growth driver for Rimage going forward.

▪ Digital Forensics Solution

The Evidence Disc Systemä(EDS) also leverages our disc publishing platform to collect, process and analyze information stored on optical media gathered at crime scenes. EDS also increases accuracy in tracing and authenticating evidence. Feedback from beta tests has been highly positive, and we have trained our VAR partners on this product. We expect to book revenues in the second half from projects in our sales pipeline.

▪ China Medical Solution

We have applied to the Chinese government for the registration of Rimage Information Technology, a majority-owned joint venture that will deploy a complete digital publishing solution for medical imaging in hospitals and clinics in China. We expect to receive approval from the Chinese government in the third quarter. In the meantime, we have hired a general manager for the joint venture and secured an office in Shanghai. Initial revenues from this undertaking are anticipated during the second half of 2010, and we are optimistic about the sales potential of our China medical venture over the next few years.

Outlook

Black added: “We are confident of making continued progress with our growth initiatives in this year’s third quarter. Given the ongoing disc publishing system refresh cycle, the positive impact of our channel realignment on sales and margins, and the outlook for new solutions-based revenues, we believe third quarter sales and earnings should be moderately above the levels reported in the second quarter. We are not factoring the impact of the previously mentioned retail agreement into our third quarter outlook, since our customer has not yet finalized our order schedule for the balance of this transaction originally scheduled for the second half of 2010.”

About Rimage

Rimage Corporation (www.rimage.com) is the world’s leading provider of workflow-integrated digital publishing solutions that produce CD/DVD/Blu-ray discs with customized content and durable disc labeling. Key vertical markets and applications for our systems include video workflows, retail, medical imaging and law enforcement. We also are implementing a multi-year process to transform Rimage into a higher-performing business. Our growth strategy involves strengthening Rimage’s traditional disc publishing business; developing total solutions that encompass both hardware and software; and identifying future opportunities in adjacent markets. Headquartered in Minneapolis, Minnesota, Rimage is a global business with operations in North America, Europe and Asia.

Statements regarding Rimage’s anticipated performance are forward-looking and therefore involve risks and uncertainties, including but not limited to: market conditions, competitive products, changes in technology, conditions in overseas markets that could affect international sales, and other factors set forth in Rimage’s filings with the Securities and Exchange Commission.

#     #     #

For additional information, contact

Robert M. Wolf, CFO
Rimage Corporation
952/944-8144 Richard G. CinquinaEquity Market Partners 
904/415-1415

RIMAGE CORPORATION

Selected Consolidated Financial Information

(In thousands except per share data)

(Unaudited)

Consolidated Statements of Income Information:

	Three months ended June 30,				Six months ended June 30,
	2010		2009		2010		2009
Revenues	$	22,303	$	19,818	$	40,673	$	38,176
Cost of revenues		11,668		10,630		21,386		20,423
Gross profit		10,635		9,188		19,287		17,753
Operating expenses:
Research and development		1,417		1,501		2,858		3,476
Selling, general and administrative		6,030		5,148		12,297		10,490
Total operating expenses		7,447		6,649		15,155		13,966
Operating income		3,188		2,539		4,132		3,787
Other income, net		123		823		268		1,333
Income before income taxes		3,311		3,362		4,400		5,120
Income tax expense		1,258		1,389		1,652		1,962
Net income		2,053		1,973		2,748		3,158
Net income per basic share	$	0.22	$	0.21	$	.29	$	.34
Net income per diluted share	$	0.22	$	0.20	$	.29	$	.33
Basic weighted average shares outstanding		9,531		9,372		9,504		9,358
Diluted weighted average shares outstanding		9,608		9,517		9,588		9,463

Consolidated Balance Sheet Information:

	Balance as of
	June 30, 2010		December 31, 2009
Cash and marketable securities	$	101,363	$	101,088
Receivables		13,794		13,732
Inventories		6,688		4,123
Total current assets		123,815		120,760
Property and equipment, net		7,939		7,855
Marketable securities – non-current		6,762		9,037
Total assets		141,405		140,282
Current liabilities		16,266		17,589
Long-term liabilities		1,881		2,744
Stockholders’ equity		123,258		119,949

Conference Call and Replay

Rimage Corporation will review its second quarter operating results in a conference call at 10:00 AM Eastern today. Investors can listen to the conference call at www.rimage.com. Listeners should go to this web site at least 15 minutes before the scheduled start time to download and install any necessary audio software. A replay of the conference will be available at 303-590-3030 with the 4326155 conference ID through August 3, 2010. In addition, the webcast of the conference call will be archived in the investor relations section of Rimage’s web site.

EX-99.2

Exhibit 99.2

Remarks of Sherman L. Black

Rimage Corporation 2nd Quarter FY 2010 Conference Call

July 27, 2010

▪ Good morning and thank you for taking the time to participate in our second quarter earnings conference call.

▪ I will lead off this call by briefly reviewing our performance for this period and then discussing the progress that we are making with the primary initiatives of our growth strategy that are focused on transforming Rimage into a higher-performing business.

▪ Then, Rob Wolf, our chief financial officer, will cover some highlights of our recent operating results.

▪ We will be pleased to take your questions at the conclusion of our remarks.

▪ Regulation FD prohibits us from providing any forward-looking statements unless they are released simultaneously to the public.

▪ It is important to understand that any forward-looking statements are subject to a number of risks that could affect our anticipated performance.

▪ These risks are set forth in our filings with the Securities and Exchange Commission, which we urge you to review.

▪ Before continuing, I want to take a moment to personally thank Rob for everything he has done for Rimage during his 13 years as our CFO.

▪ As many of you probably know, Rob announced his decision to leave Rimage in June to pursue a new set of interests.

▪ However, he agreed to continue as CFO during a search for his replacement and to continue working for a period of time once a successor was in place in order to ensure a seamless management transition.

▪ This kind of commitment has been a hallmark of Rob’s career at Rimage, but more important, it is testimony to his character and values.

▪ We will greatly miss Rob’s leadership, thoughtful guidance and friendship, and we wish him the very best in all of his future pursuits.

▪ Rob’s successor as CFO is Jim Stewart, who started with us Monday but was unable to join us today.

▪ We are extremely pleased to have an executive of Jim’s professional stature and wide-ranging capabilities join Rimage.

▪ He possesses 20 years of experience with global, mid-sized and venture-backed companies, including 3M, Imation, Ceridian, Micron Technology, Optical Solutions, and, most recently, Comm-Works.

▪ Jim is a strategically-oriented CFO, who, throughout his career, has developed strong finance organizations, implemented strategies for increasing shareholder value, directed business planning processes and managed operations.

▪ He is a worthy successor to Rob, and his extensive experience will fortify our efforts at furthering our various growth initiatives.

▪ Jim will become CFO in mid-August.

▪ Turning now to a brief discussion of our operating results, we are pleased with Rimage’s overall performance in this year’s second quarter.

▪ Sales totaled $22.3 million, an increase of 13% from $19.8 million in the second quarter of 2009.

▪ Our second quarter revenues benefited from shipment of the initial hardware order of approximately $3.0 million related to the previously announced $11.0 million agreement for disc publishing systems for integration into the digital photography solution of a major national retailer.

▪ Net income came to $2.1 million or $0.22 per diluted share, compared to $2.0 million or $0.20 per diluted share in the second quarter of 2009.

▪ Our second quarter earnings were affected by higher expense levels related to the implementation of our growth plans, but total operating expenses for this period were below forecasted levels.

▪ Rimage’s second quarter operating results benefited not only from that large retail shipment, but also from the growing number of customers who are replacing or upgrading their existing installations.

▪ The resulting shift in our sales mix toward hardware pushed our third quarter gross margin to 48% from 46% in the year-earlier period.

▪ This mix shift is being facilitated by our recently introduced 5400N disc publishing system, which is proving ideal for a wide range of applications.

▪ We shipped hundreds of 5400s during the second quarter, making this product launch the most successful in Rimage’s history.

▪ I also am encouraged to report that our growth initiatives are on track and proceeding on schedule.

▪ We have strengthened our core disc publishing business, and we are maximizing the opportunities available to this technology.

▪ At the same time, we are making significant progress toward our goal of transforming Rimage into a solutions-based company and generating new revenue streams by leveraging our disc publishing platform with greater software content.

▪ We also are continuing to evaluate opportunities for expanding our solutions beyond the realm of physical distribution of data.

▪ Now,  for the next few minutes, I will provide a progress report on the initiatives that form the near and mid-term components of Rimage’s growth strategy.

▪ First, I will discuss how we are strengthening our core disc publishing business.

▪ At the beginning of the second quarter, we ended our relationship with distributors in Rimage’s largest markets, including the U.S., Germany and the U.K.

▪ In place of distributors, we are expanding our sales force, while continuing to serve customers through high-quality value-added resellers or VARs.

▪ This action, which has eliminated significant cost from our distribution system and moved us closer to our customers, was implemented without any significant negative impact on second quarter sales and product returns.

▪ As part of this initiative, we also launched our own backroom operation for credit management and other functions previously handled by distributors.

▪ Ramping up this operation has proceeded seamlessly.

▪ We believe the positive impact of our new sales model on sales and margins will become increasingly apparent during this year’s second half.

▪ Turning next to products, the introduction of the 5400N disc publishing system in March enabled us to reduce our line of hardware offerings from 27 to a more manageable and better differentiated 15.

▪ We expect to reduce our offerings to 13 later this year per our strategic plan.

▪ We believe the reduction in our product offerings will have an increasingly positive impact on sales and manufacturing costs as the year progresses.

▪ Regarding efforts to maximize Rimage’s aftermarket opportunity, we opened our new e-commerce system during the second quarter for selling our full range of consumable supplies.

▪ In addition to providing us with better visibility into consumption patterns and customer needs, our web commerce system will give us the opportunity to increase sales of optical media by leveraging our large customer base for printer ribbons and cartridges.

▪ Finally,work is continuing on plans for increasing the attach rates of service contracts on system sales to maximize the revenue potential of Rimage’s worldwide service capability.

▪ Since Rimage’s customer base historically has been under-penetrated with our service offerings, it will probably be several more quarters before we start realizing the positive impact of this initiative on both revenues and margins.

▪ The second component of our growth strategy involves generating new revenue streams by transitioning from our historic function as a hardware supplier into a provider of total solutions.

▪ We have been steadily refining our video surveillance solution since its initial $800,000 sale in the fourth quarter of 2009.

▪ Developed in partnership with a major provider of surveillance software, this solution leverages our disc publishing platform, enabling users to collect, archive and publish large volumes of video surveillance data.

▪ We have developed a substantial pipeline of projects with law enforcement agencies that we expect to revenue in this year’s third quarter.

▪ We believe the surveillance market has the potential to become a growth driver for Rimage going forward.

▪ Our Evidence Disc System, or EDS, also leverages our disc publishing platform with software content to collect, process and analyze information stored on optical media gathered at crime scenes.

▪ EDS also increases accuracy in tracing and authenticating evidence.

▪ Feedback from beta tests has been highly positive, and we have trained our VAR partners on this product.

▪ We expect to realize revenues in the second half from projects in our sales pipeline.

▪ In addition, we have applied to the Chinese government for the registration of Rimage Information Technology, a majority-owned joint venture that will deploy a complete digital publishing solution for medical imaging in hospitals and clinics in China.

▪ We expect to receive approval from the Chinese government in the third quarter.

▪ In the meantime, we have hired a general manager for the joint venture and secured an office in Shanghai.

▪ Initial revenues from this undertaking are anticipated during the second half of 2010, and we are optimistic about the sales potential of our China medical venture over the next few years.

▪ I will conclude my remarks by commenting on the third quarter guidance contained in this morning’s earnings release.

▪ We are confident of making continued progress with our growth initiatives in this year’s third quarter.

▪ Given the ongoing disc publishing system refresh cycle, the positive impact of our channel realignment on sales and margins, and the outlook for new solutions-based revenues, we believe third quarter sales and earnings should be moderately above the levels reported in the second quarter.

▪ We are not factoring the impact of the previously mentioned retail agreement into our third quarter outlook, since our customer has not yet finalized our order schedule for the balance of this transaction originally scheduled for the second half of 2010.

▪ As we have stated in the past, it remains our goal to reverse the decline in sales and earnings that Rimage has posted over the past two years.

▪ I am confident in saying that we are making clear progress toward this objective.

▪ This goal, like our encouraging second quarter performance and positive outlook, is driven by the outstanding work of our many excellent employees around the world…by our VAR partners…and by our valued suppliers.

▪ I want to thank every member of our team for their commitment to our collective success.

▪ Thank-you. Now Rob Wolf will review some highlights from our second quarter operating results.

Remarks of Robert M. Wolf

Rimage Corporation 2nd Quarter FY 2010 Conference Call

July 27, 2010

▪ Thanks, Sherm.

▪ Sales of digital publishing systems rose 76% from the level in the first quarter of 2010 and by 52% from the second quarter of 2009, reflecting increased equipment sales related to our second quarter retail order.

▪ Systems accounted for 49% of total second quarter sales, up from 34% in this year’s first quarter and 36% in the second quarter of 2009.

▪ Recurring revenues, including sales of printer ribbons and cartridges, parts, blank CD/DVD media and maintenance contracts, were down 6% from this year’s first quarter and by 10% from the second quarter of 2009.

▪ The anticipated decline in this year’s second quarter resulted from distributors stocking up on consumables in the first quarter to enable them to continue supplying their VAR customers after the distributor termination that became effective on March 31.

▪ Since that termination, our VARS and end-user customers have been able to purchase consumables through our e-commerce system.

▪ Recurring revenues accounted for 51% of second quarter sales, compared to 66% in the first quarter and 64% in the second quarter of 2009.

▪ Sales of consumable supplies are forecasted to increase in the third quarter now that the distributor stocking issue is behind us.

▪ International sales declined 8% in the second quarter from the first quarter level and by 4% from the year-earlier period due primarily to foreign currency effects.

▪ International sales accounted for 34% of total second quarter sales, compared to 44% in the first quarter and 38% in the second quarter of 2009.

▪ Currency effects decreased worldwide sales by 2% in the second quarter of 2010.

▪ Rimage’s gross margin rose to 48% in the second quarter from 47% in this year’s first quarter and 46% in last year’s second quarter.

▪ Our gross margin in this year’s second quarter was favorably affected by the higher proportion of hardware in our sales mix.

▪ We believe our third quarter gross margin should be modestly above the second quarter level.

▪ Moving down the P&L, R&D expense of $1.4 million was unchanged from the first quarter level and down from $1.5 million in last year’s second quarter.

▪ R&D expenditures related to developing the new digital forensic and video surveillance solutions were largely offset by the completion of our recently introduced Professional 5400N and 3400 disc publishing systems on which significant expenses were incurred in 2009.

▪ Development is continuing on our solutions products and other initiatives, and we expect third quarter R&D expense to be 30 to 35 percent above the second quarter level.

▪ Selling, general and administrative expense totaled $6.0 million in the second quarter, down from $6.3 million in this year’s first quarter but up from $5.1 million in the second quarter of 2009.

▪ We incurred expenses in the second quarter related to implementing our growth strategy, including increases in our head count, costs related to rolling out the web commerce system for consumable supplies, legal fees related to the China joint venture, and expenses associated with launching the new 5400N and 3400 disc publishing systems. 

▪ However, total operating expenses for both the second quarter and year-to-date period were less than initially forecasted.

▪ We are forecasting SG&A in the range of $6.0 to $6.5 million in this year’s third quarter as we continue implementing our growth plans.

▪ Our effective tax rate was 38% in the second quarter, and we anticipate a full-year tax rate at or near this level.

▪ Cash and investments totaled $108 million at the end of the second quarter, unchanged from the level at March 31, 2010 and down from $110 million at the beginning of the year.

▪ Our use of cash over the first half of 2010 was related principally to implementing our growth strategy and making a payment to a strategic partner for production tooling related to the new 5400N and 3400 disc publishing systems.

▪ Working capital totaled $108 million at the end of the second quarter, up from $103 million both at the end of the first quarter and at the beginning of the year.

▪ Finally, Rimage’s balance sheet remains debt-free, while stockholders’ equity increased to $123 million at the end of the second quarter from $121 million at the end of the first quarter and $120 million at the beginning of the year.

▪ That wraps up our formal remarks, and now the conference call operator will poll you for any questions.