FORM 10-K / A-1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(Mark One)
(X) ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NUMBER 0-20728
RIMAGE CORPORATION
(exact name of registrant as specified in its charter)
MINNESOTA 41-1577970
(State or other jurisdiction of (I.R.S. Employer
Organization or incorporation) Identification Number)
7725 WASHINGTON AVENUE SOUTH, MINNEAPOLIS, MINNESOTA 55439
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 944-8144
Securities Registered Pursuant to Section 12(b) of the Act: NONE
Securities Registered Pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES _X_ No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( X )
As of March 25, 1997, the aggregate value of the voting stock held by
non-affiliates of the registrant, computed by reference to the last quoted price
at which such stock was sold on such date as reported by The Nasdaq Stock
Market, was $3,641,000.
As of March 25, 1997, there were outstanding 3,084,500 shares of the
Registrant's common stock.
Documents incorporated by reference: None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following discussion sets forth certain information for the last
five years with respect to the directors and executive officers of the Company.
<TABLE>
<CAPTION>
Director
or Officer
Name Positions With the Company Age Since
- ---- -------------------------- --- ----------
<S> <C> <C> <C>
Ronald R. Fletcher Chairman of the Board and Director 56 1987
Richard F. McNamara Director 64 1987
Robert L. Hoffman Director and Secretary 69 1992
George E. Kline Director 61 1992
Bernard P. Aldrich Director, Chief Executive Officer and President 47 1996
David J. Suden Director and Chief Technology Officer 50 1995
Konrad Rotermund Managing Director - Rimage Europe 49 1995
Emmett M. Day Vice President - Sales for Rimage Services Group 39 1996
Richard Gardner President - Duplication Technology 44 1994
Marvin J. Hohl Controller 32 1996
</TABLE>
RONALD R. FLETCHER has been a director of Rimage since its formation in
1987, Chairman of the Board since November 1992 and served as Chief Executive
Officer from September 1995 through November 1996. Mr. Fletcher has been the
owner and president of Aurora Service Corporation, a mortgage finance company,
since 1982. Mr. Fletcher received a B.S. degree and a J.D. degree from Drake
University.
RICHARD F. MCNAMARA has been a director of Rimage since its formation
in 1987. Mr. McNamara has been the owner of Activar, Inc., Minneapolis,
Minnesota, a company that provides management services to corporations related
to Activar, for more than five years. He is the owner of or partner in numerous
private companies. Mr. McNamara is also a director of Venturian Corporation.
ROBERT L. HOFFMAN has been a director and the Secretary of Rimage since
September 1992. Mr. Hoffman was a founder of the law firm of Larkin, Hoffman,
Daly & Lindgren, Ltd., Bloomington, Minnesota, and has practiced law with such
firm for more than five years. Mr. Hoffman is also a director of Ag-Chem
Equipment Company Inc. and Netco Communication Corporation.
GEORGE E. KLINE has been a director of Rimage since September 1992. Mr.
Kline has been General Partner of Brightstone Capital Ltd., a firm engaged in
providing venture capital to Minnesota businesses, for more than five years. Mr.
Kline is also a director of Applied Biometrics, Inc., CyberOptics Corporation,
Health Fitness Physical Therapy, Inc. and Nutrition Medical, Inc.
BERNARD P. ALDRICH has been a director, Chief Executive Officer and
President of Rimage since December 1996. For more than five years prior to
joining Rimage, Mr. Aldrich served in various financial and administrative
positions with Advance Machine Company and Colwell Industries. Mr. Aldrich
received a B.S. degree in accounting from St. Cloud State University and an
M.B.A. degree from the University of St. Thomas.
DAVID J. SUDEN has been Chief Technology Officer of Rimage since
December 1996 and a director since September 1995. He served as President of
Rimage from October 1994 through November 1996 and as Vice President -
Development and Operations from February 1991 to October 1994. Mr. Suden
received a B.S.E.E. degree from Montana State, a M.S.E.E. degree from the
University of Southern California, and an M.B.A. degree from Pepperdine
University.
KONRAD ROTERMUND has been Managing Director of Rimage Europe since
1995, and was General Manager of Rimage Europe from 1992 to 1994. From 1984 to
1991, Mr. Rotermund was President of Inverdata Electronics, a major European
distributor of media duplication equipment.
EMMETT M. DAY has been Vice President - Sales for Rimage Services Group
since December 1996. He was an independent agent for the sale of life and health
insurance from June 1995 to December 1996, and was Vice President - Sales and
Marketing for Braun Media Services from May 1994 to May 1995. For more than five
years prior thereto, Mr. Day was employed by Dunhill Software Services, Inc.,
most recently as Production and Operations Manager. Mr. Day received a B.A.
degree in business administration from the University of Wisconsin - Eau Claire.
RICHARD GARDNER has been President - Duplication Technology since its
acquisition by the Company in December 1993. He served as President of
Duplication Technology from its inception in 1984 until its acquisition by
Rimage in December 1993.
MARVIN J. HOHL has been Controller of Rimage since December 1996. He
served as Assistant Controller from June 1993 to December 1996. Prior to joining
Rimage, Mr. Hohl was employed by KPMG Peat Marwick LLP in various audit
positions. Mr. Hohl received a B.A. degree in accounting from the University of
Wisconsin - Madison.
The Company knows of no arrangements or understandings between a
director or nominee and any other person pursuant to which he has been selected
as a director or nominee. There is no family relationship between any of the
nominees, directors or executive officers of the Company.
Board Committees and Actions
During calendar year 1996, the Board of Directors met four times. The
Board of Directors has a Compensation Committee, a Stock Option Committee, an
Executive Committee and an Audit Committee. During 1996, the number of times
each of these committees met was one, four, twelve and one, respectively. Each
director attended at least 75% of the total number of meetings of the Board and
of committees on which the director served.
The Compensation Committee reviews and makes recommendations to the
Board of Directors regarding salaries, compensation and benefits of executive
officers and senior management of the Company. The entire Board of Directors
presently comprises the Compensation Committee.
The Stock Option Committee administers the Company's 1992 Stock Option
Plan. The members of the Stock Option Committee are Ronald R. Fletcher and
George E. Kline.
The Executive Committee has been delegated authority to act for the
full Board of Directors between regularly scheduled Board meetings. The members
of the Executive Committee are Ronald R. Fletcher, Richard F. McNamara, David J.
Suden (through November 1996) and Bernard P. Aldrich (since December 1996).
The Audit Committee reviews the internal and external financial
reporting of the Company, and reviews the scope of the independent audit. The
members of the Audit Committee are George E. Kline and Robert L. Hoffman.
The Board of Directors does not have a nominating committee. Directors
currently receive a fee of $1,000 for each meeting of the Board of Directors
which they attend.
Compliance With Section 16(a)
The Company's directors, its executive officers, and any persons
holding more than 10% of outstanding Common Stock are required to file reports
concerning their initial ownership of Common Stock and any subsequent changes in
that ownership. The Company believes that the filing requirements were
satisfied. In making this disclosure, the Company has relied solely on written
representations of its directors, executive officers and beneficial owners of
more than 10% of Common Stock and copies of the reports that they have filed
with the Securities and Exchange Commission.
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth the cash and noncash compensation for
each of the past three fiscal years earned by each person who served as Chief
Executive Officer during 1996 and four other executive officers of Rimage whose
salary and bonus earned for 1996 exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
--------------------------- ---------------------------
Other Annual Awards All Other
Name and Principal Position Year Salary Compensation Options (#) Compensation
- --------------------------- ---- ------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Ronald R. Fletcher (2) 1996 $ 68,619 $ 0 0 $ 1,229 (3)
Interim Chief Executive Officer 1995 15,000 0 70,000 0
1994 -- -- -- --
Bernard P. Aldrich (4) 1996 $ 7,019 $ 0 0 $ 0
Chief Executive Officer and 1995 -- -- -- --
President 1994 -- -- -- --
David J. Suden (5) 1996 $ 141,177 $ 0 0 $ 8,999 (6)
Chief Technology Officer 1995 140,000 20,000 15,000 8,021 (6)
1994 119,167 20,000 0 1,979 (6)
Konrad Rotermund (7) 1996 $ 142,500 $ 0 0 $ 0
Managing Director of Rimage 1995 136,002 13,947 0 0
Europe 1994 -- -- -- --
Richard Gardner 1996 $ 122,577 $ 3,583 0 $ 3,843
President - Duplication Technology 1995 107,000 10,626 0 2,675
1994 98,126 9,915 0 2,001
Boyce R. McCorkle (8) 1996 $ 139,896 $ 10,315 0 $ 7,525 (9)
Former Vice President - Marketing 1995 91,354 25,000 0 5,100 (9)
1994 109,467 10,000 0 5,100 (9)
</TABLE>
- --------------------
(1) Each of the executive officers receives an annual bonus in an amount
determined by the Board of Directors.
(2) Mr. Fletcher served as Chief Executive Officer from September 1995 to
November 1996.
(3) Represents the Company's matching contributions under its 401(k)
retirement savings plan.
(4) Mr. Aldrich was named President and Chief Executive Officer of the Company
in December 1996.
(5) Mr. Suden served as President of the Company from October 1994 to November
1996 and was named Chief Technology officer in December 1996.
(6) Represents Mr. Suden's automobile allowance of $6,000 in 1996 and 1995 and
the Company's matching contributions under its 401(k) retirement savings
plan of $2,999, $2,021 and $1,979 for 1996, 1995 and 1994, respectively.
(7) Mr. Rotermund became an executive officer of the Company in 1995.
(8) Mr. McCorkle, who served as Vice President - Marketing of the Company,
ceased to be employed by the Company in February 1997.
(9) Represents Mr. McCorkle's automobile allowance of $5,400, $5,100 and
$5,100 in 1996, 1995 and 1994, respectively, and the Company's matching
contribution under its 401(k) retirement savings plan of $2,125 in 1996.
Retirement Savings Plan
Rimage adopted a profit sharing and savings plan in 1991 under Section
401(k) of the Internal Revenue Code, which allows employees to contribute up to
15% of their pre-tax income to the plan.. The 401(k) Plan includes a
discretionary matching contribution by the Company. These discretionary
contributions totaled $207,459, $132,865 and $113,561 in 1996, 1995 and 1994,
respectively.
Stock Options
The Rimage Corporation 1992 Stock Option Plan (the "Plan") was adopted
by the Board of Directors of the Company and approved by the shareholders in
September 1992. Amendments to the Plan, increasing the number of shares subject
to the Plan and providing for the automatic grant of options to non-employee
directors, were adopted by the Board of Directors in December 1993 and approved
by the shareholders in June 1994. The Plan provides for the granting of
"incentive stock options" and non-qualified stock options to employees of the
Company. "Incentive stock options" are options which meet the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
non-qualified stock options are options which do not meet the requirements of
Section 422. A total of 500,000 shares of the Company's common stock has been
reserved for issuance pursuant to options granted under the Plan. As of December
31, 1996, 290,453 shares were subject to outstanding stock options and 175,047
shares were available for grant.
The Plan is administered by the Stock Option Committee of the Board of
Directors. The Plan gives broad powers to the Committee to administer and
interpret the Plan, including the authority to select the individuals to be
granted options and to prescribe the particular form and conditions of each
option granted. Options are granted on the basis of various factors, including
the individual's capacity for contributing to the successful performance of the
Company, the nature of the operations for which the individual is responsible,
and the period for which the individual has served or will have served the
Company at the vesting of the option. Options may be granted under the Plan
through September 2002. The Plan may be terminated earlier by the Board of
Directors in its sole discretion.
No stock options were granted in 1996 to any of the executive officers
named in the summary compensation table. The following table provides
information with respect to stock options held at December 31, 1996, by the
named executive officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
Value of Unexercised
Number of Unexercised In-the-Money Options
Shares Options at Year-End (#) at Year-End ($) (1)
Acquired Value ------------------------- -------------------------
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Ronald R. Fletcher -- -- 82,000 / 0 $0 / $0
Bernard P. Aldrich -- -- 0 / 0 $0 / $0
David J. Suden -- -- 53,500 / 0 $9,750 / $0
Konrad Rotermund -- -- 5,000 / 0 $0 / $0
Richard Gardner -- -- 20,271 / 0 $0 / $0
Boyce R. McCorkle -- -- 0 / 0 $0 / $0
</TABLE>
- --------------------
(1) Based on the difference between the December 31, 1996 closing price of
$2.87 per share as reported on The Nasdaq Stock Market and the exercise
price of the options.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth as of March 31, 1997, the number of
shares of Common Stock beneficially owned by (i) each person who is the
beneficial owner of more than five percent of the outstanding shares of the
Company's common stock, (ii) each executive officer of the Company named in the
Summary Compensation Table herein, (iii) each director, and (iv) all executive
officers and directors as a group.
<TABLE>
<CAPTION>
Number of Shares Percent of
Name and Address of Beneficial Owner Beneficially Owned (1) Outstanding (2)
- ------------------------------------ ---------------------- ---------------
<S> <C> <C>
Ronald R. Fletcher (3)(4)............................ 840,200 26.5%
4125 Parkglen Court N.W.
Washington, D.C. 20007
Richard F. McNamara (3)(5)........................... 818,000 26.4%
7808 Creekridge Circle
Minneapolis, MN 55439
Robert L. Hoffman (3)................................ 12,000 *
7900 Xerxes Avenue South
Bloomington, MN 55439
George E. Kline (3)(6)............................... 72,000 2.4%
4700 IDS Tower
Minneapolis, MN 55402
Bernard P. Aldrich (3)............................... -- --
7725 Washington Ave. So.
Minneapolis, MN 55439
David J. Suden (3)................................... 55,500 1.8%
7725 Washington Ave. So.
Minneapolis, MN 55439
Konrad Rotermund (3)................................. 5,000 *
7725 Washington Ave. So.
Minneapolis, MN 55439
Richard Gardner (3).................................. 20,271 *
7725 Washington Ave. So.
Minneapolis, MN 55439
All executive officers and directors as a group
(10 persons) (3)............................... 1,822,971 55.6%
</TABLE>
- -----------------------
* Less than one percent
(1) Unless otherwise noted, each person or group identified possesses sole
voting and investment power with respect to such shares.
(2) Based on 3,084,500 shares outstanding, which does not include 290,453
shares issuable upon exercise of stock options and warrants outstanding at
March 31, 1997. Each figure showing the percentage of outstanding shares
owned beneficially has been calculated by treating as outstanding and
owned the shares which could be purchased by the indicated person(s)
within 60 days upon the exercise of stock options.
(3) Includes shares which could be purchased within 60 days upon the exercise
of existing stock options, as follows: Mr. Fletcher, 82,000 shares; Mr.
McNamara, 12,000 shares; Mr. Hoffman, 12,000 shares; Mr. Kline, 12,000
shares; Mr. Suden, 53,500 shares; Mr. Rotermund, 5,000 shares; Mr.
Gardner, 20,271 shares; and all directors and executive officers as a
group 196,771 shares.
(4) Includes 8,000 shares held by Mr. Fletcher as custodian for his minor
child.
(5) Includes 65,000 shares held by a charitable foundation established by Mr.
McNamara. Mr. McNamara has sole voting power and sole dispositive power
with respect to such shares.
(6) Includes 60,000 shares which are owned by Venture Management Fund I, of
which Mr. Kline is a general partner.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Rimage leases approximately 29,000 square feet of office, manufacturing
and warehouse space from a corporation owned by Messrs. Fletcher and McNamara,
pursuant to a lease dated July, 1992. The lease expires on July 31, 2007. Rent
is approximately $237,000 per year, including a pro rata share of operating
costs.
In September 1995, Rimage consummated a merger with Dunhill Software
Services, Inc. ("Dunhill"), pursuant to which Rimage, as the surviving
corporation, issued 1,100,000 shares of Rimage common stock to the shareholders
of Dunhill. Prior to the merger, Messrs. Fletcher and McNamara were the
directors and sole shareholders of Dunhill. Messrs. Fletcher and McNamara owned
13.4% and 14.2%, respectively, of the outstanding common stock of Rimage before
the merger, and owned 26.7% and 27.1%, respectively, of the outstanding common
stock of Rimage immediately following the merger.
Rimage leases approximately 28,500 square feet of office, manufacturing
and warehouse space to house the continuing operations of its Dunhill division.
Such space is leased from a corporation owned by Messrs. Fletcher and McNamara
pursuant to a lease dated August, 1992. The lease expires on August 31, 2007.
Rent is approximately $150,000 per year, including a pro rata share of operating
costs.
Prior to the merger with Dunhill, Rimage from time to time sold
equipment to Dunhill. The aggregate amounts of such sales were approximately
$1,428,000, $978,000 and $1,522,158 during the fiscal years ended December 31,
1993 and 1994 and the nine months ended September 30, 1995.
The Company believes that all prior transactions between the Company
and its officers, directors, or other affiliates of the Company have been on
terms no less favorable than could have been obtained from unaffiliated third
parties on an arm's length basis.
SIGNATURE
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has caused this Amendment to its Annual Report on Form 10-K to be
signed on its behalf by the undersigned, thereto duly authorized.
RIMAGE CORPORATION
By /s/ Bernard P. Aldrich
---------------------------
Bernard P. Aldrich
Chief Executive Officer
and President
Dated: April 30, 1997
