UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1997; OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM__________ TO__________.
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 Identification No.)
incorporation or organization)
7725 Washington Avenue South. Edina MN 55439
(Address of principal executive offices)
612-944-8144
(Registrant's telephone number, including area code)
NA
(Former name, former address, and former fiscal year, if changed since last
report.)
Common Stock outstanding at August 12, 1997 -- 3,084,500 shares
of $.01 par value Common Stock.
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 ____
<PAGE>
RIMAGE CORPORATION
FORM 10-Q
TABLE OF CONTENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997
Description Page
----------- ----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
June 30, 1997 (unaudited) and
December 31, 1996.......................................... 3
Consolidated Statements of Operations
(unaudited) for the Three and Six Month
Ended June 30, 1997 and 1996............................... 4
Consolidated Statements of Cash Flows
(unaudited) for the Six Months
Ended June 30, 1997 and 1996............................... 5
Condensed Notes to Consolidated
Financial Statements (unaudited)........................... 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation............... 9-12
PART II OTHER INFORMATION................................................. 12-15
Items 1-3. None
Item 4. Submission of Matters to a Vote of Security Holders........... 13
Item 5. None
Item 6. Exhibits and Reports on Form 8-K.............................. 14-15
SIGNATURES................................................................ 16
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1.
RIMAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
ASSETS ------------ ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash ............................................................ $ 25,069 $ 117,322
Trade accounts receivable, net of allowance for doubtful accounts
and sales returns of $428,744 and $1,084,910, respectively .... 6,206,480 5,070,738
Inventories (note 2) ............................................ 2,509,817 4,027,553
Income tax receivable ........................................... 670,866 818,790
Prepaid expenses and other current assets ....................... 419,665 293,037
Current installments of investment in sales-type leases ......... 139,926 217,952
------------ ------------
Total current assets ...................................... 9,971,823 10,545,392
------------ ------------
Property and equipment, net ....................................... 6,612,587 7,814,430
Investment in sales-type leases, net of
current installments ............................................ 49,021 182,332
Goodwill .......................................................... 889,049 929,407
Other noncurrent assets ........................................... 416,220 537,944
------------ ------------
Total assets .............................................. $ 17,938,700 $ 20,009,505
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of notes payable (note 4) ...................... $ 4,856,428 $ 6,052,709
Current installments of capital lease obligations .............. 330,164 311,343
Trade accounts payable ......................................... 3,485,136 4,295,400
Accrued expenses ............................................... 1,335,994 1,746,912
Deferred income and customer deposits .......................... 578,212 429,822
------------ ------------
Total current liabilities ................................ 10,585,934 12,836,186
Capital lease obligations, net of current installments ............ 2,860,211 3,031,759
------------ ------------
Total liabilities ........................................ 13,446,145 15,867,945
------------ ------------
Minority interest in inactive subsidiary .......................... 57,907 57,907
Stockholders' equity:
Common stock .................................................... 30,845 30,845
Additional paid-in capital ...................................... 10,447,798 10,447,798
Accumulated deficit ............................................. (5,909,210) (6,330,291)
Equity adjustment from foreign currency translation ............. (134,785) (64,699)
------------ ------------
Total stockholders' equity ............................... 4,434,648 4,083,653
------------ ------------
Total liabilities and stockholders) equity .................... $ 17,938,700 $ 20,009,505
============ ============
</TABLE>
See accompanying condensed notes to consolidated financial statements.
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues ................................... $ 10,337,931 $ 9,899,902 $ 21,164,704 $ 20,950,408
Cost of revenues ........................... 7,440,193 7,725,934 15,702,276 15,607,931
------------ ----------- ------------ ------------
Gross Profit .......................... 2,897,738 2,173,968 5,462,428 5,342,477
Operating expenses:
Engineering and development .............. 527,974 690,281 1,084,667 1,467,129
Selling, general and administrative ...... 1,702,394 2,270,396 3,438,312 4,481,282
------------ ----------- ------------ ------------
Total operating expenses .............. 2,230,368 2,960,677 4,522,979 5,948,411
------------ ----------- ------------ ------------
Operating earnings (loss) ............. 667,370 (786,709) 939,449 (605,934)
------------ ----------- ------------ ------------
Other income (expense)
Interest expense, net .................... (244,927) (132,047) (512,065) (271,494)
Gain (loss) on currency exchange ......... 41,159 (16,700) 38,740 (11,607)
Other, net ............................... 2,591 14,097 15,099 39,151
------------ ----------- ------------ ------------
Total other expense, net .............. (201,177) (134,650) (458,226) (243,950)
------------ ----------- ------------ ------------
Net earnings (loss) before income taxes 466,193 (921,359) 481,223 (849,884)
Income taxes .......................... 60,143 (24,000) 60,143 0
------------ ----------- ------------ ------------
Net earnings (loss) ................... $ 406,050 ($ 897,359) $ 421,080 ($ 849,884)
Net earnings (loss) per common
and common equivalent share ......... $ 0.14 ($ 0.29) $ 0.15 ($ 0.27)
============ =========== ============ ============
Weighted average shares and share
equivalents outstanding ............. 3,110,395 3,092,961 3,103,847 3,108,120
============ =========== ============ ============
</TABLE>
See accompanying condensed notes to the consolidated financial statements.
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
1997 1996
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) ..................................... $ 421,080 $ (849,884)
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization ....................... 1,394,694 718,739
Change in reserve for excess and obsolete inventories 13,895 (50,000)
Change in reserve for doubtful accounts ............. (49,000) (117,951)
Loss (gain) on sale of property, plant, and equipment 69,424 (1,408)
Deferred income tax ................................. 0 (83,388)
Changes in operating assets and liabilities:
Trade accounts receivable ........................... (1,086,742) 4,066,167
Inventories ......................................... 1,503,841 445,149
Prepaid expenses and other current assets ........... (126,628) (793,440)
Income tax receivable ............................... 147,924 9,277
Accounts payable .................................... (810,264) (3,181,308)
Accrued expenses .................................... (410,918) 172,578
Deferred income and customer deposits ............... 148,390 416,080
------------ -----------
Net cash provided by operating activities ..... 1,215,696 750,611
------------ -----------
Cash flows from investing activities:
Purchase of property, plant, and equipment .............. (237,916) (780,205)
Proceeds from the sale of property and equipment ........ 16,000 13,150
Other assets ............................................ 121,724 131,109
Payments on investment in sales-type leases ............. 211,337 139,813
------------ -----------
Net cash provided by (used in) investing activities 111,145 (496,133)
------------ -----------
Cash flows from financing activities:
Proceeds from stock option exercise ..................... 0 146,250
Principal payments on capital lease obligation .......... (152,727) (8,207)
Proceeds from other notes payable ....................... 18,107,751 6,591,000
Repayment of other notes payable ........................ (19,304,032) (6,920,167)
------------ -----------
Net cash used in financing activities .............. (1,349,008) (191,124)
------------ -----------
Effect of exchange rate changes on cash ...................... (70,086) (27,276)
------------ -----------
Net increase (decrease) in cash .............................. (92,253) 36,078
Cash, beginning of period .................................... 117,322 230,014
------------ -----------
Cash, end of period .......................................... $ 25,069 $ 266,092
============ ===========
</TABLE>
See accompanying condensed notes to the consolidated financial statements.
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION AND NATURE OF BUSINESS
The consolidated financial statements include the accounts of Rimage
Corporation, Rimage Europe GmbH, A/G Systems Inc., d/b/a Duplication
Technology, Knowledge Access International (Knowledge Access) and
operations of Rimage Services Group (formerly Dunhill Software Services
which merged with Rimage in 1995 using pooling-of-interest accounting),
collectively hereinafter referred to as Rimage or the Company. All material
intercompany accounts and transactions have been eliminated upon
consolidation.
Effective September 29, 1995, Rimage Corporation and Dunhill Software
Services (Dunhill) completed a merger. Dunhill had been a significant
customer of Rimage. For financial reporting purposes, the merger has been
recorded using the pooling-of-interests method of accounting under
generally accepted accounting principles.
Following this merger, the Company operates in two segments, Rimage Systems
Group and Rimage Services Group. The Rimage Systems Group consists of
substantially all of the former Rimage Companies. The Rimage Services Group
consists of the former Dunhill operation in addition to the existing
service business at Duplication Technology.
The Systems Group develops, manufacturers and distributes duplication, and
demagnetization equipment for computer media and associated peripheral
devices. The Services Group provides computer media duplication and
production services to software developers and manufacturers and
information publishers.
The Company extends unsecured credit to its customers, substantially all of
whom are computer hardware, software and service companies, software
developers and manufacturers or information publishers.
The consolidated financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
Rimage believes that the disclosures are adequate to make the information
presented not misleading.
In the opinion of the Company, all adjustments, consisting of only normal
recurring adjustments, necessary to present fairly the consolidated
financial position of the Company as of the dates and for the periods
presented, have been made. The results of operations for such interim
periods are not necessarily indicative of the results to be expected for
the entire year.
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(2) INVENTORIES
Inventories consist of the following as of:
June 30, December 31,
1997 1996
(unaudited)
---------- ----------
Finished goods and demonstration equipment $ 951,238 $1,026,303
Work-in-process 319,156 527,378
Purchased parts and subassemblies 1,843,318 3,063,872
---------- ----------
3,113,712 4,617,553
Less reserve for excess inventories 603,895 590,000
---------- ----------
$2,509,817 $4,027,553
========== ==========
(3) SEGMENT REPORTING
The following table summarizes certain financial information for the
Systems and Service segments:
Six Months Ended June 30,
(unaudited)
(in thousands) 1997 1996
-------------- --------- ---------
Revenues from unaffiliated customers:
Systems $ 10,548 $ 10,962
Service 10,617 9,988
Operating earnings (loss):
Systems 1,228 (578)
Service (288) (28)
June 30, December 31,
1997 1996
(unaudited)
----------- ------------
Net identifiable assets:
Systems $ 8,544 $ 9,137
Service 9,395 10,873
As of and for the six months ended June 30, 1997, foreign revenues from
unaffiliated customers, operating loss, and net identifiable assets were
$1,990,976, ($57,727) and $2,029,068, respectively.
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
As of and for the six months ended June 30, 1996, foreign revenues from
unaffiliated customers, operating earnings, and net identifiable assets
were $2,423,497, $35,769 and 2,497,240, respectively.
(4) NOTES PAYABLE TO BANK
On October 13, 1995, Rimage signed a Credit Agreement which consolidated
and redefined all previously outstanding Rimage and Dunhill debt. This
credit agreement covered all of the term and revolving notes discussed
below. The Company was required to maintain certain financial ratios as a
part of the agreement. The Company obtained a waiver from the bank
regarding the tangible capital base, working capital amount, leverage
ratio, and net profit requirement which were not in compliance as of and
for the year ended December 31, 1996.
The Company had a term note agreement with a bank. Borrowings under the
agreement were secured by substantially all Company assets, accrued
interest at the bank's reference rate plus two and three quarters percent
and were payable on demand. The outstanding amount as of December 31, 1996
was $2,583,302.
The Company also had a revolving line of credit agreement which was payable
on demand. The line of credit provided for borrowings up to $5,000,000.
Borrowings under this agreement were secured by substantially all Company
assets and accrued interest at the bank's reference rate plus two and one
half percent. Borrowings outstanding under this line were $3,469,407 on
December 31, 1996.
Effective March 31, 1997, Rimage signed an Amended and Restated Credit
Agreement which amended the October 13, 1995 Credit Agreement and covers
the term and revolving notes discussed above.
Under the Amended and Restated Credit Agreement, the term note discussed
above remains payable on demand, in consecutive monthly installments of
$77,777, plus accrued interest at two and three quarters percent above the
bank's reference rate until April 1, 1998 when the remaining principal
balance and all unpaid accrued interest is due. The outstanding amount as
of June 30, 1997 was $2,116,636.
Also available to the Company under the Amended and Restated Credit
Agreement are advances based on various percentages of qualified asset
amounts, up to a maximum advance of $5,000,000. Outstanding advances are
secured by substantially all Company assets and accrue interest at a rate
equal to the bank's reference rate plus two and one-half percent. All
advances are due and payable on demand. Borrowings outstanding under this
line were $2,739,793 on June 30, 1997.
Due to the demand feature of the Amended and Restated Credit Agreement, the
Company has reflected all outstanding balances as current liabilities. The
Company believes its banking relationship is good and that satisfactory
financing will be available on terms acceptable to the Company for the
forseeable future.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth, for the periods indicated, selected items
from the Company's consolidated statements of operations, shown in
thousands.
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
---------------------- -----------------------
1997 1996 1997 1996
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenues to unaffiliated customers:
Systems ......................... $ 5,816 $ 6,234 $ 10,548 $ 10,962
Services ........................ 4,522 3,666 10,617 9,988
-------- ------- -------- --------
Total Revenues ............... 10,338 9,900 21,165 20,950
Cost of Revenues:
Systems ......................... 3,467 4,345 6,261 7,050
Service ......................... 3,973 3,381 9,441 8,558
-------- ------- -------- --------
Total Cost of Revenues ....... 7,440 7,726 15,702 15,608
Operating Expenses:
Systems ......................... 1,546 2,362 3,059 4,490
Service ......................... 684 599 1,464 1,458
-------- ------- -------- --------
Total Operating Expenses ..... 2,230 2,961 4,523 5,948
Operating Earnings (Loss):
Systems ......................... 803 (473) 1,228 (578)
Service ......................... (135) (314) (288) (28)
-------- ------- -------- --------
Total Operating Earnings (Loss) ... $ 668 $ (787) $ 940 ($ 606)
======== ======= ======== ========
</TABLE>
RESULTS OF OPERATIONS
This report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ significantly from
those discussed in the forwardlooking statements. Factors that could cause or
contribute to such differences include, but are not limited to, changes in media
or method used for distribution of software, technological changes in products
offered by the Company or its competitors and changes in general conditions in
the computer market.
<PAGE>
Rimage designs, manufactures and sells computer media duplication and printing
systems, and provides media duplication and fulfillment services. The Company's
revenues increased by 4.4% and 1.0% in the three and six months ended June 30,
1997, respectively, when compared to the three and six months ended June 30,
1996. Consolidated net earnings for the three and six months ended June 30, 1997
were $406,050 and $421,080, respectively, compared to a net loss of ($897,359)
and ($849,884), respectively, for the three and six months ended June 30, 1996.
SYSTEMS SEGMENT -- THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Systems revenues (which include equipment sold from Rimage Systems Group, Rimage
Europe, Duplication Technology, and Knowledge Access International) for the
three and six months ended June 30, 1997 decreased by $417,744 and $414,527,
respectively, when compared to the same periods of 1996. These decreases were
primarily due to significant increases in core business system revenues of
$1,599,667 and $1,636,063, respectively, offset by significant decreases in
non-core business revenues of $2,017,411 and $2,050,590, respectively, after the
shut-down of certain non-core business operations in December of 1996. The
increase in core business revenues was primarily due to an increase in
CD-Recordable ("CD-R") equipment sales combined with stable diskette equipment
sales.
Gross profit for the three and six months ended June 30, 1997, increased by
$460,123 and $373,760, or 10.1 % and 4.9% as a percentage of sales,
respectively, when compared to the same periods of 1996. These increases were
primarily due to the aforementioned sales mix change between core and non-core
businesses.
Operating expenses for the three and six months ended June 30, 1997 decreased by
$815,072 and $1,431,803, or 34.5% and 31.9%, respectively, when compared to
operating expenses for the same period of 1996. These decreases were primarily a
result of work force changes and the decision to shut-down certain non-core
business facilities and divisions in December of 1996. The Company expects the
trend of lower operating expenses in 1997 compared to operating expenses for the
same periods in 1996 to continue.
Operating profit for the three and six months ended June 30, 1997 was $802,816
and 1,227,962, respectively, compared with an operating loss of $472,379 and
$577,601, respectively, for the same periods of 1996. This improvement was due
to the aforementioned change in sales mix and decrease in operating expenses
during the first six months of 1997 compared to the same period of 1996.
SERVICE SEGMENT -- THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Service revenues (which include the revenues of the Rimage Service Group,
formerly "Dunhill", as well as the service business of Duplication Technology)
for the three and six months ended June 30, 1997, increased by $855,773 and
$628,823, respectively, when compared to the same periods of 1996. These
increases resulted primarily due to incremental CD-ROM duplication from the
Company's new CD-ROM stamping facility and due to increased outsourcing of
product fulfillment, offset by lower diskette duplication demand.
Gross profit as a percentage of revenues for the three months ended June 30,
1997, increased to 12.1 % from 7.8% and decreased to 11.1% from 14.3% for the
six months ended June 30, 1997, when compared to the
<PAGE>
same periods of 1996. These margin changes were primarily due to a lower gross
profit from the aforementioned incremental CD-ROM duplication and outsourcing
revenues, offset by personnel and manufacturing operation changes that were made
in the second quarter of 1997 to improve those margins.
Operating expenses for the three and six months ended June 30, 1997 remained
consistent when compared to the same periods of 1996, and decreased, as a
percentage of revenues, from 16.3% to 15.1%, and from 14.6% to 13.8%,
respectively. These decreases were a direct result of work force changes made in
December of 1996.
Operating loss for the three and six months ended June 30, 1997, was ($135,445)
and ($288,512), respectively, compared with an operating loss of ($314,330) and
($28,333), respectively, for the same periods of 1996. These changes in
operating loss were primarily due to the aforementioned gross profit changes.
CONSOLIDATED THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Revenues for the three and six months ended June 30, 1997, increased by $438,029
and $214,296, respectively, when compared to the same periods of 1996. These
increases were primarily a result of increased revenues from the Company's core
businesses, offset by the shut down of non-core businesses.
Gross profit, as a percentage of revenues, for the three and six months ended
June 30, 1997, increased to 28.0% and 25.8%, respectively, from 22.0% and 25.5%
for the three and six months ended June 30,1996. These increases were primarily
due to the aforementioned sales mix change between core and non-core businesses,
offset by lower gross profit from incremental CD-ROM duplication and outsourcing
revenues.
Operating expenses for the three and six months ended June 30, 1997 decreased by
$730,309 and $1,425,432, respectively, when compared to the same periods of
1996, and as a percentage of revenues, decreased to 21.6% from 29.9%, and to
21.4% from 28.4%, respectively, when compared to the same periods of 1996. This
decrease was a direct result of work force changes and the decision to shut-down
certain non-core business facilities and divisions in December of 1996.
Other expense, net, for the three and six months ended June 30, 1997, increased
by $66,527 and $214,276, respectively, when compared to the same periods of
1996. This was primarily due to higher interest expense as a direct result of
increased borrowing for working capital and capital investment in the second
half of 1996.
Due to significant loss carryforwards as of December 31, 1996, the Company's
income tax expense for the three and six months ended June 30, 1997, was
$60,143. The Company expects this trend to continue due to significant remaining
loss carryforwards.
Net earnings for the three and six months ended June 30, 1997, were $406,051 and
$421,081, respectively, compared to a net loss of ($897,359) and ($849,884),
respectively, for the same periods of 1996. Net earnings per share for the three
and six months ended June 30, 1997, were $.14 and $.15, respectively, compared
to a net loss per share of ($.29) and ($.27) for the same periods of 1996.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities during the first six months of 1997
and 1996 was $1,215,696 and $750,611, respectively. The cash provided from
operating activities during the first six months of 1997 resulted from a net of
the following: net earnings of $421,080; depreciation expense of $1,394,694; an
increase in receivables of $1,135,742; a decrease in inventory of $1,517,736;
and a decrease in accounts payable and accrued expenses of $ 1,221,182.
Net cash provided by (used in) investing activities was $111,145 and ($496,133)
during the first six months of 1997 and 1996, respectively. The change which
provided cash from investing activities during the first six months of 1997 was
primarily due to a focus on fewer property, plant, and equipment purchases. At
June 30, 1997 the Company had no significant commitments to purchase additional
capital equipment.
At June 30, 1997, the Company's negative working capital was $614,111 compared
to $2,290,794 at December 31, 1996. The net cash used in financing activities
was $1,349,008 and $191,124 for the six months ended June 30, 1997 and 1996,
respectively. The Company decreased its bank debt by approximately $ 1,200,000
during the first six months of 1997. The Company has a line of credit agreement
totaling $5,000,000 with a bank, which expires April 1, 1998. Advances under
this line of credit are secured by substantially all the Company's assets, are
subject to borrowing base requirements, are due on demand and bear interest at
the bank's reference rate plus two and one-half percent. At June 30, 1997, the
Company had borrowings under this line totaling $2,739,793. The Company also has
term note agreements totaling $2,116,636 under various terms that are secured by
substantially all the Company's assets, and bear interest at the bank's
reference rate plus two and three-quarters percent. The Company believes its
banking relationship is good and that satisfactory financing will be available
on terms acceptable to the Company for the foreseeable future.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders' was held on June 11,
1997. The following members were elected to the Company's Board of
Directors to hold office for the ensuing year:
Nominee In Favor Withheld
------- -------- --------
Bernard Aldrich 2,853,036 137,716
Ronald Fletcher 2,853,786 136,966
Robert Hoffman 2,852,086 138,666
George Kline 2,853,886 136,866
Richard McNamara 2,853,786 136,966
Dr. Joseph Miceli 2,853,761 136,991
David Suden 2,853,636 137,116
The results of the voting on the following additional items were as
follows:
(a) Ratification of the selection of KPMG Peat Marwick LLP as
independent accountants to audit the consolidated financial statements
of Rimage Corporation for the year ending December 31, 1997. The votes
of the stockholders on this ratification were as follows:
In Favor Opposed Abstained Broker Non-Vote
-------- ------- --------- ---------------
2,980,927 1,948 7,877 -0-
(a) Approval of amendment to the 1992 Stock Option Plan to increase the
number of shares reserved for issuance thereunder. The votes of the
stockholders on this amendment were as follows:
In Favor Opposed Abstained Broker Non-Vote
-------- ------- --------- ---------------
1,876,918 189,215 9,660 914,959
Item 5. Other Information
Not Applicable.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit No. 11.1 Calculation of Earnings Per Share
Exhibit No. 27.1 Financial Data Schedule
(b) Reports on Form 8-K:
Not Applicable.
<PAGE>
SIGNATURES
In accordance with the Exchange Act, this report has been signed below by
following persons on behalf of the registrant and on the dates indicated.
RIMAGE CORPORATION
------------------
Registrant
Date: August 14, 1997 By: /s/ Bernard P. Aldrich
------------------ ----------------------
Bernard P. Aldrich
Director, Chief Executive Officer,
and President
(Principal Executive Officer)
(Principal Financial Officer)
Date: August 14, 1997 By: /s/Marvin J. Hohl
------------------ -----------------
Marvin J. Hohl
Controller
(Principal Accounting Officer)
RIMAGE CORPORATION
COMPUTATION OF NET EARNINGS PER SHARE OF COMMON STOCK
Net earnings per common share is determined by dividing the net earnings by the
weighted average number of shares of common stock and common share equivalents
outstanding. The following is a summary of the weighted average common shares
outstanding and common share equivalents:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Shares Outstanding at
beginning of period 3,084,500 3,069,000 3,084,500 3,051,000
Common stock issued in stock
option exercise 0 15,500 0 33,500
--------- --------- --------- ---------
Shares Outstanding at
end of period 3,084,500 3,084,500 3,084,500 3,084,500
========= ========= ========= =========
Weighted average shares
of common stock outstanding 3,084,500 3,073,253 3,084,500 3,064,937
========= ========= ========= =========
Common stock equivalents 750,353 397,453 750,353 397,453
Weighted average shares of
common stock equivalents 19,347 19,708 25,895 43,183
========= ========= ========= =========
Weighted average shares of
common stock and
stock equivalents 3,103,847 3,092,961 3,110,395 3,108,120
========= ========= ========= =========
Net earnings (loss) $406,050 ($897,359) $421,080 ($849,884)
========= ========= ========= =========
Net earnings (loss) per share $0.14 ($0.29) $0.15 ($0.27)
========= ========= ========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 25,069
<SECURITIES> 0
<RECEIVABLES> 6,635,224
<ALLOWANCES> 428,744
<INVENTORY> 2,509,817
<CURRENT-ASSETS> 9,971,823
<PP&E> 13,675,053
<DEPRECIATION> 7,062,466
<TOTAL-ASSETS> 17,938,700
<CURRENT-LIABILITIES> 10,585,934
<BONDS> 0
0
0
<COMMON> 30,845
<OTHER-SE> 4,403,803
<TOTAL-LIABILITY-AND-EQUITY> 17,938,700
<SALES> 21,164,704
<TOTAL-REVENUES> 21,164,704
<CGS> 15,702,276
<TOTAL-COSTS> 15,702,276
<OTHER-EXPENSES> 4,522,979
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 512,065
<INCOME-PRETAX> 481,223
<INCOME-TAX> 60,143
<INCOME-CONTINUING> 421,080
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 421,080
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
