<PAGE>
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) or the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 31, 1998
RIMAGE CORPORATION
(Exact name of Registrant as specified in its charter)
Minnesota 0-20728 41-1577970
--------- ------- ----------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
7725 Washington Avenue South, Edina, MN 55439
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(Address of principal executive offices including zip code)
Registrant's telephone number, including area code: (612) 944-8144
Not applicable
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(Former name or former address, if changed since last report)
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Financial Statements
Basis of Presentation
The unaudited pro forma condensed consolidated statements of operations for the
year ended December 31, 1997 and for the six months ended June 30, 1998, present
the operating results of Rimage Corporation (the "Company"), excluding the
operations related to the assets of its Minnesota services business (the
"Assets"), as if the Assets had been sold at the beginning of the respective
periods. The pro forma condensed consolidated balance sheet has been prepared
assuming the sale of the Assets took place as of June 30, 1998.
The unaudited pro forma condensed consolidated statements of operations, the
balance sheet, and the notes thereto should be read in conjunction with the
Company's audited consolidated financial statements and notes thereto,
incorporated by reference from the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, and the unaudited consolidated financial
statements and notes thereto incorporated by reference from the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.
The unaudited pro forma information is not necessarily indicative of the results
of operations or financial position that would have resulted had the sale
occurred as described above, nor is it necessarily indicative of the results of
operations of future periods or future financial position.
F-1
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
Pro Forma Condensed Consolidated Balance Sheet
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ASSETS HISTORICAL ADJUSTMENTS RESULTS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 3,187,705 518,574 (A) $ 3,706,279
Trade accounts receivable, net of allowance
for doubtful accounts and sales returns
of $328,738 5,053,008 5,053,008
Inventories 2,520,098 2,520,098
Prepaid expenses and other current assets 849,703 849,703
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Total current assets 11,610,514 12,129,088
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Property and equipment, net 5,139,572 (2,369,669) (A) 2,769,903
Other noncurrent assets 947,908 947,908
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Total assets $ 17,697,994 $ 15,846,899
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of notes payable $ 900,000 $ 900,000
Current installments of capital lease obligations 388,190 (314,442) (A) 73,748
Trade accounts payable 2,553,666 2,553,666
Accrued expenses 1,532,575 (71,872) (A) 1,460,703
Income taxes payable 492,680 492,680
Deferred income and customer deposits 683,393 683,393
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Total current liabilities 6,550,504 6,164,190
Notes payable, less current portion 300,000 300,000
Capital lease obligations, less current installments 2,461,064 (1,012,453) (A) 1,448,611
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Total liabilities 9,311,568 7,912,801
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Minority interest in inactive subsidiary 57,907 57,907
Stockholders' equity:
Common stock 31,599 31,599
Additional paid-in capital 10,781,157 10,781,157
Accumulated deficit (2,354,208) (452,328) (A) (2,806,536)
Foreign currency translation adjustment (130,029) (130,029)
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Total stockholders' equity 8,328,519 7,876,191
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Total liabilities and stockholders' equity $ 17,697,994 $ 15,846,899
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</TABLE>
F-2
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Operations
For the Six Months Ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS RESULTS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 18,489,889 (550,133) (B) $ 17,939,756
Cost of revenues 10,962,842 (575,217) (B) 10,387,625
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Gross profit 7,527,047 7,552,131
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Operating expenses:
Engineering and development 916,877 916,877
Selling, general and administrative 3,947,931 3,947,931
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Total operating expenses 4,864,808 4,864,808
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Operating earnings 2,662,239 2,687,323
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Other (expense) income:
Interest, net (157,878) 82,818 (C) (75,060)
Other, net 66,849 66,849
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Total other expense, net (91,029) (8,211)
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Earnings before income taxes 2,571,210 2,679,112
Income tax expense 520,200 5,017 (B) 541,780
16,564 (C)
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Net earnings $ 2,051,010 $ 2,137,332
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Basic net earnings per common
share $ 0.66 $ 0.69
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Diluted net earnings per common share
and common share equivalent $ 0.57 $ 0.60
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Basic weighted average shares 3,118,012 3,118,012
------------ ------------
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Diluted weighted average shares and
share equivalents outstanding 3,572,562 3,572,562
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</TABLE>
F-3
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS RESULTS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 38,878,439 (3,184,139) (B) $ 35,694,300
Cost of revenues 27,559,498 (2,563,048) (B) 24,996,450
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Gross profit 11,318,941 10,697,850
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Operating expenses:
Engineering and development 1,904,490 1,904,490
Selling, general and administrative 6,575,558 6,575,558
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Total operating expenses 8,480,048 8,480,048
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Operating earnings 2,838,893 2,217,802
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Other (expense) income:
Interest, net (829,490) 186,352 (C) (643,138)
Other, net 35,813 (452,328) (A) (416,515)
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Total other expense, net (793,677) (1,059,653)
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Earnings before income taxes 2,045,216 1,158,149
Income tax expense 120,143 (90,466) (A) (57,270)
(124,218) (B)
37,270 (C)
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Net earnings $ 1,925,073 $ 1,215,419
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Basic net earnings per common
share $ 0.62 $ 0.39
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Diluted net earnings per common share
and common share equivalent $ 0.59 $ 0.37
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Basic weighted average shares 3,086,292 3,086,292
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Diluted weighted average shares and
share equivalents outstanding 3,276,539 3,276,539
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</TABLE>
F-4
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
Notes of Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
(A) Cash and Cash Equivalents 518,574
Accrued Expenses 71,872
Loss on sale of fixed assets/Retained Earnings 452,328
Current Installments of Capital Lease Obligation 314,442
Capital Lease Obligation, Less Current Installment 1,012,453
Property and Equipment, net (2,369,669)
</TABLE>
To record fixed asset sale to ADS and buyout of associated capital
lease obligation
(B) To reflect reduction in revenues and expenses and increase/decrease
in net income associated with the sale of CD-ROM equipment to ADS
(C) To reflect the reduction in interest expense associated resulting from
the buyout of capital lease obligation; and reflect assumed interest
income earned on net cash proceeds remaining after sale of CD-ROM
equipment and buyout of capital lease. Assume interest income
earned on cash is 5% per annum
F-5
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On July 31, 1998, Rimage Corporation ("Rimage") completed the sale of a
substantial portion of its CD-ROM duplicating equipment and a portion of its
diskette duplication equipment used in its Minnesota services business to
Advanced Duplication Services, Inc. ("ADS") for a sales price of approximately
$1.9 million in cash. This services location had revenues of approximately
$3.7 million and a net operating loss of $50,000 during the six months ended
June 30, 1998. Rimage will record a loss of approximately $460,000 on the sale
of the assets in the quarter ending September 30, 1998.
Rimage Corporation is a leading provider of systems and services for the
publication of information on CD-R, CD-ROM, diskette and tape.
Item 7. Financial Statements.
(a) Financial Statements.
Not applicable
(b) Pro Forma Financial Information:
<TABLE>
<CAPTION>
<S> <C>
Basis of presentation. . . . . . . . . . . . . . . . . . . . . . . F-1
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
June 30, 1998 . . . . . . . . . . . . . . . . . . . . . . . . F-2
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Six Months Ended June 30, 1998. . . . . . . . . . . . F-3
Unaudited Pro Forma Condensed Consolidated Statement of Operations
the Year Ended December 31, 1997. . . . . . . . . . . . . . . F-4
Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements. . . . . . . . . . . . . . . . . . . . . . . . . . F-5
</TABLE>
(c) Exhibits.
10.1 Bill of Sale Agreement dated as of July 31, 1998 by
and between Rimage and ADS.
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/ Bernard P. Aldrich By /s/ Robert M. Wolf
---------------------- ------------------
Bernard P. Aldrich, Director, Chief Robert M. Wolf
Executive Officer, and President Controller
Dated: August 14, 1998
<PAGE>
BILL OF SALE
This BILL OF SALE is made and entered into as of the 31st day of July,
1998, by and between RIMAGE SERVICES GROUP ("Transferor"), a division of
Rimage Corporation, a Minnesota corporation, located at 9701 Penn Avenue
South, Bloomington, Minnesota 55431, and ADVANCED DUPLICATION SERVICES, INC.
("Transferee"), a Minnesota corporation, located at 2155 Niagara Lane North,
Suite 120, Plymouth, Minnesota 55447.
WITNESSETH:
WHEREAS, Transferee wishes to acquire, and Transferor wishes to sell,
transfer and convey to Transferee, all of Transferor's right, title and
interest in and to the equipment listed on Schedule A hereto (collectively,
the "Equipment");
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements set forth herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto covenant and agree as follows:
1. Transferor hereby irrevocably sells, grants, assigns, transfers, conveys,
delivers and sets over unto Transferee any and all of its right, title
and interest in the Equipment, subject to the following liens, claims and
encumbrances:
none
2. Transferor hereby represents, warrants and covenants that (a) it is the
owner of good, marketable title to the Equipment, (b) the Equipment is
free from all liens and encumbrances (except as listed above) and (c)
Transferor has the right to sell and convey the Equipment to Transferee.
Transferor shall warrant and defend the sale of the Equipment to
Transferee against any and all persons who claim title to the Equipment,
subject only to the encumbrances listed above. Transferor hereby
indemnifies and holds Transferee harmless from, against and in respect of
(and on demand shall reimburse Transferee for) any and all loss,
liability or damage (including reasonable attorney's fees) suffered or
incurred by Transferee by reason of any untrue representation, breach of
warranty or nonfulfillment of any covenant by Transferor contained herein
or in any certificate, document or instrument delivered to Transferee
pursuant hereto or in connection herewith.
3. Other than is stated above, Transferor makes no express warranties, makes
no implied warranties and disclaims any warranties of merchantability or
fitness for the purpose, and Transferee understands that the Equipment is
being sold and transferred AS IS, WHERE IS.
4. This Bill of Sale shall be construed and interpreted, and the rights of
the parties determined in accordance with, the laws of the State of
Minnesota, without reference to conflicts of law principles thereunder.
<PAGE>
5. All of the covenants and agreements contained herein shall apply to and
bind the Transferor and benefit the Transferee and their respective
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Bill of Sale to
be duly executed and delivered by their respective duly authorized officers,
as of the day and year first above written.
RIMAGE SERVICES GROUP ADVANCED DUPLICATION SERVICES, INC.
By: /s/ Bernard P. Aldrich By: /s/ Mike Bernstein
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Bernard P. Aldrich Mike Bernstein
Its President and CEO Its Chief Executive Officer
By: /s/ Kathy Peterson
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Kathy Peterson
Its Chief Operating Officer
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