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 MARCH 31, 1999; 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 May 4, 1999 - 5,047,585 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 QUARTER ENDED MARCH 31, 1999
Description Page
----------- ----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
March 31, 1999 (unaudited) and
December 31, 1998................................... 3-4
Consolidated Statements of Operations
(unaudited) for the Three Months
Ended March 31, 1999 and 1998....................... 5
Consolidated Statements of Cash Flows
(unaudited) for the Three Months
Ended March 31, 1999 and 1998....................... 6-7
Condensed Notes to Consolidated
Financial Statements (unaudited).................... 8-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations....... 10-14
PART II OTHER INFORMATION......................................... 15-16
Item 1-5. None
Item 6. Exhibits
SIGNATURES................................................................ 17
2
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 1999 and December 31, 1998
<TABLE>
<CAPTION>
March 31, December 31,
Assets 1999 1998
- -------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,660,114 7,349,521
Trade accounts receivable, net of allowance for doubtful
accounts and sales returns of $104,000 and $205,000,
respectively 4,784,276 5,251,185
Inventories 2,181,422 2,043,131
Interest receivable 40,255 --
Prepaid expenses and other current assets 211,533 127,657
Deferred income taxes 593,000 593,000
=================================================================================================
Total current assets 16,470,600 15,364,494
- -------------------------------------------------------------------------------------------------
Property and equipment, net 1,009,642 908,991
Goodwill, net of accumulated amortization of $405,880 and 739,383 767,977
$377,286, respectively
Other noncurrent assets 254,360 67,427
- -------------------------------------------------------------------------------------------------
Total assets $ 18,473,985 17,108,889
=================================================================================================
</TABLE>
See accompanying condensed notes to consolidated financial statements
3
<PAGE>
<TABLE>
<CAPTION>
March 31, December 31,
Liabilities and Stockholders' Equity 1999 1998
- ------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
Current liabilities:
Trade accounts payable 2,092,505 2,273,536
Income taxes payable 789,800 236,728
Accrued compensation 796,958 899,247
Accrued other 719,984 818,109
Deferred income and customer deposits 723,773 712,982
- ------------------------------------------------------------------------------------------------------------
Total current liabilities 5,123,020 4,940,602
- ------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Common stock, $.01 par value, authorized 10,000,000 shares,
issued and outstanding 5,047,585 and 4,936,088, respectively 50,475 49,361
Additional paid-in capital 11,772,946 11,545,485
Retained earnings 1,743,008 647,477
Foreign currency translation adjustment (215,464) (74,036)
- ------------------------------------------------------------------------------------------------------------
Total stockholders' equity 13,350,965 12,168,287
- ------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 18,473,985 17,108,889
============================================================================================================
</TABLE>
4
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Three months ended March 31, 1999 and 1998
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
1999 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Revenues $ 8,651,465 9,648,600
Cost of revenues 4,504,689 5,831,732
- ----------------------------------------------------------------------------------------
Gross profit 4,146,776 3,816,868
- ----------------------------------------------------------------------------------------
Operating expenses:
Engineering and development 597,958 509,411
Selling, general, and administrative 1,814,186 2,042,250
- ----------------------------------------------------------------------------------------
Total operating expenses 2,412,144 2,551,661
- ----------------------------------------------------------------------------------------
Operating earnings 1,734,632 1,265,207
- ----------------------------------------------------------------------------------------
Other income (expense):
Interest income 100,456 --
Interest expense -- (91,639)
Loss on currency exchange (70,618) (5,683)
Other, net 5,451 8,790
- ----------------------------------------------------------------------------------------
Total other income (expense), net 35,289 (88,532)
- ----------------------------------------------------------------------------------------
Earnings before income taxes 1,769,921 1,176,675
Income taxes 674,390 173,200
- ----------------------------------------------------------------------------------------
Net earnings $ 1,095,531 1,003,475
========================================================================================
Basic net earnings per common share $ 0.22 0.22
- ----------------------------------------------------------------------------------------
Diluted net earnings per common share
and assumed conversion shares $ 0.19 0.19
- ----------------------------------------------------------------------------------------
Basic weighted average shares 4,997,417 4,640,044
========================================================================================
Diluted weighted average shares and assumed
conversion shares 5,809,622 5,170,817
========================================================================================
</TABLE>
See accompanying condensed notes to consolidated financial statements
5
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three months ended March 31, 1999 and 1998
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
1999 1998
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings 1,095,531 1,003,475
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 157,637 528,240
Change in reserve for excess and obsolete inventories 96,797 10,819
Change in reserve for doubtful accounts (100,410) (148,930)
(Gain) loss on sale of property and equipment (27,489) 1,997
Changes in operating assets and liabilities:
Trade accounts receivable 567,319 (555,896)
Inventories (235,088) 120,925
Interest receivable (40,255) --
Income tax receivable -- (110,850)
Prepaid expenses and other current assets (91,093) 81,295
Trade accounts payable (181,031) (228,768)
Accrued expenses (200,414) 298,138
Income taxes payable 553,072 155,000
Deferred income and customer deposits 10,791 56,413
- -------------------------------------------------------------------------------------------------------
Net cash provided by
operating activities 1,605,367 1,211,858
- -------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property and equipment (216,627) (223,203)
Proceeds from the sale of property and equipment 27,489 --
Other noncurrent assets (294,598) 29,546
Receipts from sales-type leases 7,217 31,704
- -------------------------------------------------------------------------------------------------------
Net cash used in investing
activities (476,519) (161,953)
- -------------------------------------------------------------------------------------------------------
</TABLE>
(Continued)
6
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
<TABLE>
<CAPTION>
Three months ended
March 31,
1999 1998
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from financing activities:
Proceeds from stock option exercise 228,575 39,507
Principal payments on capital lease obligations -- (82,984)
Repayment of other notes payable -- (225,000)
=======================================================================================================
Net cash provided by (used in)
financing activities 228,575 (268,477)
- -------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (46,830) (10,004)
- -------------------------------------------------------------------------------------------------------
Net increase in cash 1,310,593 771,424
Cash and cash equivalents, beginning of period 7,349,521 656,127
- -------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 8,660,114 1,427,551
=======================================================================================================
Supplemental disclosures of net cash paid during the
period for:
Interest $ -- 100,356
Income taxes $ 121,318 110,850
</TABLE>
See accompanying condensed notes to consolidated financial statements.
7
<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 Inc. (Rimage Boulder), and Rimage Services, collectively
hereinafter referred to as Rimage or the Company. All material
intercompany accounts and transactions have been eliminated upon
consolidation.
The Company operates in two divisions, Rimage Systems Division and
Rimage Services Division. The Rimage Systems Division consists of
Rimage Corporation and Rimage Europe GmbH. The Rimage Services
Division consists of Rimage Services and Rimage Boulder. During the
third quarter of 1998, the Company ceased operations of its
Bloomington Service division (Rimage Services) and sold the equipment
and inventory associated with it.
The Systems Division develops, manufactures and distributes high
performance CD-Recordable (CD-R) publishing and duplication systems,
and continues to support its long term involvement in diskette
duplication and publishing equipment. The Services Division provides
computer media duplication and production services to software
developers and manufacturers and information publishers.
The accompanying unaudited consolidated financial statements of the
Company have been prepared pursuant to the rules of the Securities
and Exchange Commission. These financial statements should be read in
conjunction with the more detailed financial statements and notes
thereto included in the Company's most recent annual report on Form
10-K.
The Company extends unsecured credit to its customers as well as credit
to a limited number of authorized distributor wholesalers, who in
turn provide warehousing, distribution, and credit to a network of
authorized value added resellers. These distributors and value added
resellers sell and service a variety of hardware and software
products.
In the opinion of management, the accompanying consolidated financial
statements reflect all adjustments, consisting of only normal
recurring adjustments, necessary for a fair presentation of the
financial position and results of operations and cash flows of the
Company for the periods presented. Certain prior year amounts have
been reclassified to conform with the current quarter presentation.
(Continued)
8
<PAGE>
RIMAGE CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(2) INVENTORIES
Inventories consist of the following as of:
March 31, December 31,
1999 1998
(unaudited)
- --------------------------------------------------------------------------------
Finished goods and demonstration equipment $ 1,141,921 $ 900,839
Work-in-process 89,011 165,761
Purchased parts and subassemblies 950,490 976,532
- --------------------------------------------------------------------------------
$ 2,181,422 $ 2,043,131
================================================================================
(3) SEGMENT REPORTING
The following table summarizes certain financial information for the
Systems and Services Divisions:
Three Months Ended March 31,
(unaudited)
-------------------------------------
(in thousands) 1999 1998
- --------------------------------------------------------------------------------
Revenues from unaffiliated customers:
Systems $ 7,517 $ 6,132
Services 1,135 3,517
----------- -----------
8,652 9,649
=========== ===========
Operating earnings:
Systems 1,591 1,148
Services 144 117
----------- -----------
1,735 1,265
=========== ===========
(4) COMPREHENSIVE INCOME
The Company's only item of other comprehensive income relates to
foreign currency translation adjustments, and is presented separately
on the balance sheet as required. If presented on the statement of
operations for the three months periods ended March 31, 1999 and
1998, comprehensive income would be $141,428 less than reported net
income and $1,542 more than reported net income, respectively, due to
foreign currency translation adjustments.
9
<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
March 31,
---------------------
%
1999 1998 Change
-------- --------
<S> <C> <C> <C>
Revenues from unaffiliated customers:
Systems ................................... $ 7,517 $ 6,132 22.6%
Services .................................. 1,135 3,517 (67.7)
-------- --------
Total revenues ........................ 8,652 9,649 (10.3)
Cost of revenues:
Systems ................................... 3,666 2,928 25.2
Services .................................. 839 2,904 (71.1)
-------- --------
Total cost of revenues ................ 4,505 5,832 (22.8)
Gross profit:
Systems ................................... 3,851 3,204 20.2
Services .................................. 296 613 (51.7)
-------- --------
Total gross profit .................... 4,147 3,817 8.6
Operating expenses:
Systems ................................... 2,260 2,056 9.9
Services .................................. 152 496 (69.4)
-------- --------
Total operating expenses .............. 2,412 2,552 (5.5)
Operating earnings:
Systems ................................... 1,591 1,148 38.6
Services .................................. 144 117 23.1
-------- --------
Total operating earnings .............. 1,735 $ 1,265 37.2
======== ========
</TABLE>
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
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 forward-looking 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.
Rimage operates through two primary divisions: (1) the systems division designs,
manufactures and sells high performance, on-demand publishing and duplication
equipment for CD-R's, diskettes and tapes, and (2) the services division
provides media duplication and fulfillment services for most computer media
types, including CD-ROM, diskette, tape and other media such as ZIP and Jazz
disks. Results of operations during the three months ended March 31, 1999
reflected the continued trend of growth in the systems division and lower
contribution from the services division.
REVENUES. Revenues decreased 10.3% from $9.6 million during the first quarter of
1998 to $8.7 million during the first quarter of 1999. All of the decrease,
however, occurred in the services division, which recorded a 67.7% decline in
revenues from $3.5 million in the first quarter of 1998 to $1.1 million in the
first quarter of 1999. This decrease was primarily attributable to the
divestiture of the Company's Bloomington, Minnesota services operation in August
1998. The Company's ongoing intent to focus its sales efforts more heavily
towards developing the systems' division current distribution network created
increased sales of its CD-R products. Expanded market penetration caused
revenues in the systems division to increase 22.6% to $7.5 million in the first
quarter of 1999 from $6.1 in the first quarter of 1998.
As of and for the quarter ended March 31, 1999, foreign revenues from
unaffiliated customers, operating earnings, and net identifiable assets were
$2,522,000, $370,000 and $2,917,000, respectively. As of and for the quarter
ended March 31, 1998, foreign revenues from unaffiliated customers, operating
loss, and net identifiable assets were $1,761,000, $199,000, and $1,908,000,
respectively. The growth is due to significant penetration in the European
markets of sales of CD-R products.
GROSS PROFIT. Gross profit as a percent of revenues was 47.9% during the first
quarter of 1999 compared to 39.6% during the same period of 1998. Systems
division gross profit as a percent of revenues remained relatively consistent at
51.2% during the first quarter of 1999 compared to 52.3% during the same period
of 1998. Services division gross profit as a percent of revenues was 26.1%
during the first quarter of 1999 compared to 17.4% during the same period of
1998. The increase during the quarter is primarily due to the divestiture of the
Company's low margin Bloomington, Minnesota services operation during August
1998.
OPERATING EXPENSES. Operating expenses were $2.4 million or 27.9% of revenues
during the first quarter of 1999 compared to $2.6 million or 26.4% of revenues
during the same period of 1998. The increase in operating expenses as a percent
of revenues was a result of the divestiture of the Company's Bloomington,
Minnesota services operation during August 1998. The Bloomington operation's
operating expenses as a percent of revenues was 13.0% during the first quarter
of 1998.
11
<PAGE>
Sales and marketing expenses remained relatively constant during the three month
comparative periods but increased as a percent of revenues, again, due to the
divestiture of the Company's Bloomington, Minnesota services operation. Research
and development expense as a percent of revenues increased from 5.3% during the
first quarter of 1998 to 6.9% during the same period of 1999. This increase is
in line with the Company's objective to continue to direct more resources to
research and development activities.
OTHER INCOME/(EXPENSE). During June 1998, the Company repaid the outstanding
balance of its Term Note with the bank. During the third quarter of 1998, the
Company eliminated debt associated with a capital lease on certain CD-ROM
equipment and renegotiated capital leases which resulted in their
reclassification as operating leases and the elimination of future interest
expense. As a result of these transactions, the Company recognized net interest
income of $100,000 during the first quarter of 1999 on cash investments. Net
interest expense during the first quarter of 1998 totaled $92,000.
INCOME TAXES. The provision for income taxes represents federal, state, and
foreign income taxes on earnings before income taxes. Income tax expense for the
first quarter of 1999 amounted to $674,000 as compared to $173,000 for the first
quarter of 1998. Net earnings are reflected at a fully taxed rate of 38% for
1999 compared to 15% for 1998 due to the reversal of the valuation allowance
during 1998 since, with the continued earnings, management has determined it
more likely than not the deferred tax asset will be realized.
NET EARNINGS. The significant change in mix of revenues to higher margin product
sales in the systems division and the Company's elimination of all long-term
debt during the latter half of 1998 caused earnings before income taxes to
increase from $1.2 million for the first quarter of 1998 to $1.8 million for the
first quarter of 1999. As a result of the Company's fully taxed status in 1999,
net earnings for the first quarter of 1999 increased only slightly over net
earnings for the same period in 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company expects to fund its anticipated cash requirements (including the
anticipated cash requirements of its capital expenditures) with internally
generated funds and, if required, from the Company's existing credit agreement.
Current assets are $16,471,000 as of March 31, 1999 as compared to $15,364,000
as of December 31, 1998, primarily reflecting normal operating activity. The
allowance for doubtful accounts as a percentage of receivables was 2% and 4% as
of March 31, 1999 and December 31, 1998, respectively. The change in property
and equipment principally reflects capital expenditures for development
equipment and leasehold improvements. Current liabilities increased
approximately 4% to $5,123,000 as of March 31, 1999 from $4,941,000 as of
December 31, 1998, reflecting the increase in income taxes payable netted with
normal reductions in accounts payable.
Net cash provided by operating activities was $1,605,000 for the three months
ended March 31, 1999 compared to $1,212,000 for the three months ended March 31,
1998. The increase in cash flow from operating activities from 1998 to 1999 was
greatly impacted by increased sales of higher margin CD-R products. Net cash
used by investing activities of $477,000 for the three months ended March 31,
1999 and $162,000 for the three months ended March 31, 1998 primarily reflects
capital expenditures.
12
<PAGE>
At March 31, 1999, the Company had no significant commitments to purchase
additional capital equipment. Net cash provided by financing activities of
$229,000 during the three months ended March 31, 1999 reflected stock option
proceeds. Net cash used in financing activities of $268,000 during the three
months ended March 31, 1998 principally reflect repayments of debt under the
credit agreement.
The Company believes that inflation has not had a material impact on its
operations or liquidity to date.
YEAR 2000 READINESS
The Company believes the approach of the Year 2000 could have a material effect
on the Company's business, results of operations, and financial condition if it
were to avoid the related consequences. To mitigate these potential
consequences, the Company has identified the following areas as requiring
significant analysis: 1) manufactured products, 2) information technology
applications, 3) information technology end user supported applications, 4)
information technology infrastructure, 5) business partners - both vendors and
customers, 6) manufacturing equipment, 7) facility operations (non-information
technology systems). The Company has also identified five phases associated with
each area described above as follows: 1) awareness - educating all levels of the
Company about the importance of Year 2000 readiness; 2) assessment - identify
all electronic systems which are date-sensitive and assess which systems are not
Year 2000 ready; 3) renovation - develop a strategy to repair, replace or retire
the system; 4) validation - testing of changed programs and date files to ensure
they are Year 2000 ready; and 5) implementation - placing the renovated and
validated systems into everyday use. Currently, the Company is in the renovation
and validation phases of its plan to prepare itself for the Year 2000. The
following table describes the Company's estimated completion date for each
remaining phase:
Renovation May 1999
Validation July 1999
Implementation August 1999
Through March 31, 1999, the Company has incurred costs of approximately $90,000
directly attributable to addressing Year 2000 issues. The Company estimates the
remaining costs that will be incurred in connection with its analysis of Year
2000 issues to be approximately $10,000. The following are some of its most
reasonably likely worst case Year 2000 scenarios the Company has identified: 1)
The Company's manufacturing operations consist primarily of the assembly of
products from components purchased from third parties. While some parts are
stock "off the shelf" components, others are manufactured to the Company's
specifications. Although the Company believes it has identified alternative
assembly contractors for most of its subassemblies, an actual change in such
contractors, as a result of an inability to work with such contractor due to
Year 2000 consequences they face, would likely require a period of training and
testing. Accordingly, an interruption in a supply relationship or the production
capacity of one or more of such contractors could result in the Company's
inability to deliver one or more products for a period of several months. 2) The
Company sells most of its manufactured systems through a limited number of
authorized distributor wholesalers, who in turn provide warehousing,
distribution, and credit to a network of authorized value added resellers. The
interruption of product flow to one or more of these distributors due to their
inability to process date sensitive information could result in lower than
normal sales
13
<PAGE>
revenues. To alleviate this decrease, the Company would redirect these sales to
the remaining distributors and/or sell directly to its value added resellers.
NEW EUROPEAN CURRENCY
On January 1, 1999, eleven of the fifteen member countries of the European Union
established fixed conversion rates between their existing currencies and the
euro, a new European currency, and adopted the euro as their common legal
currency (the "Euro Conversion"). Either the euro or a participating country's
present currency will be accepted as legal tender from January 1, 1999 to
January 1, 2002, from which date forward only the euro will be accepted.
The Company has customers located in European Union countries participating in
the Euro Conversion. Such customers will likely have to upgrade or modify their
computer systems and software to comply with the euro requirements. The amount
of money the Company anticipates spending in connection with product development
related to the Euro Conversion is not expected to have a material adverse effect
on the Company's results of operations or financial condition. The Euro
Conversion may also have competitive implications for the Company's pricing and
marketing strategies, which could be material in nature; however, any such
impact is not known at this time.
The Company has also modified its internal systems (such as payroll, accounting
and financial reporting to deal with the Euro Conversion. There is no assurance,
however, that all problems related to the Euro Conversion will be foreseen and
corrected, or that no material disruptions of the Company's business will occur.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standard No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS No. 133), effective in 2000,
established new standards for recognizing all derivatives as either assets or
liabilities, and measuring those instruments at fair value. At the present time,
the Company does not anticipate that SFAS No. 133 will have a material impact on
its financial position or results of operations.
MARKET RISK DISCLOSURE
The Company does not invest in any derivative financial instruments. See the
Company's most recent annual report filed on form 10K (Item 7A.). There has been
no material change in this information.
14
<PAGE>
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.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Item 5. Other Information
Not Applicable.
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.
15
<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: May 14, 1999 By: /s/ Bernard P. Aldrich
------------------- ----------------------
Bernard P. Aldrich
Director, Chief Executive Officer,
and President
(Principal Executive Officer)
(Principal Financial Officer)
Date: May 14, 1999 By: /s/ Robert M. Wolf
------------------- -------------------
Robert M. Wolf
Controller
(Principal Accounting Officer)
16
EXHIBIT 11.1
RIMAGE CORPORATION
COMPUTATION OF NET EARNINGS PER SHARE OF COMMON STOCK
Basic net earnings per common share is determined by dividing net earnings by
the weighted average number of shares of common stock outstanding, unless the
result is anti-dilutive. Diluted net earnings per common share is determined by
dividing net earnings by the weighted average number of shares of common stock
and common share equivalents outstanding, unless the result is anti-dilutive.
The following is a summary of the weighted average common shares outstanding and
assumed conversion shares:
<TABLE>
<CAPTION>
Three months ended
March 31,
1999 1998
---------- ----------
<S> <C> <C>
Shares outstanding at beginning of period 4,936,088 4,636,944
Common stock issued in stock option exercise 111,497 19,751
---------- ----------
Shares outstanding at end of period 5,047,585 4,656,695
========== ==========
Weighted average shares of common stock outstanding 4,997,417 4,640,044
========== ==========
Common stock equivalents 1,006,650 1,064,689
Weighted average shares of assumed conversion shares 812,205 530,773
========== ==========
Weighted average shares of common stock and assumed
conversion shares 5,809,622 5,170,817
========== ==========
Net earnings $1,095,531 $1,003,475
========== ==========
Basic net earnings per common share $ 0.22 $ 0.22
========== ==========
Diluted net earnings per common share and assumed
conversion shares $ 0.19 $ 0.19
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 8,660
<SECURITIES> 0
<RECEIVABLES> 4,888
<ALLOWANCES> 104
<INVENTORY> 2,181
<CURRENT-ASSETS> 16,471
<PP&E> 4,045
<DEPRECIATION> 3,035
<TOTAL-ASSETS> 18,474
<CURRENT-LIABILITIES> 5,123
<BONDS> 0
0
0
<COMMON> 50
<OTHER-SE> 13,301
<TOTAL-LIABILITY-AND-EQUITY> 18,474
<SALES> 8,652
<TOTAL-REVENUES> 8,652
<CGS> 4,505
<TOTAL-COSTS> 4,505
<OTHER-EXPENSES> 2,412
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,770
<INCOME-TAX> 674
<INCOME-CONTINUING> 1,096
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,096
<EPS-PRIMARY> .22
<EPS-DILUTED> .19
</TABLE>
