8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported):    February 16, 2005

Rimage Corporation
(Exact name of Registrant as Specified in its Charter)

Minnesota
(State Or Other Jurisdiction Of Incorporation)

000-00619	41-1577970
(Commission File Number)	(I.R.S. Employer Identification No.)

7725 Washington Avenue South
                Minneapolis, MN                
(Address Of Principal Executive Offices) 55439
(Zip Code)

(952) 944-8144
Registrant's Telephone Number, Including Area Code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Items under Sections 1 and 3 through 8 are not applicable and therefore omitted.

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Rimage Corporation hereby furnishes a press release, issued on February 16, 2005, disclosing material non-public information regarding its results of operations for the quarter and fiscal year ended December 31, 2004 and hereby furnishes statements of its Chief Executive Officer and Chief Financial Officer made on February 16, 2005 at a telephone conference relating to the quarter and fiscal year ended December 31, 2004 results.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit No.	Description
99.1	Press Release issued on February 16, 2005.
99.2	Statements of Bernard P. Aldrich, Chief Executive Officer, and Robert M. Wolf, Chief Financial Officer, at a telephone conference held on February 16, 2005.

SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RIMAGE CORPORATION

By: /s/ Robert M. Wolf        

      Robert M. Wolf
      Chief Financial Officer

Date:  February 17, 2005

EX-99.1

Exhibit 99.1

Rimage Reports Record Fourth Quarter
And Full-Year 2004 Operating Results

Minneapolis, MN—February 16, 2005—Rimage Corporation (Nasdaq: RIMG) today reported revenues of $20,895,000 for the fourth quarter of 2004 ended December 31, an increase of 33% from $15,671,000 in the year-earlier period. Net income rose 26% to $3,099,000 or $0.31 per diluted share, from $2,465,000 or $0.25 per diluted share in the fourth quarter of 2003. Rimage previously forecasted fourth quarter earnings of $0.20 to $0.22 per diluted share on revenues of $17.5 to $18.5 million.

For full-year 2004, revenues totaled $70,848,000, up 32% from $53,797,000 in 2003. Net income for 2004 increased 18% to $9,072,000 or $0.91 per diluted share, from $7,666,000 or $0.79 per share in the prior year.

Bernard P. (Bernie) Aldrich, president and chief executive officer, commented: “Our record and strongly improved operating results for the fourth quarter and full year were generated in large measure by the new growth strategy that we started implementing earlier this year. Through this strategy, we are aggressively pursuing higher-growth opportunities in such emerging markets as retail photography, medical imaging and recordkeeping, and business offices. We have developed appropriate new CD/DVD publishing systems for these markets and significantly strengthened our sales and marketing organization to penetrate these areas. We have devoted considerable resources on these initiatives during the past year, and as a result, sales into the retail, medical and business office markets have grown strongly. Moreover, these emerging markets are generating added demand for consumable supplies, and sales of media kits containing blank discs and replacement ribbons and cartridges have generated growing levels of incremental revenues. Based on the initial success of our new strategy, we believe 2005 should be another excellent year for Rimage.”

Rimage’s fourth quarter revenue growth benefited from strong sales of the new DiscLab™ product line, a CD/DVD publishing system designed as a network appliance to meet the specialized requirements of retail and medical applications. During the fourth quarter, DiscLab units continued to be deployed by the major national retailer that is using this equipment as the digital output solution in its one-hour photo-finishing labs. DiscLab systems are now installed in approximately 600 of this customer’s labs. The DiscLab product line also posted strong sales into the medical market, where CT, MRI, PACS and other medical imaging modalities are being retrofitted with Rimage’s digital output systems. The medical arena remained Rimage’s fastest growing market throughout the past year. Sales of Rimage’s new 2000i Desktop publishing system into the business office market were also robust in the fourth quarter.

Recurring revenues, including sales of maintenance contracts, printer ribbons and cartridges, parts and blank CD/DVD media, increased 55% in the fourth quarter and 65% for the year. These revenues accounted for 35% of total fourth quarter sales (versus 30% in the year-earlier period) and 38% of total sales for the full year (compared to 30% in 2003). The strong growth of consumable supplies has been spurred by Rimage’s media kit strategy as well as by the continued expansion of Rimage’s worldwide installed base of CD/DVD publishing systems.

International sales, primarily European, increased 17% in the fourth quarter and 18% for the full year. As a percentage of total revenues, international sales accounted for 40% of fourth quarter revenues (versus 45% in the year-earlier period) and 38% for the year (compared to 42% in 2003). Currency effects increased worldwide sales by 3% in the fourth quarter and for the full year.

Cash and short-term investments totaled $52,495,000 at December 31, 2004, up from $49,188,000 at the end of the third quarter and also up from $48,597,000 at the end of 2003. Stockholders’ equity came to $62,721,000 at December 31, 2004, up from $59,370,000 at the end of the third quarter and from $52,011,000 at year-end 2003.

First Quarter Guidance
For the first quarter of 2005 ending March 31, Rimage is forecasting earnings of $0.21 to $0.23 per diluted share on revenues of $18.0 to $19.0 million.

About Rimage
Rimage Corporation is the world’s leading provider of recordable CD and DVD publishing systems, which are used by businesses to produce discs with customized digital content on an on-demand basis. Rimage’s publishing systems, which span the range from high to low CD/DVD production volumes, integrate robotics, software and surface label printers into a complete publishing solution. Rimage is focusing its CD/DVD publishing solutions on a set of vertical markets with special needs for customized, on-demand digital information: digital photography, medical imaging, financial institutions, business offices, and government. Visit our web site at www.rimage.com.

Statements regarding Rimage’s anticipated performance in 2004 are forward-looking and therefore involve risks and uncertainties, including but not limited to: market conditions in the computer peripherals market, competitive products, changes in technology, conditions in overseas markets that could affect international sales, and other factors set forth in Rimage’s filings with the Securities and Exchange Commission.

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For additional information, contact:

Bernard P. (Bernie) Aldrich, CEO	Richard G. Cinquina
Robert M. Wolf, CFO	Equity Market Partners
Rimage Corporation	904/261-2210
952/944-8144

RIMAGE CORPORATION
Selected Consolidated Financial Information
(In thousands except per share data)
(Unaudited)

Consolidated Statement of Operations Information:

	Three months ended December 31,				Twelve months ended December 31,
	2004		2003		2004		2003
Revenues	$	20,895	$	15,671	$	70,848	$	53,797
Cost of Revenues		11,064		8,023		38,027		27,399
Gross Profit		9,831		7,649		32,821		26,398
Operating Expenses:
Research and Development		1,168		1,123		4,530		3,765
Selling, General and Administrative		4,279		2,821		14,856		11,076
Total Operating Expenses		5,447		3,945		19,386		14,841
Operating Income		4,384		3,704		13,435		11,557
Other Income, Net		253		178		608		515
Income Before Income Taxes		4,637		3,882		14,043		12,072
Income Tax Expense		1,538		1,417		4,971		4,406
Net Income		3,099		2,465		9,072		7,666
Net Income Per Basic Share	$	.33	$	.27	$	.98	$	.86
Net Income Per Diluted Share	$	.31	$	.25	$	.91	$	.79
Basic Weighted Average
Shares Outstanding		9,361		9,105		9,290		8,931
Diluted Weighted Average
Shares Outstanding		9,989		9,950		9,932		9,743
Consolidated Balance Sheet Information:
	Balance as of
	December 31, 2004		December 31, 2003
	(Unaudited)
Cash and Marketable Securities	$	52,495	$	48,597
Accounts Receivable		10,184		6,243
Inventories		7,396		3,334
Total Current Assets		71,665		59,849
Property and Equipment, Net		2,386		1,137
Total Assets		74,138		61,024
Current Liabilities		11,277		9,013
Stockholders' Equity		62,721		52,011

Conference Call and Replay

Rimage Corporation will review its fourth quarter operating results in a conference call at 10:00 AM Eastern today. To participate, call 1-800-240-6709 about 10 minutes before the scheduled start time and ask for the Rimage conference call. A replay of the conference call will be available through February 23, 2005 by dialing 1-303-590-3000 and providing the 11024020 confirmation code. Investors also can listen to the conference call at www.rimage.com. Listeners should go to this web site at least 15 minutes before the scheduled start time to download and install any necessary audio software.

EX-99.2

Exhibit 99.2

Remarks of Bernard P. Aldrich

Rimage Corporation 4th Quarter/FYE 2004 Conference Call

February 16, 2005

• Good morning and thanks for taking the time to participate in our fourth quarter and full-year 2004 earnings conference call.

• Joining me today is Rob Wolf, our chief financial officer, who will review our recent operating results in some detail, Dave Suden, our chief technology officer, and Manny Almeida, our executive vice president.

• We will all be available for your questions following our introductory remarks.

• In keeping with Regulation FD, which prohibits us from providing any guidance or other forward-looking statements unless they are simultaneously released to the public, we have provided financial guidance in our fourth quarter release.

• It is important to understand that this guidance is subject to a number of risks that could affect our anticipated performance.

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

• Turning now to the subject of this conference call, we ended 2004 on a strong note by reporting record fourth quarter operating results.

• Revenues of $20.9 million were up 33%, while earnings rose 26% to $3.1 million or $0.31 per diluted share.

• These results were well above our previously issued guidance for this period.

• Our full year results also marked a new record for Rimage, with sales rising 32% to $70.8 million and earnings up 18% to $9.1 million or $0.91 per diluted

• In addressing our fourth quarter performance, we made continued progress at penetrating our primary targeted markets, which include retail photography, medical imaging and business offices.

• For instance, during the quarter, we shipped an order of approximately $1.3 million for equipment and consumable supplies to the national retailer that is deploying our DiscLab publishing system as the digital output solution for its one-hour photo labs.

• Our DiscLab equipment is now installed at approximately 600 of this customer’s stores.

• Our progress in the medical imaging and business office markets was equally strong.

• Medical imaging continues to be our fastest growing market as growing numbers of health care facilities convert their imaging modalities to CD/DVD output, thus replacing conventional film.

• We are also encouraged by the strong market reception accorded our new 2000i Desktop product line.

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• Designed specifically for office environments, the prospects of the 2000i family received a boost later in the year when Tech Data, one of the industry’s largest IT and office product distributors, started carrying this product line.

• Tech Data became the second major specialized distributor for our Desktop line, following the decision of WYNIT earlier in the year.

• We believe our progress with our targeted markets and our resulting ability to generate strong sales and earnings are due in large part to the new business model that we started unfolding earlier in the year.

• We spoke about our new business model in our last conference call, but I think parts of this story merit repeating and some elaboration, because we are committed to this model for the long term.

• Rimage historically has focused on high-volume CD/DVD publishing solutions for our Producer product line in such areas as banking and finance and wholesale photo processing labs.

• We have established a strong presence in these and other traditional markets, and we fully intend to defend our position in these areas.

• However, today we are focusing on new applications with higher-growth potential in retail photography, medical imaging and business offices.

• As emerging opportunities, these large markets have the potential to accelerate our sales growth.

• And due to our experience, technological expertise and worldwide customer service and support, we believe Rimage is uniquely positioned to capitalize on these new opportunities.

• However, other things had to be done in order to successfully participate in these high-growth markets, and accomplishing these things formed our business agenda over the past year.

• First, we had to develop the appropriate products for the retail, medical and business office markets.

• By “appropriate,” I mean these products had to meet certain market-driven characteristics.

• For example, they had to be smaller in order to fit onto crowded retail counters or in physician offices.

• They also had to be highly user-friendly and convenient to use.

• In addition, they had to carry lower average selling prices, while still providing the power and many of the features of entry-level Producer products.

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• We have met these requirements with our new DiscLab and Desktop 2000i systems, and additional product introductions are anticipated during the coming year.

• Second, to penetrate our targeted markets, which are far larger than our traditional Producer opportunities, we had to expand our sales organization, in addition to strengthening marketing support for our new products.

• As a result, over the past year, we have hired high-quality product managers and marketing professionals with extensive experience in our targeted markets.

• Finally, since the emerging markets we are pursuing have the potential to generate high volumes of recurring revenues, we launched a new consumable supply initiative in 2004.

• We have started marketing kits consisting of blank CD or DVD discs and replacement label printer ribbons or cartridges.

• These Rimage-branded kits are making it easier and more convenient for customers to order their consumable supplies.

• Equally important, the blank CDs and DVDs we are providing are manufactured to Rimage’s specifications, enabling our customers to optimize the performance of our publishers and disc label printers.

• The initial results of this strategy are encouraging, with sales of consumable supplies growing 65% for the year.

• Implementing these initiatives has involved substantial investments in R&D and sales and marketing.

• We believe spending in these expense categories will remain at relatively high levels as we continue to unfold our business model.

• However, once this model is firmly in place, we expect operating expenses to gradually plateau, which could occur at some point later in 2005.

• Looking ahead, we believe 2005 should be another good year for Rimage.

• As we stated in this morning’s release, we are currently forecasting earnings of $.21 to $.23 per share on revenues of $18 to $19 million for the first quarter ending March 31.

• Due to the spending patterns of our customers, the first quarter historically is somewhat weaker than the fourth quarter.

• However, attaining first quarter results at forecasted levels would mark a very strong start to 2005.

• Thank you. Now, Rob Wolf will review our fourth quarter results in some detail.

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Remarks of Robert M. Wolf

Rimage Corporation 4th Quarter/FYE 2004 Conference Call

February 16, 2005

• Thanks, Bernie

• Since our top line growth has already been covered in some detail, I will only highlight a few points about our fourth quarter sales.

• Reflecting the impact of our new consumables strategy, recurring revenues increased 55% in the fourth quarter and accounted for 35% of total sales, up from 30% in last year’s fourth quarter.

• For the full year, recurring revenues were up 65% and accounted for 38% of our 2004 sales.

• The strong growth of consumable supplies has been spurred by Rimage’s media kit strategy and the continued expansion of our worldwide installed base of CD/DVD publishing systems.

• International sales, primarily European, increased 17% in the fourth quarter and accounted for 40% of our total sales for this period, compared to 45% in the year-earlier period.

• For the year, international sales rose 18% and accounted for 38% of total sales, compared to 42% in 2003.

• Currency effects increased worldwide sales by 3% in the fourth quarter and for the full year.

• Rimage’s gross margin improved to 47% in the fourth quarter, from 44% in the third quarter, but was down from 49% in last year’s fourth quarter.

• The margin improvement between the third and fourth quarters reflects a shift in the sales mix toward equipment during the fourth quarter.

• The year-over-year margin decline primarily reflects increased sales of consumables in 2004 which carry lower margins than equipment.

• For the coming year, we believe gross margins will remain at or near the mid-40% range.

• Moving down the P&L, fourth quarter R&D expense of $1.2 million was up from $1.0 million in the third quarter and virtually unchanged from the year-earlier period.

• However, due to the impact of strongly higher sales, fourth quarter R&D expense was unchanged at 6% of sales in comparison to the third quarter and down from 7% of sales in the year-earlier period.

• So even at today’s increased levels, R&D spending remains consistent with our historic norms as a sales percentage.

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• And as a percentage of sales, R&D is expected to stay at or near current levels in this year’s first quarter due to a number of product development initiatives currently underway.

• Selling, general and administrative expense came to $4.3 million in the fourth quarter, up from $3.7 million in the third quarter and $2.8 million in the fourth quarter of 2003.

• The growth in SG&A expense reflects the implementation of sales and marketing initiatives aimed at supporting new product introductions and expanding our sales and marketing organization.

• However, it is important to understand that total SG&A also was inflated by Sarbanes-Oxley compliance costs.

• As a percentage of sales, SG&A expense came to 20% in this year’s fourth quarter, compared to 18% in the third quarter but was down from 21% in last year’s fourth quarter.

• Despite the increase in absolute dollars, SG&A expense also remains in line with our historic sales percentage norms.

• Operating income rose to $4.4 million in the fourth quarter, up 42% from $3.1 million in the third quarter and also up 19% from $3.7 million in the fourth quarter of 2003.

• As a result, our fourth quarter operating margin was 21%, up from 18%, in the third quarter but down from 24% in last year’s fourth quarter.

• As sales continue to increase in response to our growth strategies and as operating expenses begin to plateau, we believe that our operating margins should continue to improve.

• Our effective tax rate was 33.2% in the fourth quarter and 35.4% for the year, reflecting adjustments required by Sarbanes-Oxley.

• We believe our effective tax rate will be in the range of 35% to 36% in 2005.

• Turning now to our balance sheet, cash and investments totaled $52.9 million at December 31, 2004, up from $49.2 million at the end of the third quarter and also up from $48.6 million at the end of 2003.

• Reflecting our strong sales growth, both accounts receivable and inventories are up significantly from prior periods.

• Due to the growth of consumables sales, inventories, in particular, are expected to remain at these new, higher levels, since we now must stock additional supplies of both blank CD/DVD media and printer ribbons and cartridges.

• Even so, we believe operating cash flows will remain strong, reflecting our low capital requirements and strong margins.

• Finally, shareholders’ equity rose to $62.7 million at the end of the fourth quarter, from $59.4 million at the end of the third quarter and $52.0 million at year-end 2003.

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

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