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): July 20, 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 July 20, 2005, disclosing material non-public information regarding its results of operations for the quarter ended June 30, 2005 and hereby furnishes statements of its Chief Executive Officer and Chief Financial Officer made on July 20, 2005 at a telephone conference relating to the quarter ended June 30, 2005 results.

ITEM 9.01      FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit No.	Description
99.1	Press Release issued on July 20, 2005.
99.2	Statements of Bernard P. Aldrich, Chief Executive Officer, and Robert M. Wolf,
	Chief Financial Officer, at a telephone conference held on July 20, 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: July 21, 2005

EX-99.1

Exhibit 99.1

Rimage Reports Strong Second Quarter Sales and Earnings

$9 Million Retail Order Received in July

Minneapolis, MN—July 20, 2005—Rimage Corporation (Nasdaq: RIMG) today reported revenues of $22,307,000 for the second quarter of 2005 ended June 30, an increase of 27% from $17,631,000 in the second quarter of 2004. Net income came to $2,288,000 or $0.22 per diluted share, up 13% from $2,031,000 or $0.20 per diluted share in the year-earlier quarter.

Bernard P. (Bernie) Aldrich, president and chief executive officer, commented: “Our second quarter revenue growth was generated by stronger than anticipated sales into most of our targeted markets, reflecting the continued positive impact of our growth strategy that emphasizes market-driven product development, expanded sales support and marketing initiatives, and sales of consumable supplies. Our strong sales performance was broadly based and not generated by major orders from any one customer or market. Following the close of the second quarter, we received an order of approximately $9 million related to the national roll-out of our systems by a major retailer. We are scheduled to ship approximately $7 million of this total order, which includes consumable supplies, during the third quarter, and the remainder in the fourth quarter. We believe the magnitude of this order is fully indicative of the growing momentum of Rimage’s focus on retail applications for our CD/DVD systems. Reflecting our progress in this segment, four other national retailers are currently testing Rimage equipment in music, photo and software applications. These and other positive developments make us optimistic about Rimage’s near and longer-term prospects.”

Aldrich continued: “We believe that substantial opportunities exist for our current CD/DVD technology for the foreseeable future. As an organization that is managed from a long-term perspective, we have deemed it prudent to embark on a far-ranging study aimed at identifying potential new technologies and opportunities that Rimage can effectively pursue in its global markets in coming years. A major international consulting group with extensive experience in this arena will be assisting us with this vitally important strategic study, which will involve an expense of approximately $1.5 million. We expect to incur $1 million of this expense in this year’s third quarter and the remainder in the fourth. Despite this investment, we believe cash from operations should continue to increase in the third quarter.”

Financial Highlights
Recurring revenues, including sales of printer ribbons and cartridges, parts, blank CD/DVD media and maintenance contracts, increased 37% in the second quarter of 2005 and accounted for 42% of sales, compared to 39% in the second quarter of 2004. 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 increased 20% in this year’s second quarter and accounted for 34% of total sales, compared to 36% in the year-earlier quarter. The European market continued to generate the majority of international sales for this period, but sales growth in Asia and Latin America was strong, reflecting intensified sales efforts in these regions. Currency effects increased worldwide sales by 1% in the second quarter of 2005.

Growth-related investments continued at high levels in this year’s second quarter as Rimage pushed forward with the process of developing next-generation systems, expanding sales support for recently introduced products, including the Rimage 360i, and strengthening business infrastructure systems that can accommodate Rimage’s accelerating growth. For the quarter, total operating expenses increased 29% and accounted for 28% of sales, which was unchanged from the year-earlier period. Expense growth is expected to moderate in the fourth quarter of 2005.

Cash and short-term investments totaled $56.1 million at June 30, up from $52.4 million at March 31, 2005 and $52.5 million at December 31, 2004. Stockholders’ equity came to $68.2 million at the end of this year’s second quarter, up from $62.7 million at year-end 2004.

Third Quarter Guidance
For the third quarter of 2005 ending September 30, Rimage is forecasting earnings of $0.27 to $0.32 per diluted share on revenues of $27 to $29 million. This guidance reflects the fact that the impact of the large shipment of CD/DVD systems and related consumables to the national retail customer will more than offset the expense related to the strategic study. Third quarter guidance also reflects the impact of the normal seasonal slowdown experienced by Rimage’s European operation.

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 2005 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	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 June 30,					Six months ended June 30,
	2005		2004		2005		2004
Revenues	$	22,307	$	17,631	$	43,182	$	32,074
Cost of Revenues		12,662		9,564		23,926		16,934
Gross Profit		9,645		8,067		19,256		15,140
Operating Expenses:
Research and Development		1,499		1,227		2,778		2,352
Selling, General and Administrative		4,787		3,658		9,147		6,869
Total Operating Expenses		6,286		4,885		11,925		9,221
Operating Income		3,359		3,182		7,331		5,919
Other Income, Net		334		17		534		164
Income Before Income Taxes		3,693		3,199		7,865		6,083
Income Tax Expense		1,405		1,168		2,886		2,220
Net Income		2,288		2,031		4,979		3,863
Net Income Per Basic Share	$	.24	$	.22	$	.53	$	.42
Net Income Per Diluted Share	$	.22	$	.20	$	.49	$	.39
Basic Weighted Average
Shares Outstanding		9,491		9,313		9,457		9,256
Diluted Weighted Average
Shares Outstanding		10,214		9,942		10,152		9,942

Consolidated Balance Sheet Information:

	Balance As Of
	June 30, 2005		December 31, 2004
	(Unaudited)
Cash and Cash Equivalents	$	56,069	$	52,495
Accounts Receivable		11,198		10,184
Inventories		7,555		7,396
Total Current Assets		77,073		71,665
Property and Equipment, Net		2,810		2,386
Total Assets		79,937		74,138
Current Liabilities		11,592		11,277
Long-term Liabilities		142		139
Stockholders' Equity		68,203		62,721

Conference Call and Replay

Rimage Corporation will review its second quarter operating results in a conference call at 4:30 PM Eastern today. Investors 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. A replay of the conference call will be available through June 27, 2005 by dialing 1-303-590-3000 and providing the 11034978 confirmation code.
The webcast will be archived on Rimage’s website.

EX-99.2

Exhibit 99.2

Exhibit 99.2

Remarks of Bernard P. Aldrich
Rimage Corporation 2nd Quarter/FYE 2005 Conference Call
July 20, 2005

• Good afternoon and thanks for taking the time to participate in our second quarter earnings conference call.
• Joining me today is Rob Wolf, our chief financial officer, who will review our recent operating results in some detail.
• 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 second 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 reported strong second quarter operating results.
• Revenues of $22.3 million were up 27%, while earnings rose 13% to $2.3 million or $0.22 per diluted share.
• First, a few words about our strong top line growth.
• During the second quarter we benefited from stronger than anticipated sales into most of our targeted markets, including medical imaging and business offices.
• This growth reflects the continued positive impact of our strategy that emphasizes market-driven product development, expanded marketing and sales support initiatives, and sales of consumable supplies.
• During the quarter, we benefited from strong sales into the medical market, where CT, MRI, PACS and other medical imaging modalities are being retrofitted with our DiscLab digital output systems.
• We also are starting to receive orders from OEMs of imaging equipment, who are selling systems that already incorporate our publishers.
• In addition, we continued making solid progress at penetrating the business office market with our Desktop product line, which now includes the recently introduced Rimage 360i.

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• This growth reflects the effectiveness of the mass market distribution channel that we are developing for this product family.
• As previously announced, Tech Data and Wynit, two of the nation's largest distributors of IT products, are now carrying our Desktop line in their catalogs.
• Our targeted, emerging markets are also generating growing demand for consumable supplies.
• Sales of consumables, which constitute a stream of recurring revenues, accounted for over 37% of our second quarter sales.
• Consistent with our forecast in our first quarter earnings release, sales into the retail market were below the levels posted in the first quarter, reflecting the uneven pace of deployment of our CD/DVD publishing systems by a major national retailer.
• However, following the close of the second quarter, we received an order of approximately $9 million related to this retailer's national roll-out for delivery in this year's second half.
• We expect to ship approximately $7 million of this total order, which includes consumable supplies, during the third quarter and the balance in the fourth quarter.
• It is expected that the publishing systems in this large order will have multiple in-store applications, including photography and music-on-demand.
• It is increasingly apparent that applications such as photography, music and video are all converging at the retail level, and this development should significantly expand Rimage's overall retail opportunity.
• In fact, four other national retailers are currently testing our equipment in photo, music and software applications.
• We believe these field trials have the potential for expanding into national rollouts in 2006.
• Turning now to our bottom line, Rimage's second quarter earnings growth was affected by the near-term impact of our growth strategy.
• Our gross margin declined to 43%, reflecting a shift in our sales mix due to the growth of Desktop systems and consumable supplies.
• This should not be surprising in that we have been saying for some time that gross margins will likely be in the low to mid-40% range as we penetrate these two areas.

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• At this time, we do not anticipate gross margins much below current levels, and our margins could increase in the third quarter, reflecting our ability to leverage fixed costs over a larger revenue base.
• Our earnings also were affected by growth-related investments as we pushed forward with the development of next-generation systems, expanding marketing and sales support, and strengthening business infrastructure systems that can accommodate Rimage's accelerating growth.
• Operating expenses have grown considerably over the past few quarters as we rolled out our growth strategy, but we believe expenses directly tied to operations are close to plateauing.
• As we indicated in this afternoon's release, we will incur an expense of approximately $1.5 million in this year's second half related to a critically important strategic analysis of Rimage's long-term future.
• We believe substantial opportunities exist for our current CD/DVD technology in retail, medical and office applications for the foreseeable future.
• However, as an organization that is managed from a truly long-term perspective, we believe it is prudent to embark on a far-ranging study aimed at identifying potential new technologies and opportunities that we can effectively pursue on a global basis in coming years.
• Our belief is grounded in the understanding that information technologies are evolving continuously and the fact that we have capitalized upon such technology changes in the past.
• In the early 1990s, Rimage's business focused primarily on floppy disc technology.
• As this technology started to decline, we correctly anticipated the emergence of CD technology...which then evolved into DVD technology...which will eventually evolve into blue laser technology.
• We have already anticipated this technology path and are now developing blue laser equipment that is expected to have significant applications in such areas as high-volume data archiving.

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• Although we know blue laser technology is on the horizon and we are staying ahead of the curve, we also want to know what could come next and how Rimage could participate in some next-generation technology.
• A major international consulting group with extensive experience in this arena will be assisting us with this vitally important strategic study.
• As part of this analysis, we also will be determining appropriate future growth strategies, including both internal initiatives and, if necessary acquisitions.
• At the conclusion of this strategic development process, we expect to have a more defined vision of Rimage's long-term future.
• We also expect to be equipped with a framework of strategies required for attaining our long-term objectives.
• We will incur $1 million of the $1.5 million expense associated with this study in this year's third quarter and the remainder in the fourth.
• However, I want to emphasize that despite this investment, we believe cash from operations should continue to increase in the third quarter.
• Looking ahead, we believe the third quarter of 2005 should be another strong period for Rimage.
• As we stated in this afternoon's release, we are forecasting earnings of $.27 to $.32 per share on revenues of $27 to $29 million for the third quarter ending September 30.
• This guidance reflects the fact that the $7 million shipment of CD/DVD systems and related consumables that I discussed earlier should more than offset the third quarter expense impact of the consulting fee related to our strategic study.
• Our third quarter guidance also takes into account the impact of the normal summer slowdown in the European market.
• In conclusion, I would simply like to say that we believe we are making strong progress with our business and that we feel very good about Rimage's future, both near and longer-term.
• Thank you. Now, Rob Wolf will review our second quarter results in some detail.

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Remarks of Robert M. Wolf
Rimage Corporation 2nd Quarter/FYE 2005 Conference Call
July 20, 2005

• Thanks, Bernie.
• Since our top line growth has already been covered in some detail, I will only highlight a few points about our second quarter sales.
• Reflecting the impact of our consumables strategy, recurring revenues in the form of replacement printer ribbons and cartridges, blank CD/DVD discs, parts and service contracts increased 37% in the second quarter of 2005 and accounted for 42% of sales, compared to 39% in the second quarter of 2004.
• International sales increased 20% in this year's second quarter and accounted for 34% of total sales, compared to 36% in the year-earlier quarter.
• The European market continued to generate the majority of our international sales for this period, but sales in Asia and Latin America posted strong growth, reflecting intensified sales efforts in these regions.
• As we reported previously, Rimage opened a Tokyo sales office last year that is responsible for penetrating the Asian market.
• We are encouraged by the initial results of this undertaking, and staffing of our Tokyo office is being increased.
• Currency effects increased worldwide sales by 1% in the second quarter of 2005.
• Rimage's gross margin declined to 43% in the second quarter, from 46% in the year-earlier period, due primarily to a shift in our sales mix toward Desktop products and consumables, as well as increased labor and overhead expenses related to the May 360i launch.
• As Bernie indicated, our second quarter gross margin is consistent with our prior statements regarding our penetration of the office market and the growth of consumables sales.
• However, it is possible that our gross margin could rebound in the third quarter, reflecting our ability to leverage fixed costs over a large base of revenues.
• Moving down the P&L, second quarter R&D expense rose 22% to $1.5 million from the year-earlier quarter, reflecting continued development of next-generation products.

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• However, due to the impact of strongly higher sales, second quarter R&D expense was unchanged at 7% of sales on a year-over-year basis.
• Selling, general and administrative expense came to $4.8 million in the second quarter, up 31% from last year's second quarter.
• This growth reflects the continued expansion of our sales and marketing organization, programs aimed at supporting the second quarter launch of the Rimage 360i and Sarbanes-Oxley costs.
• However, as a percentage of sales, SG&A expense was virtually unchanged at 21% year-over-year.
• Despite the increase in absolute dollars, SG&A expense remains in line with our historic sales percentage norms.
• Excluding the impact of the third quarter consulting fee that Bernie discussed earlier, we believe that our growth-related investments are close to plateauing.
• Our effective tax rate increased to 38% from 36.5% in last year's second quarter due to lower levels of R&D and manufacturing credits.
• We believe that our effective tax rate will range between 36% and 37% for the full year.
• Turning now to our balance sheet, cash and investments totaled $56.1 million at the end of the second quarter, up from $52.4 at March 31, 2005 and $52.5 million at the end of 2004.
• As we indicated in our last conference call, first quarter cash balances were affected by a higher level of accounts receivable, reflecting our strong sales growth, particularly in March.
• As anticipated, these receivables were collected in the second quarter according to our normal payment cycle.
• Despite our strong sales growth, second quarter inventories grew by only 2% from the level at the end of 2004 due to improved inventory management.
• Looking ahead to the third quarter, we believe operating cash flows should continue to increase despite the $1 million consulting expense, reflecting scheduled payments on that large retail order, our low capital requirements and strong margins.
• Finally, stockholders' equity rose to $68.2 million at the end of the second quarter, from $62.7 million at the end of 2004.

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

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