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): October 21, 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	55439
(Address Of Principal Executive Offices)	(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 3 through 8 are not applicable and therefore omitted.

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

As previously reported, Rimage Corporation (the “Company”) has engaged a strategic planning consultant. On October 21, 2005, the Company’s Board of Directors established a Strategic Planning Committee (the “Committee”) to assist the Board of Directors in its oversight of the Company’s strategic planning. The establishment of the Committee was approved and recommended by the Governance Committee of the Board of Directors. The two members of the Committee are Philip D. Hotchkiss and Steven M. Quist, both of whom are “independent” directors under the Nasdaq Marketplace Rules. Mr. Hotchkiss was appointed as the chair of the Committee. As is the case with other committees of the Board of Directors, members of the Committee will receive $1,500 for each meeting of the Committee and $1,000 for each telephonic meeting that they attend. Further, in recognition of the substantial time and effort the Board of Directors expects the chair to devote in the early stages of the strategic planning process, Mr. Hotchkiss will receive an additional monthly retainer of $6,500 for the first twelve months of his service on the Strategic Planning Committee. The Compensation Committee of the Board of Directors approved and recommended the fees payable to members of the Committee. The Board expects to review the retainers and meeting fees payable to members of the Committee when the initial phase of the strategic planning process is completed.

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

The Company hereby furnishes a press release, issued on October 25, 2005, disclosing material non-public information regarding its results of operations for the quarter ended September 30, 2005 and hereby furnishes statements of its Chief Executive Officer and Chief Financial Officer made on October 25, 2005 at a telephone conference relating to the quarter ended September 30, 2005 results.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit No. Description

99.1 Press Release issued on October 25, 2005.

99.2 Statements of Bernard P. Aldrich, Chief Executive Officer, and Robert M. Wolf, Chief Financial Officer, at a telephone conference held on October 25, 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
Date:	October 25, 2005	By:	/s/ Robert M. Wolf
			Robert M. Wolf
			Chief Financial Officer

EX-99.1

Exhibit 99.1

Rimage Reports Strongest Quarterly Earnings In Company’s History

Minneapolis, MN—October 25, 2005—Rimage Corporation (Nasdaq: RIMG) today reported record net income of $4,085,000 or $0.39 per diluted share for the third quarter of 2005 ended September 30, an increase of 94% from $2,110,000 or $0.21 per diluted share in the year-earlier period. Revenues for this period rose 56% to $27,962,000, from $17,879,000 in the third quarter of 2004.

Bernard P. (Bernie) Aldrich, president and chief executive officer, commented: “Our strong third quarter results were generated by above-plan sales of Producer CD/DVD publishing systems across virtually all of our targeted markets. Producer sales for this period included shipments of approximately $6.0 million related to a previously reported order associated with Rimage’s continuing rollout into the retail market. The $2.0 million balance of this order is scheduled to ship in the fourth quarter. Reflecting the shift in our sales mix toward high-end systems, Rimage’s gross margin rose to 48% in the third quarter from 44% in the year-earlier period. As a result, net income significantly exceeded our earnings guidance for this period.”

He continued: “It is particularly encouraging to note that our above-plan earnings were attained despite incurring approximately $1.1 million in additional expense related to the previously discussed strategic study that is being conducted by a major international consulting firm. Aimed at identifying and developing new applications and markets as well as strengthening our current business, this far-ranging study is scheduled for completion by the end of October. The remaining $500,000 expense associated with this undertaking will be incurred in the fourth quarter.”

Aldrich added: “We are optimistic about our prospects for a solid fourth quarter, which would make 2005 the strongest year in Rimage’s history. We also are confident about our longer-term future. For example, four national retailers are currently testing Rimage equipment in music, photo and software applications. And the strategic study currently underway is uncovering a new range of promising opportunities. In all, we believe Rimage’s strategic position is solidly grounded, and we look forward to bringing you news of further positive developments in the future.”

Financial Highlights
Recurring revenues, including sales of printer ribbons and cartridges, parts, blank CD/DVD media and maintenance contracts, increased 33% in the third quarter of 2005 and accounted for 35% of sales, compared to 41% in the third quarter of 2004. The 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 29% in this year’s third quarter and accounted for 28% of total sales, compared to 34% in the year-earlier quarter. The European market continued to generate the majority of international sales for this period, but sales in Asia and Latin America are growing, reflecting intensified sales efforts in these regions. Currency effects had minimal impact on worldwide sales in the third quarter of 2005.

Growth-related investments continued at high levels in this year’s third quarter as Rimage pushed forward with developing next-generation systems, expanding its sales support, and strengthening business infrastructure systems that can accommodate Rimage’s accelerating growth. Operating expenses, which included the approximately $1.1 million in expense related to the strategic study, rose 56% in the third quarter year-over-year but declined to 26% of sales from 28% of sales in this year’s second quarter. Consistent with prior statements, expense growth is expected to moderate in the fourth quarter of 2005.

Cash and marketable securities totaled $61.7 million at September 30, 2005, up from $56.1 million at June 30 and $52.5 million at December 31, 2004. Stockholders’ equity rose to $73.4 million at September 30, from $68.2 million at the end of this year’s second quarter and $62.7 million at year-end 2004.

Fourth Quarter Guidance
For the fourth quarter of 2005 ending December 31, Rimage is forecasting earnings of $0.27 to $0.32 per diluted share on revenues of $24 to $26 million. Results at these levels would bring Rimage’s full-year earnings to the range of $1.15 to $1.20 on full-year sales of $95 to $97 million. Fourth quarter revenue guidance reflects the absence of retail-related shipments similar in size to that in the third quarter. The outlook for the retail market remains positive, but roll-outs of Rimage systems are expected to continue fluctuating between quarters.

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, CEO Robert M. Wolf, CFO Rimage Corporation 952/944-8144	Richard G. Cinquina Equity Market Partners 904/415-1415

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

Consolidated Statement of Operations Information:

	Three months ended				Nine months ended
	September 30,				September 30,
	2005		2004		2005		2004
Revenues	$	27,962	$	17,879	$	71,144	$	49,953
Cost of Revenues		14,571		9,995		38,498		26,929
Gross Profit		13,391		7,884		32,646		23,024
Operating Expenses:
Research and Development		1,399		1,009		4,177		3,361
Selling, General and Administrative		5,937		3,708		15,083		10,577
Total Operating Expenses		7,336		4,717		19,260		13,938
Operating Income		6,055		3,167		13,386		9,086
Other Income, Net		360		191		895		355
Income Before Income Taxes		6,415		3,358		14,281		9,441
Income Tax Expense		2,330		1,226		5,217		3,446
Net Income		4,085		2,132		9,064		5,995
Net Income Per Basic Share	$	.43	$	.23	$	.95	$	.65
Net Income Per Diluted Share	$	.39	$	.21	$	.88	$	.60
Basic Weighted Average
Shares Outstanding		9,553		9,339		9,507		9,284
Diluted Weighted Average
Shares Outstanding		10,380		9,947		10,250		9,939

Consolidated Balance Sheet Information:

	Balance as of
	September 30,		December 31,
	2005		2004
	(Unaudited)
Cash and Marketable Securities	$	61,651	$	52,495
Accounts Receivable		14,802		10,184
Inventories		6,154		7,396
Total Current Assets		84,690		71,665
Property and Equipment, Net		2,669		2,386
Total Assets		87,425		74,138
Current Liabilities		14,050		11,277
Stockholders’ Equity		73,359		62,721

EX-99.2

Exhibit 99.2

Remarks of Bernard P. Aldrich
Rimage Corporation 3rd Quarter/FYE 2005 Conference Call
October 25, 2005

n Good morning and thanks for taking the time to participate in our third quarter earnings conference call.

n  Joining me today is Rob Wolf, our chief financial officer, who will review our recent operating results in some detail.

n Also with us are Dave Suden, Rimage’s chief technology officer, and Manny Almeida, our executive vice president.

n All of us will be pleased to take your questions at the conclusion of our opening remarks.

n 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 third quarter release.

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

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

n Turning now to the subject of this conference call, we reported strong third quarter operating results.

n Revenues of $28 million were up 56% from the year-earlier period.

n Earnings rose 94% to $4.1 million or $0.39 per diluted share, marking an all-time quarterly record.

n Third quarter revenues were consistent with our previously reported guidance, but earnings exceeded our forecast of $0.27 to $0.32 per share for this period.

n As we stated in this morning’s earnings release, the major story in the third quarter was the significant shift in our sales mix toward our high-end Producer CD/DVD publishing systems.

n One of the drivers of this shift was anticipated; and that was shipments of approximately $6.0 million related to our continuing rollout into the retail market.

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n The approximately $2 million balance of this previously reported order is scheduled for shipment in the fourth quarter.

n However, strong Producer sales were not restricted to the retail market.

n We recorded robust sales into virtually all of our targeted Producer markets, including medical imaging.

n This pattern is consistent with the fact that we are finding a steadily greater number of market applications for our Producer line.

n Reflecting these positive developments, our gross margin increased to 48% in the third quarter from 43% in this year’s second quarter and from 44% in the third quarter of 2004.

n This strong margin improvement was the factor primarily responsible for our stronger than forecasted third quarter earnings.

n It is particularly encouraging to note that our above plan earnings were attained while incurring approximately $1.0 million in additional expense related to our previously announced strategic analysis that is being conducted by a major international consulting firm.

n This analysis indicates that substantial opportunities exist for our current CD/DVD technology for the foreseeable future, and that optical media will be a growth medium for the next 5-10 years.

n The high-end opportunity in this arena is substantial and pursuing it will require an intense focus on our part.

n New technologies and applications that support our high-end Producer line also will be aggressively pursued.

n In addition, we will continue to evaluate opportunities within the low-end Desktop market, but future development must meet long term strategic objectives.

n To facilitate these objectives, our Board of Directors has established a Strategic Planning Committee to assist in the assessment and development of our strategic plan.

n Turning to the guidance contained in this morning’s release, we are optimistic about our prospects for a solid fourth quarter, which would make 2005 the strongest year in Rimage’s history.

n We are forecasting fourth quarter earnings of $0.27 to $0.32 per diluted share on revenues of $24 to $26 million.

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n Results at these levels would bring Rimage’s full-year earnings to the range of $1.15 to $1.20 on full-year sales of $95 to $97 million.

n Our fourth quarter guidance is based on several factors.

n First, forecasted revenues for this period reflect the absence of retail-related shipments similar in size to that in the third quarter.

n The outlook for the retail market remains positive, but roll-outs of Rimage systems are expected to continue fluctuating between quarters.

n Second, we do not anticipate at this time any material strengthening in sales of 360i systems.

n And third, expense growth is expected to moderate in the fourth quarter, although we will incur an additional expense of approximately $500,000 related to our strategic analysis.

n We also are confident about our longer-term future.

n For example, 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.

n In fact, four national retailers are currently testing our equipment in photo, music and software applications.

n We believe these field trials have the potential for expanding into national rollouts in 2006.

n In all, we believe Rimage’s strategic position is solidly grounded, and we look forward to bringing you news of further positive developments in coming quarters.

n Thank you. Now, Rob Wolf will review our third quarter results in some detail.

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Remarks of Robert M. Wolf
Rimage Corporation 3rd Quarter/FYE 2005 Conference Call
October 25, 2005

n Thanks, Bernie

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

n 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 33% in the third quarter of 2005 and accounted for 35% of sales, compared to 41% in the third quarter of 2004.

n International sales, which were somewhat stronger than anticipated, increased 29% in this year’s third quarter and accounted for 28% of total sales, compared to 34% in the year-earlier quarter.

n 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.

n Currency effects had a minimal impact on our worldwide sales in the third quarter of 2005.

n Rimage’s gross margin improved to 48% in the third quarter, from 43% in the second quarter and 44% in the year-earlier period, due primarily to a shift in our sales mix toward our high-end Producer line of publishing systems.

n Given the positive outlook for our Producer line, we believe our fourth quarter gross margin should be at or near the third quarter level.

n Moving down the P&L, third quarter R&D expense of $1.4 million was down by 7% from this year’s second quarter but up by 39% from the year-earlier level.

n Third quarter R&D expense equaled 5% of sales, down from 7% in the second quarter and 6% in the year-earlier period.

n R&D expense in this year’s fourth quarter is expected to be relatively unchanged from the third quarter level.

n Selling, general and administrative expense, which included the $1.1 million associated with our strategic study, came to approximately $5.9 million in the third quarter, up 24% from this year’s second quarter and 60% from last year’s third quarter.

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n As a percentage of sales, third quarter SG&A came in at 21%, down from 22% in this year’s second quarter and unchanged from last year’s third quarter.

n The growth in SG&A during the past year has been driven by the need to strengthen our sales and marketing organization, implement business systems to accommodate our accelerating growth, and costs related to the strategic study.

n Excluding the expenses related to the strategic study in the third and fourth quarters, we believe SG&A growth is expected to moderate in this year’s fourth quarter.

n Turning now to our balance sheet, cash and investments rose by $5.6 million to $61.7 million at the end of the third quarter from the level at the end of this year’s second quarter.

n Third quarter-ending cash was also up from $52.5 million at the end of 2004.

n Inventories fell by 19% from the level at the end of this year’s second quarter and by 17% in comparison to the end of 2004.

n This decline was due partly to exceptionally strong sales in the final month of the third quarter, which depleted our quarter-ending inventories.

n Barring similarly strong sales in December, we would expect fourth quarter-ending inventories to be above the third quarter level.

n Finally, stockholders’ equity rose to $73.4 million at the end of the third quarter, up from $68.2 million at the end of the second quarter and $62.7 million at the end of 2004.

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

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