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): April 20, 2006

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 Edina, 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 1, 3 through 8 are not applicable and therefore omitted.

ITEM 2.02   RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

The Company hereby furnishes a press release, issued on April 20, 2006, disclosing material non-public information regarding its preliminary results of operations for the quarter ended March 31, 2006 and hereby furnishes statements of its Chief Executive Officer and Chief Financial Officer made on April 20, 2006 at a telephone conference relating to the quarter ended March 31, 2006 results.

ITEM 9.01   FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit No. Description

99.1 Press Release issued on April 20, 2006.

99.2 Statements of Bernard P. Aldrich, Chief Executive Officer, and Robert M. Wolf, Chief Financial Officer, at a telephone conference held on April 20, 2006.

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:   April 21, 2006

EX-99.1

Exhibit 99.1

Rimage Reports Solid First Quarter Operating Results

Minneapolis, MN—April 20, 2006—Rimage Corporation (Nasdaq: RIMG) today reported sales of $22,637,000 for the first quarter of 2006 ended March 31, an increase of 8% from $20,875,000 in the year-earlier quarter. Sales exceeded the previously issued financial guidance for this period. First quarter earnings came to $1,634,000 or $0.16 per diluted share, which were at the upper end of the guidance range for this period. As previously reported, Rimage’s earnings included $1.2 million of expense related to the conclusion of a strategic engagement with an international consulting group and approximately $200,000 of stock compensation expenses due to the required adoption of SFAS No. 123(R), “Share Based Payment.” Rimage reported earnings of $2,691,000 or $0.27 per diluted share in the first quarter of 2005.

Bernard P. (Bernie) Aldrich, president and chief executive officer, commented: “Our first quarter operating results were generated by sales of Producer CD/DVD publishing systems and related consumable supplies across a broad spectrum of market applications, with no single order accounting for a disproportionate share of our total first quarter sales. Sales in the first quarter of 2005 included retail-related shipments of approximately $4.0 million, but consistent with our financial guidance, we posted nominal retail sales in this year’s first quarter, reflecting the uneven pace of customer rollout schedules. Retailers have installed our systems in more than 1,000 locations, where they are used in photography, music and software publishing and business services applications. Other national retail chains are currently testing Rimage systems for similar applications.”

Aldrich continued: “During the first quarter, we concluded our strategic engagement with an international consulting firm to assess Rimage’s current operations and potential new market applications. We believe this extensive process of research and implementation will strengthen our prospects in 2006 and beyond by positioning Rimage to take optimum advantage of both current and new opportunities that leverage our core competencies in mission critical CD/DVD publishing solutions. Rimage also continued making growth-related investments in product development, expanding global sales and marketing support and strengthening our business systems. In March, we introduced our Producer III series of CD/DVD publishing systems, which feature higher production throughput and enhanced operator convenience. As reported previously, we also started implementing an enterprise resource planning system that will significantly strengthen our ability to manage Rimage’s anticipated future growth. We expect to invest more than $4.0 million in this initiative during 2006, of which approximately $2.0 million will be capitalized. This project had a minimal impact on Rimage’s first quarter profitability, and the level of investment will vary in coming quarters.”

Financial Highlights
Recurring revenues, including sales of printer ribbons and cartridges, parts, blank CD/DVD media and maintenance contracts, increased 47% in the first quarter of 2006 and accounted for 48% of sales, compared to 35% in the first quarter of 2005. The growth of consumable supplies has been generated by the continued expansion of the worldwide installed base of CD/DVD publishing system, as well as Rimage’s strategic emphasis on this portion of its business.

International sales increased 11% in the first quarter and accounted for 38% of total sales, compared to 37% in the year-earlier period. The European market continued to generate the majority of international sales, but sales in Asian markets made a growing contribution, reflecting intensified sales efforts in this region. Currency effects decreased worldwide sales by 3% in the first quarter of 2006.

Rimage generated substantial operating cash flows in the first quarter. Cash and marketable securities rose to $66,241,000, from $64,471,000 at the end of 2005. Stockholders’ equity increased to $80,288,000, from $76,529,000 at the end of 2005.

For the second quarter of 2006 ending June 30, Rimage is forecasting revenues of $22.0 to $24.0 million and earnings of $0.18 to $0.23 per diluted share, which includes estimated stock compensation expense of $300,000 to $500,000 pretax.

About Rimage
Rimage Corporation is the world’s leading provider of 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, including digital photography, medical imaging and financial institutions. Visit our web site at www.rimage.com

Statements regarding Rimage’s anticipated performance are forward-looking and therefore involve risks and uncertainties, including but not limited to: market conditions, 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	904/415-1415
952/944-8144

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

Consolidated Statement of Operations Information:

	Three months ended March 31,
	2006		2005
Revenues	$	22,637	$	20,875
Cost of Revenues		12,964		11,265
Gross Profit		9,673		9,610
Operating Expenses:
Research and Development		1,576		1,279
Selling, General and Administrative		6,123		4,360
Total Operating Expenses		7,699		5,639
Operating Income		1,974		3,971
Other Income, Net		621		201
Income Before Income Taxes		2,595		4,172
Income Tax Expense		961		1,481
Net Income		1,634		2,691
Net Income Per Basic Share	$	.17	$	.29
Net Income Per Diluted Share	$	.16	$	.27
Basic Weighted Average Shares Outstanding		9,685		9,422
Diluted Weighted Average Shares Outstanding		10,331		10,092

Consolidated Balance Sheet Information:

	Balance As Of
	March 31, 2006		December 31, 2005
	(Unaudited)
Cash and Marketable Securities	$	66,241	$	64,471
Accounts Receivable		12,468		12,689
Inventories		6,287		6,621
Total Current Assets		88,798		86,444
Property and Equipment, Net		3,029		2,525
Total Assets		91,863		89,009
Current Liabilities		11,549		12,467
Stockholders’ Equity		80,288		76,529

Conference Call and Replay

Rimage Corporation will review its first 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 April 27, 2006 by dialing 1-303-590-3000 and providing the 11058973 confirmation code.

EX-99.2

Exhibit 99.2

Remarks of Bernard P. Aldrich

Rimage Corporation 1st Quarter/FYE 2006 Conference Call

April 20, 2006

• Good afternoon and thanks for taking the time to participate in our first quarter earnings conference call.

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

• Also with us are Manny Almeida, our chief operating officer, and Dave Suden, Rimage’s chief technology officer.

• We will be pleased to take your questions at the conclusion of our opening remarks.

• Since Regulation FD prohibits us from providing any guidance or other forward-looking statements unless they are simultaneously released to the public, we have provided financial guidance for the second quarter of 2006 in this afternoon’s earnings 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, our first quarter revenues rose 8% to $22.6 million from the year-earlier period, which exceeded our previously issued guidance for this period.

• As I will discuss shortly, our above-plan revenues were attained without the benefit of a significant volume of retail-related sales, unlike the situation in the first quarter of 2005.

• Earnings came to $1.6 million or $0.16 per diluted share, compared to $2.7 million or $0.27 per diluted share in the first quarter of 2005.

• Our earnings, which came in at the upper end of our guidance, were affected by two factors.

• As previously reported, we incurred $1.2 million of expense related to the conclusion of the engagement with an international consulting group to assess Rimage’s current operations and potential new market applications.

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• Also as previously reported, we incurred stock compensation expense of approximately $200,000 due to the required adoption of SFAS No. 123, “Share Based Payment.”

• Now, for the next few minutes, I will discuss our sales performance in this year’s first quarter.

• Our above-plan revenues benefited from sales of our Producer CD/DVD publishing systems and related consumable supplies for a broad range of market applications, including medical imaging.

• Our sales performance was extremely balanced, with no single order or application accounting for a disproportionate share of sales for this period.

• In the first quarter of 2005, retail-related shipments accounted for approximately $4 million of our $21 million sales total.

• Consistent with our guidance, retail-related sales were relatively small in this year’s first quarter, reflecting the uneven rate of our customers’ rollout schedules.

• These uneven or lumpy rollout rates are simply a fact of life, and retail-related shipments will likely continue to fluctuate between quarters.

• However, the fluctuating nature of this business does not alter or diminish the fundamental, long-term vitality of our retail opportunity.

• Growing numbers of activities are converging at the retail level.

• Today, these include the in-store publishing of photos, music, video, software and business documents on CDs and DVDs on a customized, on-demand basis.

• The momentum of this retail trend is expected to continue strengthening for the foreseeable future, and due to the quality of our products and worldwide customer support, Rimage is strongly positioned to capitalize upon this major opportunity.

• Our systems are currently installed in over 1,000 retail locations, and several major national retailers are currently field testing our Producer publishing systems in several of the applications I just mentioned.

• Another example of our growing retail opportunity is the previously announced integration of our disc publishing technology into HP’s new Photosmart Studio.

• Through this in-store kiosk solution, customers will be able to create a customized CD of photos from the memory card of their digital camera and personalize each disc with a custom color label.

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• During the first quarter, we continued to invest in new product development, expanding our global sales and marketing organization and strengthening our business systems.

• To areas of investment merit some mention at this time.

• In March, we introduced our new line of disc publishing systems, the Producer III series.

• These units offer improved software features, resulting in higher production throughput and greater operator convenience.

• Both models, the 7100 and 8100, utilize the latest state of the art combination DVD/CD recorders.

• This continues our commitment to providing customers with unsurpassed levels of automation and reliability for the highest throughput and fastest disc creation in the industry.

• The second investment I want to briefly discuss is our new enterprise resource planning system, which as previously reported, we have started implementing with the goal of significantly strengthening our ability to manage Rimage’s anticipated future growth.

• Our current ERP system was in place when I joined Rimage as CEO 10 years ago.

• Due to the growth and increased complexity of our business operations, a new system is badly needed and implementation is proceeding on schedule for a late summer conversion.

• We expect to invest more than $4.0 million in this initiative during 2006, of which approximately $2.0 million will be capitalized.

• This project had a minimal impact on Rimage’s first quarter profitability, and the level of investment will vary in coming quarters.

• As we mentioned in this afternoon’s release, we have concluded our strategic investment with an international consulting group that focused on evaluating our current operations and future opportunities.

• Since we have previously discussed some of the major findings of this undertaking, I will only briefly recap what we learned.

• It was determined that Rimage’s greatest opportunity is in mission critical applications where our strengths for providing systems with minimal production downtime, high disc production volumes and unique content on each disc are most valued by the customer.

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• These characteristics are the hallmark of the value-added applications at which we excel.

• In addition, we found that the optical technology which forms the basis for our CD/DVD publishing systems is expected to remain a strong growth platform, which is uniquely positioned to serve multiple applications.

• Blu-ray Disc or HD DVD represent the next generation of optical technology, and we are now developing new systems based on this high-capacity platform.

• It also was determined that we have substantial, long-term opportunities in our existing markets, which are still emerging and, as such, remain under-served by our CD/DVD technology.

• And finally, the study determined that we are under-penetrated in selected geographies outside the U.S.

• As we have stated previously, this investment was extended into the first quarter in order to help speed the actual implementation of various findings.

• This process is well under way and is now being handled by our internal resources.

• Turning to the guidance contained in this afternoon’s release, we are forecasting earnings of $0.18 to $0.23 per diluted share on revenues of $22 to $24 million for the second quarter of 2006 ending June 30.

• This earnings guidance includes estimated stock compensation expense of $300,000 to $500,000 pretax.

• In closing, I want to say that we are optimistic about Rimage’s prospects for 2006.

• Our targeted markets remain robust and we feel we are strongly positioned to capitalize upon a range of highly attractive growth opportunities.

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

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Remarks of Robert M. Wolf

Rimage Corporation 1st Quarter/FYE 2006 Conference Call

April 20, 2006

• Thanks, Bernie

• Since our top line growth has already been covered in some detail, I will run through only a few highlights about our first quarter sales.

• Recurring revenues in the form of replacement printer ribbons and cartridges, blank CD/DVD discs, parts and service contracts increased 47% in the first quarter and accounted for 48% of sales, compared to 35% in the first quarter of 2005.

• The growth of consumable supplies has been generated by the continued expansion of the worldwide installed base of CD/DVD publishing system and Rimage’s strategic emphasis on this portion of our business.

• International sales increased 11% in the first quarter and accounted for 38% of total sales, compared to 37% in the year-earlier period.

• European sales continued to generate the majority of our international business, but sales in Asia made a growing contribution in the first quarter, reflecting intensified sales efforts in these regions.

• Currency effects decreased worldwide sales by 3% in this year’s first quarter.

• Rimage’s gross margin declined to 43% in the first quarter, from 46% in the year-earlier period.

• This decline resulted primarily from a shift in our first quarter sales mix.

• Due to exceptionally strong retail-related shipments a year ago, Producer systems accounted for a larger percentage of our sales mix in the first quarter of 2005 than they did in this year’s first quarter.

• Moving down the P&L, first quarter R&D expense of $1.6 million was up from $1.3 million in both the fourth and first quarters of 2005, reflecting development of several important new products, including the next-generation Producer III line.

• R&D expense rose modestly to 7% of sales, from 6% of sales in both the fourth and first quarters of 2005.

• Selling, general and administrative expense, which included the final $1.2 million payment for our strategic study came to $6.1 million, down slightly from $6.2 million in the fourth quarter and up from $4.4 million in last year’s first quarter.

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• As a percentage of sales, SG&A came in at 27%, up slightly from 26% in the fourth quarter and 21% in the first quarter of 2005.

• Turning now to our balance sheet, cash and investments totaled $66.2 million at March 31, an increase of $1.7 million from $64.5 million at the end of 2005.

• Despite our high level of business investments, Rimage is continuing to generate significant cash flows from its internal operations.

• Finally, stockholders’ equity rose to $80.3 million at the end of this year’s first quarter, from $76.5 million at the end of 2005.

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

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