EX-99.1 2 rimage064179_ex99-1.htm PRESS RELEASE DATED OCTOBER 31, 2006 Exhibit 99.1 to Rimage Corporation Form 8-K Dated October 31, 2006

Exhibit 99.1



 

Rimage Corporation Reports Record Third Quarter Earnings


 

Minneapolis, MN—October 31, 2006—Rimage Corporation (Nasdaq: RIMG) today reported strong operating results for the third quarter of 2006 ended September 30.

 

 

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Sales totaled $24.8 million, compared to $27.9 million in last year’s third quarter, which benefited from a retail order of approximately $6.0 million. Third quarter sales were at the high end of the previously reported guidance for this period.

 

 

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Earnings came to a quarterly record of $4.4 million or $0.43 per diluted share, an increase of 9% from $4.1 million or $0.39 per diluted share in the year-earlier period. Earnings, which significantly exceeded Rimage’s third quarter guidance, included stock compensation expense of approximately $637,000. Earnings also were positively affected by higher than previously expected tax-exempt interest income and a reduction in a prior year’s tax reserve. Due primarily to these items, the effective tax rate for the third quarter of 2006 declined to 32% from 36% in the comparable period of 2005. The effective tax rate for full-year 2006 is forecasted to return to a normalized level of 36% to 37%.

 

Bernard P. (Bernie) Aldrich, president and chief executive officer, commented: “Our third quarter operating results benefited from strong sales of our mission-critical Producer CD/DVD publishing systems for retail and medical imaging applications, as well as the introduction of our next-generation P3 Producer product line during the quarter. Reflecting these factors, Rimage’s gross margin increased to 49% from 46% in the second quarter and 48% in last year’s third quarter. In addition, total operating expenses declined significantly despite incurring costs related to the successful implementation of an SAP enterprise resource planning system for Rimage’s domestic operation. Implementation of the SAP system at our European operation will commence in the fourth quarter, with completion scheduled by the end of the first quarter of 2007.”

 

Aldrich continued: “We ended the third quarter with a backlog of approximately $2 million, which is scheduled for shipment in the fourth quarter of 2006 and first quarter of 2007. Looking ahead, we will continue to focus on significant opportunities in our targeted retail, medical imaging and business services markets, making us believe Rimage’s near and longer-term outlooks are very positive.”

 

Financial Highlights

Recurring revenues, including sales of printer ribbons and cartridges, parts, blank CD/DVD media and maintenance contracts, increased 15% in the third quarter of 2006 and accounted for 45% of sales, compared to 35% in the third quarter of 2005. The growth of consumable supplies has been generated by strategic efforts to capitalize upon the continued expansion of Rimage’s worldwide installed base of CD/DVD publishing systems.

 

International sales accounted for 29% of total sales in the third quarters of 2006 and 2005. Rimage is moving forward with efforts to strengthen its large European operation, which continued to generate the majority of the quarter’s international sales. Currency effects increased worldwide sales by 1% in the third quarter of 2006.

 

Rimage generated substantial operating cash flows in this year’s third quarter. Cash and investments rose to $73.3 million, from $69.6 million at the end of the second quarter and $64.5 million at the end of 2005. Stockholders’ equity increased to $90.5 million from $76.5 million at year-end 2005.





For the fourth quarter of 2006 ending December 31, Rimage is forecasting revenues of $23.0 to $25.0 million and earnings of $0.23 to $0.28 per diluted share, which includes estimated stock compensation expense of $400,000 to $500,000 on a pre-tax basis. Due to a change in product mix, gross margins on a portion of forecasted retail sales are expected to be somewhat below the third quarter level. In addition, fourth quarter operating expenses will reflect continued strengthening of Rimage’s sales and marketing organization in the form of additional key personnel.

 

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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RIMAGE CORPORATION

Selected Consolidated Financial Information

(In thousands except per share data)

(Unaudited)

 

Consolidated Statement of Operations Information:

 

 

Three months ended

September 30,

 

Nine months ended

September 30,

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

 

 

Revenues

$24,777

 

$27,962

 

$72,733

 

$71,144

Cost of Revenues

12,517

 

14,571

 

39,158

 

38,498

Gross Profit

12,260

 

13,391

 

33,575

 

32,646

Operating Expenses:

 

 

 

 

 

 

 

Research and Development

1,459

 

1,399

 

4,781

 

4,177

Selling, General and Administrative

5,032

 

5,937

 

16,115

 

15,083

Total Operating Expenses

6,491

 

7,336

 

20,896

 

19,260

Operating Income

5,769

 

6,055

 

12,679

 

13,386

Other Income, Net

739

 

360

 

1,997

 

895

Income Before Income Taxes

6,508

 

6,415

 

14,676

 

14,281

Income Tax Expense

2,067

 

2,330

 

5,217

 

5,217

Net Income

4,441

 

4,085

 

9,459

 

9,064

 

 

 

 

 

 

 

 

Net Income Per Basic Share

$.45

 

$.43

 

$.97

 

$.95

 

 

 

 

 

 

 

 

Net Income Per Diluted Share

$.43

 

$.39

 

$.92

 

$.88

Basic Weighted Average
Shares Outstanding

9,854

 

9,553

 

9,783

 

9,507

Diluted Weighted Average
Shares Outstanding

10,375

 

10,380

 

10,336

 

10,250

 





Consolidated Balance Sheet Information:

 

 

 

Balance as of

 

 

September 30,

2006

 

December 31,

2005

 

 

(Unaudited)

 

 

 

 

 

 

 

Cash and Marketable Securities

 

$48,138

 

$64,471

Accounts Receivable

 

14,892

 

12,689

Inventories

 

6,496

 

6,621

Total Current Assets

 

71,988

 

86,444

Property and Equipment, Net

 

3,924

 

2,525

Marketable Securities – Non-Current

 

25,135

 

Total Assets

 

101,167

 

89,009

Current Liabilities

 

10,651

 

12,467

Long-Term Liabilities

 

12

 

13

Stockholders’ Equity

 

90,504

 

76,529

 

 

 

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

 


Conference Call and Replay

Rimage Corporation will review its third 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 November 7, by dialing 1-303-590-3000 and providing the 11073233 confirmation code.