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 17, 2009

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 1, 3, 4 and 6 though 8 are not applicable and therefore omitted.

ITEM 2.02    RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Rimage Corporation (the “Company”) hereby furnishes a press release, issued on February 18, 2009, disclosing material non-public information regarding its results of operations for the year and quarter ended December 31, 2008 and hereby furnishes statements of its Chief Executive Officer and Chief Financial Officer made on February 18, 2009 at a telephone conference relating to the year and quarter ended December 31, 2008 results.

ITEM 5.02    DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

Establishment of 2009 Bonus Program

On February 16, 2009, the Compensation Committee approved and on February 17, 2009, the Board of Directors of the Company ratified the establishment of the Company’s cash bonus program for 2009 (the “2009 Bonus Program”) for the Company’s current executive officers. The current executive officers are the Company’s Chief Executive Officer, Bernard P. Aldrich; the Company’s Chief Financial Officer, Robert M. Wolf; and the Company’s Executive Vice President of Sales and Marketing, Manual M. Almeida. At the time that Sherman L. Black joins the Company as its President and Chief Operating Officer, he also will be eligible to participate in the 2009 Bonus Program.

Under the 2009 Bonus Program, the Compensation Committee determined minimum, target and maximum quarterly and annual performance goals. The performance goals are weighted such that 15% of the bonus opportunity depends upon achievement of the quarterly performance goals for each of the four fiscal quarters of 2009 and 40% of the bonus opportunity depends upon achievement of performance goals for the 2009 fiscal year. The quarterly and annual performance goals relate to sales and operating income as a percentage of sales in the form of a matrix for each period of incrementally increasing sales and incrementally increasing operating income as a percentage of sales. No bonus amounts will be earned by any executive officer for a quarter or for the year if the minimum goals for that period are not achieved. All bonuses earned in 2009 will be paid following the end of 2009 and an executive officer must be employed by the Company as of December 31, 2009 in order to receive payout of any bonus earned during the year unless termination of employment is due to death, disability or follows a change in control.

The Compensation Committee also approved the cash bonuses that executive officers may earn under the 2009 Bonus Program based upon percentages of their respective salaries. The following table shows the bonus amounts as a percentage of salary that will be earned by the executive officers under the 2009 Bonus Program upon the Company’s achievement of the target and maximum goals relating to sales and operating income as a percentage of sales, assuming achievement at the target or maximum level for each quarter and for the year. Under the matrices associated with the 2009 Bonus Program, achievement of the performance goals at less than target level will result in a decreasing bonus until the achievement fails to meet the minimum performance goals, at which point the executive officer is entitled to no bonus.

Executive Officer and Title	Bonus Opportunity Under 2009 Bonus Program As a Percentage of Base Salary
	Target Goals Achieved	Maximum Goals Achieved
Bernard P. Aldrich Chief Executive Officer	60%	120%
Manuel M. Almeida Senior Vice President of Sales and Marketing	50%	100%
Robert M. Wolf Chief Financial Officer	50%	100%

The Compensation Committee also set the target and maximum bonus opportunity for Sherman L. Black at 50% and 100%, respectively, of his base salary. However, Mr. Black will not earn a bonus for the quarterly period during which he was not employed by the Company. Mr. Black is expected to begin his service with the Company on April 1, 2009.

2008 Incentive Plan Payout and 2009 Base Salaries

On February 18, 2008, the Compensation Committee determined to make no changes in the base salaries for 2009 for the current executive officers. Additionally, the Compensation Committee determined that because the minimum performance goals were not achieved under the Company’s 2008 cash incentive compensation plan for executive officers, no executive officer earned a bonus under this plan.

ITEM 9.01    FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit No.	Description
99.1	Press Release issued on February 18, 2009.
99.2	Statements of Bernard P. Aldrich, Chief Executive Officer, and Robert M. Wolf, Chief Financial Officer, at a telephone conference held on February 18, 2009.

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 18, 2009

EX-99.1

Exhibit 99.1

Rimage Reports Fourth Quarter Sales and Earnings

Minneapolis, MN—February 18, 2009—Rimage Corporation (Nasdaq: RIMG) today reported sales of $20,749,000 for the fourth quarter of 2008 ended December 31, compared to $28,212,000 in the year-earlier period. Fourth quarter earnings were $1,712,000 or $0.18 per diluted share versus $4,515,000 or $0.45 per diluted share in the same period of 2007. Fourth quarter sales and earnings were consistent with the previously-issued financial guidance for this period.

For full-year 2008, Rimage reported sales of $91,394,000, down from $108,874,000 in 2007. Earnings for the year came to $9,431,000 or $0.97 per diluted share, compared to $15,761,000 or $1.52 per diluted share in 2007.

Bernard P. (Bernie) Aldrich, president and chief executive officer, commented: “Considering the severity of the global economic downturn and its impact upon our markets, we are encouraged to be reporting a solid level of profitability for the fourth quarter of 2008. Interest in our disc publishing capital equipment remains relatively high, but customer caution due to the weak economy has significantly lengthened selling lead times. This has resulted in a reduction in hardware sales during the fourth quarter and a larger percentage of consumable sales which generate lower margins and consequently lower earnings. In response, we have taken several actions to streamline Rimage’s expense structure. Through workforce reductions over the past nine months, we have reduced our worldwide employee base by approximately 20%. In addition, no bonuses were paid to executive officers in 2008, and salaries for 2009 have been frozen at 2008 levels on a companywide basis. Since we are unable to predict when our markets will begin to materially strengthen, we are prepared to take additional cost saving measures as required.”

He continued: “Despite lengthening sales cycles, we are continuing to see promising opportunities for our disc publishing systems. The government market continues to generate demand for our products, and we will strengthen our sales efforts in this area. We also are optimistic about the future of archiving and video applications as well as electronic medical records. To capitalize upon these and other opportunities, we continue to enhance the capabilities of our existing products and invest in the development of new products to keep Rimage at the forefront of the on-demand disc publishing industry. Rimage’s strong financial condition is enabling us to pursue these and other opportunities in a global economy where credit has become difficult to attain. With cash and investments of more than $95 million at the end of this year’s fourth quarter, we possess the resources for supporting our growth initiatives and ongoing operations.”

Financial Review

Recurring revenues, including sales of printer ribbons and cartridges, parts, blank CD/DVD media and maintenance contracts, accounted for 64% of sales during the fourth quarter of 2008 compared to 54% in the fourth quarter of 2007. The growth in consumable supplies as a percentage of total sales reflects the fact that equipment accounted for a lower proportion of sales in this year’s fourth quarter.

International sales accounted for 44% of total sales during both the fourth quarter of 2008 and 2007.

Cash and investments totaled $95.4 million at December 31, 2008, up from $90.6 million at September 30, 2008 and $94.2 million at the beginning of 2008. During 2008, Rimage used cash of $9.6 million to acquire approximately 577,000 shares under two 500,000 share repurchase authorizations. Approximately 423,000 shares remain available for repurchase under the uncompleted authorization. Only a minimal number of shares were repurchased under this authorization in the fourth quarter. Also during 2008, cash of $3.9 million also was used to purchase Rimage’s Minneapolis headquarters and manufacturing facility.

As previously reported, Sherman L. Black has been named as Rimage’s president and chief operating officer. Scheduled to start April 1, 2009, he will report to Bernard P. Aldrich, Rimage’s current president and chief executive officer, who will continue to serve as chief executive officer following Black’s appointment. Prior to joining Rimage, Black served as senior vice president, marketing and strategy, of the Core Products Business Group of Seagate Technology.

About Rimage

Rimage Corporation (www.rimage.com) is the world’s leading provider of recordable CD, DVD and Blu-ray (BD) 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/BD production volumes, integrate robotics, software and surface label printers into a complete publishing solution. Rimage is focusing its CD/DVD/BD publishing solutions on a set of vertical markets with special needs for customized, on-demand digital information, including retail, medical and business services.

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.

#      #      #

RIMAGE CORPORATION

Selected Consolidated Financial Information

(In thousands except per share data)

(Unaudited)

Consolidated Statements of Income Information:

	Three months ended December 31,				Twelve months ended December 31,
	2008		2007		2008		2007
Revenues	$	20,749	$	28,212	$	91,394	$	108,874
Cost of revenues		12,654		14,615		51,731		57,719
Gross profit		8,095		13,597		39,663		51,155
Operating expenses:
Research and development		1,160		1,280		5,251		5,903
Selling, general and administrative		5,129		6,079		22,664		24,371
Total operating expenses		6,289		7,359		27,915		30,274
Operating income		1,806		6,238		11,748		20,881
Other income, net		631		904		2,711		3,513
Income before income taxes		2,437		7,142		14,459		24,394
Income tax expense		725		2,627		5,028		8,633
Net income		1,712		4,515		9,431		15,761
Net income per basic share	$	0.19	$	0.46	$	.99	$	1.59
Net income per diluted share	$	0.18	$	0.45	$	.97	$	1.52
Basic weighted average shares outstanding		9,337		9,686		9,556		9,915
Diluted weighted average shares outstanding		9,447		10,093		9,729		10,371

Consolidated Balance Sheet Information:

	Balance as of
	December 31, 2008		December 31, 2007
Cash and marketable securities	$	54,755	$	59,021
Receivables		11,099		14,447
Inventories		5,625		8,075
Total current assets		74,151		84,771
Property and equipment, net		6,183		3,206
Marketable securities – non-current		40,647		35,201
Total assets		123,456		125,096
Current liabilities		12,010		17,882
Long-term liabilities		2,398		2,153
Stockholders’ equity		109,048		105,061

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 fourth quarter operating results in a conference call at 10:00 AM 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 can be heard through February 25, 2009 by dialing 1-303-590-3000 and providing the 11126430 confirmation code.

EX-99.2

Exhibit 99.2

Remarks of Bernard P. Aldrich

Rimage Corporation 4th Quarter and FY 2008 Conference Call

February 18, 2009

§ Good morning and thank you for taking the time to participate in our fourth quarter earnings conference call.

§ Joining me today is Rob Wolf, our chief financial officer, who will review our recent operating results following my opening remarks.

§ Also with us is Manny Almeida, our executive vice president of sales and marketing.

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

§ Unable to be with us today is Sherman Black, who, as we recently announced, has been named president and chief operating officer.

§ We are extremely pleased to have an executive of Sherman’s capabilities join Rimage.

§ Given his wide-ranging and highly successful career in senior management with Seagate Technology, his appointment will significantly strengthen our management team.

§ In addition to being responsible for our daily operations, he will help us formulate a long-range strategic plan and evaluate new business opportunities and technologies.

§ Following his scheduled start date on April 1, I will continue in my role as Rimage’s chief executive officer.

§ Moving on, Regulation FD prohibits us from providing any forward-looking statements unless they are released simultaneously to the public.

§ It is important to understand that any forward-looking statements are 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 fourth quarter sales came to $20.7 million, compared to $28.2 million in the year-earlier period.

§ Fourth quarter earnings of $1.7 million or $0.18 per diluted share were down from $4.5 million or $0.45 per diluted share in the same period of 2007.

§ Both sales and earnings were consistent with our previously issued guidance for this period.

§ Given the severity of the global economic downturn and its impact upon our markets, we are encouraged to be reporting a solid level of profitability for the fourth quarter.

§ Interest in our CD/DVD/Blu-ray disc publishing capital equipment across a wide range of applications remains sound.

§ However, confronted by weak economic fundamentals, customers have adopted an extremely cautious posture toward capital expenditures.

§ This cautionary approach has significantly lengthened selling lead times.

§ This results in a reduction in hardware sales during the fourth quarter and a larger percentage of consumable sales which generate lower margins and consequently lower profitability.

§ In response to the current economic operating environment, we have taken several actions to streamline Rimage’s expense structure.

§ Through workforce reductions over the past nine months we have reduced our worldwide employee base by approximately 20%.

§ We paid no bonuses to executive officers in 2008.

§ In addition, salaries for 2009 have been frozen at 2008 levels on a companywide basis.

§ Since we are unable to predict when our markets will begin to materially strengthen, we are prepared to take additional cost saving measures as required.

§ Now that I have outlined some of the challenges we are facing, I would like to spend a few minutes discussing a number of positives in our business.

§ For example, the government market continues to generate solid demand for our products.

§ We intend to strengthen our sales efforts in this area.

§ We also are optimistic about the future of archiving and video applications as well as electronic medical records. These opportunities exist not only within the U.S. but also with our other geographical markets in Europe, Asia and Latin America.

§ To take advantage of these and other opportunities, we continue to enhance the capabilities of our existing hardware and software as well as invest in the development of new products to keep Rimage at the forefront of the on-demand disc publishing industry.

§ Rimage’s strong financial condition is enabling us to pursue these and other opportunities in a global economy where credit has become difficult to attain.

§ With cash and investments of more than $95 million at the end of this year’s fourth quarter...working capital in excess of $62 million...and a virtually debt-free balance sheet, we possess more than adequate resources for supporting our various growth initiatives.

§ As you might have noticed in this morning’s release, we provided no financial guidance for the first quarter of 2009.

§ Moreover, we do not plan to give any quarterly guidance over the balance of this year.

§ We made this decision due to a lack of visibility and an abundance of uncertainty in our markets.

§ This decision should not be taken as a lack of confidence in Rimage’s future.

§ To the contrary, we see our long-term future as highly promising.

§ We are actively pursuing attractive opportunities across a full range of markets...some established, some emerging.

§ We are pushing ahead with R&D on next-generation and upgraded products.

§ And, we will be evaluating new technologies and business opportunities.

§ Although our near-term performance may lag our historic norms, we have a great deal of confidence in Rimage’s prospects over the long haul.

§ Thank-you. Now Rob Wolf will review our fourth quarter results in some detail.

Remarks of Robert M. Wolf

Rimage Corporation 4th Quarter and FY 2008 Conference Call

February 18, 2009

§ Thanks, Bernie

§ First, I will run through some fourth quarter sales highlights.

§ Sales of digital publishing equipment declined 42% in the fourth quarter of 2008 and accounted for 36% of total sales, compared to 46% in the fourth quarter of 2007.

§ Recurring revenues, including sales of printer ribbons and cartridges, parts, blank CD/DVD media and maintenance contracts, decreased 13% in the fourth quarter and accounted for 64% of sales, compared to 54% in the fourth quarter of 2007.

§ Consumables have accounted for a significantly larger portion of our sales mix during 2008 due to the economy-related slowdown in sales of disc publishing hardware, in addition to the expansion of our base of retail installations that occurred in 2007.

§ International sales declined 27% in the fourth quarter and accounted for 44% of total sales during both the fourth quarter of 2008 and 2007.

§ Our lower international sales reflect the impact of fluctuating currency rates and weakening economic conditions on our European and Asian operations.

§ Currency effects decreased worldwide sales by 3% in the fourth quarter of 2008.

§ Rimage’s gross margin was 39% in the fourth quarter, down from 48% in both the third quarter 2008 and the fourth quarter 2007.

§ Our gross margin in this year’s fourth quarter was affected by the shift in our sales mix toward consumable supplies, which carry lower gross margins than those associated with disc publishing hardware.

§ Moving down the P&L, our overall cost structure in the fourth quarter continued to benefit from the $2.0 million of annualized expense reductions that we instituted in May.

§ R&D expense came to $1.2 million during the fourth and third quarters of 2008 and $1.3 million in last year’s fourth quarter.

§ Despite the flatness of R&D expense, we are continuing investments in new product development in addition to important enhancements to our current product line.

§ Selling, general and administrative expense totaled $5.1 million in the fourth quarter, down from $5.2 million in this year’s third quarter and $6.0 million in the fourth quarter of 2007.

§ Our operating margin as a percent of revenues was 9% in this year’s fourth quarter, down from 22% in the third quarter of 2008 and the fourth quarter of 2007.

§ Decreased sales and a shift in product mix from hardware to consumable supplies were the primary drivers of the decline in operating margin as a percent of revenues.

§ We were taxed at an effective rate of 35% for the full year of 2008 and 2007.

§ Turning now to our balance sheet, cash and investments totaled $95.4 million at the end of the fourth quarter, compared to $90.6 million at the end of the third quarter and $94.2 million at the beginning of 2008.

§ During the quarter, cash of $0.3 million was used to repurchase approximately 26,000 Rimage shares under two 500,000 share buyback authorizations.

§ And, for the full year of 2008, we used cash of $9.6 million to repurchase a total of 577,000 shares.

§ Approximately 423,000 shares remain available for repurchase under our one uncompleted authorization.

§ Stockholders’ equity came to $109.0 million at the end of the fourth quarter, compared to $106.6 million at the end of the third quarter and $105.1 million at the end of 2007.

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