Rimage: Fiscal 4Q Financial Results

Rimage Corporation reported revenues of
$108,874,000 for the year ended December 31, 2007, up from $103,252,000
in 2006. Net income was $15,761,000 or $1.52 per diluted share, up 20%
from $13,084,000 or $1.26 per diluted share in 2006.

For the fourth quarter of 2007, sales were $28,212,000, compared to
$30,519,000 in the year-earlier period. Fourth quarter earnings were
$4,515,000 or $0.45 per diluted share, up 25% from $3,625,000 or $0.34
per diluted share in the fourth quarter of 2006.

Rimage’s Board of Directors today issued a
500,000 share repurchase authorization, which is in addition to the
previous 500,000 share buyback authorization. Since no shares were
acquired in the fourth quarter of 2007 under the prior authorization, a
total of 1,000,000 shares are now available for repurchase. Under both
authorizations, shares can be purchased at prevailing market prices in
the open market or in private transactions, subject to market
conditions, share price, trading volume and other factors. This program
can be discontinued at any time.

Bernard P. (Bernie) Aldrich, president and chief executive officer,
commented: “Rimage’s
fourth quarter sales were generated primarily by our global distribution
channel. As expected, we recorded no significant orders from national
retailers, which is the primary reason for the lower revenue when
compared to the fourth quarter of 2006. Our fourth quarter earnings
benefited from increased channel sales of Rimage’s
Producer line. We also benefited from improved pricing on this product
line. These factors contributed to our fourth quarter gross margin of
48%. Last year’s fourth quarter gross margin
of 45% was affected by a writedown of approximately $648,000 related to
the low-end 360i product line. Our fourth quarter earnings also
benefited from lower operating expenses, reflecting the completion of
several product development and SAP initiatives.”

He continued: “A significant portion of Rimage’s
growth over the past few years has been generated by our ability to
successfully penetrate the retail and medical imaging markets with our
digital output solutions. We will continue to pursue opportunities in
these markets. At the same time, we are starting to address untapped
opportunities for our disc publishing technology in a number of large
business service markets, including media and broadcasting, law
enforcement, education, government, software and professional services.
We expect business service applications to help drive Rimage’s
future growth, and we plan to focus our resources toward building
positions in these markets similar to what we have achieved in the
retail and medical markets.”

Aldrich added: “At this time, we believe 2008
should be another year of progress and improved operating results for
Rimage, and for the first quarter of 2008 ending March 31, we are
forecasting earnings of $0.21 to $0.26 on revenues of $22 to $24 million.”

Financial Highlights

Recurring revenues, including sales of printer ribbons and cartridges,
parts, blank CD/DVD media and maintenance contracts, increased 6% in the
fourth quarter of 2007 and accounted for 54% of sales, compared to 47%
in the fourth quarter of 2006. Sales of consumables, which lend a
measure of stability and predictability to Rimage’s
revenue stream, are benefiting from the Company’s
growing installed base of disc publishing systems in retail and other
markets.

International sales increased 18% in the fourth quarter and accounted
for 44% of total sales, compared to 34% of total sales in the
year-earlier period. Sales generated by Rimage’s
large European operation, which is being strengthened with new
management personnel and an expanded sales and marketing organization,
grew 15% in the fourth quarter. Sales in Asian markets increased 39%
during this period, reflecting efforts aimed at strengthening the reach
of Rimage’s Tokyo sales office. Currency
effects increased worldwide sales by 4% in the fourth quarter of 2007.

Cash and investments totaled $94.2 million at the end of the fourth
quarter, compared to $84.9 million at the end of the third quarter and
$77.4 million at December 31, 2006.

Rimage Corporation