Rimage: Fiscal 1Q08 Financial Results

Rimage Corporation reported revenues of $22,749,000 for the first quarter ended March 31, 2008, an increase of 6% from $21,526,000 in the year-earlier period. Net income was $1,786,000 or $0.18 per diluted share, compared to $2,122,000 or $0.20 per diluted share in the first quarter of 2007.

Bernard P. (Bernie) Aldrich, president and chief executive officer, commented: "We believe Rimage’s first quarter revenues were adversely affected by lower than anticipated sales of disc publishing hardware, including our high-end Producer family, due primarily to the impact of the weakening economy. This has caused some distributors to adopt a more cautious approach to their purchasing decisions. As a result, consumable supplies rose significantly as a percentage of our total sales for this period. This shift in our sales mix resulted in some gross margin erosion, which caused earnings to fall below previously forecasted levels."

Aldrich continued: "Although we are not satisfied with Rimage’s first quarter results, we remain optimistic about our prospects. Our pending business activity is encouraging, even though economic conditions may result in longer selling cycles. Efforts aimed at strengthening our European operation are starting to generate the intended results, and we are continuing to invest in our growing Asian business. We have significantly strengthened our sales force over the past year by adding seven new sales representatives and further strengthened our sales channel by adding three new distribution partners."

He added, "We also see untapped opportunities for our disc publishing technology in various business services markets, including media and broadcasting, law enforcement, education, government, software and professional services. To help Rimage capitalize upon these opportunities, we plan to introduce software later this year that is designed exclusively for Mac-based audio/visual production environments. In addition, our newly introduced Everest 600 color disc surface label printer, which generates superior color graphics and text at faster production speeds than its predecessor model, has been integrated into our Producer equipment line. Equipped with these and other technologies, we believe business services applications will drive a significant portion of Rimage’s future growth, and we plan to focus our resources toward building growing positions in these markets."

Financial Highlights
Recurring revenues, including sales of printer ribbons and cartridges, parts, blank CD/DVD media and maintenance contracts, increased 27% in the first quarter of 2008 and accounted for 62% of sales, compared to 51% in the first quarter of 2007. Sales of consumables are benefiting from Rimage’s growing installed base of disc publishing systems in retail and other markets.

International sales increased 14% in the first quarter and accounted for 43% of total sales, compared to 41% of total sales in the year-earlier period. This increase was due primarily to foreign currency effects.

Cash and investments totaled $92.4 million at the end of this year’s first quarter, compared to $94.2 million at the beginning of 2008 and $83.5 million at the end of the first quarter of 2007.

The sequential quarterly decline in cash was attributable primarily to the payment of income taxes and annual incentive bonuses. Approximately 26,000 Rimage shares were repurchased during the first quarter under two 500,000 share buyback authorizations.

For the second quarter of 2008 ending June 30, Rimage is forecasting earnings of $0.22 to $0.27 per diluted share on revenues of $24 to $26 million.

Rimage Corporation