Rimage: Fiscal 1Q09 Financial Results

Rimage Corporation reported sales of $18,358,000 for the first quarter of 2009 ended March 31, compared to $22,749,000 in the year-earlier period. First quarter earnings were $1,185,000 or $0.13 per diluted share versus $1,786,000 or $0.18 per diluted share in the same period of 2008.

Bernard P. (Bernie) Aldrich, chief executive officer, commented: “Rimage’s first quarter operating results continued to be affected by the global economic downturn. We are experiencing lengthened selling lead times for our disc publishing hardware due to the hesitancy of many existing and prospective customers to purchase capital equipment. In addition, our customers are managing their inventories of consumable supplies in a cautious manner, reflecting reduced consumption of blank discs and replacement printer ribbons/cartridges used in retail and other applications. Rimage’s first quarter gross margin benefited from a shift in product mix and reduced costs related to improvements to our products that have further strengthened their performance and reliability. Our first quarter earnings also benefited from the actions we have taken in recent quarters to streamline our cost structure. Primarily due to our emphasis on cost control, selling, general and administrative expense has been reduced by approximately $1.3 million in comparison to last year’s first quarter. At the same time, we have increased spending on product development, reflecting our commitment to further strengthen Rimage’s position for future growth.”

He added: “We see promising opportunities for our disc publishing systems in the government market, archiving and video applications, and electronic medical records. We also are continuing to evaluate new business opportunities. Spearheading this process is Sherman L. Black, Rimage’s new president and chief operating officer, who previously served as senior vice president, marketing and strategy, of the Core Products Business Group of Seagate Technology. Having started in his new capacity in early April, Sherman also will play a key role in formulating a long-range strategic plan. With cash and investments of approximately $97 million at the end of this year’s first quarter, we possess ample resources for supporting our growth initiatives.”

Financial Review
Recurring revenues, including sales of printer ribbons and cartridges, parts, blank CD/DVD media and maintenance contracts, declined 17% in this year’s first quarter in comparison to the year-earlier period and accounted for 64% of sales, compared to 62% in the first quarter of 2008. Recurring revenues have accounted for a higher than normal proportion of total sales over the past year due to reduced demand for disc publishing hardware as a result of the recession.

International sales declined 10% in this year’s first quarter and accounted for 48% of total sales, compared to 43% in the year-earlier period. Currency effects decreased worldwide sales by 5% in the first quarter of 2009.

Cash and investments totaled $96.7 million at March 31, 2009, up from $95.4 million at the beginning of this year, reflecting the cash-generating ability of Rimage’s business. Working capital was $71.7 million at the end of the first quarter, compared to $62.1 million at the end of 2008. In addition, stockholders’ equity increased to $110.3 million at March 31, 2009 from $109.0 million at December 31, 2008.