Rimage: Fiscal 4Q08 Financial Results

Rimage Corporation 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.