ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Rimage Corporation ("Rimage") is a leading provider of CD recordable ("CD-R") and DVD recordable ("DVD-R") publishing systems required for producing discs with customized digital content on an on-demand basis. Rimage's publishing systems, which include equipment to handle a full range of low to high production volumes, incorporate robotics, software and custom printing technology for disc labeling. Rimage focuses its CD-R and DVD-R publishing solutions on a set of vertical markets with special needs for customized, on-demand digital information such as digital photography, banking and finance, government, business offices, and medical imaging.
Incorporated as IXI, Inc. in Minnesota in February 1987, Rimage has focused on digital storage production equipment since its inception. From 1987 until the introduction of its first CD-R production equipment in 1995, most of Rimage's products consisted of diskette and tape duplication equipment. Rimage also generated a significant portion of its revenue from CD-ROM and diskette duplication and production services from 1993 until 1999. Rimage also engaged in other lines of business, including development of browser and archiving software and distribution of CD-ROM stamping presses.
Since 1995, Rimage has focused its business on development and sale of its CD-R publishing systems. In 1997, Rimage ceased distribution activities for CD-ROM stamping presses and terminated browser and archiving software development. During the third quarter of 1998, Rimage ceased operations of its Minnesota services business and sold the equipment and inventory associated with that business. On June 30, 1999, Rimage ceased operations of its Colorado services business and sold all the assets associated with that business. The resources previously applied to these businesses were instead applied to development and sales of CD-R and DVD-R products, primarily for commercial applications.
On March 1, 2000, Rimage acquired Cedar Technologies, Inc. ("Cedar") and issued 497,496 shares of its common stock for all of the outstanding shares of Cedar. Cedar had developed and manufactured CD-R publishing and duplication equipment for desktop applications that sold at a lower price point than the higher volume systems sold by Rimage. The Cedar operations have continued as Rimage's desktop operations.
Rimage's operations during the past five years have been affected by the timing of the foregoing acquisitions and subsequent phasing out of unprofitable operations, new product introductions and the expenses associated with development of such new products, and by changes in preferred formats for media storage. The shift from diskette to CD-R/DVD-R storage technologies precipitated the introduction of Rimage's CD-R products in 1995 and DVD-R products in 2000.
PRODUCTS
Rimage's products are designed to automate manual processes, resulting in a reduction of labor and training costs for users of the products. The principal benefits to users of Rimage's products are reduced operational costs, higher throughput than alternative systems, and higher quality. One of the essential elements of Rimage's marketing and development is to provide users with a path for upgrading to future enhancements and additional capabilities. Rimage has made a long-term commitment to its customers by providing maintenance service contracts, replacement parts, and repair service to customers for current as well as past products.
Sales of CD-R/DVD-R production equipment comprised 74%, 79%, and 73% of Rimage's revenue from continuing operations during the 2001, 2000, and 1999 calendar years, respectively. Rimage's other major sources of revenue consist of consumables, maintenance contracts and diskette equipment sales.
Since the acquisition of Cedar, Rimage's CD-R and DVD-R products have been divided into two product lines: the producer line of higher volume equipment for commercial CD-R, DVD-R production, and the desktop line of lower cost products for office and other desktop applications. The Producer line of products continue to generate the
majority of Rimage's revenue, contributing $23,979,000 or 62% of Rimage's revenue during the year ended December 31, 2001. The desktop line contributed $4,706,000 or 12% of revenue during 2001. The balance of revenue was generated through sale of consumables and services.
THE PRODUCER LINE. The Producer CD-R/DVD-R product line consists of a growing family of products that cover a broad range of requirements for the publishing and duplication of CD-R's and DVD-R's. Each Producer Product incorporates CD-R or DVD-R recorders, or both, with Rimage's customized robotics, Rimage's new re-transfer thermal printer for on-disc color printing, Rimage's unique publishing and handling software, and computer hardware components.
Rimage offers its Producer line of products in a variety of configurations to meet the varying needs of its commercial customers. The Producer Prostar(TM) provides industry leading speed and throughput for on-demand CD-R/DVD-R production utilizing up to eight simultaneous data streams. The Prostar also includes Rimage's high resolution integrated thermal printer for full color, indelible instant-dry printing that keeps pace with high volumes and custom software for graphics alignment and implementation. The Producer Autostar provides similar functionality and features with any combination of four CD-R/DVD-R recorders and a 300 disc capacity. The Protege system comes standard with two CD-R recorders that may be interchanged with DVD-R recorders. The Amigo is the least costly member of the Producer family's full production machines and comes with one recorder. The Autostar, Protege and Amigo are all available with either Rimage's Everest or Prism printers.
Introduced in July 2001, the Everest printer was developed to meet the need of customers for an on-demand surface printer able to produce color labels with quality similar to offset and silkscreen printing systems. Rimage's robust Prism Printer provides laser quality color printing on standard CD-R/DVD-R media for in-house, customized printing. The Prism is capable of printing full color CDs with indelible images every fifty seconds. The Producer line also includes Autoprinters that incorporate either an Everest or Prism printer.
THE DESKTOP LINE. Acquired through the acquisition of Cedar Technologies, Inc., Rimage's Desktop line of CD-R/DVD-R products features economical pricing, a compact "desktop" design, user-friendly software, customizable software tools, network compatibility and stand-alone plug-and-play units ideal for office environments. For low-volume users, the Desktop line of products offers single-drive recorder units. Complete four-drive publishing systems are available for higher-volume users. The desktop line also includes an Autoprinter, a 1200 dpi inkject printer capable of full color printing on CD-R discs.
MARKETING AND DISTRIBUTION
Rimage utilizes three principal means of distribution for its products: an international and domestic distributor network, a value added reseller (VAR) network, and inside sales.
Rimage's sales force focuses primarily on building and supporting the distribution channel; the distributor network sells to and supports all size users; the VAR network is used to distribute the CD-R/DVD-R products within industry specific environments; and inside sales focuses on the sale of maintenance contracts and consumables.
During 2001, Rimage derived 18% and 13% of its revenues from Optical Laser and New Wave Technologies, respectively. Each of these customers is a third party distributor of Rimage. During 2000, Rimage derived 13% and 16% of its revenues from Optical Laser and New Wave Technologies.
Rimage conducts foreign sales and services through its U.S. operation and its subsidiary in Germany, Rimage Europe GmbH. Foreign sales constituted approximately 40%, 30%, and 32% of Rimage's revenue for the years ended December 31, 2001, 2000, and 1999, respectively.
COMPETITION
Rimage competes with a growing number of manufacturers of CD-R production equipment and related products. Rimage is able to compete effectively in the sale of CD-R production equipment because of technological leadership in automated solutions and its early start within the CD-R production equipment industry. Rimage believes that the quality printing capabilities for CD/DVD, its transporter mechanisms and its software differentiate its products from those of competitors.
MANUFACTURING
Rimage's manufacturing operations consist primarily of the assembly of products from components purchased from third parties. Some parts are stock "off-the-shelf" components and others are manufactured to Rimage's specifications. Rimage's employees at its facility in Edina, Minnesota conduct final assembly operations. Components include CD-R drives, circuit boards, electric motors, and machined and molded parts.
Although Rimage believes it has identified alternative assembly contractors for most of its subassemblies, an actual change in such contractors would likely require a period of training and test. Accordingly, a sudden interruption in a supply relationship or the production capacity of one or more of such contractors could result in Rimage's inability to deliver one or more products for a period of several months.
RESEARCH AND DEVELOPMENT
There are 27 people involved in research and development at Rimage's various locations. This staff, with software, electronic, mechanical and drafting capabilities engages in research and development of new products, and development of enhancements to existing products.
The microcomputer industry served by Rimage is subject to rapid technological changes. Alternate data storage media exist or are under development, including high capacity hard drives, new CD technologies, file servers accessible through computer networks, and the Internet. All these forces may affect the usage of CD-R and DVD-R media. Rimage believes that it must continue to innovate and anticipate advances in the storage media industry in order to remain competitive.
Rimage's expenditures for engineering and development were $3,901,000, $3,551,000, and $3,020,000 in 2001, 2000, and 1999 (or 10.0%, 7.1%, and 7.3% of revenues, respectively). Rimage anticipates maintaining its expenditures in research and development within the range of 7% of revenues during 2002.
PATENTS AND GOVERNMENT REGULATION
Rimage is the owner of seventeen patents, has four patents pending and has license rights to another ten patents. In addition, Rimage protects the proprietary nature of its software primarily through copyright and license agreements and through close integration with its hardware offerings. It is Rimage's policy to protect the proprietary nature of its new product developments whenever they are likely to become significant sources of revenue. No guarantee can be given that Rimage will be able to obtain patent or other protection for other products.
As the number of Rimage's products increase and the functionality of those products expands, Rimage believes that it may become increasingly subject to attempts by others to duplicate its proprietary technology and to the possibility of infringement claims. In addition, although Rimage does not believe that any of its products infringe the rights of others, there can be no assurance that third parties will not assert infringement claims against Rimage in the future or that any such assertion will not require Rimage to enter into a royalty arrangement or result in litigation.
The FCC requires some of Rimage's equipment meet radio frequency emission standards. Rimage has the necessary certification.
EMPLOYEES
At December 31, 2001, Rimage had 127 full-time employees, of whom 27 were involved in research and development, 43 in manufacturing, assembly, testing and customer service, and 57 in sales, administration and management. None of Rimage's employees are represented by a labor union or are covered by a collective bargaining agreement. Rimage believes its relationship with employees is good.
ITEM 2.
ITEM 2. PROPERTIES
Rimage headquarters are located in a leased facility of 43,000 square feet at 7725 Washington Avenue South, Edina, Minnesota 55439. The operating lease contains a sixty-two month term for this facility ending September 30, 2003,
which is owned by a related party (see note 8 to the consolidated financial statements). Rent is $7.37 per square foot per year, plus taxes and common area charges of $3.00 per square foot per year. Rimage also leases a facility in Dietzenbach, Germany. These facilities are used for manufacturing, engineering, service and sales.
Rimage terminated operating leases on its Bloomington, MN and former Cedar Technologies facilities during April and June 2001, respectively.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
Rimage is not a party to any litigation that may have a material adverse effect on Rimage, its business, or its financial condition.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Rimage did not submit any matters to a vote of security holders during the last quarter of the fiscal year covered by this report.
PART II
ITEM 5.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Rimage's common stock is traded on the NASDAQ National Market under the symbol "RIMG". The following table sets forth, for the periods indicated, the range of low and high prices for Rimage's common stock as reported on the NASDAQ System.
Low High --- ---- Calendar Year 2000: 1st Quarter................ $10.000 $19.750 2nd Quarter............... 12.750 22.000 3rd Quarter............... 14.563 24.875 4th Quarter............... 7.625 19.484
Calendar Year 2001: 1st Quarter................ 8.250 12.000 2nd Quarter............... 7.250 10.000 3rd Quarter............... 6.000 8.940 4th Quarter............... 5.810 8.350
SHAREHOLDERS At March 25, 2002, there were 94 record holders of Rimage's common stock, and management believes that there are approximately 2,300 beneficial holders of Rimage's common stock.
DIVIDENDS Rimage has never paid or declared any cash dividends on its common stock and does not intend to pay cash dividends on its common stock in the foreseeable future. Rimage presently expects to retain its earnings to finance the development and expansion of its business. The payment by Rimage of dividends, if any, on its common stock in the future is subject to the discretion of the Board of Directors and will depend on Rimage's continued earnings, financial condition, capital requirements and other relevant factors.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The percentage relationships to revenues of certain income and expense items for the three years ended December 31, 2001 and the percentage changes in these income and expense items between years are contained in the following table:
RESULTS OF OPERATIONS Rimage develops, manufactures and distributes high performance CD-Recordable (CD-R) and DVD-Recordable (DVD-R) publishing and duplication systems and continues to support its long-term involvement in diskette duplication and publishing equipment.
On March 1, 2000, Rimage completed the acquisition of Cedar Technologies, Inc. ("Cedar"). This acquisition was accounted for using the pooling-of-interests method of accounting. Accordingly, all years have been restated to include the operations and balances of Cedar.
Until June 1999, Rimage had two primary divisions: The Systems Division and the Services Division. On June 30, 1999, Rimage discontinued its Services Division with the sale of the assets of its Rimage Boulder subsidiary. The consolidated financial statements reflect the net operating results of the Services Division net of applicable income taxes, as "Income (loss) from operations of discontinued Services Division" and the net cash flows of the Services Division within the section "Net cash provided by operating activities" and after the section "Net cash provided by (used in) financing activities". The comments herein pertain to Rimage's continuing operations (its Systems Division), unless otherwise stated.
REVENUES. Revenues were $38.9 million, $49.8 million, and $41.4 million for 2001, 2000, and 1999, respectively, reflecting changes of (21.9)%, 20.4%, and 31.8%, respectively, over the prior years. The decrease in revenues from 2000 to 2001 was primarily the result of the absence of sales within the music-on-demand and photography industries during 2001. Revenues during 2001 were also negatively impacted by a noticeable slowdown in capital spending activities as a result of a weakened economy. CD-R/DVD-R equipment only sales totaled $28.7 million during 2001, reflecting a 26.6% decrease from 2000. The revenue increases during 2000 and 1999 were a result of continued growth within our worldwide channel program. CD-R/DVD-R equipment only sales totaled $39.1 million and $30.1 million during 2000 and 1999, respectively, reflecting 29.9% and 35.0% increases, respectively, over the prior years.
GROSS PROFIT. Gross profit as a percentage of revenues was 49.4%, 53.3%, and 50.9% during 2001, 2000, and 1999, respectively. The decrease in 2001 was primarily due to lower sales volumes and increased inventory reserves associated with the Producer 2000 line of products, which was replaced with the new Producer II line of products. The decrease in gross profit as a percentage of revenues was also due to increased European sales outside Germany. These sales carry a lower margin associated with selling through a distribution network. The increase in 2000 is due to sales volume increases of our equipment offset by the continued strategic shifting of our European distribution from direct selling to selling through value added resellers (VAR's). Rimage anticipates that its future gross profit percentages will continue to be affected by many factors, including product mix, the timing of new product introductions and manufacturing volume.
OPERATING EXPENSES. Total operating expenses for 2001, 2000, and 1999 were $12.8 million, $14.2 million, and $12.2 million, respectively, representing 32.8%, 28.6%, and 29.5% of revenues, respectively. A non-recurring merger related expense of $541,000 is included in the results of operations for 2000. This non-recurring charge was related to acquisition expenses associated with the Cedar transaction. Excluding this non-recurring charge, the operating expenses for 2000 would have represented 27.5% of revenues.
Research and development expenses were $3.9 million, $3.6 million, and $3.0 million for 2001, 2000, and 1999, respectively, representing 10.0%, 7.1%, and 7.3% of revenues, respectively. The dollar increases are a result of increased personnel and development materials needed to manage the increasing number of projects Rimage has undertaken over the years. During the second half of 2000 and the first half of 2001, Rimage devoted considerable resources towards developing its Producer II line of products containing the new Everest printer accounting for the dollar increases. Rimage anticipates its research and development expenditures to be within the range of 7% of revenues during 2002.
Selling, general and administrative expenses were $8.9 million, $10.2 million, and $9.2 million for 2001, 2000, and 1999, respectively, representing 22.8%, 20.4%, and 22.2% of revenues, respectively. The decrease in dollars during 2001 was primarily due to the reversal of $240,000 previously accrued for a vacated leased facility that was subleased in July of 2001 coupled with targeted workforce reductions and significantly reduced management bonuses. The dollar increase during 2000 primarily reflects incentives associated with selling activities and additional personnel related to overall business growth.
OTHER INCOME, NET. For 2001, 2000, and 1999 interest income was $1,111,000, $1,088,000, and $386,000, respectively. See "Liquidity and Capital Resources" below for a discussion of cash levels. Other income was negatively impacted by foreign currency transaction losses during 2001, 2000 and 1999.
INCOME FROM CONTINUING OPERATIONS. For 2001, 2000, and 1999, income from continuing operations were $4.8 million, $8.2 million, and $6.0 million, respectively, representing 12.4%, 16.6%, and 14.4% of revenues, respectively. The decrease during 2001 primarily represented the absence of CD-R related product sales into the music-on-demand and photography industries coupled with a noticeable slowdown in capital spending activities as a result of a weakened economy. The dollar increase during 2000 primarily reflects increased revenues from sales into the music-on-demand industry.
INCOME TAXES. The provision for income taxes represents federal, state, and foreign income taxes on earnings before income taxes. For 2001, 2000, and 1999, income tax expense amounted to $2.6 million, $5.1 and $3.4 million, respectively, representing 35%, 38%, and 36% of income before income taxes, respectively. The Company recognized benefits of research and development and foreign tax credits during 2001. The Company anticipates an effective tax rate of 35% during 2002.
NET INCOME. Net income was $4.8 million (or $0.51 per diluted share) for 2001, compared to $8.2 million (or $0.85 per diluted share) for 2000 and $6.5 million (or $0.68 per diluted share) for 1999. Excluding $541,000 of non-recurring charges in 2000, net income would have been $8.8 million (or $0.91 per diluted share).
LIQUIDITY AND CAPITAL RESOURCES Rimage expects to fund its anticipated cash requirements (including the anticipated cash requirements of its capital expenditures) with internally generated funds and, if required, from Rimage's existing credit agreement.
Current assets increased to $38.8 million as of December 31, 2001 from $35.7 million as of December 31, 2000, primarily reflecting normal operating activity. The allowance for doubtful accounts and sales returns as a percentage of receivables increased to 12.5% as of December 31, 2001 from 5.6% as of December 31, 2000, primarily reflecting increased sales return activity due to new product introductions. Current liabilities decreased slightly to $5.2 million as of December 31, 2001 from $5.6 million as of December 31, 2000 primarily reflecting a reduction in executive bonuses.
Net cash provided by operating activities was $9.2, $6.2 million, and $5.9 million during 2001, 2000, and 1999, respectively. The changes in cash flow from operating activities from 1999 through 2001 were primarily due to the timing of cash collections from our customers.
Net cash (used in) provided by investing activities was $(24.7) million, $(337,000), and $56,000 during 2001, 2000, and 1999, respectively. Cash used in investing activities during 2001 primarily reflected purchases of short-term investments combined with payments made towards tooling for the Everest printer. Cash used in investing activities during 2000 primarily reflected capital expenditures. Cash provided by investing activities during 1999 resulted from net sales of property, equipment and intangibles. At December 31, 2001 Rimage had no significant commitments to purchase additional capital equipment.
Net cash (used in) provided by financing activities was $(700,000), $1.8 million, and $(808,000) during 2001, 2000, and 1999, respectively. Cash used in financing activities during 2001 primarily reflected cash payments to acquire Company stock netted with proceeds from stock option exercises. Cash provided by financing activities during 2000 reflected proceeds from stock option and warrant exercises. Cash used in financing activities during 1999 primarily related to cash payments to acquire Company stock netted with proceeds from stock option exercises.
Please refer to our lease footnote (note 9) for a detail of the Company's contractual cash obligations at December 31, 2001. The Company has a term note agreement with a bank. The agreement allows for advances under a revolving loan up to a maximum advance of $5,000,000 and is effective until June 30, 2002. No amounts have been outstanding since the establishment of the term note agreement.
On June 30, 1999, Rimage completed the sale of the assets of its Rimage Boulder subsidiary to Advanced Duplication Services, Inc. for $2,050,000 in cash.
Rimage believes that inflation has not had a material impact on its operations or liquidity to date.
CRITICAL ACCOUNTING POLICIES Management utilizes its technical knowledge, cumulative business experience, judgment and other factors in the selection and application of the Company's accounting policies. The following accounting policies are considered by management to be the most critical to the presentation of the consolidated financial statements because they require the most difficult, subjective and complex judgments:
ALLOWANCE FOR DOUBTFUL ACCOUNTS AND SALES RETURNS. The Company records a reserve for accounts receivable which are potentially uncollectible. The reserve is established by estimating the amounts that are potentially uncollectible based on a review of customer accounts, the age of the receivable, the customer's financial condition and industry, and general economic conditions. The Company also records a reserve for sales returns from its customers. The amount of the reserve is based upon historical trends, timing of new product introductions and other factors. Results could be materially different if economic conditions worsened for the Company's customers.
INVENTORY RESERVES. The Company records reserves for inventory shrinkage and for potentially excess, obsolete and slow moving inventory. The amounts of these reserves are based upon historical loss trends, inventory levels, physical inventory and cycle count adjustments, expected product lives and forecasted sales demand. In 2001, obsolescence charges of approximately $250,000 were taken on Producer I inventory due to the introduction of the Producer II family of products. Results could be materially different if demand for the Company's products decreased because of economic or competitive conditions, or if products became obsolete because of technical advancements in the industry or by the Company.
DEFERRED TAX ASSETS. The Company recognizes deferred tax assets for the expected future tax impact of temporary differences between book and taxable income. A valuation allowance and income tax charge are recorded when, in management's judgment, realization of a specific deferred tax asset is uncertain. Income tax expense could be materially different from actual results because of changes in management's expectations regarding future taxable income, the relationship between book and taxable income and tax planning strategies employed by the Company.
WARRANTY RESERVES. The Company records a liability for warranty claims at the time of sale. The amount of the liability is based on the trend in the historical ratio of claims to sales, the historical length of time between the sale and resulting warranty claim, anticipated releases of new products and other factors. Claims experience could be materially different from actual results because of the introduction of new, more complex products; a change in the Company's warranty policy in response to industry trends, competition or other external forces; or manufacturing changes that could impact product quality.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standard No. 133 "Accounting for Derivative Instruments and Hedging Activities" as amended establishes new standards for recognizing all derivatives as either assets or liabilities, and measuring those
instruments at fair value. Rimage adopted SFAS No. 133 as of January 1, 2001. Adoption did not have a material impact on Rimage's financial position or results of operations.
In August 2001, the Financial Accounting Standards Board issued FASB Statement No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS (Statement 144), which supersedes both FASB Statement No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF (Statement 121) and the accounting and reporting provisions of APB Opinion No. 30, REPORTING THE RESULTS OF OPERATIONS--REPORTING THE EFFECTS OF DISPOSAL OF A SEGMENT OF A BUSINESS, AND EXTRAORDINARY, UNUSUAL AND INFREQUENTLY OCCURRING EVENTS AND TRANSACTIONS (Opinion 30), for the disposal of a segment of a business (as previously defined in that Opinion). Statement 144 retains the fundamental provisions in Statement 121 for recognizing and measuring impairment losses on long-lived assets held for use and long-lived assets to be disposed of by sale, while also resolving significant implementation issues associated with Statement 121. Statement 144 also retains the basic provisions of Opinion 30 on how to present discontinued operations in the income statement but broadens that presentation to include a component of an entity (rather than a segment of a business). Unlike Statement 121, an impairment assessment under Statement 144 will never result in a write-down of goodwill. Rather, goodwill is evaluated for impairment under Statement No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS. The Company is required to adopt Statement 144 no later than the year beginning after December 15, 2001, and plans to adopt its provisions for the quarter ending March 31, 2002. Management does not expect the adoption of Statement 144 to have a material impact on the Company's financial statements because the impairment assessment under Statement 144 is largely unchanged from Statement 121.
In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141 "Business Combinations," and SFAS No. 142 "Goodwill and Other Intangible Assets," which change the accounting for business combinations and goodwill. SFAS No. 141 requires that the purchase method of accounting be used for business combinations initiated after June 30, 2001. Use of the pooling-of-interests method will be prohibited. SFAS No. 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. The Company is currently evaluating SFAS No. 142, but does not expect that they will have a material impact on the Company's financial position or results of operations.
FORWARD LOOKING STATEMENTS
Some of the statements in this Annual Report and in the Company's press releases and oral statements made by or with the approval of the Company's executive officers constitute or will constitute "forward looking statements". All forward looking statements involve risks and uncertainties, and actual results may be materially different. The following factors are among those that could cause the Company's actual results to differ materially from those set forth in such forward looking statements.
o The markets for computer and associated storage media have historically changed rapidly and a reduction in industry prominence from CD-R or DVD-R media, or the introduction of superior media, would significantly negatively impact the Company's operations and prospects.
o Approximately 40% of the Company's revenue is attributable to foreign operations, primarily in Europe, and a majority of these sales are invoiced in foreign currencies. Such operations are subject to the affects of currency fluctuations, factors affecting local economic health, and the difficulties of managing operations from long distances.
o Although the Company has obtained patent protection on some of its products, it has periodically been subject to competition from others who have copied its products or otherwise used technology that may infringe the Company's rights. There are a number of companies that claim intellectual property rights in the industry in which the Company competes and the Company cannot predict in advance that it will be able to protect its products from the competing claims of others or will not be required to pay others for use of technology for which they claim rights.
o The Company sells its products through a large number of distributors, value added resellers and dealers and its quarterly operations may be affected by the operating results of some of these channel partners and by its ability to keep its channel partners properly trained and actively selling its products.
o The Company's products must operate with a number of other computer and related equipment and the Company must maintain compatibility and interoperability with the products of others, as well as new product introductions.
o The Company's operations are periodically affected by introductions of new products by competitors.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
DERIVATIVE FINANCIAL INSTRUMENTS. The Company enters into forward exchange contracts principally to hedge the eventual dollar cash flow of foreign currency denominated transactions (principally European euro) with Rimage Europe, a German based subsidiary. Gains or losses on forward exchange contracts are recognized in income on a current basis over the term of the contracts. The Company does not utilize financial instruments for trading or other speculative purposes.
EXCHANGE RATE SENSITIVITY
The table below summarizes information on foreign currency forward exchange agreements that are sensitive to foreign currency exchange rates. For these foreign currency forward exchange agreements, the table presents the notional amounts and weighted average exchange rates by expected (contractual) maturity dates. These notional amounts generally are used to calculate the contractual payments to be exchanged under the contract.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FINANCIAL STATEMENTS Page in 2001 Annual Report to Shareholders ------------
Independent Auditors' Report.................... 13
Consolidated Balance Sheets, as of December 31, 2001 and 2000...................... 14
Consolidated Statements of Operations, for the years ended December 31, 2001, 2000 and 1999................................... 15
Consolidated Statements of Stockholders' Equity and Comprehensive Income, for the years ended December 31, 2001, 2000 and 1999............................................ 16
Consolidated Statements of Cash Flows, for the years ended December 31, 2001, 2000 and 1999................................... 17-18
Notes to Consolidated Financial Statements...................................... 19-33
INDEPENDENT AUDITORS' REPORT
The Board of Directors Rimage Corporation:
We have audited the accompanying consolidated balance sheets of Rimage Corporation and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, stockholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2001. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Rimage Corporation and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP
Minneapolis, Minnesota February 8, 2002
RIMAGE CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2001 and 2000
See accompanying notes to consolidated financial statements
RIMAGE CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations Years Ended December 31, 2001, 2000 and 1999
See accompanying notes to consolidated financial statements
RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity and Comprehensive Income
Years Ended December 31, 2001, 2000, and 1999
See accompanying notes to consolidated financial statements.
RIMAGE CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows Years ended December 31, 2001, 2000, and 1999
(Continued)
RIMAGE CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows, Continued Years ended December 31, 2001, 2000, and 1999
See accompanying notes to the consolidated financial statements
RIMAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) Nature of Business and Summary of Significant Accounting Policies
Basis of Presentation and Nature of Business
The consolidated financial statements include the accounts of Rimage Corporation and its subsidiaries, collectively hereinafter referred to as Rimage or the Company. All material intercompany accounts and transactions have been eliminated upon consolidation.
The Company develops, manufactures and distributes high performance CD-Recordable (CD-R) and DVD-Recordable (DVD-R) publishing and duplication systems, and continues to support its long-term involvement in diskette duplication and publishing equipment.
On March 1, 2000, the Company acquired 100% of the outstanding stock of Cedar Technologies, Inc. ("Cedar"), a manufacturer of CD-R desktop publishing and duplication equipment. The business combination has been accounted for as a pooling-of-interests, and accordingly, the consolidated financial statements for periods prior to the combination have been restated to include the accounts and results of operations of Cedar (see note 12).
On June 30, 1999, the Company sold the fixed assets, inventory and intangible assets of its wholly owned subsidiary A/G Systems, Inc. d/b/a Duplication Technology, Inc. (Rimage Boulder). This sale, in conjunction with the August 31, 1998 sale of the fixed assets and inventory used in its Bloomington, Minnesota services operation, constitutes the discontinued operations of the Company's Services Division (see note 13).
Revenue Recognition
Revenue is recognized at the time of delivery and acceptance on all equipment orders. The Company provides maintenance services under long-term maintenance contracts. Revenue associated with these contracts is deferred and recognized on a straight-line basis over the terms of the respective contracts.
(Continued)
RIMAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from estimates on items such as allowance for doubtful accounts and sales returns, inventory reserves, deferred tax assets, and warranty reserves.
Cash Equivalents
All short-term investments with original maturities of three months or less at date of purchase are considered cash equivalents.
Marketable Securities
Marketable securities generally consist of U.S. Treasury, asset-backed and corporate securities with long-term credit ratings of AAA and short-term credit ratings of A-1. Marketable securities are classified as short-term or long-term in the balance sheet based on their maturity date. All marketable securities have maturities of fifteen months or less and are classified as available-for-sale. Available-for-sale securities are recorded at fair value and any unrealized holding gains and losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of accumulated other comprehensive loss until realized.
Inventories
Inventories are stated at the lower of cost, determined on a first-in, first-out (FIFO) basis, or market.
Property and Equipment
Property and equipment are stated at cost and depreciated on a straight-line basis over periods of two to seven years. Leasehold improvements are amortized using the straight-line method over the terms of the respective leases. Repairs and maintenance costs are charged to operations as incurred.
(Continued)
RIMAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Stock Based Compensation
The Company accounts for stock based compensation under Accounting Principles Board Opinion No. 25 (APB No. 25), ACCOUNTING FOR STOCKS ISSUED TO EMPLOYEES. Accordingly, no compensation expense had been recognized for its stock-based compensation plans. The Company has adopted the disclosure requirements under Statement of Financial Accounting Standards (SFAS) No. 123, ACCOUNTING AND DISCLOSURE OF STOCK-BASED COMPENSATION.
Software Development Costs
Capitalization of software development costs begins upon the establishment of technological feasibility of the product. The establishment of technological feasibility and the ongoing assessment of the recoverability of these costs require considerable judgment by management with respect to certain external factors, including, but not limited to, anticipated future gross product revenues, estimated economic life, and changes in software and hardware technology.
The Company capitalizes software development costs between the date when project technological feasibility is established (beta stage) and the date when the product is ready for normal production release. All other research and development costs related to software development are expensed as incurred. Software development costs are amortized over the estimated economic life of the product, which ranges from two to five years. Amortization expense is included in cost of goods sold. Included in other noncurrent assets are capitalized software costs of $367,836 as of December 31, 2001 and 2000. Accumulated amortization at December 31, 2001 and 2000 was $367,836 and $363,636, respectively.
Income Taxes
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
(Continued)
RIMAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Net Income Per Share
Basic income per share is calculated as income available to common stockholders divided by the weighted average number of common shares outstanding for the period. Diluted income per share is calculated by dividing the weighted average number of common and assumed conversion shares outstanding during each period. Assumed conversion shares result from dilutive stock options and warrants computed using the treasury stock method.
Translation of Financial Statements in Foreign Currencies
The assets and liabilities for the Company's international subsidiary are translated into U.S. dollars using current exchange rates. The resulting translation adjustments are recorded in the foreign currency translation adjustment account in equity. Statement of operations items are translated at average exchange rates prevailing during the period. Foreign currency transaction gains or losses are included in net income.
Comprehensive Income
Comprehensive income consists of the Company's net income, foreign currency translation adjustment, and unrealized holding gains from available-for-sale investments and is presented in the consolidated statements of stockholders' equity and comprehensive income.
Reclassification
Certain prior year amounts have been reclassified to conform with the current year presentation.
(Continued)
RIMAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2) Fair Value of Financial Instruments
The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments.
Cash and cash equivalents: The carrying amount approximates fair value because of the short maturity of those instruments.
Marketable securities: The fair values are determined using quoted market prices.
Foreign currency forward exchange contracts: The fair value is the amount the Company would receive or pay to terminate the contracts at the reporting date. The fair value of foreign currency forwards is $11,000 and $0 at December 31, 2001 and 2000, respectively.
Trade accounts receivable and accounts payable: The carrying amount approximates fair value because of the short maturity of those instruments.
3) Marketable Securities
The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of available-for-sale securities by major security type and class of security at December 31, 2001 were as follows:
(Continued)
RIMAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4) Inventories
Inventories consist of the following as of December 31:
2001 2000 - --------------------------------------------------------------------------------
Finished goods and demonstration equipment $ 1,179,963 $ 1,239,034 Work-in-process 495,245 323,785 Purchased parts and subassemblies 1,949,493 1,373,300 - -------------------------------------------------------------------------------- $ 3,624,701 $ 2,936,119 ================================================================================
5) Note Payable To Bank
The Company has a term note agreement (the Credit Agreement) with a bank. The Credit Agreement allows for advances under a revolving loan based on various percentages of qualified asset (primarily accounts receivable and inventory) amounts, up to a maximum advance of $5,000,000 and is effective until June 30, 2002. There were no outstanding borrowings under this revolving loan as of December 31, 2001 or 2000.
The Credit Agreement contains various covenants pertaining to minimum tangible net worth and current, leverage and fixed charge coverage ratios. The Company is in compliance with all covenants at December 31, 2001.
(Continued)
RIMAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6) Income Taxes
The provision for income tax expense consists of the following:
Total tax expense differs from the expected tax expense, computed by applying the federal statutory rate of 35% to earnings before income taxes as follows:
(Continued)
RIMAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The tax effects of temporary differences that give rise to significant portions of deferred tax assets as of December 31, are presented below:
2001 2000 - --------------------------------------------------------------------------------
Inventories $ 327,000 269,000 Gross margin recognition on sale to foreign subsidiary 298,000 247,000 Accounts receivable 230,000 187,000 Accrued payroll 68,000 62,000 Uniform capitalization 65,000 21,000 Deferred maintenance 42,000 9,000 Warranty accrual 32,000 26,000 Amortization 31,000 60,000 Fixed assets 6,000 86,000 Accrued rents - 118,000 Other 22,000 - - -------------------------------------------------------------------------------- Total deferred tax assets $1,121,000 1,085,000 - --------------------------------------------------------------------------------
(Continued)
RIMAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7) Stockholders' Equity
Stock Options
Rimage has two stock option plans that allow for the granting of options to purchase shares of common stock to certain key administrative, managerial and executive employees and the automatic periodic grants of stock options to non-employee directors. Options under these plans may be either incentive stock options or non-qualified options. Pursuant to this plan, the following options are currently issued and outstanding:
(Continued)
RIMAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table summarizes exercise prices of exercisable options as of December 31, 2001:
- ---------------------------------------------------------------- Weighted Number Average Exercise Price Range Of Options Exercise Price - ---------------------------------------------------------------- $ 1.33 $ 1.33 527,050 $ 1.33
$ 2.08 $ 2.76 491,509 $ 2.68
$ 4.39 $ 6.50 6,500 $ 5.13
$ 6.85 $ 10.25 382,265 $ 9.10
$ 17.00 $ 17.00 15,000 $ 17.00 --------------- ------------- 1,422,324 $ 4.07
- ----------------------------------------------------------------
The exercisable options have a weighted average contractual life of 7.0 years.
The following table calculates the fair market value of options granted on the date of grant using the Black-Scholes option pricing model:
(Continued)
RIMAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company applies APB No. 25 and related interpretations in accounting for its plans. Accordingly, no compensation expense has been recognized for its stock-based compensation plans. Had the Company determined compensation cost based on the fair value at the grant date for its stock options under SFAS No. 123, the Company's 2001, 2000 and 1999 net income and basic and diluted earnings per share would have been adjusted to the proforma amounts stated below:
Employee Stock Purchase Plan
In February 2001, the Company's board of directors adopted, and our shareholders approved in May 2001, the Employee Stock Purchase Plan (ESPP). A total of 300,000 common shares were reserved for issuance under the ESPP. The ESPP allows employees to elect, at one year intervals, to contribute between 1 and 10% of their compensation, subject to certain limitations, to purchase shares of common stock at the lower of 85% of the fair market value on the first day or last day of each one year period. At December 31, 2001, no shares have been issued under this plan.
(Continued)
RIMAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8) Net Income Per Share
The components of net income per basic and diluted share are as follows:
9) Leases
The future minimum lease payments excluding operating expenses and real estate taxes as of December 31, 2001 are:
Rent expense under operating leases amounted to approximately $556,000, $951,000, and $750,000, respectively, for the years ended December 31, 2001, 2000, and 1999.
(Continued)
RIMAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10) Profit Sharing and Savings Plan
Rimage has a profit sharing and savings plan under Section 401(k) of the Internal Revenue Code. The plan allows employees to contribute up to 16% of pretax compensation. The Company matches a percentage of employees' contributions. Matching contributions totaled $167,715, $168,314, and $142,957 in 2001, 2000, and 1999, respectively.
11) Major Customers
The Company derived approximately $6,993,000 and $5,229,000 of its 2001 sales from two unaffiliated customers and had receivable balances of $971,000 and $709,000, respectively as of December 31, 2001. The Company derived approximately $8,169,000 and $6,296,000 of its 2000 sales from two unaffiliated customers and had receivable balances of $1,696,000 and $1,055,000, respectively as of December 31, 2000.
12) Acquisition
On March 1, 2000, the Company issued 497,496 shares of its common stock in exchange for all outstanding stock of Cedar Technologies, Inc. ("Cedar"), a manufacturer of CD-R desktop publishing and duplication equipment. The Company also assumed the obligations to issue 224,064 shares of its common stock upon exercise of outstanding options of Cedar and 177,894 shares of its common stock upon exercise of outstanding warrants of Cedar. The business combination has been accounted for as a pooling-of-interests combination, and accordingly, the consolidated financial statements for periods prior to the combination have been restated to include the accounts and results of operations of Cedar.
(Continued)
RIMAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The results of operations previously reported by the separate enterprises are summarized below:
- ------------------------------------------------------------------- (Amounts in thousands) Year Ended December 31, 1999 Net sales Rimage $ 36,314 Cedar 5,041 --------------------------
Combined $ 41,355 ========================== Income from continuing operations Rimage $ 5,854 Cedar 108 --------------------------
Combined $ 5,962 ==========================
- -------------------------------------------------------------------
13) Discontinued Operations
On June 30, 1999, the Company sold the remaining assets of its Services Division. The consolidated financial statements of the Company have been reclassified to reflect the dispositions of the companies that comprised the Company's Services Division business segment. This segment included the Company's Bloomington, Minnesota services operation and Rimage Boulder. Accordingly, the revenues, costs and expenses, assets and liabilities, and cash flows of the Services Division have been excluded from the respective captions in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows. The net operating results of the Services Division have been reported, net of applicable income taxes, as "Income from operations of discontinued Services Division".
(Continued)
RIMAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Summarized financial information for the discontinued operation, is as follows:
For the year ended December 31 (in thousands) 1999 ------------------------------------------------------------------------
Revenues $ 2,322 Income from discontinued operations net of income tax expense of $105 $ 186
Gain on disposal, net of income tax expense of $609 $ 303 ------------------------------------------------------------------------
14) Commitments and Contingencies
The Company is exposed to a number of asserted and unasserted claims encountered in the normal course of business. In the opinion of management, the resolution of these matters will not have a material adverse effect on the Company's financial position or results of operations.
15) Supplemental Quarterly Data - Unaudited (dollars in thousands, except per share data)
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None. PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors, executive officers, promoters and control persons of the Company is set forth under "Election of Directors" in the Company's definitive proxy statement for its 2002 Annual Meeting of Shareholders, to be filed by April 30, 2002 and is incorporated herein by reference. Information regarding compliance with Section 16(a) of the Securities Exchange Act of 1934 by the directors, executive officers and beneficial owners of more than ten percent of the common stock of the Company is set forth under "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's definitive proxy statement for its 2002 Annual Meeting of Shareholders, to be filed by April 30, 2002, and is incorporated herein by reference.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding compensation of directors and executive officers of the Company is set forth in the section entitled "Board Committee and Actions" under "Election of Directors" and the sections entitled "Summary Compensation Table", "Stock Options", and "Retirement Savings Plan" under "Executive Compensation" in the Company's definitive proxy statement for its 2002 Annual Meeting of Shareholders, to be filed by April 30, 2002, and is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial owners and management is set forth under "Beneficial Ownership of Common Stock" in the Company's definitive proxy statement for its 2002 Annual Meeting of Shareholders, to be filed by April 30, 2002, and is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions is set forth in the section entitled "Certain Transactions" under "Executive Compensation" in the Company's definitive proxy statement for its 2002 Annual Meeting of Shareholders, to be filed by April 30, 2002, and is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS. See Part II, Item 8 of this report.
(2) FINANCIAL STATEMENT SCHEDULES.
Page in this Form 10-K
Independent Auditors' Report on Financial Statement Schedule ...36
Schedule II - Valuation and Qualifying Accounts ................37
(3) EXHIBITS. See Index to Exhibits on page 39 of this report.
(b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the last quarter of the fiscal year.
(c) See Exhibit Index and Exhibits.
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE
The Board of Directors Rimage Corporation:
Under date of February 8, 2002, we reported on the consolidated balance sheets of Rimage Corporation and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, stockholders' equity and comprehensive income and cash flows for each of the years in the three-year period ended December 31, 2001, as included in the Rimage Corporation's Annual Report on Form 10-K for the year ended December 31, 2001. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related financial statement schedule as listed in Item 14(a)(2). This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
/s/ KPMG LLP
Minneapolis, Minnesota February 8, 2002
SCHEDULE II
RIMAGE CORPORATION VALUATION AND QUALIFYING ACCOUNTS
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
RIMAGE CORPORATION
By: /s/ Bernard P. Aldrich ---------------------- Bernard P. Aldrich Chief Executive Officer
Dated: 3/28/02
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
3.1 1992 Restated Articles of Incorporation of Rimage Corporation (Incorporated herein by reference to Exhibit 3.1 to the Company's Registration Statement on Form SB-2 (File No. 33-22558)).
3.2 Articles of Amendment to 1992 Restated Articles of Incorporation of Rimage Corporation (Incorporated herein by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-8 (File No. 333-69550)).
3.3 Bylaws of Rimage Corporation (Incorporated herein by reference to Exhibit 3.2 to the Company's Registration Statement on Form SB-2 (File No. 33-22558)).
10.1 Rimage Corporation 1992 Stock Option Plan, as amended *
10.2 Rimage Corporation 2001 Stock Option Plan for Non-Employee Directors *
10.3 Rimage Corporation 2001 Employee Stock Purchase Plan *
10.4 Lease dated September 1, 1998, between Rimage Corporation and 7725 Washington Avenue Corporation.
10.5 Credit Agreement dated December 31, 1997 between Rimage Corporation and First Bank, National Association. (Incorporated by reference to Exhibit 10.3 to the Company's Annual Report on Form 10-K for the year ended December 31, 1997).
21.1 Subsidiaries of Rimage Corporation.
23.1 Independent Auditors' Consent.
* Indicates a management contract or compensatory plan or arrangement