UNITED STATES
|
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2003; OR |
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________. |
Commission file number: 0-20728 |
| RIMAGE CORPORATION | |
| (Exact name of Registrant as specified in its charter) |
| Minnesota |
41-1577970 |
| (State or other jurisdiction of | (I.R.S. Employer Identification Number) |
| incorporation or organization) |
7725 Washington Avenue South, Edina, MN 55439 | |
| (Address of principal executive offices) | |
952-944-8144 | |
| (Registrant’s telephone number, including area code) | |
NA | |
| (Former name, former address, and former fiscal year, if changed since last report.) |
|
Common Stock outstanding at October
30, 2003 - 9,108,446 shares Indicate by checkmark
whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Act). Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _X_ No ___ |
|
RIMAGE CORPORATION
|
| Description | Page | ||||||
PART I |
FINANCIAL INFORMATION | ||||||
Item 1. | Financial Statements | ||||||
Consolidated Balance Sheets | |||||||
| (unaudited) as of September 30, 2003 and | |||||||
| December 31, 2002 | 3 | ||||||
Consolidated Statements of Operations | |||||||
| (unaudited) for the Three and Nine Months | |||||||
| Ended September 30, 2003 and 2002 | 4 | ||||||
Consolidated Statements of Cash Flows | |||||||
| (unaudited) for the Three and Nine Months | |||||||
| Ended September 30, 2003 and 2002 | 5 | ||||||
Condensed Notes to Consolidated | |||||||
| Financial Statements (unaudited) | 6-9 | ||||||
Item 2. | Management's Discussion and Analysis of | ||||||
| Financial Condition and Results of Operations | 10-14 | ||||||
Item 3. | Quantitative and Qualitative Disclosures about | ||||||
| Market Risk | 15 | ||||||
Item 4. | Controls and Procedures | 15 | |||||
PART II | OTHER INFORMATION | 16 | |||||
Item 1. | None | ||||||
Item 2. | Changes in Securities and Use of Proceeds | ||||||
Item 3-5. | None | ||||||
Item 6. | Exhibits and Report on Form 8-K | ||||||
SIGNATURES |
18 | ||||||
2
RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
| Assets | September 30, 2003 | December 31, 2002 | ||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 20,467,551 | $ | 17,339,135 | ||||
| Marketable securities | 22,968,387 | 18,997,987 | ||||||
| Trade accounts receivable, net of allowance for doubtful accounts | ||||||||
| and sales returns of $868,000 and $635,000, respectively | 7,463,803 | 6,643,613 | ||||||
| Inventories | 4,128,258 | 3,041,828 | ||||||
| Prepaid expenses and other current assets | 207,264 | 385,205 | ||||||
| Deferred income taxes-current | 929,279 | 929,279 | ||||||
| Total current assets | 56,164,542 | 47,337,047 | ||||||
| Property and equipment, net | 1,143,585 | 1,313,922 | ||||||
| Deferred income taxes-noncurrent | 55,274 | 55,274 | ||||||
| Other noncurrent assets | 1,432 | 3,011 | ||||||
| Total assets | $ | 57,364,833 | $ | 48,709,254 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 2,547,629 | $ | 2,476,299 | ||||
| Accrued compensation | 1,718,254 | 1,287,585 | ||||||
| Accrued other | 1,188,903 | 1,270,536 | ||||||
| Income tax payable | 772,681 | 194,973 | ||||||
| Deferred income and customer deposits | 1,747,648 | 1,322,729 | ||||||
| Total current liabilities | 7,975,115 | 6,552,122 | ||||||
| Stockholders' equity: | ||||||||
| Common stock, $.01 par value, authorized 30,000,000 shares, | ||||||||
| issued and outstanding 9,093,712 and 8,719,411 respectively | 90,937 | 87,194 | ||||||
| Additional paid-in capital | 18,074,764 | 16,157,259 | ||||||
| Retained earnings | 31,334,889 | 26,134,084 | ||||||
| Accumulated other comprehensive loss | (110,872 | ) | (221,405 | ) | ||||
| Total stockholders' equity | 49,389,718 | 42,157,132 | ||||||
| Commitments and contingencies | ||||||||
| Total liabilities and stockholders' equity | $ | 57,364,833 | $ | 48,709,254 | ||||
See accompanying condensed notes to consolidated financial statements
3
RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||
| Revenues | $ | 13,791,009 | $ | 12,555,084 | $ | 38,125,906 | $ | 34,750,982 | ||||||
| Cost of revenues | 7,108,991 | 6,406,799 | 19,376,516 | 17,748,763 | ||||||||||
| Gross profit | 6,682,018 | 6,148,285 | 18,749,390 | 17,002,219 | ||||||||||
| Operating expenses: | ||||||||||||||
| Research and development | 867,125 | 851,679 | 2,642,161 | 2,741,926 | ||||||||||
| Selling, general and administrative | 2,797,940 | 2,502,621 | 8,254,639 | 7,303,888 | ||||||||||
| Total operating expenses | 3,665,065 | 3,354,300 | 10,896,800 | 10,045,814 | ||||||||||
| Operating income | 3,016,953 | 2,793,985 | 7,852,590 | 6,956,405 | ||||||||||
| Other income (expense): | ||||||||||||||
| Interest | 126,570 | 189,330 | 397,899 | 625,152 | ||||||||||
| Loss on currency exchange | (12,414 | ) | (29,023 | ) | (25,006 | ) | (7,865 | ) | ||||||
| Other, net | (13,662 | ) | 4,931 | (35,239 | ) | 7,622 | ||||||||
| Total other income, net | 100,494 | 165,238 | 337,654 | 624,909 | ||||||||||
| Income before income taxes | 3,117,447 | 2,959,223 | 8,190,244 | 7,581,314 | ||||||||||
| Income taxes | 1,137,868 | 1,080,117 | 2,989,439 | 2,767,180 | ||||||||||
| Net income | $ | 1,979,579 | $ | 1,879,106 | $ | 5,200,805 | $ | 4,814,134 | ||||||
| Net income per basic share | $ | 0.22 | $ | 0.22 | $ | 0.59 | $ | 0.55 | ||||||
| Net income per diluted share | $ | 0.20 | $ | 0.20 | $ | 0.54 | $ | 0.51 | ||||||
| Basic weighted average shares outstanding | 9,066,835 | 8,712,285 | 8,872,558 | 8,698,020 | ||||||||||
| Diluted weighted average shares and | ||||||||||||||
| assumed conversion shares | 9,834,627 | 9,521,289 | 9,669,881 | 9,495,190 | ||||||||||
See accompanying condensed notes to consolidated financial statements
4
RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)
| Nine months ended September 30, | ||||||||
| 2003 | 2002 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 5,200,805 | $ | 4,814,134 | ||||
| Adjustments to reconcile net income to net cash | ||||||||
| provided by operating activities: | ||||||||
| Depreciation and amortization | 696,611 | 576,363 | ||||||
| Change in reserve for allowance for doubtful accounts | ||||||||
| and sales returns | 232,733 | (35,040 | ) | |||||
| Loss on sale of property and equipment | 41,401 | 1,622 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade accounts receivable | (1,052,923 | ) | (2,055,508 | ) | ||||
| Inventories | (1,086,430 | ) | 659,104 | |||||
| Prepaid income taxes | — | 764,523 | ||||||
| Prepaid expenses and other current assets | 177,941 | (57,390 | ) | |||||
| Trade accounts payable | 71,330 | 263,124 | ||||||
| Accrued compensation | 430,669 | 301,288 | ||||||
| Accrued other | (81,633 | ) | 61,407 | |||||
| Income taxes payable | 1,601,887 | 490,945 | ||||||
| Deferred income and customer deposits | 424,919 | 265,998 | ||||||
| Net cash provided by operating activities | 6,657,310 | 6,050,570 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of marketable securities | (43,083,123 | ) | (20,161,384 | ) | ||||
| Maturity of marketable securities | 39,112,723 | 9,967,986 | ||||||
| Purchase of property and equipment | (566,096 | ) | (340,510 | ) | ||||
| Other noncurrent assets | 14,749 | (64,172 | ) | |||||
| Net cash used in investing activities | (4,521,747 | ) | (10,598,080 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from stock option and warrant exercises | 897,069 | 335,635 | ||||||
| Other noncurrent liabilities | — | (68,750 | ) | |||||
| Net cash provided by financing activities | 897,069 | 266,885 | ||||||
| Effect of exchange rate changes on cash | 95,784 | 62,773 | ||||||
| Net increase (decrease) in cash and cash equivalents | 3,128,416 | (4,217,852 | ) | |||||
| Cash and cash equivalents, beginning of period | 17,339,135 | 14,767,126 | ||||||
| Cash and cash equivalents, end of period | $ | 20,467,551 | $ | 10,549,274 | ||||
| Supplemental disclosures of net cash paid during the period for: | ||||||||
| Income taxes | $ | 1,202,806 | $ | 1,394,381 | ||||
Supplemental disclosures of non cash financing activities during the period for: | ||||||||
| Tax effect of disqualifying disposition of stock options | $ | 1,024,179 | $ | — | ||||
See accompanying condensed notes to the consolidated financial statements
5
| Rimage Corporation (the Company) develops, manufactures and distributes high performance CD-Recordable (CD-R) and DVD-Recordable (DVD-R) publishing and duplication systems. |
| The accompanying unaudited consolidated financial statements of the Company have been prepared pursuant to the rules of the Securities and Exchange Commission. These financial statements should be read in conjunction with the more detailed financial statements and notes thereto included in the Company’s most recent annual report on Form 10-K. |
| In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the financial position and results of operations and cash flows of the Company for the periods presented. Certain previously reported amounts have been reclassified to conform with the current presentation. |
| The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
| 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 twelve 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 income (loss) until realized. |
(Continued)
6
| The Company applies APB No. 25 and related interpretations in accounting for its stock based compensation 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 three months ended and nine months ended September 30, 2003 and 2002 net income and basic and diluted earnings per share would have been adjusted to the proforma amounts stated below: |
| Three Months Ended September 30, 2003 | Three Months Ended September 30, 2002 | Nine Months Ended September 30, 2003 | Nine Months Ended September 30, 2002 | |||||||||||
| Net income: | ||||||||||||||
| As reported | $ | 1,979,579 | $ | 1,879,106 | $ | 5,200,805 | $ | 4,814,134 | ||||||
| Stock based employee | ||||||||||||||
| compensation, net of tax | (128,586 | ) | (132,392 | ) | (295,996 | ) | (397,175 | ) | ||||||
| Proforma | 1,850,993 | 1,746,714 | 4,904,809 | 4,416,959 | ||||||||||
| Basic net income per share: | ||||||||||||||
| As reported | $ | 0.22 | ||||||||||||