UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003; OR
--------------
[ ] 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
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(Exact name of Registrant as specified in its charter)
Minnesota 41-1577970
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7725 Washington Avenue South, Edina, MN 55439
---------------------------------------------
(Address of principal executive offices)
952-944-8144
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(Registrant's telephone number, including area code)
NA
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(Former name, former address, and former fiscal year,
if changed since last report.)
Common Stock outstanding at April 29, 2003 - 8,740,190 shares
of $.01 par value Common Stock.
Indicate by checkmark whether the registrant is an accelerated filer (as defined
in Rule 12b-2 of the Act). YES ___ NO _X_
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
FORM 10-Q
TABLE OF CONTENTS
FOR THE QUARTER ENDED MARCH 31, 2003
Description Page
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PART I FINANCIAL INFORMATION
- ------
Item 1. Unaudited Financial Statements
Consolidated Balance Sheets as of
March 31, 2003 and December 31, 2002 .................. 3
Consolidated Statements of Operations
for the Three Months Ended
March 31, 2003 and 2002 ............................... 4
Consolidated Statements of Cash Flows
for the Three Months Ended
March 31, 2003 and 2002 ............................... 5
Condensed Notes to Consolidated
Financial Statements .................................. 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ......... 9-11
Item 3. Quantitative and Qualitative Disclosures about
Market Risk ........................................... 12
Item 4. Controls and Procedures.................................. 12
PART II OTHER INFORMATION ........................................... 13
- -------
Item 1-5. None
Item 6. Exhibits
SIGNATURES .............................................................. 14
CERTIFICATIONS .......................................................... 15-16
2
RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 2003 and December 31, 2002
(Unaudited)
March 31, December 31,
Assets 2003 2002
- --------------------------------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 10,672,649 $ 17,339,135
Marketable securities 26,440,690 18,997,987
Trade accounts receivable, net of allowance for doubtful accounts
and sales returns of $609,000 and $635,000, respectively 6,233,149 6,643,613
Inventories 3,918,068 3,041,828
Prepaid expenses and other current assets 336,867 385,205
Deferred income taxes-current 929,279 929,279
- --------------------------------------------------------------------------------------------------------
Total current assets 48,530,702 47,337,047
- --------------------------------------------------------------------------------------------------------
Property and equipment, net 1,334,282 1,313,922
Deferred income taxes-noncurrent 55,274 55,274
Other noncurrent assets 2,485 3,011
- --------------------------------------------------------------------------------------------------------
Total assets $ 49,922,743 $ 48,709,254
========================================================================================================
Liabilities and Stockholders' Equity
- --------------------------------------------------------------------------------------------------------
Current liabilities:
Trade accounts payable $ 1,690,499 $ 2,476,299
Accrued compensation 1,127,615 1,287,585
Accrued other 1,455,955 1,270,536
Income tax payable 489,912 194,973
Deferred income and customer deposits 1,427,467 1,322,729
- --------------------------------------------------------------------------------------------------------
Total current liabilities 6,191,448 6,552,122
- --------------------------------------------------------------------------------------------------------
Stockholders' equity:
Common stock, $.01 par value, authorized 30,000,000 shares,
issued and outstanding 8,740,190 and 8,719,411, respectively 87,402 87,194
Additional paid-in capital 16,177,076 16,157,259
Retained earnings 27,637,921 26,134,084
Accumulated other comprehensive loss (171,104) (221,405)
- --------------------------------------------------------------------------------------------------------
Total stockholders' equity 43,731,295 42,157,132
- --------------------------------------------------------------------------------------------------------
Commitments and contingencies
Total liabilities and stockholders' equity $ 49,922,743 $ 48,709,254
========================================================================================================
See accompanying condensed notes to consolidated financial statements
3
RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
March 31,
2003 2002
- --------------------------------------------------------------------------
Revenues $ 11,543,734 $ 9,886,371
Cost of revenues 5,808,747 5,139,298
- --------------------------------------------------------------------------
Gross profit 5,734,987 4,747,073
- --------------------------------------------------------------------------
Operating expenses:
Research and development 848,530 877,724
Selling, general and administrative 2,633,758 2,298,023
- --------------------------------------------------------------------------
Total operating expenses 3,482,288 3,175,747
- --------------------------------------------------------------------------
Operating income 2,252,699 1,571,326
- --------------------------------------------------------------------------
Other income (expense):
Interest 137,828 212,475
Gain (loss) on currency exchange (21,782) 151
Other, net (497) 2,197
- --------------------------------------------------------------------------
Total other income, net 115,549 214,823
- --------------------------------------------------------------------------
Income before income taxes 2,368,248 1,786,149
Income tax expense 864,411 651,944
- --------------------------------------------------------------------------
Net income 1,503,837 1,134,205
==========================================================================
Net income per basic share $ 0.17 $ 0.13
==========================================================================
Net income per diluted share $ 0.16 $ 0.12
==========================================================================
Basic weighted average shares outstanding 8,726,760 8,646,243
==========================================================================
Diluted weighted average shares and
assumed conversion shares 9,483,421 9,454,027
==========================================================================
See accompanying condensed notes to the consolidated financial statements
4
RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)
Three months ended
March 31,
2003 2002
- -------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 1,503,837 $ 1,134,205
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 212,092 177,631
Change in reserve for excess and obsolete inventories 51,500 (56,593)
Change in allowance for doubtful accounts and sales returns (26,106) (2,064)
Loss on sale of property and equipment 3,034 --
Changes in operating assets and liabilities:
Trade accounts receivable 436,570 (930,313)
Inventories (927,740) 555,651
Prepaid expenses and other current assets 48,338 (91,484)
Prepaid income taxes -- 429,109
Trade accounts payable (785,800) 208,974
Accrued compensation (159,970) (187,939)
Accrued other 185,419 5,255
Income tax payable 294,939 --
Deferred income and customer deposits 104,738 58,538
- -------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 940,851 1,300,970
- -------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of marketable securities, net (7,442,703) (1,052,923)
Purchase of property and equipment (234,960) (32,148)
Other noncurrent assets 14,914 (51,464)
- -------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (7,662,749) (1,136,535)
- -------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from stock option/warrant exercise 20,025 50,238
Other noncurrent liabilities -- (68,750)
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Net cash provided by (used in) financing activities 20,025 (18,512)
- -------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 35,387 (9,374)
- -------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (6,666,486) 136,549
Cash and cash equivalents, beginning of period 17,339,135 4,978,871
- -------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 10,672,649 $ 5,115,420
=============================================================================================================
Supplemental disclosures of net cash paid during the period for:
Income taxes $ 491,400 $ 209,743
See accompanying condensed notes to the consolidated financial statements
5
RIMAGE CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) BASIS OF PRESENTATION AND NATURE OF BUSINESS
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.
The Company extends unsecured credit to its customers as well as credit to
a limited number of authorized distributor wholesalers, who in turn
provide warehousing, distribution, and credit to a network of
authorized value added resellers. These distributors and value added
resellers sell and service a variety of hardware and software
products.
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.
(Continued)
6
RIMAGE CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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 first quarter 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 Three Months Ended
March 31, 2003 March 31, 2002
=========================================================================================
Net income:
As reported $1,503,837 $1,134,205
Stock based employee compensation, net of tax (68,252) (132,391)
Proforma 1,435,585 1,001,814
-----------------------------------------------------------------------------------------
Basic net income per share:
As reported $ 0.17 $ 0.13
Stock based employee compensation, net of tax $ (0.01) $ (0.02)
Proforma $ 0.16 $ 0.11
-----------------------------------------------------------------------------------------
Diluted net income per share:
As reported $ 0.16 $ 0.12
Stock based employee compensation, net of tax $ (0.01) $ (0.01)
Proforma $ 0.15 $ 0.11
-----------------------------------------------------------------------------------------
(2) INVENTORIES
Inventories consist of the following as of:
March 31, December 31,
2003 2002
----------------------------------------------------------------------
Finished goods and demonstration equipment $ 1,111,594 $ 668,154
Work-in-process 426,204 480,293
Purchased parts and subassemblies 2,380,269 1,893,381
----------------------------------------------------------------------
$ 3,918,068 $ 3,041,828
======================================================================
(Continued)
7
RIMAGE CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(3) COMPREHENSIVE INCOME
Comprehensive income is defined as the change in equity of a business
during a period from transactions and other events from sources other
than from shareholders. The components of and changes in other
comprehensive income (loss) are as follows (in 000's):
Three Months Ended
March 31,
---------------------
2003 2002
------- -------
Net income $ 1,504 $ 1,134
Other comprehensive income (loss):
Foreign currency translation adjustment 31 (10)
Net unrealized gains (losses) on securities 19 (51)
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Total comprehensive income $ 1,554 $ 1,073
======= =======
(4) FOREIGN CURRENCY CONTRACTS
The Company enters into forward foreign exchange contracts to hedge
inter-company receivables denominated in Euros arising from sales to
its subsidiary in Germany. Gains or losses on forward foreign exchange
contracts are recognized in net earnings on a current basis over the
term of the contracts.
As of March 31, 2003, the Company had forty outstanding foreign currency
contracts totaling $4,189,000. These contracts mature in 2003 and bear
rates between .9686 and 1.0989 U.S. Dollars per Euro. As of March 31,
2003 and December 31, 2002, the fair value of foreign currency
contracts is $214,000 and $220,000 and is recorded in other current
liabilities.
8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth, for the periods indicated, selected
items from the Company's consolidated statements of operations.
- ----------------------------------------------------------------------------------------------
Percentage (%)
Percentage (%) of Revenues Increase/(Decrease)
Three Months Ended March 31, Between Periods
- ----------------------------------------------------------------------------------------------
2003 2002 2003 vs. 2002
- ----------------------------------------------------------------------------------------------
Revenues 100.0 100.0 16.8
Cost of revenues (50.3) (52.0) 13.0
- ----------------------------------------------------------------------------------------------
Gross profit 49.7 48.0 20.8
Operating expenses:
Research and development (7.4) (8.9) (3.3)
Selling, general and administrative (22.8) (23.2) 14.6
- ----------------------------------------------------------------------------------------------
Operating income 19.5 15.9 43.4
Other income, net 1.0 2.2 (46.2)
- ----------------------------------------------------------------------------------------------
Income before income taxes 20.5 18.1 32.6
Income tax expense (7.5) (6.6) 32.6
- ----------------------------------------------------------------------------------------------
Net income 13.0 11.5 32.6
==============================================================================================
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 that 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. During the first quarter of 2003, obsolescence charges of
approximately $115,000 were taken on Desktop inventory due to the anticipated
introduction of the new Desktop line 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.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
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.
RESULTS OF OPERATIONS
- ---------------------
REVENUES. Revenues increased 16.8% from $9.9 million during the first quarter of
2002 to $11.5 million during the first quarter of 2003. The increase was
primarily due to the addition of two distributors during the second quarter of
2002, increased sales of higher value systems and consumables from the prior
year's first quarter and the positive impact of the continued strengthening of
the Euro on our European sales.
As of and for the three months ended March 31, 2003, foreign revenues from
unaffiliated customers, operating income, and net identifiable assets were
$4,288,000, $152,000 and $5,460,000, respectively. As of and for the three
months ended March 31, 2002, foreign revenues from unaffiliated customers,
operating income, and net identifiable assets were $3,161,000, $105,000 and
$3,566,000, respectively. The revenue increase is primarily due to strong sales
within the Northern European region and the positive impact of the continued
strengthening of the Euro on our European operations.
GROSS PROFIT. Gross profit as a percent of revenues was 49.7% during the first
quarter of 2003 compared to 48.0% of revenues during the same period of 2002.
The increase was primarily due to increased volume of sales generated from our
Producer Line of products which carry a higher margin and decreased volume of
sales from our Desktop Line of products which carry a lower margin. The
decreased sales of our Desktop Line of products were a result of the
introduction of the new products within that line during May 2003.
OPERATING EXPENSES. Operating expenses during the first quarter of 2003 were
$3.5 million or 30.2% of revenues compared to $3.2 million or 32.1% of revenues
during the same prior year period. The dollar increase primarily reflects
investments in sales and marketing programs aimed at strengthening Rimage's
ability to penetrate its targeted markets. Research and development dollar
expenditures remained relatively constant during the first quarter of 2003 at
$849,000 or 7.4% of revenues, compared to $878,000, or 8.9% of revenues, during
the first quarter of 2002.
OTHER INCOME. The Company recognized net interest income on cash investments of
$138,000 during the first quarter of 2003 compared to $212,000 during the first
quarter of 2002. The Company also
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
recognized a loss of $22,000 on currency exchange during the first quarter of
2003 compared to an almost zero impact during the first quarter of 2002.
INCOME BEFORE INCOME TAXES. Income before income taxes increased 32.6% to $2.4
million for the first quarter of 2003 from $1.8 million for the same prior year
period. This increase is the result of increased U.S. and European channel sales
of equipment and consumables and the positive effect of the strengthening Euro
on our European operations during the first quarter of 2003.
INCOME TAXES. The provision for income taxes represents federal, state, and
foreign income taxes on income before income taxes. Income tax expense for the
first quarter of 2003 and 2002 amounted to $864,000 and $652,000, respectively
or 36.5% of income before income taxes. The Company anticipates an effective tax
rate of 36.5% for the remainder of 2003.
LIQUIDITY AND CAPITAL RESOURCES
The Company expects to fund its anticipated cash requirements (including the
anticipated cash requirements of its capital expenditures) with internally
generated funds and, if required, from the Company's existing credit agreement
that would allow borrowings up to $5 million. At March 31, 2003 there were no
amounts outstanding under the credit agreement.
Current assets are $48.5 million as of March 31, 2003 as compared to $47.3
million as of December 31, 2002. The allowance for doubtful accounts and sales
returns as a percentage of receivables remained stable at 9% as of March 31,
2003 and December 31, 2002. Current liabilities are $6.2 million as of March 31,
2003 as compared to $6.6 million as of December 31, 2002.
Net cash provided by operating activities was $941,000 and $1.3 million for the
three months ended March 31, 2003 and 2002, respectively. This decrease was
primarily the result of stocking increased inventories to prepare for the
upcoming release of the new Desktop Line of products and a decrease in accounts
payables due to the timing of payments offset by a decrease in accounts
receivables due to improved collection of receivables and the timing of
receipts. Net cash used in investing activities was $7.7 million and $1.1
million for the three months ended March 31, 2003 and 2002, respectively. This
increase was primarily due to purchases of marketable securities during the
first quarter of 2003. Net cash provided by (used in) financing activities was
$20,000 and $(19,000) during the three months ended March 31, 2003 and 2002,
respectively. The net cashed provided by financing activities for the three
months ended March 31, 2003 represented proceeds from stock option exercises.
The net cash used in financing activities for the three months ended March 31,
2002 was primarily for long term debt repayment on tooling for the Everest
printer offset by proceeds from stock option exercises.
The Company believes that inflation has not had a material impact on its
operations or liquidity to date.
11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has a policy of using forward exchange contracts to hedge net
exposures related to its foreign currency-denominated monetary assets and
liabilities. The primary objective of these hedging activities is to maintain an
approximately balanced position in foreign currencies so that exchange gains and
losses resulting from exchange rate changes, net of related tax effects, are
minimized. (See footnote 4.)
ITEM 4. CONTROLS AND PROCEDURES
Bernard P. Aldrich, the Company's Chief Executive Officer and Robert M. Wolf,
the Company's Chief Financial Officer, have reviewed the Company's disclosure
controls and procedures within 90 days prior to the filing of this report. Based
upon such review, Mr. Aldrich and Mr. Wolf believe the disclosure controls and
procedures to be effective in ensuring that material information is made known
to them by others within the Company.
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls during the quarter
covered by this report or from the end of the reporting period to the date of
this Form 10-Q.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that involve risks and
uncertainties. For this purpose, any statements contained in report that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, words such as "may," "will," "expect,"
"believe," "anticipate," "estimate" or "continue" or comparable terminology are
intended to identify forward-looking statements. These statements by their
nature involve substantial risks and uncertainties. The Company's actual results
could differ significantly from those discussed in the forward-looking
statements. Factors that could cause or contribute to such differences include,
but are not limited to, changes in media or method used for distribution of
software, technological changes in products offered by the Company or its
competitors and changes in general conditions in the computer market, as well as
other factors not now identified. These forward-looking statements are only made
as of the date of this report. In addition to the risks the Company has
articulated above, changes in market conditions, changes in our business and
other factors may result in different or increased risks to our business in the
future that are not foreseeable at this time.
12
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Not Applicable.
Item 2. Changes in Securities
---------------------
Not Applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not Applicable.
Item 5. Other Information
-----------------
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
EXHIBIT NO. DESCRIPTION
----------- -----------
11.1 Calculation of Income Per Share.
99.1 Certification Pursuant to 18 U.S.C. ss.1350.
(b) Reports on Form 8-K:
None.
13
SIGNATURES
In accordance with the Exchange Act, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereto duly authorized.
RIMAGE CORPORATION
Registrant
Date: May 12, 2003 By: /s/ Bernard P. Aldrich
------------------ ----------------------
Bernard P. Aldrich
Director, Chief Executive Officer,
and President
(Principal Executive Officer)
Date: May 12, 2003 By: /s/ Robert M. Wolf
------------------ -------------------
Robert M. Wolf
Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer)
14
CERTIFICATION
I, Bernard P. Aldrich, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Rimage Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining the disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and I have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: May 12, 2003 /s/ Bernard P. Aldrich
------------ ----------------------
President and Chief
Executive Officer
15
CERTIFICATION
I, Robert M. Wolf, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Rimage Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining the disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and I have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: May 12, 2003 /s/ Robert M. Wolf
------------ -----------------------
Chief Financial Officer
16