Table of Contents





|                                   |  | 
|---------------------------------- |  | 
|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, 2011; 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: 000-20728

|
|

| |                                                        | 
| | ------------------------------------------------------ | 
| | RIMAGE CORPORATION                                     | 
| | (Exact name of registrant as specified in its charter) | 

|                                |                                      |  |  |            | 
|------------------------------- | ------------------------------------ |  |  | ---------- | 
|                                | Minnesota                            |  |  | 41-1577970 | 
|(State or other jurisdiction of | (I.R.S. Employer Identification No.)
|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)

|
|

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 o

Indicate by
check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files). Yes o No o

Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer or a smaller reporting company (as defined in
Rule 12b-2 of the Exchange Act):

Large Accelerated
Filero
Accelerated Filerx
Non-Accelerated Filero
Smaller Reporting Companyo

Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act): Yes o No x

Common Stock
outstanding at April 30, 2011 -- 9,499,289 shares of $.01 par value Common
Stock.

1







RIMAGE
CORPORATION
FORM 10-QTABLE OF CONTENTS
FOR THE QUARTER ENDED MARCH 31, 2011

|           |                                                                                                     |  |       |     
|---------- | --------------------------------------------------------------------------------------------------- |  | ----- | ----
|           | Description                                                                                         |  |       | Page
|           |                                                                                                     |  |      
|PART 1     | FINANCIAL INFORMATION                                                                               |  |      
|           |                                                                                                     |  |      
|Item 1.    | Financial Statements (unaudited)                                                                    |  |      
|           |                                                                                                     |  |      
|           | Condensed Consolidated
 Balance Sheets as of March 31, 2011 and December 31, 2010                   |  | 3    
|           |                                                                                                     |  |      
|           | Condensed Consolidated
 Statements of Income for the three months ended March 31, 2011 and 2010     |  | 4    
|           |                                                                                                     |  |      
|           | Condensed Consolidated
 Statements of Cash Flows for the three months ended March 31, 2011 and 2010 |  | 5    
|           |                                                                                                     |  |      
|           | Notes to Condensed
 Consolidated Financial Statements                                               |  | 6-15 
|           |                                                                                                     |  |      
|Item 2.    | Managements
 Discussion and Analysis of Financial Condition and Results of Operations              |  | 16-22
|           |                                                                                                     |  |      
|Item 3.    | Quantitative and
 Qualitative Disclosures about Market Risk                                         |  | 22   
|           |                                                                                                     |  |      
|Item 4.    | Controls and
 Procedures                                                                            |  | 22   
|           |                                                                                                     |  |      
|PART II    | OTHER INFORMATION                                                                                   |  | 23   
|           |                                                                                                     |  |      
|Item 1.    | Legal Proceedings                                                                                   |  |      
|           |                                                                                                     |  |      
|Item 1A.   | Risk Factors                                                                                        |  |      
|           |                                                                                                     |  |      
|Item 2.    | Unregistered Sales of Equity Securities and Use of
 Proceeds                                        |  |      
|           |                                                                                                     |  |      
|Item 3.    | Defaults Upon Senior Securities                                                                     |  |      
|           |                                                                                                     |  |      
|Item 4.    | [Removed and Reserved]                                                                              |  |      
|           |                                                                                                     |  |      
|Item 5.    | Other Information                                                                                   |  |      
|           |                                                                                                     |  |      
|Item 6.    | Exhibits                                                                                            |  |      
|           |                                                                                                     |  |      
|SIGNATURES |                                                                                                     |  | 24   

2

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Table of Contents

|                                         
|-----------------------------------------
|PART 1
  FINANCIAL INFORMATION          
|Item
 1. Financial Statements (unaudited)

RIMAGE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets(unaudited
- in thousands, except share data)

|                                                                                                                         |  |                 |         |                    |   |         | 
|------------------------------------------------------------------------------------------------------------------------ |  | --------------- | ------- | ------------------ | - | ------- | 
|Assets                                                                                                                   |  | March 31,
 2011 |         | December 31,
 2010 |  
|                                                                                                                         |  |                 |         |                    |   |         | 
|Current assets:                                                                                                          |  |                 |         |                    |   |         | 
|Cash and cash equivalents                                                                                                |  | $               | 108,933 |                    | $ | 107,982 | 
|Marketable securities                                                                                                    |  |                 | 8,716   |                    |   | 8,790   | 
|Receivables, net of allowance for doubtful accounts and sales returns
 of $282 and $286, respectively                    |  |                 | 13,380  |                    |   | 13,764  | 
|Inventories                                                                                                              |  |                 | 6,249   |                    |   | 4,502   | 
|Prepaid income taxes                                                                                                     |  |                 | 383     |                    |   |        | 
|Prepaid expenses and other current assets                                                                                |  |                 | 1,139   |                    |   | 1,069   | 
|Deferred income taxes - current                                                                                          |  |                 | 443     |                    |   | 425     | 
|Total
 current assets                                                                                                    |  |                 | 139,243 |                    |   | 136,532 | 
|Property and equipment, net of accumulated depreciation and
 amortization of $11,073 and $10,741, respectively           |  |                 | 7,093   |                    |   | 7,528   | 
|Deferred income taxes - non-current                                                                                      |  |                 | 2,634   |                    |   | 2,509   | 
|Other assets - non-current                                                                                               |  |                 | 3,427   |                    |   | 1,475   | 
|Total
 assets                                                                                                            |  | $               | 152,397 |                    | $ | 148,044 | 
|                                                                                                                         |  |                 |         |                    |   |         | 
|Liabilities and
 Stockholders Equity                                                                                    |  |                 |         |                    |   |         | 
|Current liabilities:                                                                                                     |  |                 |         |                    |   |         | 
|Trade accounts payable                                                                                                   |  | $               | 6,408   |                    | $ | 6,045   | 
|Accrued compensation                                                                                                     |  |                 | 2,583   |                    |   | 3,821   | 
|Other accrued expenses                                                                                                   |  |                 | 851     |                    |   | 663     | 
|Dividends payable                                                                                                        |  |                 | 950     |                    |   |        | 
|Income taxes payable                                                                                                     |  |                 |        |                    |   | 139     | 
|Deferred income and customer deposits                                                                                    |  |                 | 5,843   |                    |   | 5,615   | 
|Other current liabilities                                                                                                |  |                 | 32      |                    |   | 20      | 
|Total
 current liabilities                                                                                               |  |                 | 16,667  |                    |   | 16,303  | 
|                                                                                                                         |  |                 |         |                    |   |         | 
|Long-term liabilities:                                                                                                   |  |                 |         |                    |   |         | 
|Deferred income - non-current                                                                                            |  |                 | 4,675   |                    |   | 2,225   | 
|Income taxes payable - non-current                                                                                       |  |                 | 235     |                    |   | 215     | 
|Other non-current liabilities                                                                                            |  |                 | 663     |                    |   | 664     | 
|Total
 long-term liabilities                                                                                             |  |                 | 5,573   |                    |   | 3,104   | 
|Total
 liabilities                                                                                                       |  |                 | 22,240  |                    |   | 19,407  | 
|                                                                                                                         |  |                 |         |                    |   |         | 
|Stockholders equity:                                                                                                    |  |                 |         |                    |   |         | 
|Rimage stockholders equity:                                                                                             |  |                 |         |                    |   |         | 
|Preferred stock, $.01 par value, authorized 250,000 shares, no shares
 issued and outstanding                            |  |                 |        |                    |   |        | 
|Common stock, $.01 par value, authorized 29,750,000 shares, issued and
 outstanding 9,499,289 and 9,479,272 respectively |  |                 | 95      |                    |   | 95      | 
|Additional paid-in capital                                                                                               |  |                 | 43,699  |                    |   | 43,062  | 
|Retained earnings                                                                                                        |  |                 | 85,205  |                    |   | 84,657  | 
|Accumulated other comprehensive income                                                                                   |  |                 | 664     |                    |   | 317     | 
|Total
 Rimage stockholders equity                                                                                       |  |                 | 129,663 |                    |   | 128,131 | 
|Noncontrolling interest                                                                                                  |  |                 | 494     |                    |   | 506     | 
|Total
 stockholders equity                                                                                              |  |                 | 130,157 |                    |   | 128,637 | 
|                                                                                                                         |  |                 |         |                    |   |         | 
|Total liabilities and stockholders equity                                                                               |  | $               | 152,397 |                    | $ | 148,044 | 

See accompanying notes to condensed
consolidated financial statements.

3

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Table of Contents

RIMAGE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income(unaudited
- in thousands, except per share data)

|                                                      |  |                               |        |      |   |        |  
|----------------------------------------------------- |  | ----------------------------- | ------ | ---- | - | ------ | -
|                                                      |  | Three Months Ended
 March 31, |       
|                                                      |  | 2011                          |        | 2010 |  
|Revenues:                                             |  |                               |        |      |   |        |  
|Product                                               |  | $                             | 18,781 |      | $ | 15,844 |  
|Service                                               |  |                               | 2,675  |      |   | 2,526  |  
|Total revenues                                        |  |                               | 21,456 |      |   | 18,370 |  
|Cost of revenues:                                     |  |                               |        |      |   |        |  
|Product                                               |  |                               | 9,209  |      |   | 7,755  |  
|Service                                               |  |                               | 1,463  |      |   | 1,963  |  
|Total cost of revenues                                |  |                               | 10,672 |      |   | 9,718  |  
|Gross profit                                          |  |                               | 10,784 |      |   | 8,652  |  
|Operating expenses:                                   |  |                               |        |      |   |        |  
|Research and development                              |  |                               | 1,552  |      |   | 1,441  |  
|Selling, general and administrative                   |  |                               | 6,906  |      |   | 6,267  |  
|Total operating expenses                              |  |                               | 8,458  |      |   | 7,708  |  
|Operating income                                      |  |                               | 2,326  |      |   | 944    |  
|Other income (expense):                               |  |                               |        |      |   |        |  
|Interest, net                                         |  |                               | 67     |      |   | 168    |  
|Loss on currency exchange                             |  |                               | (33    | )    |   | (27    | )
|Other, net                                            |  |                               |       |      |   | 4      |  
|Total other income, net                               |  |                               | 34     |      |   | 145    |  
|Income before income taxes                            |  |                               | 2,360  |      |   | 1,089  |  
|Income tax expense                                    |  |                               | 877    |      |   | 394    |  
|Net income                                            |  |                               | 1,483  |      |   | 695    |  
|Net loss attributable to
 the noncontrolling interest |  |                               | 15     |      |   |       |  
|Net income attributable to Rimage                     |  | $                             | 1,498  |      | $ | 695    |  
|                                                      |  |                               |        |      |   |        |  
|Net income per basic share                            |  | $                             | 0.16   |      | $ | 0.07   |  
|                                                      |  |                               |        |      |   |        |  
|Net income per diluted
 share                         |  | $                             | 0.16   |      | $ | 0.07   |  
|                                                      |  |                               |        |      |   |        |  
|Basic weighted average
 shares outstanding            |  |                               | 9,494  |      |   | 9,476  |  
|                                                      |  |                               |        |      |   |        |  
|Diluted weighted average
 shares outstanding          |  |                               | 9,543  |      |   | 9,557  |  

See accompanying notes to
condensed consolidated financial statements.

4

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Table of Contents

RIMAGE CORPORATION AND SUBSIDIARIES 
Condensed Consolidated Statements of Cash Flows(unaudited
- in thousands)

|                                                                                   |  |                                |         |      |   |        |  
|---------------------------------------------------------------------------------- |  | ------------------------------ | ------- | ---- | - | ------ | -
|                                                                                   |  | Three
 Months Ended
 March 31, |        
|                                                                                   |  | 2011                           |         | 2010 |  
|Cash flows from operating
 activities:                                             |  |                                |         |      |   |        |  
|Net income                                                                         |  | $                              | 1,483   |      | $ | 695    |  
|Adjustments to reconcile net income to net cash provided by operating
 activities: |  |                                |         |      |   |        |  
|Depreciation and amortization                                                      |  |                                | 621     |      |   | 374    |  
|Deferred income tax benefit                                                        |  |                                | (175    | )    |   | (112   | )
|Loss on disposal of property and equipment                                         |  |                                | 1       |      |   |       |  
|Stock-based compensation                                                           |  |                                | 469     |      |   | 467    |  
|Excess tax benefits from stock-based compensation                                  |  |                                | (11     | )    |   | (12    | )
|Changes in operating assets and liabilities:                                       |  |                                |         |      |   |        |  
|Receivables                                                                        |  |                                | 679     |      |   | 2,390  |  
|Inventories                                                                        |  |                                | (1,639  | )    |   | (1,154 | )
|Prepaid
 income taxes/income taxes payable                                         |  |                                | (446    | )    |   | (837   | )
|Prepaid
 expenses and other current assets                                         |  |                                | (62     | )    |   | (151   | )
|Trade
 accounts payable                                                            |  |                                | 659     |      |   | 1,560  |  
|Accrued
 compensation                                                              |  |                                | (1,031  | )    |   | (1,651 | )
|Other
 accrued expenses and other current liabilities                              |  |                                | (59     | )    |   | (132   | )
|Deferred
 income and customer deposits                                             |  |                                | 2,627   |      |   | (686   | )
|                                                                                   |  |                                |         |      |   |        |  
|Net cash provided by operating activities                                          |  |                                | 3,116   |      |   | 751    |  
|                                                                                   |  |                                |         |      |   |        |  
|Cash flows from investing activities:                                              |  |                                |         |      |   |        |  
|Purchase of stock in software company                                              |  |                                | (2,000  | )    |   |       |  
|Maturities and sales of marketable securities                                      |  |                                |        |      |   | 12,631 |  
|Purchases of property and equipment                                                |  |                                | (485    | )    |   | (2,727 | )
|                                                                                   |  |                                |         |      |   |        |  
|Net cash provided by (used in) investing activities                                |  |                                | (2,485  | )    |   | 9,904  |  
|                                                                                   |  |                                |         |      |   |        |  
|Cash flows from financing activities:                                              |  |                                |         |      |   |        |  
|Principal payments on capital lease obligations                                    |  |                                | (5      | )    |   | (5     | )
|Excess tax benefits from stock-based compensation                                  |  |                                | 11      |      |   | 12     |  
|Proceeds from stock option exercises                                               |  |                                | 158     |      |   | 66     |  
|                                                                                   |  |                                |         |      |   |        |  
|Net cash provided by financing activities                                          |  |                                | 164     |      |   | 73     |  
|                                                                                   |  |                                |         |      |   |        |  
|Effect of exchange rate changes on cash                                            |  |                                | 156     |      |   | (121   | )
|                                                                                   |  |                                |         |      |   |        |  
|Net increase in cash and cash equivalents                                          |  |                                | 951     |      |   | 10,607 |  
|                                                                                   |  |                                |         |      |   |        |  
|Cash and cash equivalents, beginning of period                                     |  |                                | 107,982 |      |   | 72,507 |  
|                                                                                   |  |                                |         |      |   |        |  
|Cash and cash equivalents, end of period                                           |  | $                              | 108,933 |      | $ | 83,114 |  
|                                                                                   |  |                                |         |      |   |        |  
|Supplemental disclosures of net cash paid during the period for:                   |  |                                |         |      |   |        |  
|Income taxes                                                                       |  | $                              | 1,528   |      | $ | 1,334  |  

See accompanying notes to
condensed consolidated financial statements.

5

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Table of Contents

RIMAGE CORPORATION AND SUBSIDIARIES 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(unaudited)

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Basis of Presentation and Nature of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Rimage
 Corporation (the Company or Rimage) develops, manufactures and markets
 workflow-integrated digital publishing solutions that are used by businesses
 to produce CD, DVD and Blu-ray Discs with customized content and durable
 disc labeling. Rimage distributes its publishing systems from its operations
 in the United States, Germany, Japan and its joint venture operation in
 China. The Company also distributes related consumables for use with its
 systems, consisting of media kits, ribbons, ink cartridges and Rimage-branded
 blank CD-R, DVD-R and Blu-ray media.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The
 accompanying condensed consolidated financial statements are unaudited and
 have been prepared by the Company in accordance with accounting principles
 generally accepted in the United States of America for interim financial
 information, pursuant to the rules and regulations of the Securities and
 Exchange Commission. Pursuant to such rules and regulations, certain
 financial information and footnote disclosures normally included in the
 financial statements have been condensed or omitted. However, in the opinion
 of management, the financial statements include all adjustments, consisting
 of normal recurring accruals, necessary for a fair presentation of the
 financial position and results of operations and cash flows of the interim
 periods presented. Operating results for these interim periods are not
 necessarily indicative of results to be expected for the entire year, due to
 seasonal, operating and other factors. These condensed consolidated financial
 statements should be read in conjunction with the consolidated financial
 statements and notes thereto included in the Companys Annual Report on Form
 10-K as of and for the year ended December 31, 2010.                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | 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 estimates on items such as allowance for doubtful accounts and
 sales returns, inventory provisions, asset impairment charges, deferred tax
 asset valuation allowances, accruals for uncertain tax positions and warranty
 accruals. These estimates and assumptions are based on managements best
 judgment. Management evaluates estimates and assumptions on an ongoing basis
 using its technical knowledge, historical experience and other factors,
 including consideration of the impact of the current economic environment. Management
 believes its assumptions are reasonable and adjusts such estimates and
 assumptions when facts and circumstances change. Illiquid credit markets,
 volatile equity, foreign currency and energy markets, and declines in
 business and consumer spending have combined to increase the uncertainty
 inherent in such estimates and assumptions. As future events and their
 effects cannot be determined with precision, actual results could differ
 significantly from these estimates. Any required changes in those estimates
 will be reflected in the financial statements in future periods.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(2) | Stock-Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | In
 May 2007, the Companys shareholders approved the 2007 Stock Incentive Plan
 (the 2007 Plan). The 2007 Plan provides for the grant of stock incentive
 awards in the form of incentive and non-qualified stock options, stock
 appreciation rights, restricted stock, restricted stock units, performance
 stock, performance units and other awards in stock and/or cash to certain key
 employees, non-employee directors and service providers. In May 2009, the
 Companys shareholders approved amendments to the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

6

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Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2007
 Plan, including an increase in the number of shares authorized for issuance
 by 500,000 shares to a total of 1,230,320 shares. At March 31, 2011, a total
 of 463,008 shares were available for future grant under the 2007 Plan, as
 amended. Effective with the approval of the 2007 Plan in May 2007, the
 Company may not issue any new awards or options under its Amended and
 Restated 1992 Stock Option Plan (the 1992 Plan). The exercise price of
 stock options granted under the 2007 Plan is equal to the market value on the
 date of grant. Options issued to employees through March 31, 2006 under the
 1992 Plan generally become exercisable over a two-year period and terminate
 ten years from the date of grant. Options issued to employees after March 31,
 2006 under both the 1992 Plan and the 2007 Plan generally become exercisable
 over a four-year period. Options issued to employees through May 13, 2008
 under the 1992 Plan and the 2007 Plan terminate ten years from the date of
 grant, while options issued effective May 14, 2008 under the 2007 Plan
 terminate seven years from the date of grant. Stock options granted to
 non-employee directors vest six months from the date of grant and terminate
 ten years from the date of grant. Restricted stock and restricted stock unit
 awards issued to employees and non-employee directors under the 2007 Plan are
 subject to the risk of forfeiture and transfer restrictions that lapse in
 varying time periods from the date of grant.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | In
 addition to awards granted under the 2007 Plan and 1992 Plan, the Company
 granted a non-qualified option to purchase 200,000 shares of its common stock
 to a newly hired executive officer on April 1, 2009. The option was granted
 outside of any shareholder-approved plan as an inducement to accept
 employment with the Company. The option has an exercise price equal to the
 closing price of the Companys common stock as reported by the Nasdaq Stock
 Market on the first day of employment of April 1, 2009, vests in four equal
 installments on each of the first four anniversaries of the date of grant and
 has a term of seven years. In other respects, the option was structured to
 mirror the terms of options granted under the 2007 Plan and is subject to a
 stock option plan between the Company and the executive officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | Under
 the guidance of the Stock Compensation Topic of the Codification, stock-based
 compensation expense is determined based on the grant-date fair value and is
 recognized on a straight-line basis over the vesting period for each
 stock-based award granted on or after January 1, 2006, and for previously
 granted awards not yet vested as of January 1, 2006. The Company recognizes
 stock-based compensation net of an estimated forfeiture rate, resulting in
 the recognition of compensation cost for only those shares expected to vest.
 Compensation cost is recognized for all awards over the vesting period to the
 extent the employees or directors meet the requisite service requirements,
 whether or not the award is ultimately exercised. Conversely, when an
 employee or director does not meet the requisite service requirements and
 forfeits the award prior to vesting, any compensation expense previously
 recognized for the award is reversed. The Company recognized stock-based
 compensation costs of $469,000 and $467,000 for the three months ended March
 31, 2011 and 2010, respectively.                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | The
 fair value of each option award is estimated at the date of grant using the
 Black-Scholes option pricing model. The following key assumptions were
 utilized in valuing option awards issued during the three months ended March
 31, 2011 and 2010:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

7

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Table of Contents

|                                   |  |                              |      |      |  |               |  
|---------------------------------- |  | ---------------------------- | ---- | ---- |  | ------------- | -
|                                   |  | Three Months Ended March 31, |     
|                                   |  | 2011                         |      | 2010 | 
|                                   |  |                              |      |      |  |               |  
|Expected life of options in
 years |  |                              | 4.75 |      |  | 4.75          |  
|                                   |  |                              |      |      |  |               |  
|Risk-free interest rate            |  |                              | 2.05 | %    |  | 2.34%
 - 2.65 | %
|                                   |  |                              |      |      |  |               |  
|Expected volatility                |  |                              | 48.1 | %    |  | 49.2%
 - 49.6 | %
|                                   |  |                              |      |      |  |               |  
|Expected dividend yield            |  |                              | 2.7  | %    |  | 0.0           | %

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
 Company reviews these assumptions at the time of each new option award and
 adjusts them as necessary to ensure proper option valuation. The expected
 life represents the period that the stock option awards are expected to be
 outstanding. Effective April 2008, the Companys Board of Directors approved
 a change in the contractual term of stock options granted to employees from
 ten to seven years. Given the reduction in the contractual term of its
 employee stock option awards, the Company determined it was unable to rely on
 its historical exercise data as a basis for estimating the expected life of
 stock options granted to employees subsequent to this change. As such, the
 Company used the simplified method for determining the expected life of
 stock options granted to employees in 2010 and 2011, as specified by Staff
 Accounting Bulletin (SAB) No. 107, Valuation of Share-Based Payment
 Arrangements for Public Companies, which bases the expected life calculation
 on the average of the vesting term and the contractual term of the awards. The
 risk-free interest rate is based on the yield of constant maturity U.S.
 treasury bonds with a remaining term equal to the expected life of the
 awards. The Company estimated the stock price volatility using weekly price
 observations over the most recent historical period equal to the expected
 life of the awards. The expected dividend yield for 2010 grants was zero as
 the Company had not paid or declared any cash dividends to date on its common
 stock, and did not have plans at that time to pay dividends. With the
 approval by the Companys Board of Directors effective February 23, 2011 of a
 quarterly dividend policy, the Company has computed an expected dividend rate
 for grants awarded in the first quarter of 2011 based on the relationship of
 the expected dividend to the stock price on the date of grant. Other
 information pertaining to stock options is as follows:

|                                                          |  |                                       |       |      |   |       | 
|--------------------------------------------------------- |  | ------------------------------------- | ----- | ---- | - | ----- | 
|                                                          |  | Three Months Ended March 31,          |      
|                                                          |  | 2011                                  |       | 2010 |  
|                                                          |  | (in thousands, except per share data) |      
|                                                          |  |                                       |       |      |   |       | 
|Number of options granted                                 |  |                                       | 15    |      |   | 75    | 
|Fair value of options
 granted                            |  | $                                     | 77    |      | $ | 557   | 
|Per share weighted average
 fair value of options granted |  | $                                     | 5.15  |      | $ | 7.43  | 
|Total fair value of stock
 options vested                 |  | $                                     | 139   |      | $ |      | 
|Total intrinsic value of
 stock options exercised         |  | $                                     | 138   |      | $ | 66    | 
|Total intrinsic value of
 stock options outstanding       |  | $                                     | 1,086 |      | $ | 1,000 | 

8

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Table of Contents

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Cash
 received from the exercise of stock options was $158,000 and $66,000 for the
 three months ended March 31, 2011 and 2010, respectively. The aggregate
 impact of the exercise of stock options, expirations of vested stock options
 and lapse of restrictions on restricted stock generated a net tax impact of
 $9,000 and $12,000 during the three months ended March 31, 2011 and 2010,
 respectively, recorded as an addition to additional paid-in capital in both
 periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(3) | Accounting for Uncertainty in Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | As
 of March 31, 2011 and December 31, 2010, the Companys liability for gross
 unrecognized tax benefits totaled $375,000 and $360,000, respectively
 (excluding interest and penalties). Total accrued interest and penalties
 relating to unrecognized tax benefits amounted to $46,000 and $43,000 on a
 gross basis at March 31, 2011 and December 31, 2010, respectively. The
 Company does not currently expect significant changes in the amount of
 unrecognized tax benefits during the next twelve months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(4) | Marketable Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Marketable
 securities consist primarily of municipal securities and corporate securities
 with long-term credit ratings of AAA and short-term credit ratings of A-1.
 Marketable securities are classified as either short-term or long-term in the
 condensed consolidated balance sheet based on their effective maturity date.
 All marketable securities as of March 31, 2011 and December 31, 2010 have
 original maturities ranging from three to 12 months. Marketable securities
 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 until realized.
 See Note 8, Fair Value Measurements, for a discussion of inputs used to
 measure the fair value of the Companys available-for-sale securities. The
 Companys marketable securities at March 31, 2011 did not include any
 auction-rate securities, high-yield sub-prime backed paper or other
 affected securities which are subject to significant market value declines or
 liquidity issues.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(5) | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Inventories
 consisted of the following (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|                                            |  |                 |       |                    |   |       | 
|------------------------------------------- |  | --------------- | ----- | ------------------ | - | ----- | 
|                                            |  | March 31,
 2011 |       | December 31,
 2010 |  
|                                            |  |                 |       |                    |   |       | 
|Finished goods and
 demonstration equipment |  | $               | 2,040 |                    | $ | 1,521 | 
|Purchased parts and
 subassemblies          |  |                 | 4,209 |                    |   | 2,981 | 
|                                            |  | $               | 6,249 |                    | $ | 4,502 | 

|    |                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(6) | Comprehensive
 Income                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                               
|    | Comprehensive
 income consists of the Companys net income, foreign currency translation
 adjustments and unrealized holding gains and losses from available-for-sale
 securities. The components of and changes in other comprehensive income are
 as follows (in thousands):

9

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Table of Contents

|                                                                                     |  |                               |       |      |   |      |  
|------------------------------------------------------------------------------------ |  | ----------------------------- | ----- | ---- | - | ---- | -
|                                                                                     |  | Three Months Ended
 March 31, |      
|                                                                                     |  | 2011                          |       | 2010 |  
|                                                                                     |  |                               |       |      |   |      |  
|Net income                                                                           |  | $                             | 1,483 |      | $ | 695  |  
|Other comprehensive income:                                                          |  |                               |       |      |   |      |  
|Net changes in:                                                                      |  |                               |       |      |   |      |  
|Foreign currency translation adjustments                                             |  |                               | 375   |      |   | (348 | )
|Change in net unrealized gain on marketable securities, net of taxes                 |  |                               | (25   | )    |   | (55  | )
|Total comprehensive income                                                           |  |                               | 1,833 |      |   | 292  |  
|Net loss attributable to
 the noncontrolling interest                                |  |                               | (15   | )    |   |     |  
|Foreign currency
 translation adjustment attributable to the noncontrolling interest |  |                               | 3     |      |   |     |  
|Comprehensive loss
 attributable to the noncontrolling interest                      |  |                               | (12   | )    |   |     |  
|Comprehensive income
 attributable to Rimage                                         |  | $                             | 1,845 |      | $ | 292  |  

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(7) | Derivatives                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The
 Company enters into forward foreign exchange contracts principally to hedge
 intercompany receivables denominated in Euros arising from sales to its subsidiary
 in Germany. The Companys foreign exchange contracts do not qualify for hedge
 accounting under the Derivatives and Hedging Topic of the Codification. As a
 result, gains or losses related to mark-to-market adjustments on forward
 foreign exchange contracts are recognized as other income or expense in the
 income statement during the period in which the instruments are outstanding.
 The fair value of forward foreign exchange contracts represents the amount
 the Company would receive or pay to terminate the forward exchange contracts
 at the reporting date and is recorded in other current assets or other
 current liabilities depending on whether the net amount is a gain or a loss.
 The Company does not utilize financial instruments for trading or other speculative
 purposes.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | As
 of March 31, 2011, the Company had four outstanding foreign exchange
 contracts with a notional amount totaling approximately $824,000. These
 contracts mature during April 2011 and bear exchange rates ranging from
 1.3864 and 1.4060 U.S. Dollars per Euro. As of March 31, 2011, the fair value
 of foreign exchange contracts resulted in a net loss position of
 approximately $13,000, which is recorded in other current liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | As
 of December 31, 2010, the Company had five outstanding foreign exchange
 contracts with a notional amount totaling approximately $695,000, all
 maturing during the first quarter of 2011 at exchange rates ranging from
 1.3025 to 1.3539 U.S. Dollars per Euro. As of December 31, 2010, the fair
 value of foreign exchange contracts resulted in a net loss position of
 approximately $2,000, which is recorded in other current liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Realized
 and unrealized gains or losses on derivative instruments related to foreign
 currency exchange contracts and their location on the Companys condensed
 consolidated statements of income are as follows (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

10

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Table of Contents

|                           |  |                           |  |                             |    |      |   |    | 
|-------------------------- |  | ------------------------- |  | --------------------------- | -- | ---- | - | -- | 
|                           |  |                           |  | Three Months EndedMarch 31, |   
|Derivative
 Instrument     |  | Location                  |  | 2011                        |    | 2010 |  
|                           |  |                           |  |                             |    |      |   |    | 
|Foreign Exchange Contracts |  | Loss on currency exchange |  | $                           | 26 |      | $ | 48 | 

| |                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
 net gains or losses from foreign exchange contracts reflected above were
 largely offset by the underlying transaction net gains and losses arising
 from the foreign currency exposures to which these contracts relate.       
| |                                                                                                                                                                                                                                      
| | The
 gross fair market value of derivative instruments related to foreign currency
 exchange contracts and their location on the Companys condensed consolidated
 balance sheets are as follows as of March 31, 2011 (in thousands):

|                           |  |                          |  |                       |   |          |                              |                 |   |    | 
|-------------------------- |  | ------------------------ |  | --------------------- | - | -------- | ---------------------------- | --------------- | - | -- | 
|                           |  | Asset Derivatives        |  | Liability Derivatives |  
|Derivative
 Instrument     |  | Location                 |  | March 31,
 2011       |   | Location |                              | March 31,
 2011 |  
|                           |  |                          |  |                       |   |          |                              |                 |   |    | 
|Foreign Exchange Contracts |  | Other current assets (1) |  | $                     |  |          | Other current liabilities(1) |                 | $ | 13 | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | (1)
 As the Companys foreign exchange agreement is subject to a master netting
 arrangement, the Companys policy is to record the fair value of outstanding
 foreign exchange contracts as other current assets or other current
 liabilities, based on whether outstanding contracts are in a net gain or loss
 position, respectively. See Note 8, Fair Value Measurements, for additional
 information regarding the fair value measurements of derivative instruments
 related to foreign currency exchange contracts.                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The
 Company enters into its foreign exchange contracts with a single
 counterparty, a financial institution. The Company manages its concentration
 of counterparty risk associated with foreign exchange contracts by
 periodically assessing relevant information such as the counterpartys
 current financial statements, credit agency reports and/or credit references.
 To further mitigate credit risk, the Companys Foreign Exchange Agreement
 with its counterparty includes a master netting arrangement, which allows
 netting of asset and liability positions of outstanding foreign exchange
 contracts if settlement were required.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(8) | Fair Value Measurements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | A
 hierarchy for inputs used in measuring fair value is in place that
 distinguishes market data between observable independent market inputs and
 unobservable market assumptions by the reporting entity.                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The
 hierarchy is intended to maximize the use of observable inputs and minimize
 the use of unobservable inputs by requiring that the most observable inputs
 be used when available. Three levels within the hierarchy may be used to
 measure fair value:                                                                                                                                                                                                                                                                                                                                                                                          

| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | Level
 1: Inputs are unadjusted quoted prices in active markets for identical assets
 and liabilities.                                                                                                                                                                                                                                                                                           
| |  |   |                                                                                                                                                                                                                                                                                                                                                                                                  
| |  |  | Level
 2: Inputs include data points that are observable such as quoted prices for
 similar assets or liabilities in active markets, quoted prices for identical
 or similar assets or liabilities in markets that are not active, and inputs
 (other than quoted prices) such as interest rates and yield curves that are
 observable for the asset or liability, either directly or indirectly.

11

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Table of Contents

| |                                                                                                                                                                                          |   |                                                                                                                                                                                                                                                                                   
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                          |  | Level
 3: Inputs are generated from model-based techniques that use significant
 assumptions not observable in the market. These unobservable assumptions
 reflect an entitys own estimates of assumptions that market participants
 would use in pricing the asset or liability.
| |                                                                                                                                                                                          |   |                                                                                                                                                                                                                                                                                   
| | The
 Companys assets and liabilities measured at fair value on a recurring basis
 and the fair value hierarchy utilized to determine such fair values is as
 follows at March 31, 2011:

|                                            |  |                                      |       |                                             |   |                                                  |  |                                              |       |  |   |   | 
|------------------------------------------- |  | ------------------------------------ | ----- | ------------------------------------------- | - | ------------------------------------------------ |  | -------------------------------------------- | ----- |  | - | - | 
|                                            |  |                                      |       | Fair Value Measurements Using               |  
|(in thousands)                              |  | Total Fair
 Value at
 March 31, 2011 |       | Quoted Prices in
 Active Markets
 (Level 1) |   | Significant Other
 Observable
 Inputs
 (Level 2) |  | Significant
 Unobservable
 Inputs
 (Level 3) |      
|Assets                                      |  |                                      |       |                                             |   |                                                  |  |                                              |       |  |   |   | 
|Available-for-sale securities               |  | $                                    | 8,716 |                                             | $ |                                                 |  | $                                            | 8,716 |  | $ |  | 
|Liabilities                                 |  |                                      |       |                                             |   |                                                  |  |                                              |       |  |   |   | 
|Foreign currency forward exchange contracts |  | $                                    | 13    |                                             | $ |                                                 |  | $                                            | 13    |  | $ |  | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Available-for-sale
 securities in the preceding table are classified as current marketable
 securities in the accompanying condensed consolidated balance sheets.
 Available-for-sale securities are carried at fair value based on significant
 observable inputs other than quoted market prices. Such inputs may include
 benchmark yields, reported trades, broker/dealer quotes, issuer spreads,
 two-sided markets, benchmark securities, bids, offers and other reference
 data. Foreign currency forward exchange contracts are also carried at fair
 value based on significant other observable market inputs, in this case,
 quoted foreign currency exchange rates. Such valuation represents the amount
 the Company would receive or pay to terminate the forward exchange contracts
 at the reporting date.                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | In
 September 2009, the Financial Accounting Standards Board (FASB) issued
 Accounting Standards Update (ASU) 2009-12, Fair Value Measurements and
 Disclosures  Investments in Certain Entities That Calculate Net Asset Value
 per Share (or its Equivalent). ASU 2009-12 allows companies to use net asset
 value as a practical expedient to estimate fair value of investments that are
 within the scope of this ASU that do not have readily determinable fair
 values. The Company adopted this guidance in the first quarter of 2010, and
 the adoption did not have an impact on the Companys condensed consolidated
 financial statements.                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(9) | Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Effective
 October 2010, the Companys Board of Directors approved the continuation of
 common stock repurchases under original Board authorizations providing for
 the repurchase of up to 1,000,000 shares of the Companys common stock.
 Shares may be purchased at prevailing market prices in the open market or in
 private transactions, subject to market conditions, share price, trading
 volume and other factors. The repurchase program may be discontinued at any
 time. The Company repurchased 117,377 shares of its common stock during the
 fourth quarter of 2010. The Company did not repurchase any shares of its
 common stock during the three months ended March 31, 2011. The repurchase
 program has been funded to date using cash on hand. As of March 31, 2011,
 305,540 shares were available for repurchase under the authorizations.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

12

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Table of Contents

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | On
 February 23, 2011, the Companys Board of Directors approved the initiation
 of a quarterly dividend policy and authorized the first dividend of $0.10 per
 share payable April 15, 2011, to shareholders of record as of March 31, 2011.
 The condensed consolidated balance sheet as of March 31,
 2011 reflects an associated current liability of $950,000 in dividends
 payable with an offsetting charge to retained earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(10) | Recently Issued Accounting Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     | In
 January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures
  Improving Disclosures about Fair Value Measurements, which requires new
 disclosures about recurring and nonrecurring fair-value measurements
 including significant transfers into and out of Level 1 and Level 2 of the
 fair value hierarchy. The ASU also requires additional information in the
 roll-forward of Level 3 assets and liabilities including the presentation of
 purchases, sales, issuances and settlements on a gross basis. Further
 clarification for existing disclosure requirements provides for the
 disaggregation of assets and liabilities presented, and the enhancement of
 disclosures around inputs and valuation techniques. This ASU impacts
 disclosures only. The Company adopted the disclosure provisions of this ASU
 in the first quarter of 2010, with the exception of the additional required
 information in the roll-forward of Level 3 assets and liabilities, which was
 adopted in the first quarter of 2011. No transfers of assets or liabilities
 into or out of Levels 1, 2 or 3 of the fair value hierarchy occurred or were
 required during the three months ended March 31, 2011. The Companys adoption
 of this guidance did not have an impact on the Companys condensed
 consolidated financial statements and related disclosures.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(11) | Computation of Net Income Per Share of Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     | Basic
 net income per common share is determined by dividing net income by the basic
 weighted average number of shares of common stock outstanding. Diluted net
 income per common share includes the potentially dilutive effect of common
 shares issued in connection with outstanding stock options using the treasury
 stock method and the dilutive impact of restricted stock units. Stock options
 to acquire weighted average common shares of 1,112,000 and 1,078,000 for the
 three months ended March 31, 2011 and 2010, respectively, have been excluded
 from the computation of diluted weighted average shares outstanding for each
 respective period as their effect is anti-dilutive. The following table
 identifies the components of net income per basic and diluted share (in
 thousands, except for per share data):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|                                                        |  |                               |       |      |   |       | 
|------------------------------------------------------- |  | ----------------------------- | ----- | ---- | - | ----- | 
|                                                        |  | Three Months Ended
 March 31, |      
|                                                        |  | 2011                          |       | 2010 |  
|                                                       
|Shares outstanding at end
 of period                    |  |                               | 9,499 |      |   | 9,485 | 
|                                                        |  |                               |       |      |   |       | 
|Basic weighted average shares outstanding               |  |                               | 9,494 |      |   | 9,476 | 
|                                                        |  |                               |       |      |   |       | 
|Dilutive effect of stock options/restricted stock units |  |                               | 49    |      |   | 81    | 
|Total diluted weighted
 average shares outstanding      |  |                               | 9,543 |      |   | 9,557 | 
|                                                        |  |                               |       |      |   |       | 
|Net income attributable to
 Rimage                      |  | $                             | 1,498 |      | $ | 695   | 
|                                                        |  |                               |       |      |   |       | 
|Basic net income per common
 share                      |  | $                             | 0.16  |      | $ | 0.07  | 
|                                                        |  |                               |       |      |   |       | 
|Diluted net income per
 common share                    |  | $                             | 0.16  |      | $ | 0.07  | 

13

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|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(12) | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | The
 manufacturing facilities of a number of the Companys suppliers are located
 in Japan, including its single-source supplier of Everest printers,
 associated printer ribbons and Professional Series 5400N and 3400 disc
 publishing systems. These products collectively generate a significant
 portion of the Companys revenues. An earthquake and accompanying tsunami
 struck the north-east area of Japan on March 11, 2011, causing significant
 damage in the surrounding region. Rimages Japanese office and its reseller
 partners remain in operation. Some of the Companys key suppliers in Japan
 have experienced disruptions in their production processes, resulting from
 factory or equipment damage, loss of power, rolling blackouts and
 transportation challenges. The Company is implementing contingency plans to
 minimize the impact of this event on its customers. Since supply for some
 products may be affected in the second quarter of 2011, alternative sources
 of supply for these products have been secured with an accompanying increase
 in costs due to higher prices from alternative suppliers and use of expedited
 deliveries. The Company expects to fulfill all second quarter orders.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(13) | Consolidation
 of Joint Venture Entity and Noncontrolling Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | The
 Company holds a 51% controlling interest in a joint venture established in
 mid August 2010 in China, Rimage Information Technology (Shanghai) Co., Ltd.
 (RIT). Taiwan Electronic Data Processing (TEDPC), a Taiwanese software
 provider in the healthcare solutions market, holds the remaining 49%
 interest. RIT purchases digital publishing systems from Rimage, and
 integrates medical disc system software purchased from TEDPC with Rimages
 digital publishing systems to allow deployment of a complete digital
 publishing solution for medical imaging in hospitals in China.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | RIT
 has a commitment to pay TEDPC a minimum of $1,000,000 over the first three
 years of operations for the purchase of the software source code and associated
 intellectual property, which was acquired by RIT from TEDPC in December 2010.
 To the extent RITs sales over the initial three-year period exceed
 established thresholds, RIT has agreed to pay TEDPC an incremental fee based
 on unit sales volumes. The Company capitalized the $1,000,000 purchase price
 for the software source code in other non-current assets and recorded the
 associated liability in current accounts payable ($400,000) and other
 non-current liabilities ($600,000) in the accompanying condensed consolidated
 balance sheets as of December 31, 2010. RIT paid the first installment
 payment of $400,000 for the purchase of the software source code to TEDPC
 during the first quarter of 2011. The software source code is being amortized
 over its expected useful life of five years. Amortization expense recognized
 during the three months ended March 31, 2011 was approximately $50,000.
 Accumulated amortization was approximately $125,000 and $75,000 as of March
 31, 2011 and December 31, 2010, respectively.       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | The
 Company includes the financial statements of RIT in its condensed
 consolidated financial statements, with the equity and loss attributed to the
 noncontrolling interest identified separately in the accompanying condensed
 consolidated balance sheets and statements of income. During the three months
 ended March 31, 2011, RIT earned revenues of $199,000 and incurred a net loss
 of $31,000, of which $15,000 was attributed to the noncontrolling interest.
 Consolidated stockholders equity as of March 31, 2011 included $494,000
 attributable to the noncontrolling interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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Table of Contents

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(14) | Investment
 in Software Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | At
 December 31, 2010, the Company held a $290,000 convertible note receivable
 with BriefCam, Ltd., a privately-held Israeli company that develops video
 synopsis technology to augment security and surveillance systems to
 facilitate review of surveillance video. In February 2011, the Company
 participated in the funding of BriefCams preferred stock issuance with a
 cash investment of $2.0 million, and concurrently converted its note
 receivable into the same series of convertible preferred stock, achieving a
 minority ownership interest of less than 20%. Rimage intends to integrate
 this technology into its digital surveillance solutions.                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | Because
 Rimages ownership interest is less than 20% and it has no other rights or
 privileges that enable it to exercise significant influence over the
 operating and financial policies of BriefCam, Rimage accounts for this equity
 investment using the cost method. Management believes it is not practicable
 to estimate the fair value of its investment because of the early stage of
 BriefCams business and low volume of BriefCams equity transactions. Through
 its seat on BriefCams board of directors, Rimage monitors BriefCams results
 of operations and business plan, and is not aware of any events or
 circumstances that would indicate a decline in the carrying value of its
 investment, which amounted to $2.29 million at March 31, 2011 and is included
 in other noncurrent assets in the condensed consolidated balance sheets.

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Table of Contents

| |                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------
| | 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 condensed consolidated statements of income.

|                                    |  |                                                              |       |                                              |  |               |   |  |       |  
|----------------------------------- |  | ------------------------------------------------------------ | ----- | -------------------------------------------- |  | ------------- | - |  | ----- | -
|                                    |  | Percentage (%)
 of Revenues 
 Three Months Ended 
 March 31, |       | Percentage (%)
 Inc/(Dec)
 Between 
 Periods | 
|                                    |  | 2011                                                         |       | 2010                                         |  | 2011 vs. 2010 |  
|Revenues                            |  |                                                              | 100.0 |                                              |  | 100.0         |   |  | 16.8  |  
|Cost of revenues                    |  |                                                              | (49.7 | )                                            |  | (52.9         | ) |  | 9.8   |  
|Gross profit                        |  |                                                              | 50.3  |                                              |  | 47.1          |   |  | 24.6  |  
|Operating expenses:                 |  |                                                              |       |                                              |  |               |   |  |       |  
|Research and development            |  |                                                              | (7.2  | )                                            |  | (7.9          | ) |  | 7.7   |  
|Selling, general and administrative |  |                                                              | (32.3 | )                                            |  | (34.1         | ) |  | 10.2  |  
|Operating income                    |  |                                                              | 10.8  |                                              |  | 5.1           |   |  | 146.4 |  
|Other income, net                   |  |                                                              | 0.2   |                                              |  | 0.8           |   |  | (76.6 | )
|Income before income taxes          |  |                                                              | 11.0  |                                              |  | 5.9           |   |  | 116.7 |  
|Income tax expense                  |  |                                                              | (4.1  | )                                            |  | (2.1          | ) |  | 122.6 |  
|Net income                          |  |                                                              | 6.9   |                                              |  | 3.8           |   |  | 113.4 |  
|Less noncontrolling
 interest       |  |                                                              | 0.1   |                                              |  |              |   |  |      |  
|Net income attributable to
 Rimage  |  |                                                              | 7.0   |                                              |  | 3.8           |   |  | 115.5 |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Overview                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Rimage
 develops, manufactures and markets workflow-integrated digital publishing
 solutions that are used by businesses to produce recordable CD, DVD and
 Blu-ray discs with customized digital content and durable disc labeling on an
 on-demand basis. Rimage distributes its publishing systems from its
 operations in the United States, Germany, Japan and its joint venture
 operation in China. The Company also distributes related consumables for use
 with its systems, consisting of ribbons, ink cartridges, Rimage-branded blank
 CD-R, DVD-R and Blu-ray media, or media kits, which combine these items for the
 customers convenience. These systems allow customers to benefit from cost
 savings by eliminating their manual labor efforts in markets and applications
 such as digital photography, medical imaging, business services, video
 workflows and law enforcement, including surveillance and evidence
 management. As Rimages sales within North America and Europe have averaged
 91% of total sales over the past three years, the strength of the economies
 in these regions plays an important role in determining the success of
 Rimage.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Rimage
 earns revenues through the sale of equipment, consumables and parts (included
 in Product revenues in the accompanying condensed consolidated statements of
 income), as well as maintenance contracts, repair and installation services
 (included in Service revenues in the condensed consolidated statements of
 income). Rimages recurring revenues (consumables, parts, maintenance
 contracts and service) comprised 67% and 66% of its consolidated revenues
 during the three months ended March 31, 2011 and 2010, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | As
 part of its plan to improve the efficiency of its sales channels, effective
 April 1, 2010, Rimage discontinued its distributor relationships with
 distributors in the United States, Germany, and the United Kingdom, and now
 sells products in these regions to end-user customers primarily through
 value-added resellers or other strategic partners, and also directly to
 select accounts through its own sales force.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In
 August 2010, the Company received approval of its registration of a
 majority-owned joint venture in China, Rimage Information Technology
 (Shanghai) Co., Ltd. (RIT), and was issued a business license which allowed
 initiation of operations. The Chinese healthcare systems transition from
 medical film to optical disc for distribution of patient imaging related
 information is expected to drive growth in the digital medical imaging market
 in China. As part of the Companys strategy to participate in this growth
 opportunity, RIT will deploy a complete digital publishing solution for
 medical imaging in hospitals in China. The Company includes the financial
 statements of RIT in its condensed consolidated financial statements, with
 the equity and loss attributed to the noncontrolling interest identified separately
 in the accompanying condensed consolidated balance sheets and statements of
 income. During the three months ended March 31, 2011, RIT earned revenues of
 $199,000 and incurred a net loss of $31,000, of which $15,000 was attributed
 to the noncontrolling interest. Consolidated stockholders equity as of March
 31, 2011 included $494,000 attributable to the noncontrolling interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | In
 February 2011, the Company made a $2.0 million minority equity investment in
 BriefCam, Ltd., a surveillance software company, and concurrently converted
 to equity its $0.3 million convertible note receivable with Briefcam
 initiated in December 2010. Rimage will utilize Briefcams video synopsis
 software to enhance its video surveillance solution with analytical capabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | Results
 of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | Revenues. Total revenues increased 17%, or $3.1 million, to $21.5 million for
 the three months ended March 31, 2011 from $18.4 million in the prior-year
 period. The increase in total revenues between periods reflects a $3.0
 million increase in product revenues, and a $0.1 million increase in
 service-related revenues. The increase in product revenues for the
 current-year period resulted from a $2.0 million increase in consumables and
 parts sales and a $1.0 increase in equipment sales.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | The
 growth in sales of consumable products was driven by a $3.1 million increase
 in the volume of sales of media and media kits, partially offset by a $1.1
 million decrease in sales of ribbons and ink cartridges. The rise in sales of
 media and media kits was primarily impacted by increased sales of $1.8
 million to a retail customer and generally increased sales to channel
 partners in the U.S., Europe and Asia. The increase in channel partner sales
 was impacted by the Companys sales model change in 2010, which caused key
 distributors in the U.S. to reduce purchases and sell through remaining media
 kit inventories in the first quarter of 2010, pending termination of the
 distributor agreements effective March 31, 2010. The sales model change in
 2010 also drove a partially offsetting decline in sales of ribbons and ink
 cartridges in the current period, as U.S. distributors took advantage of
 favorable pricing and increased their purchases of these products during the
 three months ended March 31, 2010 to allow continued sales to their resellers
 after the termination of the distributor relationships with Rimage. The $1.0
 million increase in equipment revenues during the three months ended March
 31, 2011 consisted of a $1.1 million increase in the volume of Professional
 Series product sales and a $0.1 million increase in sales of Producer Series
 products, partially offset by a $0.2 million decrease in the volume of
 Desktop product sales. Professional Series equipment sales in the
 current-year period included $1.3 million in sales to a retail customer,
 which largely completed a multi-system sales agreement obtained in the second
 quarter of 2010. The growth in sales of Professional Series products in the
 current-year period was also impacted by increased sales to channel partners
 in the U.S. and Europe. The shift in the distribution of sales from Producer
 Series equipment to Professional Series equipment was accompanied by lower
 average selling prices, which partially offset the impact of increased sales
 volumes.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | The
 $0.1 million increase in service-related revenues in the current period was
 driven by a significant increase in the installed base of systems covered by
 a maintenance contract, driven largely by the multi-system sales to a retail
 customer starting in the second quarter of 2010 and continuing through the
 first quarter of 2011. Partially offsetting the increase in maintenance
 contract revenues was a decline in sales of installation and repair services
 during the current period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Recurring
 revenues comprised 67% and 66% of total revenues for the three months ended
 March 31, 2011 and 2010, respectively. Sales of Producer and Professional
 Series product line equipment comprised 13% and 17%, respectively, of total
 revenues for the three months ended March 31, 2011, compared to 15% and 14%,
 respectively, of total revenues in the prior-year period. Remaining revenues
 in each period were generated by sales of Desktop product line equipment,
 representing 3% of revenues for the current period, compared to 5% in the
 prior-year period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | International
 sales decreased $0.1 million, or 1% during the three months ended March 31,
 2011, compared to the same period last year, and comprised 38% of total
 sales, compared to 44% in the prior-year period. The decline in international
 sales was driven by a 7% and 2% reduction in sales in the Companys Asian and
 European markets, respectively, for the three months ended March 31, 2011. In
 the aggregate, currency fluctuations had a minimal impact, increasing
 reported consolidated revenues for the three months ended March 31, 2011 by
 0.3%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Future
 revenues will be dependent upon many factors, including the effectiveness of
 changes that occurred effective April 1, 2010 to improve the efficiency of
 the Companys sales channels, described in the Overview section above, the
 success of the Companys deployment of a complete digital publishing solution
 for medical imaging in hospitals in China and the rate of adoption of other
 new solutions-based products introduced by the Company. Other factors that
 will influence future revenues include the Companys ability to successfully
 commercialize its virtual publishing solution currently under development,
 the timing of other new product introductions, the rate of adoption of other
 new applications for the Companys products in its targeted markets, the
 performance of the Companys channel partners, the timing of customer orders
 and related product deliveries, the Companys ability to maintain continuous
 supply of its products and components, the impact of changes in economic
 conditions and the impact of foreign currency exchange rate fluctuations.                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Gross profit. Gross profit as a
 percentage of total revenues was 50.3% for the three months ended March 31, 2011,
 compared to 47.1% for the same period in 2010. Gross profit as a percentage
 of revenues for the current-year period benefitted from increased selling
 prices primarily for consumable products in the Companys U.S. and major
 European markets, reflecting the impact of removing distributors from these
 markets effective April 1, 2010. Also favorably impacting margins in the
 current-year period were improvements in service-related margins, stemming
 from an increase in maintenance contract revenues coupled with reductions in
 support costs as a result of changes initiated in 2010 in the Companys
 global service model. The service cost reductions included lower compensation
 from a reduction in personnel, a reduced requirement for replacement parts
 under maintenance contracts and the sale of lower cost on-site maintenance
 contracts. Margins in the current period also benefitted from the
 finalization of a regulatory audit by the German customs office that resulted
 in a nonrecurring refund of customs duty costs incurred by the Companys
 German subsidiary in prior years.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Partially
 offsetting the favorable impact of the above on gross profit as a percentage
 of revenue was the impact of a general shift in the mix of sales to lower
 margin products. Sales of Professional Series products increased 44% in the
 current period and comprised 17% of total revenue, compared to 14% in the
 same period last year, driven primarily by increased sales in the U.S. retail
 market segment. Professional Series products generally carry lower selling
 prices and gross margins than Producer Series products. Additionally, sales
 in the retail market generally carry lower selling prices than other markets,
 further decreasing Professional series equipment margins in the current
 period. Sales of media and media kits, which have lower margins than sales of
 ribbons and ink cartridges, increased 113% in the current period, and
 comprised 27% of sales in the current-year period compared to 15% in the prior-year
 period. Conversely, sales of ribbons and ink cartridges declined by 18% and
 comprised 24% of sales in the current period, compared to 34% in the same
 period last year.                                                                                                    

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Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Future
 gross profit margins will continue to be affected by many factors, including
 the impact of the changes in the Companys sales distribution model described
 above, product mix, the timing of new product introductions, the timing of
 customer orders and related product deliveries, changes in material costs and
 supply sources, manufacturing volume, the growth rate of service related
 revenues relative to associated service support costs and foreign currency
 exchange rate fluctuations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Operating expenses. Research and development expenses totaled $1.6 million and $1.4
 million for the three months ended March 31, 2011 and 2010, respectively,
 representing 7% and 8% of revenues in the respective periods. The Company
 incurred a higher level of compensation costs in the current period
 associated with personnel additions to support the development of an online
 virtual publishing solution and other new products. Rimage anticipates
 expenditures in research and development in the second quarter 2011 will
 increase approximately 10% from that of the first quarter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Selling,
 general and administrative expenses for the three months ended March 31, 2011
 amounted to $6.9 million, or 32% of revenues, compared to expenses in the
 same prior-year period of $6.3 million, or 34% of revenues. The rise in
 expenses in the current-year period primarily reflects the impact of continued
 investments made to strengthen the Companys core business and implement its
 growth strategy. Such costs included investments in the Companys sales and
 marketing organization to support solutions-based sales, increased
 compensation-related and travel costs stemming from personnel additions,
 including costs to restructure the European sales organization, increased
 legal expenses associated with the acquisition of a minority equity interest
 in BriefCam, increased consulting costs and expenses incurred by the
 Companys majority-owned Chinese joint venture to establish its support
 infrastructure. Partially offsetting these increases were decreases in
 expenses for audit services, promotional programs and recruiting activities.
 Rimage anticipates expenditures for selling, general and administrative
 activities in the second quarter to be comparable to first quarter 2011
 expense levels.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Other income, net. The Company recognized net interest income
 on cash and marketable securities of $0.1 million and $0.2 million for the
 three month periods ended March 31, 2011 and 2010, respectively. The
 reduction in interest income in the current-year period was the result of a
 decline in average effective yields relative to the same prior-year period
 due to a shift in investments to lower yield money market and U.S. Treasury
 securities. Partially offsetting the impact of the reduction in effective
 yields was a $6.8 million increase in average cash equivalent and marketable
 securities balances for the three months ended March 31, 2011 compared to the
 same period in the prior year. Other income for the three months ended March
 31, 2011 also includes net losses on foreign currency transactions of
 $33,000, compared to net losses of $27,000 for the same period in the prior
 year.                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Income taxes.The provision for income taxes represents federal, state and foreign
 income taxes on income. Income tax expense for the three month periods ended
 March 31, 2011 and 2010 amounted to $0.9 million and $0.4 million,
 respectively, or 37.2% and 36.2% of income before taxes for the respective
 periods. The effective tax rate for the current-year period was unfavorably
 impacted as a result of not recording a tax benefit on a projected increase
 in foreign operating losses related to the operations of the Companys joint
 venture in China. Also unfavorably impacting the effective tax rate for the
 current period was the impact of a significantly reduced amount of projected
 tax-exempt interest income comprising a smaller percentage of pre-tax income.
 Favorable impacts to the effective tax rate in the current period included
 the reinstatement of the federal research credit, for which no benefit was
 available in same period last year, and a projected increase in the relative
 benefit from the Section 199 deduction.                                                                                                                                                                                     

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Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Net income / net income per share. Resulting
 net income attributable to Rimage for the three months ended March 31, 2011
 was $1.5 million, or 7% of revenues, compared to $0.7 million, or 4% of
 revenues, for the same prior-year period. Related net income per diluted
 share was $0.16 for the three months ended March 31, 2011, compared to $0.07
 per diluted share for the respective prior-year period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | Liquidity
 and Capital Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | The
 Company expects it will be able to maintain current operations and
 anticipated capital expenditure requirements for the foreseeable future
 through its internally generated funds and cash reserves. At March 31, 2011,
 the Company had working capital of $122.6 million, up $2.3 million from
 working capital reported at December 31, 2010. The increase was primarily the
 result of the generation of net income adjusted for non-cash items of $2.4
 million and a $2.5 million increase in non-current deferred income from sales
 of maintenance contracts, partially offset by the use of cash to purchase a
 $2.0 million minority equity interest in BriefCam and $0.5 million in
 property and equipment and the recognition of $1.0 million of dividends
 payable at March 31, 2011. Exclusive of a small amount of capital lease obligations,
 Rimage has no long-term debt and does not require significant capital
 investment for its ongoing operations as all fabrication of tooling-intensive
 parts is outsourced to vendors.                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | Effective
 October 2010, the Companys Board of Directors approved the continuation of
 common stock repurchases under original Board authorizations providing for
 the repurchase of up to 1,000,000 shares of the Companys common stock.
 Shares may be purchased at prevailing market prices in the open market or in
 private transactions, subject to market conditions, share price, trading
 volume and other factors. The repurchase program may be discontinued at any
 time. The Company repurchased 117,377 shares of its common stock during the
 fourth quarter of 2010. The Company did not repurchase any shares of its
 common stock during the three months ended March 31, 2011. The repurchase
 program has been funded to date using cash on hand. As of March 31, 2011,
 305,540 shares were available for repurchase under the authorizations. The
 Company also intends on utilizing its cash primarily for its continued
 organic growth and potential future strategic initiatives or alliances.                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | On
 February 23, 2011, the Companys board of directors approved the initiation
 of a quarterly dividend policy and authorized the first dividend of $0.10 per
 share payable April 15, 2011, to shareholders of record as of March 31, 2011.
 The dividend issuance is expected to result in future quarterly payments of
 approximately $1 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | Net
 cash provided by operating activities totaled $3.1 million for the three
 months ended March 31, 2011, compared to $0.8 million in the same prior-year
 period. The $2.3 million increase in cash provided by operating activities
 resulted from a $1.0 million increase in net income adjusted for non-cash
 items and a $1.3 million increase in cash provided by changes in operating
 assets and liabilities. Primarily contributing to the change in operating
 assets and liabilities compared to the prior-year period were favorable changes
 of $3.3 million in deferred income and $0.6 million in accrued compensation,
 partially offset by unfavorable changes in receivables of $1.7 million and
 trade accounts payable of $0.9 million. The change in deferred income was
 impacted primarily by a $3.5 million sale of new maintenance contracts to a
 retail customer in the current period under a multi-system sales agreement
 obtained in the second quarter of 2010. The unfavorable change in receivables
 was the result of increased sales in February and March of 2011 compared to
 the same months in 2010. The unfavorable change in trade accounts payable
 occurred largely as a result of payments in the current period of previously
 accrued non-recurring engineering charges under a development agreement and
 the timing of other payments for trade payables.

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Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Investing
 activities used net cash of $2.5 million for the three months ended March 31,
 2011, compared to net cash provided of $9.9 million for the same prior-year
 period. The fluctuations in investing activities were primarily the result of
 $12.6 million in maturities of marketable securities during the three months
 ended March 31, 2010, with no comparable maturities in the current period,
 and a $2 million equity investment in BriefCam in the current period.
 Purchases of property and equipment during the three months ended March 31,
 2011 and 2010 amounted to $0.5 million and $2.7 million, respectively.
 Capital expenditures in the current-year period consisted primarily of the
 first installment payment of $0.4 million for software source code, acquired
 and capitalized by the Companys Chinese joint venture in late 2010. Capital
 expenditures in the prior-year period included $2.4 million of production
 tooling capitalized by the Company in late 2009 associated with a new product
 line launched during the first quarter of 2010. Remaining capital
 expenditures in the prior-year period consisted primarily of costs to support
 the Companys information technology related requirements.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Financing
 activities generated net cash of $0.2 million and $0.1 million for the three
 months ended March 31, 2011 and 2010, respectively, consisting primarily of
 proceeds from stock option exercises.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 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 accounting policies considered by management to be
 the most critical to the presentation of the condensed consolidated financial
 statements because they require the most difficult, subjective and complex
 judgments include revenue recognition, allowance for doubtful accounts,
 inventory provisions, deferred tax asset valuation allowances, accruals for
 uncertain tax positions, stock-based compensation and impairment of
 long-lived assets. These accounting policies are discussed in Item 7.
 Managements Discussion and Analysis of Financial Condition and Results of
 Operations of the Companys Annual Report on Form 10-K for the year ended
 December 31, 2010. Management made no significant changes to the Companys
 critical accounting policies during the three months ended March 31, 2011.                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | In
 applying its critical accounting policies, management reassesses its
 estimates each reporting period based on available information. Changes in
 such estimates did not have a significant impact on the Companys condensed
 consolidated financial statements for the three months ended March 31, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Cautionary
 Note Regarding Forward-Looking Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | This
 report contains forward-looking statements that involve risks and
 uncertainties. For this purpose, any statements contained in this 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, the following, as well as other factors not now identified: the
 economic health of the markets from which Rimage derives its sales and, in
 particular, the strength of the economies within North America and Europe
 where the Company has averaged 91% of total sales over the past three years;
 the Companys ability to keep pace with changes in technology in the computer
 and storage media industries as well as technology changes in the Companys
 targeted markets; increasing competition and the ability of the Companys
 products to successfully compete with products of competitors and newly
 developed media storage products; the ability of the Companys newly
 developed products to gain acceptance and                                                                                                                                                                                                                                                                                                                                                                                                                       

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Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | compete
 against products in their markets; the Companys ability to successfully
 commercialize its virtual publishing solution currently under development;
 the significance of the Companys international operations and the risks
 associated with international operations including currency fluctuations,
 local economic health and management of these operations over long distances;
 the Companys ability to protect its intellectual property and to defend
 claims of others relating to its intellectual property; the Companys ability
 to effectively market its products and serve customers through its
 value-added resellers, distributors, strategic partners and its own sales
 force; the Companys ability to maintain adequate inventory of products; the
 Companys ability to secure alternative sources of supply given its reliance
 on single source suppliers for certain key products; the ability of the
 Companys products to operate effectively with the computer products
 developed and to be developed by other manufacturers; the negative effect
 upon the Companys business from manufacturing or design defects; the effect
 of U.S. and international regulation; fluctuations in the Companys operating
 results; the Companys dependence upon its key personnel; the volatility of
 the price of the Companys common stock; provisions governing the Company
 relating to a change of control, compliance with corporate governance and
 securities disclosures rules and other risks, including those set forth in
 the Companys reports filed with the Securities and Exchange Commission,
 including Item 1A of Part I of the Companys Annual Report on Form 10-K for
 the year ended December 31, 2010. These forward-looking statements are made
 as of the date of this report and the Company assumes no obligation to update
 such forward-looking statements, or to update the reasons why actual results
 could differ materially from those anticipated in such forward-looking
 statements.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Item 3. Quantitative and Qualitative Disclosures
 about Market Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The
 Company is exposed to market risk from foreign exchange rate fluctuations of
 the European Euro, Japanese Yen and Chinese Yuan to the U.S. dollar as the
 financial position and operating results of the Companys German subsidiary,
 Rimage Europe GmbH, its Japanese subsidiary, Rimage Japan Co., Ltd. and its
 majority-owned Chinese joint venture, Rimage Information Technology
 (Shanghai) Co., Ltd. are translated into U.S. dollars for consolidation.
 Resulting translation adjustments are recorded as a separate component of
 stockholders equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The
 Company enters into forward exchange contracts principally to hedge
 intercompany receivables denominated in Euros arising from sales to its
 subsidiary in Germany. Gains or losses on forward exchange contracts are
 calculated at each period end and are recognized in net income in the period
 in which they arose. The Company records the fair value of its open forward
 foreign exchange contracts in other current assets or other current
 liabilities depending on whether the net amount is a gain or a loss. The
 Company does not utilize financial instruments for trading or other
 speculative purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Item 4. Controls and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (a) Evaluation of
 Disclosure Controls and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The
 Companys Chief Executive Officer, Sherman L. Black, and the Companys Chief
 Financial Officer, James R. Stewart, have evaluated the Companys disclosure
 controls and procedures as of March 31, 2011. Based upon such evaluation,
 they have concluded that these disclosure controls and procedures are
 effective. The Companys Chief Executive Officer and Chief Financial Officer
 used the definition of disclosure controls and procedures as set forth in
 Rule 13a-15(e) under the Exchange Act in making their conclusion as to the
 effectiveness of such controls and procedures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (b) Changes in Internal
 Control Over Financial Reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | There
 have been no changes in internal controls over financial reporting that
 occurred during the first quarter ended March 31, 2011 that have materially
 affected, or are reasonable likely to materially affect, the Companys
 internal control over financial reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

22

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Table of Contents

|                            |                                                      |                                                              |                                                                                                  
|--------------------------- | ---------------------------------------------------- | ------------------------------------------------------------ | -------------------------------------------------------------------------------------------------
|PART II  OTHER INFORMATION
|                            |                                                      |                                                              |                                                                                                  
|                            | Item 1.                                              | Legal
 Proceedings                                          
|                            |                                                      |                                                              |                                                                                                  
|                            | Not Applicable.                                      |                                                              |                                                                                                  
|                            |                                                      |                                                              |                                                                                                  
|                            | Item 1A.                                             | Risk
 Factors                                               
|                            |                                                      |                                                              |                                                                                                  
|                            | Not Applicable.                                      |                                                              |                                                                                                  
|                            |                                                      |                                                              |                                                                                                  
|                            | Item 2.                                              | Unregistered
 Sales of Equity Securities and Use of Proceeds
|                            |                                                      |                                                              |                                                                                                  
|                            | Not Applicable.                                      |                                                              |                                                                                                  
|                            |                                                      |                                                              |                                                                                                  
|                            | Item 3.                                              | Defaults
 Upon Senior Securities                            
|                            |                                                      |                                                              |                                                                                                  
|                            | Not Applicable.                                      |                                                              |                                                                                                  
|                            |                                                      |                                                              |                                                                                                  
|                            | Item 4.                                              | [Removed
 and Reserved]                                     
|                            |                                                      |                                                              |                                                                                                  
|                            | Item 5.                                              | Other
 Information                                          
|                            |                                                      |                                                              |                                                                                                  
|                            | Not Applicable.                                      |                                                              |                                                                                                  
|                            |                                                      |                                                              |                                                                                                  
|                            | Item 6.                                              | Exhibits                                                    
|                            |                                                      |                                                              |                                                                                                  
|                            | (a)     The
 following exhibits are included herein:
|                            |                                                      |                                                              |                                                                                                  
|                            |                                                      | 31.1                                                         | Certificate
 of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14 of the
 Exchange Act.
|                            |                                                      |                                                              |                                                                                                  
|                            |                                                      | 31.2                                                         | Certificate
 of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14 of the
 Exchange Act.
|                            |                                                      |                                                              |                                                                                                  
|                            |                                                      | 32                                                           | Certifications
 pursuant to 18 U.S.C. §1350.                                                     

23

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Table of Contents

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 9, 2011 | By:                 | /s/
 Sherman L. Black          
|                  |                     | Sherman
 L. Black              
|                  |                     | Chief
 Executive Officer       
|                  |                     | (Principal
 Executive Officer) 
|                  |                     |                                
|Date: May 9, 2011 | By:                 | /s/
 James R. Stewart          
|                  |                     | James
 R. Stewart              
|                  |                     | Chief
 Financial Officer       
|                  |                     | (Principal
 Financial Officer) 
|                  |                     | (Principal
 Accounting Officer)

24

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