Table of Contents





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|----------------------------------
|UNITED
STATES                     
|SECURITIES
AND EXCHANGE COMMISSION
|Washington, DC 20549              

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|
|

FORM 10-Q

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|

|           |                                                                                                                                                            
|---------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|(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,
2009; 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 xNo
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 oNo 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 Filer o    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 oNo x

Common Stock outstanding at
April 30, 2009  9,363,685 shares of $.01 par value Common Stock.

1





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RIMAGE
CORPORATION
FORM 10-Q
TABLE OF CONTENTS
FOR THE QUARTER ENDED MARCH 31, 2009

|           |                                                              |                                                                                                     |    |       |     
|---------- | ------------------------------------------------------------ | --------------------------------------------------------------------------------------------------- | -- | ----- | ----
|           |                                                              | Description                                                                                         |    |       | Page
|           |                                                              |                                                                                                     |    |       |     
|PART I     | FINANCIAL
 INFORMATION                                       |                                                                                                     |   
|           |                                                              |                                                                                                     |    |       |     
|Item 1.    | Financial
 Statements (unaudited)                            |                                                                                                     |   
|           |                                                              |                                                                                                     |    |       |     
|           |                                                              | Condensed Consolidated Balance Sheets as of
 March 31, 2009 and December 31, 2008                   |    | 3    
|           |                                                              |                                                                                                     |    |       |     
|           |                                                              | Condensed Consolidated Statements of Income
 for the three months ended March 31, 2009 and 2008     |    | 4    
|           |                                                              |                                                                                                     |    |       |     
|           |                                                              | Condensed Consolidated Statements of Cash Flows
 for the three months ended March 31, 2009 and 2008 |    | 5    
|           |                                                              |                                                                                                     |    |       |     
|           |                                                              | Notes to
 Condensed Consolidated Financial Statements                                               |    | 6-13 
|           |                                                              |                                                                                                     |    |       |     
|Item 2.    |                                                              | Managements Discussion and Analysis of
 Financial Condition and Results of Operations              |    | 14-20
|           |                                                              |                                                                                                     |    |       |     
|Item 3.    |                                                              | Quantitative and Qualitative Disclosures about
 Market Risk                                         |    | 20   
|           |                                                              |                                                                                                     |    |       |     
|Item 4.    |                                                              | Controls
 and Procedures                                                                            |    | 20   
|           |                                                              |                                                                                                     |    |       |     
|PART II    | OTHER
 INFORMATION                                           |                                                                                                     | 21
|           |                                                              |                                                                                                     |    |       |     
|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.    | Submission
 of Matters to a Vote of Security Holders         |                                                                                                     |   
|           |                                                              |                                                                                                     |    |       |     
|Item 5.    | Other
 Information                                           |                                                                                                     |   
|           |                                                              |                                                                                                     |    |       |     
|Item 6.    | Exhibits                                                     |                                                                                                     |   
|           |                                                              |                                                                                                     |    |       |     
|SIGNATURES |                                                              | 22                                                                                                 
|           |                                                              |                                                                                                     |    |       |     

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,
 2009 |         | December 31,
 2008 |  
|                                                                                                                         
|Current assets:                                                                                                           |  |                 |         |                    |   |         | 
|Cash and cash equivalents                                                                                                 |  | $               | 15,209  |                    | $ | 14,885  | 
|Marketable securities                                                                                                     |  |                 | 49,160  |                    |   | 39,870  | 
|Receivables, net of allowance for doubtful accounts
and sales returns
 of $414 and $489, respectively                     |  |                 | 11,179  |                    |   | 11,099  | 
|Inventories                                                                                                               |  |                 | 4,958   |                    |   | 5,625   | 
|Prepaid income taxes                                                                                                      |  |                 | 642     |                    |   | 314     | 
|Prepaid expenses and other current assets                                                                                 |  |                 | 1,787   |                    |   | 2,014   | 
|Deferred income taxes - current                                                                                           |  |                 | 354     |                    |   | 344     | 
|Total current assets                                                                                                      |  |                 | 83,289  |                    |   | 74,151  | 
|                                                                                                                          |  |                 |         |                    |   |         | 
|Marketable securities - non-current                                                                                       |  |                 | 32,372  |                    |   | 40,647  | 
|Property and equipment, net                                                                                               |  |                 | 5,894   |                    |   | 6,183   | 
|Deferred income taxes - non-current                                                                                       |  |                 | 2,517   |                    |   | 2,281   | 
|Other assets - non-current                                                                                                |  |                 | 181     |                    |   | 194     | 
|Total assets                                                                                                              |  | $               | 124,253 |                    | $ | 123,456 | 
|                                                                                                                         
|Liabilities and
 Stockholders Equity                                                                                     |  |                 |         |                    |   |         | 
|                                                                                                                         
|Current liabilities:                                                                                                      |  |                 |         |                    |   |         | 
|Trade accounts payable                                                                                                    |  | $               | 4,623   |                    | $ | 4,534   | 
|Accrued compensation                                                                                                      |  |                 | 1,830   |                    |   | 1,879   | 
|Other accrued expenses                                                                                                    |  |                 | 801     |                    |   | 827     | 
|Deferred income and customer deposits                                                                                     |  |                 | 4,288   |                    |   | 4,507   | 
|Other current liabilities                                                                                                 |  |                 | 64      |                    |   | 263     | 
|Total current liabilities                                                                                                 |  |                 | 11,606  |                    |   | 12,010  | 
|                                                                                                                          |  |                 |         |                    |   |         | 
|Long-term liabilities:                                                                                                    |  |                 |         |                    |   |         | 
|Deferred income and customer deposits -
non-current                                                                       |  |                 | 1,731   |                    |   | 1,942   | 
|Income taxes payable - non-current                                                                                        |  |                 | 619     |                    |   | 421     | 
|Other non-current liabilities                                                                                             |  |                 | 29      |                    |   | 35      | 
|Total long-term liabilities                                                                                               |  |                 | 2,379   |                    |   | 2,398   | 
|Total liabilities                                                                                                         |  |                 | 13,985  |                    |   | 14,408  | 
|                                                                                                                          |  |                 |         |                    |   |         | 
|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 9,353,435 and 9,334,435, respectively |  |                 | 93      |                    |   | 93      | 
|Additional paid-in capital                                                                                                |  |                 | 37,914  |                    |   | 37,484  | 
|Retained earnings                                                                                                         |  |                 | 71,472  |                    |   | 70,287  | 
|Accumulated other comprehensive income                                                                                    |  |                 | 789     |                    |   | 1,184   | 
|Total stockholders equity                                                                                                |  |                 | 110,268 |                    |   | 109,048 | 
|                                                                                                                          |  |                 |         |                    |   |         | 
|Total liabilities and stockholders
equity                                                                                |  | $               | 124,253 |                    | $ | 123,456 | 

3

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Table of Contents

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

|                                            |  |                               |        |      |   |        |  
|------------------------------------------- |  | ----------------------------- | ------ | ---- | - | ------ | -
|                                            |  | Three Months Ended
 March 31, |       
|                                            |  | 2009                          |        | 2008 |  
|                                           
|Revenues:                                   |  |                               |        |      |   |        |  
|Product                                     |  | $                             | 15,361 |      | $ | 20,437 |  
|Service                                     |  |                               | 2,997  |      |   | 2,312  |  
|Total revenues                              |  |                               | 18,358 |      |   | 22,749 |  
|Cost of revenues:                           |  |                               |        |      |   |        |  
|Product                                     |  |                               | 7,928  |      |   | 10,711 |  
|Service                                     |  |                               | 1,865  |      |   | 2,361  |  
|Total cost of revenues                      |  |                               | 9,793  |      |   | 13,072 |  
|Gross profit                                |  |                               | 8,565  |      |   | 9,677  |  
|                                            |  |                               |        |      |   |        |  
|Operating expenses:                         |  |                               |        |      |   |        |  
|Research and development                    |  |                               | 1,975  |      |   | 1,351  |  
|Selling, general and administrative         |  |                               | 5,342  |      |   | 6,638  |  
|Total operating expenses                    |  |                               | 7,317  |      |   | 7,989  |  
|                                            |  |                               |        |      |   |        |  
|Operating income                            |  |                               | 1,248  |      |   | 1,688  |  
|                                           
|Other income (expense):                     |  |                               |        |      |   |        |  
|Interest, net                               |  |                               | 556    |      |   | 836    |  
|Gain (loss) on currency exchange            |  |                               | (45    | )    |   | 247    |  
|Other, net                                  |  |                               | (1     | )    |   | (1     | )
|Total other income, net                     |  |                               | 510    |      |   | 1,082  |  
|                                           
|Income before income taxes                  |  |                               | 1,758  |      |   | 2,770  |  
|Income tax expense                          |  |                               | 573    |      |   | 984    |  
|Net income                                  |  | $                             | 1,185  |      | $ | 1,786  |  
|                                            |  |                               |        |      |   |        |  
|Net income per basic share                  |  | $                             | 0.13   |      | $ | 0.18   |  
|                                            |  |                               |        |      |   |        |  
|Net income per diluted share                |  | $                             | 0.13   |      | $ | 0.18   |  
|                                            |  |                               |        |      |   |        |  
|Basic weighted average shares outstanding   |  |                               | 9,344  |      |   | 9,763  |  
|                                            |  |                               |        |      |   |        |  
|Diluted weighted average shares outstanding |  |                               | 9,431  |      |   | 10,089 |  

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, |       
|                                                                                   |  | 2009                          |        | 2008 |  
|Cash flows from operating activities:                                              |  |                               |        |      |   |         |  
|Net income                                                                         |  | $                             | 1,185  |      | $ | 1,786   |  
|Adjustments to reconcile net income to net cash provided by operating
 activities: |  |                               |        |      |   |         |  
|Depreciation and amortization                                                      |  |                               | 309    |      |   | 360     |  
|Deferred income tax expense (benefit)                                              |  |                               | (263   | )    |   | 53      |  
|Loss on disposal of property and equipment                                         |  |                               | 2      |      |   | 3       |  
|Stock-based compensation                                                           |  |                               | 215    |      |   | 191     |  
|Excess tax benefits from stock-based compensation                                  |  |                               |       |      |   | (631    | )
|Changes in operating assets and liabilities:                                       |  |                               |        |      |   |         |  
|Receivables                                                                        |  |                               | (408   | )    |   | 1,415   |  
|Inventories                                                                        |  |                               | 366    |      |   | 442     |  
|Prepaid
 income taxes/income taxes payable                                         |  |                               | (104   | )    |   | (1,909  | )
|Prepaid
 expenses and other current assets                                         |  |                               | 189    |      |   | (36     | )
|Trade
 accounts payable                                                            |  |                               | 346    |      |   | (3,077  | )
|Accrued
 compensation                                                              |  |                               | (8     | )    |   | (1,252  | )
|Other
 accrued expenses and other current liabilities                              |  |                               | (186   | )    |   | (197    | )
|Deferred
 income and customer deposits                                             |  |                               | (387   | )    |   | (279    | )
|                                                                                   |  |                               |        |      |   |         |  
|Net cash provided by (used in) operating activities                                |  |                               | 1,256  |      |   | (3,131  | )
|                                                                                   |  |                               |        |      |   |         |  
|Cash flows from investing activities:                                              |  |                               |        |      |   |         |  
|Purchases of marketable securities                                                 |  |                               | (1,593 | )    |   | (23,010 | )
|Maturities of marketable securities                                                |  |                               | 626    |      |   | 28,513  |  
|Purchases of property and equipment                                                |  |                               | (73    | )    |   | (249    | )
|Other non-current items                                                            |  |                               |       |      |   | 42      |  
|                                                                                   |  |                               |        |      |   |         |  
|Net cash provided by (used in) investing activities                                |  |                               | (1,040 | )    |   | 5,296   |  
|                                                                                   |  |                               |        |      |   |         |  
|Cash flows from financing activities:                                              |  |                               |        |      |   |         |  
|Principal payments on capital lease obligations                                    |  |                               | (6     | )    |   | (6      | )
|Repurchase of common stock                                                         |  |                               |       |      |   | (606    | )
|Excess tax benefits from stock-based compensation                                  |  |                               |       |      |   | 631     |  
|Proceeds from employee stock plans                                                 |  |                               | 188    |      |   | 873     |  
|                                                                                   |  |                               |        |      |   |         |  
|Net cash provided by financing activities                                          |  |                               | 182    |      |   | 892     |  
|                                                                                   |  |                               |        |      |   |         |  
|Effect of exchange rate changes on cash                                            |  |                               | (74    | )    |   | 105     |  
|                                                                                   |  |                               |        |      |   |         |  
|Net increase in cash and cash equivalents                                          |  |                               | 324    |      |   | 3,162   |  
|                                                                                   |  |                               |        |      |   |         |  
|Cash and cash equivalents, beginning of period                                     |  |                               | 14,885 |      |   | 7,416   |  
|                                                                                   |  |                               |        |      |   |         |  
|Cash and cash equivalents, end of period                                           |  | $                             | 15,209 |      | $ | 10,578  |  
|                                                                                  
|Supplemental disclosures of net cash paid during the period
for:                   |  |                               |        |      |   |         |  
|Income taxes                                                                       |  | $                             | 940    |      | $ | 2,842   |  

See accompanying notes to
condensed consolidated financial statements.

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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
 digital publishing systems that are used by businesses to produce recordable
 CD (CD-R), DVD (DVD-R) and blue laser discs with customized digital
 content on an on-demand basis. Rimage distributes its publishing systems from
 its operations in the United States, Germany and Japan. 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 blue
 laser 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, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | 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 in light of the current
 economic environment. Management 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.
 Changes in those estimates resulting from continuing changes in the economic
 environment will be reflected in the financial statements in future periods.

6

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Table of Contents

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

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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. The 2007 Plan permits the issuance of up to
 730,320 shares of the Companys common stock. At March 31, 2009, a total of
 346,420 shares were available for future grant under the 2007 Plan. 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 issued to non-employee directors under the 2007 Plan are
 subject to the risk of forfeiture and transfer restrictions that lapse one
 year from the date of grant.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In
 accordance with Statement of Financial Accounting Standards (SFAS) No.
 123R, Share-Based Payment, 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. Under the provisions of SFAS 123R, 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 $215,000 and $193,000 for the three months ended March
 31, 2009 and 2008, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | The
 fair value of each option award is estimated at the date of grant using the
 Black-Scholes option pricing model. No stock options were granted during the
 three months ended March 31, 2009 and 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Other information pertaining to
 stock options is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

| |                                                     |  |                                       |       |      |   |       | 
| | --------------------------------------------------- |  | ------------------------------------- | ----- | ---- | - | ----- | 
| |                                                     |  | Three Months Ended March 31,          |      
| |                                                     |  | 2009                                  |       | 2008 |  
| |                                                     |  | (in thousands, except per share data) |      
| |                                                     |  |                                       |       |      |   |       | 
| | Number of options granted                           |  |                                       |      |      |   |      | 
| | Total intrinsic value of
 stock options exercised   |  | $                                     | 74    |      | $ | 2,029 | 
| | Total intrinsic value of
 stock options outstanding |  | $                                     | 1,060 |      | $ | 5,970 | 

7

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Table of Contents

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

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Cash
 received from the exercise of stock options was $188,000 and $873,000 for the
 three months ended March 31, 2009 and 2008, respectively. The income tax
 benefit realized from the exercise of stock options and recorded as an increase to additional paid-in capital was $28,000
 and $812,000 for the three months ended March 31, 2009 and 2008,
 respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3) | Accounting for Uncertainty in Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The
 Company implemented the provisions of Financial Accounting Standards Board
 (FASB) Interpretation No. (FIN) 48, Accounting for Uncertainty in Income
 Taxesan interpretation of FASB Statement No. 109, effective January 1,
 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Gross
 unrecognized tax benefits recorded under FIN 48 as of March 31, 2009 and
 December 31, 2008 totaled $566,000 and $361,000, respectively (excluding
 interest and penalties). Changes in gross unrecognized tax benefits during
 the three months ended March 31, 2009 consisted primarily of an increase of
 $206,000 for tax positions taken in prior years and is fully offset by a
 deferred tax asset. Included in the balance of unrecognized tax benefits at
 March 31, 2009 are potential benefits of $127,000 that if recognized, would
 affect the effective tax rate. The difference between this amount and the
 corresponding amount of gross unrecognized tax benefits relates primarily to
 deferred federal benefits of uncertain tax positions. The Company made no
 other material adjustments to its unrecognized tax benefits during the three
 months ended March 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The
 Company recognizes accrued interest and penalties related to unrecognized tax
 benefits as a component of income tax expense. Total accrued interest and
 penalties amounted to $53,000 and $59,000 on a gross basis at March 31, 2009
 and December 31, 2008, respectively, and are excluded from the gross amounts
 of unrecognized tax benefits reflected above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The
 Company files income tax returns in the U.S. federal jurisdiction and various
 state and foreign jurisdictions. As of March 31, 2009, the Company was no
 longer subject to income tax examinations for taxable years before 2006 and
 2005 in the case of U.S. federal and German taxing authorities, respectively,
 and taxable years generally before 2004 in the case of state taxing
 authorities, consisting primarily of Minnesota, California and Maryland.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(4) | Marketable Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Marketable
 securities consist primarily of municipal securities, U.S. government agency
 and money market 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 consolidated balance
 sheet based on their effective maturity date. All marketable securities,
 except for variable rate demand notes, have maturities ranging from three to
 36 months. Variable rate demand notes may be liquidated in less than three
 months from the date of purchase, but have legal maturities of greater than
 three months and are required to be classified as marketable securities.
 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 portfolio of marketable
 securities at March 31, 2009 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.

8

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Table of Contents

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

|    |                                                        
|--- | -------------------------------------------------------
|(5) | Inventories                                            
|    |                                                        
|    | Inventories consisted of
 the following (in thousands):

| |                                             |  |                 |       |                    |   |       | 
| | ------------------------------------------- |  | --------------- | ----- | ------------------ | - | ----- | 
| |                                             |  | March 31,
 2009 |       | December 31,
 2008 |  
|
| | Finished goods and
 demonstration equipment |  | $               | 1,576 |                    | $ | 1,717 | 
| | Purchased parts and
 subassemblies          |  |                 | 3,382 |                    |   | 3,908 | 
| |                                             |  | $               | 4,958 |                    | $ | 5,625 | 

|    |                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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):

| |                                                            |  |                               |       |      |   |       | 
| | ---------------------------------------------------------- |  | ----------------------------- | ----- | ---- | - | ----- | 
| |                                                            |  | Three Months Ended
 March 31, |      
| |                                                            |  | 2009                          |       | 2008 |  
|
| | Net income                                                 |  | $                             | 1,185 |      | $ | 1,786 | 
| | Other comprehensive income:                                |  |                               |       |      |   |       | 
| | Net changes in:                                            |  |                               |       |      |   |       | 
| | Foreign currency translation adjustments                   |  |                               | (427  | )    |   | 147   | 
| | Net unrealized gain on marketable securities, net of taxes |  |                               | 32    |      |   | 301   | 
| | Total comprehensive income                                 |  | $                             | 790   |      | $ | 2,234 | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 SFAS No. 133, Accounting for Derivative Instruments
 and Hedging Activities. 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, 2009, the Company had ten outstanding foreign exchange contracts
 totaling approximately $1,841,000. These contracts mature during 2009 and
 bear exchange rates ranging from 1.2524 to 1.3601 U.S. Dollars per Euro. As
 of March 31, 2009, the fair value of foreign exchange contracts resulted in a
 net loss position of $39,000, which is recorded in other current liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

9

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Table of Contents

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

| |                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As
 of December 31, 2008, the Company had 15 outstanding foreign exchange
 contracts totaling $2,601,000, all maturing during the first half of 2009 at
 exchange rates ranging from 1.2431 to 1.3540 U.S. Dollars per Euro. As of
 December 31, 2008, the fair value of foreign exchange contracts resulted in a
 net loss position of approximately $238,000, which is recorded in other
 current liabilities.
| |                                                                                                                                                                                                                                                                                                                                                                                                                 
| | 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):                                                                                                                                                                                                      

| |                            |  |                                   |  |                               |     |      |   |      |  
| | -------------------------- |  | --------------------------------- |  | ----------------------------- | --- | ---- | - | ---- | -
| |                            |  |                                   |  | Three Months Ended
 March 31, |    
| | Derivative
 Instrument     |  | Location                          |  | 2009                          |     | 2008 |  
| |                            |  |                                   |  |                               |     |      |   |      |  
| | Foreign Exchange Contracts |  | Gain (loss) on currency
 exchange |  | $                             | 180 |      | $ | (108 | )

| |                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
 net gains or losses from foreign exchange contracts reflected above were
 largely offset by the underlying transaction net gains and loses arising from
 the foreign currency exposures for 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, 2009 (in thousands):

| |                            |  |                          |  |                       |    |          |  |                              |  |   |     |  
| | -------------------------- |  | ------------------------ |  | --------------------- | -- | -------- |  | ---------------------------- |  | - | --- | -
| |                            |  | Asset Derivatives        |  | Liability Derivatives |   
| | Derivative
 Instrument     |  | Location                 |  | March 31,
 2009       |    | Location |  | March 31,
 2009              | 
| |                            |  |                          |  |                       |    |          |  |                              |  |   |     |  
| | Foreign Exchange Contracts |  | Other current assets (1) |  | $                     | 15 |          |  | Other current liabilities(1) |  | $ | (54 | )

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (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.

10

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Table of Contents

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

|    |                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(8) | Fair
 Value Measurements                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                  
|    | SFAS
 No. 157, Fair Value Measurements, establishes a framework for measuring
 fair value by creating a hierarchy of fair value measurements that
 distinguishes market data between observable independent
 market inputs and unobservable market assumptions by the reporting entity.
 SFAS No. 157 provides three levels within its hierarchy that 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.
|    |                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                             |  | 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 are as
 follows at March 31, 2009:                                                                                                                                                                                                  

| |                                             |  |                                           |        |                                             |                               |                                                  |  |                                              |        |  |   |   | 
| | ------------------------------------------- |  | ----------------------------------------- | ------ | ------------------------------------------- | ----------------------------- | ------------------------------------------------ |  | -------------------------------------------- | ------ |  | - | - | 
| |                                             |  |                                           |        |                                             | Fair Value Measurements Using |                                                 
| | (in thousands)                              |  | Total Carrying
 Amount at
 March 31, 2009 |        | Quoted Prices in
 Active Markets
 (Level 1) |                               | Significant Other
 Observable
 Inputs
 (Level 2) |  | Significant
 Unobservable
 Inputs
 (Level 3) |       
| | Assets                                      |  |                                           |        |                                             |                               |                                                  |  |                                              |        |  |   |   | 
| | Available-for-sale securities               |  | $                                         | 81,532 |                                             | $                             |                                                 |  | $                                            | 81,532 |  | $ |  | 
| | Liabilities                                 |  |                                           |        |                                             |                               |                                                  |  |                                              |        |  |   |   | 
| | Foreign currency forward exchange contracts |  | $                                         | 39     |                                             | $                             |                                                 |  | $                                            | 39     |  | $ |  | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Available-for-sale
 securities in the table above are classified as either current or non-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.                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | The Company adopted SFAS No. 159, The Fair Value Option for
 Financial Assets and Financial Liabilities-Including an Amendment of FASB
 Statement No. 115, on January 1, 2008. This standard permits entities to
 choose to measure many financial instruments and certain other items at fair
 value. This statement also establishes presentation and disclosure
 requirements designed to facilitate comparisons between entities that choose
 different measurement attributes for similar types of assets and liabilities.
 Unrealized gains and losses on items for which the fair value option is
 elected would be reported in earnings. The Company has not elected the fair
 value measurement option for any of its financial assets or liabilities as of
 March 31, 2009, and the Company has not determined whether or not it will
 elect this option for financial instruments it may acquire in the future.

11

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Table of Contents

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

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(9)  | Common Stock Repurchase Authorizations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | On
 October 17, 2007, the Companys Board of Directors authorized the repurchase
 of up to 500,000 shares of its common stock. In February 2008, the Companys
 Board of Directors increased the share repurchase authorization by an
 additional 500,000 shares, bringing total shares authorized for repurchase to
 1,000,000. 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 is funded from cash
 on hand and may be discontinued at any time. During the three months ended March
 31, 2009, the Company did not repurchase any shares of its common stock. As
 of March 31, 2009, 422,917 shares were available for repurchase under the
 authorizations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(10) | Recently Issued Accounting Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | In
 September 2006, the Financial Accounting Standards Board (FASB) issued
 Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value
 Measurements. SFAS No. 157 defines fair value, establishes a framework for
 measuring fair value and requires enhanced disclosures about fair value
 measurements. The Company adopted SFAS No. 157 for financial assets and
 liabilities effective January 1, 2008. In February 2008, FASB Staff Position
 (FSP) No. 157-2 was issued, which delayed the effective date of FASB No.
 157 to fiscal years beginning after November 15, 2008 for nonfinancial assets
 and liabilities, except for items that are recognized and disclosed at fair
 value in the financial statements on a recurring basis (at least annually).
 Effective January 1, 2009, the company adopted the requirements of SFAS No.
 157 that had been deferred under FSP No. 157-2. The adoption did not impact
 the Companys consolidated financial statements and related disclosures for
 the three months ended March 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     | In
 March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative
 Instruments and Hedging Activitiesan Amendment to SFAS No. 133. SFAS No.
 161 requires additional quantitative and qualitative disclosures for
 derivative instruments. The required disclosures include information about an
 entitys objectives and strategies for using derivatives, the existence and
 nature of credit-risk-related contingent features in derivative instruments,
 counterparty credit risk, the relative volume of derivative activity, the
 fair value of derivative instruments and related amounts of gains and losses.
 The Company adopted the disclosure provisions of SFAS No. 161 effective
 January 1, 2009. In June 2008, the FASB issued FSP No. EITF 03-6-1,
 Determining Whether Instruments Granted in Share-Based Payment Transactions
 Are Participating Securities. FSP No. EITF 03-6-1 requires all outstanding
 unvested share-based payment awards that contain nonforfeitable rights to
 dividends or dividend equivalents (whether paid or unpaid) to be considered
 participating securities and shall be included in the computation of basic
 and diluted earnings per share using the two-class method. All prior-period
 earnings per share data presented shall be adjusted retrospectively. The
 Company adopted FSP No. EITF 03-6-1 effective January 1, 2009. The adoption
 did not have a material impact on the Companys consolidated financial
 statements.

12

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Table of Contents

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

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | In
 November 2007, the FASB issued EITF No. 07-1, Accounting for Collaborative
 Arrangements. This Issue applies to participants in a collaborative
 arrangement, defined as a contractual arrangement that involves a joint
 operating activity involving two (or more) parties who are both (a) active
 participants in the activity and (b) exposed to significant risks and rewards
 dependent on the commercial success of the activity. Revenues and costs
 incurred with third parties in connection with a collaborative arrangement
 should be presented gross or net by the collaborators based on the criteria
 in EITF Issue No. 99-19, Reporting Revenue Gross as a Principal versus Net
 as an Agent, and other applicable accounting literature. Payments to or from
 collaborators should be presented in the income statement based on the nature
 of the arrangement, the nature of the Companys business and whether the
 payments are within the scope of other accounting literature. This Issue is
 effective for the Company as of January 1, 2009, and should be applied to collaborative
 arrangements in existence at the date of adoption using the modified
 retrospective method that requires reclassification in all periods presented
 for those arrangements still in effect at the transition date, unless that
 application is impracticable. The adoption of EITF No. 07-1 did not have an
 impact on the Companys consolidated financial statements and related
 disclosures for three months ended March 31, 2009.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(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. Stock options to acquire 869,000 and 365,000 weighted average
 common shares have been excluded from the computation of diluted weighted
 average shares outstanding for the three months ended March 31, 2009 and
 2008, respectively, 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, |      
|                                                  |  | 2009                         |       | 2008 |  
|                                                  |  |                              |       |      |   |        | 
|Shares outstanding at end of period               |  |                              | 9,353 |      |   | 9,806  | 
|                                                  |  |                              |       |      |   |        | 
|Basic weighted average shares outstanding         |  |                              | 9,344 |      |   | 9,763  | 
|                                                  |  |                              |       |      |   |        | 
|Dilutive effect of stock options                  |  |                              | 87    |      |   | 326    | 
|Total diluted weighted average shares
outstanding |  |                              | 9,431 |      |   | 10,089 | 
|                                                  |  |                              |       |      |   |        | 
|Net income                                        |  | $                            | 1,185 |      | $ | 1,786  | 
|                                                  |  |                              |       |      |   |        | 
|Basic net income per common share                 |  | $                            | 0.13  |      | $ | 0.18   | 
|                                                  |  |                              |       |      |   |        | 
|Diluted net income per common share               |  | $                            | 0.13  |      | $ | 0.18   | 

|     |                                                                                                                                                                                                                                                                                           
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.

13

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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
(%)
Increase/(Decrease)
of Dollar Amounts
Between Periods | 
|                                    |  | 2009                                                    |       | 2008                                                                 |  | 2009 vs. 2008 |  
|Revenues                            |  |                                                         | 100.0 |                                                                      |  | 100.0         |   |  | (19.3 | )
|Cost of revenues                    |  |                                                         | (53.3 | )                                                                    |  | (57.5         | ) |  | (25.1 | )
|Gross profit                        |  |                                                         | 46.7  |                                                                      |  | 42.5          |   |  | (11.5 | )
|Operating expenses:                 |  |                                                         |       |                                                                      |  |               |   |  |       |  
|Research and development            |  |                                                         | (10.8 | )                                                                    |  | (5.9          | ) |  | 46.2  |  
|Selling, general and administrative |  |                                                         | (29.1 | )                                                                    |  | (29.2         | ) |  | (19.5 | )
|Operating income                    |  |                                                         | 6.8   |                                                                      |  | 7.4           |   |  | (26.1 | )
|Other income, net                   |  |                                                         | 2.8   |                                                                      |  | 4.8           |   |  | (52.8 | )
|Income before income taxes          |  |                                                         | 9.6   |                                                                      |  | 12.2          |   |  | (36.5 | )
|Income tax expense                  |  |                                                         | (3.1  | )                                                                    |  | (4.3          | ) |  | (41.8 | )
|Net income                          |  |                                                         | 6.5   |                                                                      |  | 7.9           |   |  | (33.7 | )

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Overview                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Rimage
 develops, manufactures and markets digital publishing systems that are used
 by businesses to produce recordable CD, DVD and blue laser discs with
 customized digital content on an on-demand basis. Rimage distributes its
 publishing systems from its operations in the United States, Germany and
 Japan. 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 blue laser media. These systems allow customers to
 benefit from cost savings by reducing or eliminating their manual labor
 efforts in industries such as digital photography, medical imaging and
 business services. As Rimages sales within North America and Europe have
 averaged 95% 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 on the accompanying condensed consolidated statements of
 income), as well as maintenance contracts, repair and installation services
 (included in Service revenues on the condensed consolidated statements of
 income). Rimages recurring revenues (consumables, parts, maintenance
 contracts and service) comprised 64% and 62% of its consolidated revenues
 during the three months ended March 31, 2009 and 2008, respectively.
 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 its products is outsourced to
 vendors.                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Results of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Revenues. Total revenues decreased 19% to $18.4 million for the three months
 ended March 31, 2009 from $22.7 million for the same prior-year period. The
 $4.4 million reduction in total revenues between periods reflects a $5.1
 million or 25% decline in product revenues, partially offset by a $0.7
 million or 30% increase in service-related revenues. The reduction in product
 revenues resulted from a $3.1 million and $2.0 million reduction in sales of
 consumable products and equipment, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                          

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Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Managements Discussion and Analysis of Financial Condition
 and Results of Operations (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | The
 decrease in consumable product sales consisted primarily of declines in the
 volume of media and media kit sales of $1.5 million and ribbon and ink
 cartridge sales of $1.3 million. The lower level of media and media kit sales
 in the current period was largely impacted by the timing of an order from a
 retail customer. Equipment sales reflect a $1.4 million and $0.6 million
 decline in sales of Producer and Desktop product line equipment,
 respectively, from the same prior-year period. The overall decline in
 equipment sales was primarily impacted by a reduced volume of sales to the
 Companys U.S. channel partners. The reduction in equipment sales was also
 impacted by a shift in the distribution of sales to lower-end Producer
 products with lower average selling prices. The growth in service-related
 revenues was primarily impacted by a higher level of maintenance contract
 revenue recognized in the current period.                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Recurring
 revenues, consisting of consumables, parts, maintenance contracts and
 service, comprised 64% of total revenues for the three months ended March 31,
 2009, compared to 62% in the same prior-year period. Sales of Producer
 product line equipment comprised 31% of total revenues in both the first
 quarter 2009 and the prior years comparable period. Remaining revenues in
 each period were generated by sales of Desktop product line equipment,
 representing 5% and 7% of revenues for the three months ended March 31, 2009
 and 2008, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | International
 sales decreased 10% in the first quarter of 2009 compared to the same period
 last year and comprised 48% of total sales, compared to 43% in the prior
 years first quarter. Currency fluctuations primarily affecting the Companys
 European operation generated the decline in international revenues and
 reduced reported consolidated revenues for the three months ended March 31,
 2009 by 5% compared to the same prior-year period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | As
 of and for the three months ended March 31, 2009, the Companys German and
 Japanese operations generated foreign revenues from unaffiliated customers of
 $8.0 million and operating income of $0.1 million. Net identifiable assets
 for these operations amounted to $9.5 million. These amounts pertain
 primarily to the Companys German operations. Comparable amounts for the
 Companys German and Japanese operations as of and for the three months ended
 March 31, 2008 were revenues of $8.8 million, operating income of $0.2
 million and net identifiable assets of $10.7 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Gross profit. Gross profit as a
 percentage of total revenues was 47% for the three months ended March 31,
 2009, compared to 43% for the same period in 2008. The rise in gross profit
 as a percentage of total revenues resulted primarily from a higher level of
 maintenance contract revenues in the current period, coupled with reduced
 service costs related to improvements in the serviceability of the Companys
 products and lower compensation costs stemming from workforce reductions over
 the prior twelve-month period. Also contributing to the improvement in gross profit as a percentage
 of total revenue was a lower volume and concentration of sales of media and
 media kits, which generally carry lower margins than other product offerings,
 comprising 17% of revenues in the first quarter of 2009 compared to 20% in
 same period in 2008. Partially offsetting the favorable impact of the above
 was a shift in the distribution of equipment sales to lower-end Producer
 products, resulting in lower average selling prices and reduced equipment
 margins.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Future
 gross profit margins will continue to be affected by many factors, including
 product mix, the timing of new product introductions, changes in material
 costs, manufacturing volume, the growth rate of service-related revenues
 relative to associated service support costs and foreign currency exchange
 rate fluctuations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Managements Discussion and Analysis of Financial Condition
 and Results of Operations (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Operating expenses. Research and development expenses totaled
 $2.0 million, or 11% of revenues, and $1.4 million, or 6% of revenues, for
 the quarterly periods ended March 31, 2009 and 2008, respectively. The
 increase in expenses between periods resulted from a higher level of
 investments in new product development as well as continued enhancements to
 existing products. Rimage anticipates expenditures in research and
 development to continue at a similar level in the second quarter of 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Selling,
 general and administrative expenses for the three months ended March 31, 2009
 amounted to $5.3 million, or 29% of revenues, compared to $6.6 million, or
 29% of revenues for the three months ended March 31, 2008. The $1.3 million
 decline in expenses primarily reflects the impact of cost reduction measures
 implemented over the prior twelve-month period, including reduced
 compensation related costs stemming from workforce reductions and the absence
 of personnel recruiting costs ($0.5 million), reduced expenditures for
 marketing and promotional programs ($0.3 million) and reduced travel expenses
 ($0.2 million). Also contributing to the decrease in expenses was the impact
 of currency fluctuations primarily affecting the Companys European operation
 ($0.2 million). The Company expects a similar level of selling, general and
 administrative expenses in the second quarter of 2009.                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Other income, net. The Company recognized net interest income
 on cash and marketable securities of $0.6 million for the three months ended
 March 31, 2009, compared to $0.8 million for the same prior-year period. The
 reduction in interest income in the current period was the result of a
 decline in average effective yields approximating one percentage point
 relative to the same prior-year period. Other income for the three months
 ended March 31, 2009 included a net loss on foreign currency transactions of
 $45,000, compared to a net gain on foreign currency transactions of $247,000
 in the same prior-year period. Translation gains of $0.2 million associated
 with an intercompany loan that was deemed to be permanently invested in the
 first quarter of 2008 were recorded as transaction gains during the first
 quarter of 2008, but should have been recorded as other comprehensive income
 at that time. The Company recorded a pre-tax out-of-period adjustment during
 the second quarter 2008 to reduce the transaction gains and to increase other
 comprehensive income to properly state other comprehensive income as of June
 30, 2008.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Income taxes.The provision for income taxes represents federal, state and foreign
 income taxes on income. Income tax expense for the three months ended March
 31, 2009 and 2008 amounted to $0.6 million and $1.0 million, respectively, or
 32.6% and 35.5% of income before taxes in each respective period. The
 decrease in the effective tax rate for the three months ended March 31, 2009
 primarily reflects the impact of tax-exempt interest income comprising a
 larger percentage of pre-tax income, the impact of a lower tax bracket from
 lower pre-tax income, an increased benefit from the research credit and the
 recognition of a benefit in the first quarter 2009 for a reduction in the
 liability for unrecognized tax benefits related to prior-year income tax
 positions. Partially offsetting the favorable impact of the above was the
 increased impact of recording no tax benefit on foreign operating losses for
 the Companys Japanese subsidiary and a reduced benefit from the
 manufacturers tax deduction. The Company anticipates its effective tax rate
 will range between 34% and 35% for the full year 2009.                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | Net income / net income per share. Resulting net income for the three months
 ended March 31, 2009 was $1.2 million, or 6% of revenues. This compares to
 net income of $1.8 million, or 8% of revenues for the same prior-year period.
 Related net income per diluted share amounts were $0.13 and $0.18 for the
 three months ended March 31, 2009 and 2008, respectively, reflecting a 7%
 reduction in diluted weighted average shares outstanding between periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Managements Discussion and Analysis of Financial Condition
 and Results of Operations (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 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, if required, from Rimages
 existing credit agreement. This credit agreement allows for advances under an
 unsecured revolving loan up to a maximum advance of $10 million. At March 31,
 2009, no amounts were outstanding under the credit agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | At
 March 31, 2009, the Company had working capital of $71.7 million, an increase
 of $9.6 million from working capital reported at December 31, 2008. The
 increase was primarily the result of the impact of a non-cash change in the
 classification of $9.9 million of marketable securities from non-current as
 of December 31, 2008 to current as of March 31, 2009 and net income of $1.2
 million, partially offset by a $1.6 million net use of cash to purchase
 non-current marketable securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | On
 October 17, 2007, the Companys Board of Directors authorized the repurchase
 of up to 500,000 shares of its common stock. In February 2008, the Companys
 Board of Directors increased the share repurchase authorization by an
 additional 500,000 shares, bringing total shares authorized for repurchase to
 1,000,000. 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 will finance the purchase of the shares, if any,
 using cash on hand. During the three months ended March 31, 2009, the Company
 did not repurchase any shares of its common stock. The Company also intends
 on utilizing its assets primarily for its continued organic growth.
 Additionally, the Company may use its available cash for potential future
 strategic initiatives or alliances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Net
 cash provided by operating activities totaled $1.3 million for the three
 months ended March 31, 2009, compared to a $3.1 million net use of cash in
 operating activities in the same prior-year period. The $4.4 million
 favorable change in cash generated from operating activities resulted from
 changes in operating assets and liabilities producing a $4.7 million smaller
 net use of cash in the current-year period compared to the same prior-year
 period, partially offset by a reduction in net income adjusted for non-cash
 items of $0.3 million between periods. Primarily contributing to the change
 in operating assets and liabilities compared to the comparable prior-year
 period was a $4.7 million favorable change in the aggregate amount of trade
 accounts payable, accrued compensation and accrued expenses and a $1.8
 million smaller increase in net prepaid income taxes, partially offset by an
 unfavorable variation of $1.8 million in receivables. The change in trade
 accounts payable, accrued compensation and accrued expenses reflects a $0.2
 million aggregate increase in the amount of these balances in the first
 quarter of 2009, compared to a $4.5 million aggregate decrease in the same
 period last year. These changes were primarily due to reduced payments in the
 current-year period for inventory purchases, in the case of accounts payable,
 and reduced payments for bonus accruals, in the case of accrued compensation.
 The unfavorable change in receivables resulted from a $0.1 million increase
 in receivables in the current period, compared to a $1.4 million decrease in
 the comparable prior-year period, primarily impacted by a $1.5 million
 increase in revenue in March 2009 relative to December 2008 (last month of
 each quarter), compared to a $0.7 million decrease in revenue between the comparable
 prior-year periods.

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Table of Contents

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Managements Discussion and Analysis of Financial Condition
 and Results of Operations (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | Investing
 activities used net cash of $1.0 million for the three months ended March 31,
 2009, compared to a net generation of cash of $5.3 million for the same
 prior-year period. The fluctuations in investing activities were primarily
 the result of $1.0 million in purchases of marketable securities, net
 of related maturities, during the three months ended March 31, 2009, compared
 to $5.5 million in maturities of marketable securities, net of related
 purchases, in the same prior-year period. Purchases of property and equipment
 during the three months ended March 31, 2009 and 2008 amounted to $0.1
 million and $0.2 million, respectively. Capital expenditures in both periods
 consisted primarily of purchases of office equipment.                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | Financing
 activities generated net cash of $0.2 million and $0.9 million for the three
 months ended March 31, 2009 and 2008, respectively. Financing activities in
 each period included proceeds from employee stock plans of $0.2 million and
 $0.9 million, respectively. Financing activities for the three months ended
 March 31, 2008 also benefited from excess tax benefits recognized as an addition
 to the additional paid-in capital pool of $0.6 million. Partially offsetting
 the increases in cash generated by financing activities in the prior years
 first quarter was the Companys repurchase of 26,510 shares of its common
 stock for $0.6 million.                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 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 consolidated financial
 statements because they require the most difficult, subjective and complex
 judgments include revenue recognition, allowance for doubtful accounts and
 sales returns, inventory provisions, deferred tax asset valuation allowances,
 accruals for uncertain tax positions, warranty accruals, 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, 2008. Management made no changes to the
 Companys critical accounting policies during the three months ended March
 31, 2009.                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 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 earnings for the three
 months ended March 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | Recently Issued Accounting Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | In
 September 2006, the Financial Accounting Standards Board (FASB) issued
 Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value
 Measurements. SFAS No. 157 defines fair value, establishes a framework for
 measuring fair value and requires enhanced disclosures about fair value
 measurements. The Company adopted SFAS No. 157 for financial assets and
 liabilities effective January 1, 2008. In February 2008, FASB Staff Position
 (FSP) No. 157-2 was issued, which delayed the effective date of FASB No.
 157 to fiscal years beginning after November 15, 2008 for nonfinancial assets
 and liabilities, except for items that are recognized and disclosed at fair
 value in the financial statements on a recurring basis (at least annually).
 Effective January 1, 2009, the company adopted the requirements of SFAS No.
 157 that had been deferred under FSP No. 157-2. The adoption did not impact
 the Companys consolidated financial statements and related disclosures for
 the three months ended March 31, 2009.

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Table of Contents

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| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Managements Discussion and Analysis of Financial Condition
 and Results of Operations (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
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| | In
 March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative
 Instruments and Hedging Activitiesan Amendment to SFAS No. 133. SFAS No.
 161 requires additional quantitative and qualitative disclosures for
 derivative instruments. The required disclosures include information about an
 entitys objectives and strategies for using derivatives, the existence and
 nature of credit-risk-related contingent features in derivative instruments,
 counterparty credit risk, the relative volume of derivative activity, the
 fair value of derivative instruments and related amounts of gains and losses.
 The Company adopted the disclosure provisions of SFAS No. 161 effective
 January 1, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
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| | In
 June 2008, the FASB issued FSP No. EITF 03-6-1, Determining Whether
 Instruments Granted in Share-Based Payment Transactions Are Participating
 Securities. FSP No. EITF 03-6-1 requires all outstanding unvested
 share-based payment awards that contain nonforfeitable rights to dividends or
 dividend equivalents (whether paid or unpaid) to be considered participating
 securities and shall be included in the computation of basic and diluted
 earnings per share using the two-class method. All prior-period earnings per
 share data presented shall be adjusted retrospectively. The Company adopted
 FSP No. EITF 03-6-1 effective January 1, 2009. The adoption did not have a material
 impact on the Companys consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | In
 November 2007, the FASB issued EITF No. 07-1, Accounting for Collaborative
 Arrangements. This Issue applies to participants in a collaborative
 arrangement, defined as a contractual arrangement that involves a joint
 operating activity involving two (or more) parties who are both (a) active
 participants in the activity and (b) exposed to significant risks and rewards
 dependent on the commercial success of the activity. Revenues and costs
 incurred with third parties in connection with a collaborative arrangement
 should be presented gross or net by the collaborators based on the criteria
 in EITF Issue No. 99-19, Reporting Revenue Gross as a Principal versus Net
 as an Agent, and other applicable accounting literature. Payments to or from
 collaborators should be presented in the income statement based on the nature
 of the arrangement, the nature of the Companys business and whether the
 payments are within the scope of other accounting literature. This Issue is
 effective for the Company as of January 1, 2009, and should be applied to
 collaborative arrangements in existence at the date of adoption using the
 modified retrospective method that requires reclassification in all periods
 presented for those arrangements still in effect at the transition date,
 unless that application is impracticable. The adoption of EITF No. 07-1 did
 not have an impact on the Companys consolidated financial statements and
 related disclosures for three months ended March 31, 2009.
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| | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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Table of Contents

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| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Managements Discussion and Analysis of Financial Condition
 and Results of Operations (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 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 95% 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 retail,
 medical and business services 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 compete against
 products in their markets; 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 dependence upon the selling efforts of
 the Companys key channel partners; the Companys ability to maintain
 adequate inventory of products; the Companys reliance on single source
 suppliers; 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, 2008. 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.
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| | 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 and Japanese Yen to the U.S. dollar as the financial
 position and operating results of the Companys German and Japanese
 subsidiaries, Rimage Europe GmbH and Rimage Japan Co., Ltd., respectively,
 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, Bernard P. Aldrich, and the Companys
 Chief Financial Officer, Robert M. Wolf, have evaluated the Companys
 disclosure controls and procedures as of the end of the period covered by
 this report. Based upon such evaluation, they have concluded that these
 disclosure controls and procedures are effective.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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| |                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) Changes in Internal
 Control Over Financial Reporting                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                   
| | There
 have been no changes in internal controls over financial reporting that
 occurred during the fiscal quarter covered by this report that have materially
 affected, or are reasonably likely to materially affect, the Companys
 internal control over financial reporting.

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.         | Submission
 of Matters to a Vote of Security Holders        
| |                 |                                                             
| | Not Applicable.
| |                 |                                                             
| | 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.                                                    

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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 8, 2009 |  | By: | /s/
 Bernard P. Aldrich        
|      |             |  |     | Bernard
 P. Aldrich            
|      |             |  |     | Chief
 Executive Officer       
|      |             |  |     | (Principal
 Executive Officer) 
|      |             |  |     |                                
|Date: | May 8, 2009 |  | By: | /s/
 Robert M. Wolf            
|      |             |  |     | Robert
 M. Wolf                
|      |             |  |     | Chief
 Financial Officer       
|      |             |  |     | (Principal
 Financial Officer) 
|      |             |  |     | (Principal
 Accounting Officer)

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