# UNITED STATESSECURITIES
AND EXCHANGE COMMISSIONWashington, DC 20549

# FORM 10-Q

(Mark One)

|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March
31, 2005; OR
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------

|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________________   TO  _________________.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Commission File
Number:   0-20728

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

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

|7725 Washington Avenue South, Edina, MN 55439
|---------------------------------------------
|(Address of principal executive offices)     

|952-944-8144                                        
|----------------------------------------------------
|(Registrants telephone number, including area code)

|NA                                                                                  
|------------------------------------------------------------------------------------
|(Former name, former address, and former fiscal year, if changed since last report.)

Common Stock outstanding at April
30, 2004  9,476,587 shares of $.01 par value Common Stock.

Indicate by checkmark whether the
registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  Yes  X  No

Indicate by check mark whether the
Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  X  No

1

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RIMAGE CORPORATIONFORM 10-Q
TABLE OF CONTENTSFOR THE QUARTER ENDED MARCH 31, 2005

|          
|----------
|          
|          
|PART I    
|          
|Item 1.   
|          
|          
|          
|          
|          
|          
|          
|          
|          
|          
|          
|          
|          
|          
|          
|Item 2.   
|          
|          
|Item 3.   
|          
|          
|Item 4.   
|          
|PART II   
|          
|Item 1-5. 
|Item 6.   
|          
|SIGNATURES

2

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RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Balance SheetsMarch 31, 2005 and December 31, 2004

|Assets                                                                |  | March 31,2005(unaudited) |   | December 31,2004 |  
|--------------------------------------------------------------------- |  | ------------------------ | - | ---------------- | -
|                                                                      | 
|Current assets:                                                       |  |                          |   |                  |  
|Cash and cash equivalents                                             |  |                          | $ | 26,415,877       |  
|Marketable securities                                                 |  |                          |   | 25,986,050       |  
|Trade accounts receivable, net of allowance for doubtful accounts     |  |                         
|and sales returns of $589,000 and $600,000, respectively              |  |                          |   | 10,783,120       |  
|Inventories                                                           |  |                          |   | 7,106,030        |  
|Prepaid expenses and other current assets                             |  |                          |   | 1,222,275        |  
|Deferred income taxes - current                                       |  |                          |   | 1,127,642        |  
|                                                                      | 
|Total current assets                                                  |  |                          |   | 72,640,994       |  
|                                                                      | 
|                                                                     
|Property and equipment, net                                           |  |                          |   | 2,908,390        |  
|Other non-current assets                                              |  |                          |   | 70,417           |  
|                                                                      | 
|Total assets                                                          |  |                          | $ | 75,619,801       |  
|                                                                      | 
|                                                                     
|Liabilities and Stockholders Equity                                  |  |                         
|                                                                      | 
|Current liabilities:                                                  |  |                         
|Trade accounts payable                                                |  |                          | $ | 4,400,110        |  
|Accrued compensation                                                  |  |                          |   | 1,292,499        |  
|Other accrued expenses                                                |  |                          |   | 1,275,870        |  
|Income taxes payable                                                  |  |                          |   | 771,855          |  
|Deferred income and customer deposits                                 |  |                          |   | 1,975,667        |  
|Other current liabilities                                             |  |                          |   | 11,350           |  
|                                                                      | 
|Total current liabilities                                             |  |                          |   | 9,727,351        |  
|                                                                     
|Long-term liabilities:                                                |  |                         
|Deferred taxes                                                        |  |                          |   | 122,932          |  
|Other non-current liabilities                                         |  |                          |   | 22,501           |  
|                                                                      | 
|Total long-term liabilities                                           |  |                          |   | 145,433          |  
|                                                                      | 
|Total liabilities                                                     |  |                          |   | 9,872,784        |  
|                                                                     
|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 9,476,587 and 9,365,479, respectively          |  |                          |   | 94,766           |  
|Additional paid-in capital                                            |  |                          |   | 20,142,289       |  
|Retained earnings                                                     |  |                          |   | 45,562,906       |  
|Accumulated other comprehensive income (loss)                         |  |                          |   | (52,944          | )
|                                                                      | 
|Total stockholders equity                                            |  |                          |   | 65,747,017       |  
|                                                                      | 
|Commitments and contingencies                                         |  |                         
|                                                                     
|Total liabilities and stockholders equity                            |  |                          | $ | 75,619,801       |  
|                                                                      | 
|                                                                     
|See accompanying condensed notes to consolidated financial statements |  |                         

3

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RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations (unaudited)

|                                                                          |  | Three Months EndedMarch 31,
|------------------------------------------------------------------------- |  | ---------------------------
|
|                                                                          | 
|                                                                         
|Revenues                                                                  |  |                            
|Cost of revenues                                                          |  |                            
|                                                                          | 
|Gross profit                                                              |  |                            
|                                                                          | 
|                                                                         
|Operating expenses:                                                       |  |                            
|Research and development                                                  |  |                            
|Selling, general and administrative                                       |  |                            
|                                                                          | 
|Total operating expenses                                                  |  |                            
|                                                                          | 
|                                                                         
|Operating income                                                          |  |                            
|                                                                          | 
|                                                                         
|Other income (expense):                                                   |  |                            
|Interest, net                                                             |  |                            
|Loss on currency exchange                                                 |  |                            
|Other, net                                                                |  |                            
|                                                                          | 
|Total other income, net                                                   |  |                            
|                                                                          | 
|                                                                         
|Income before income taxes                                                |  |                            
|Income tax expense                                                        |  |                            
|                                                                          | 
|Net income                                                                |  |                            
|                                                                          | 
|                                                                         
|Net income per basic share                                                |  |                            
|                                                                          | 
|                                                                         
|Net income per diluted share                                              |  |                            
|                                                                          | 
|                                                                         
|Basic weighted average shares outstanding                                 |  |                            
|                                                                          | 
|                                                                         
|Diluted weighted average shares and                                       |  |                            
|assumed conversion shares                                                 |  |                            
|                                                                          | 
|                                                                         
|See accompanying condensed notes to the consolidated financial statements |  |                            

4

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RIMAGE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (unaudited)

|                                                                                                           |  | Three Months EndedMarch 31,
|---------------------------------------------------------------------------------------------------------- |  | ---------------------------
|
|                                                                                                           | 
|Cash flows from operating activities:                                                                      |  |                            
|Net income                                                                                                 |  |                            
|Adjustments to reconcile net income to net cash                                                            |  |                            
|provided by (used in) operating activities:                                                                |  |                            
|Depreciation and amortization                                                                              |  |                            
|Loss on sale of property and equipment                                                                     |  |                            
|Changes in operating assets and liabilities:                                                               |  |                            
|Trade accounts receivable                                                                                  |  |                            
|Inventories                                                                                                |  |                            
|Prepaid expenses and other current assets                                                                  |  |                            
|Trade accounts payable                                                                                     |  |                            
|Accrued compensation                                                                                       |  |                            
|Other accrued expenses and other current liabilities                                                       |  |                            
|Income taxes payable                                                                                       |  |                            
|Deferred income and customer deposits                                                                      |  |                            
|                                                                                                           | 
|                                                                                                          
|Net cash provided by (used in) operating activities                                                        |  |                            
|                                                                                                           | 
|                                                                                                          
|Cash flows from investing activities:                                                                      |  |                            
|Purchases of marketable securities                                                                         |  |                            
|Maturities of marketable securities                                                                        |  |                            
|Purchases of property and equipment                                                                        |  |                            
|Other non-current assets                                                                                   |  |                            
|                                                                                                           | 
|                                                                                                          
|Net cash provided by (used in) investing activities                                                        |  |                            
|                                                                                                           | 
|                                                                                                          
|Cash flows from financing activities:                                                                      |  |                            
|Principal payments on capital lease obligations                                                            |  |                            
|Proceeds from stock option exercises                                                                       |  |                            
|                                                                                                           | 
|                                                                                                          
|Net cash provided by financing activities                                                                  |  |                            
|                                                                                                           | 
|                                                                                                          
|Effect of exchange rate changes on cash                                                                    |  |                            
|                                                                                                           | 
|                                                                                                          
|Net increase (decrease) in cash and cash equivalents                                                       |  |                            
|                                                                                                          
|Cash and cash equivalents, beginning of period                                                             |  |                            
|                                                                                                           | 
|                                                                                                          
|Cash and cash equivalents, end of period                                                                   |  |                            
|                                                                                                           | 
|                                                                                                          
|Supplemental disclosures of net cash paid during the period for:                                           |  |                            
|Income taxes                                                                                               |  |                            
|                                                                                                          
|The Company entered into capital lease obligations of $11,899 during the three months ended March 31, 2005
|                                                                                                          
|See accompanying condensed notes to the consolidated financial statements                                  |  |                            

5

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

|(1) |  | Basis
of Presentation and Nature of BusinessRimage Corporation (the Company)
develops, manufactures and distributes high performance CD-Recordable (CD-R) and
DVD-Recordable (DVD-R) publishing and duplication systems from its
operations in the United States and Germany. The Company also distributes
related consumables for use with its systems, consisting of media kits, ribbons, ink
cartridges and blank CD-R and DVD-R media.
The accompanying interim consolidated financial statements of Rimage Corporation
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. Certain previously reported amounts have been reclassified to conform
with the current  presentation.  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 financial statements should be read
in conjunction  with the financial  statements and notes thereto included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2004.

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Marketable
SecuritiesMarketable securities primarily consist of U.S. Treasury and money
market securities and municipal securities with long-term credit ratings of
AAA and short-term credit ratings of A-1. All marketable securities have maturities of
twelve months or less and are classified as available-for-sale.
Available-for-sale securities are recorded at fair value and any unrealized
holding gains and losses, net of the related tax effect, are excluded from earnings and
are reported as a separate component of accumulated other comprehensive income
(loss) until realized.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6

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

|(3) |  | Stock
Based CompensationThe Company applies APB No. 25 and related interpretations in
accounting for the issuance of stock incentives to employees and directors.
Accordingly, no compensation expense related to employees and directors stock
incentives has been recognized in the financial statements as all options
granted under stock incentive plans had an exercise price equal to the market
value of the underlying common stock on the date of grant. Had compensation
costs for the Companys stock incentive plans been determined based on the fair
value of the awards on the date of grant, consistent with the provisions of SFAS
No. 123, the Companys net income and basic and diluted earnings per share for
the three months ended March 31, 2005 and 2004 would have been adjusted to the
proforma amounts stated below:
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                              |  | Three Months EndedMarch 31, 2005 |   | Three Months EndedMarch 31, 2004
|--------------------------------------------- |  | -------------------------------- | - | --------------------------------
|                                              | 
|Net income:                                   |  |                                  |   |                                 
|As reported                                   |  |                                  | $ | 2,691,236                       
|Stock-based employee compensation, net of tax |  |                                  |   | (184,148                        
|Proforma                                      |  |                                  |   | 2,507,088                       
|                                              | 
|Basic net income per share:                   |  |                                 
|As reported                                   |  |                                  | $ | 0.29                            
|Stock-based employee compensation, net of tax |  |                                  | $ | (0.02                           
|Proforma                                      |  |                                  | $ | 0.27                            
|                                              | 
|Diluted net income per share:                 |  |                                 
|As reported                                   |  |                                  | $ | 0.27                            
|Stock-based employee compensation, net of tax |  |                                  | $ | (0.02                           
|Proforma                                      |  |                                  | $ | 0.25                            
|                                              | 

|(4) |  | InventoriesInventories
consist of the following as of:
|--- |  | ------------------------------------------------------

|                                          |  | March 31,2005 |   | December 31,2004 | 
|----------------------------------------- |  | ------------- | - | ---------------- | 
|                                          | 
|                                         
|Finished goods and demonstration equipmen |  |               | $ | 1,444,728        | 
|Work-in-process                           |  |               |   | 733,436          | 
|Purchased parts and subassemblies         |  |               |   | 4,927,866        | 
|                                          | 
|                                          |  |               | $ | 7,106,030        | 
|                                          | 

7

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

|(5) |  | Comprehensive Income
Comprehensive income consists of the Companys net income, foreign currency
translation adjustments and unrealized holding gains (losses) from available for
sale investments.  The components of and changes in other  comprehensive  income
(loss) are as follows:
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                            |  | Three Months EndedMarch 31,
|------------------------------------------- |  | ---------------------------
|
|Net income                                  |  |                            
|Other comprehensive income (loss):          |  |                            
|Foreign currency translation adjustment     |  |                            
|Net unrealized gains (losses) on securities |  |                            
|                                            |  |                            
|Total comprehensive income                  |  |                            
|                                            |  |                            

|(6) |  | Foreign
Currency  Contracts  The Company  enters into forward  foreign  exchange
contracts to hedge inter-company  receivables  denominated in Euros arising from
sales to its subsidiary in Germany.  Gains or losses on forward foreign exchange
contracts are  calculated at each period end and are recognized in net income in
the period in which they  arose.  The fair  value of  forward  foreign  exchange
contracts  is  recorded in other  current  assets or other  current  liabilities
depending on whether the net amount is a gain or a loss.

As of March 31, 2005,  the Company had  nineteen  outstanding  foreign  currency
contracts  totaling  $3,143,000.  These contracts  mature in 2005 and bear rates
ranging from 1.2811 to 1.3391 U.S.  Dollars per Euro. As of March 31, 2005,  the
fair value of foreign  currency  contracts  is a net gain  position  of $35,144,
recorded in other current assets.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) |  | Recent
Accounting Developments
In December  2004,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement  of  Financial  Accounting  Standard  (SFAS) No. 123  (Revised  2004),
Share-Based  Payment.  SFAS No 123R is a revision  of SFAS No.  123,
Accounting for Stock-Based  Compensation  and supersedes  Accounting
Principles  Board (APB)  Opinion No. 25,  Accounting  for Stock  Issued to
Employees  and its related implementation  guidance. SFAS No. 123R focuses
primarily on accounting for  transactions  in which an entity  obtains  employee
services  through  share-based  payment  transactions.  SFAS No 123R  requires a
public entity to measure the cost of employee  services received in exchange for
the award of equity instruments based on the fair value of the award at the date
of grant.  The cost will be recognized  over the period during which an employee
is required to provide  services in exchange for the award.  In April 2005,  the
Securities and Exchange  Commission  amended the  compliance  dates for SFAS No.
123R,   with  the  result  that  the  effective  date  for  the   Companys
implementation  of SFAS No.  123R is  deferred  from July 1, 2005 to  January 1,
2006.  While the Company cannot  precisely  determine the impact on net earnings
that may  result  from the  adoption  of SFAS No  123R,  estimated  compensation
expense  related  to prior  annual  periods  can be  found  in the  notes to the
Consolidated  Financial  Statements included in the Companys Form 10-K for
the year  ended  December  31,  2004,  and for  interim  periods,  note 3 to the
Consolidated Financial Statements included in this Form 10Q. The ultimate amount
of increased
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

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

| | compensation
expense will be dependent on whether the Company adopts SFAS 123R using the modified
prospective or retrospective method, the number of option shares granted during the year,
their timing and vesting period, and the method used to calculate the fair value of the
awards, among other factors. In April 2005, the Securities and Exchange Commission issued
Staff Accounting Bulletin (SAB) No. 107, Share-Based Payment, confirming the
latitude in SFAS No. 123Rs provisions on selecting models for valuing share options
and clarified other positions on accounting and disclosure for share-based-payment
arrangements. SAB 107 permits registrants to choose from different valuation models to
estimate the fair value of share options, assuming consistent application, and also
provides guidance on developing assumptions used in valuing employee share options and on
related MD&A disclosures.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | FASB
Interpretation No. 47, Accounting for Conditional Asset Retirement
Obligations, was issued in March 2005, and provides clarification on certain
provisions of SFAS No. 143, Accounting for Asset Retirement Obligations. Under
Interpretation No. 47, an entity is required to recognize a liability for the fair value
of a conditional asset retirement obligation if the fair value of the liability can be
reasonably estimated. The fair value of a liability for a conditional asset retirement
obligation should be recognized when incurred, generally upon acquisition, construction,
development or through the normal operation of the asset. This Interpretation also
clarifies when an entity would have sufficient information to reasonably estimate the fair
value of an asset retirement obligation. Interpretation No. 47 is effective for the
Company no later than December 31, 2005, and is not expected to have a significant impact
on the Companys consolidated financial statements.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | FIN
46, Consolidation of Variable Interest Entities, was issued by the FASB in
January 2003, and the interpretation was revised in December 2003 (FIN 46-R).
FIN 46-R provides accounting requirements for business enterprises to consolidate related
entities in which they are determined to be the primary beneficiary as a result of their
variable economic interests. The interpretation provides guidance in judging multiple
economic interests in an entity and in determining the primary beneficiary. The
interpretation is effective for all such interests entered into after December 31, 2003,
and for all others at the beginning of the fiscal year commencing after December 15, 2004.
Adoption of the interpretation has not affected, and is not expected to affect, the
Companys consolidated financial statements.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment of ARB
No. 43, Chapter 4. SFAS No. 151 amends the guidance in ARB No. 43, Chapter 4,
Inventory Pricing, to clarify the accounting for abnormal amounts of idle
facility expense, freight, handling charges and spoilage. This statement requires that
those items be recognized as current period charges regardless of whether they meet the
criterion of so abnormal which was the criterion specified in ARB No. 43. In
addition, this Statement requires that allocation of fixed production overheads to the
cost of production be based on normal capacity of the production facilities. The
provisions under SFAS No. 151 are effective for the Company beginning January 1, 2006, and
shall be applied prospectively. The Company does not expect that the adoption of this
pronouncement will have a significant impact on its consolidated financial statements.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, an
amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions. The
guidance in APB No. 29 is based on the principle that exchanges of nonmonetary assets
should be measured based upon the fair value of the assets exchanged. SFAS No. 153 amends
APB No. 29 to eliminate the narrow exception for nonmonetary exchanges of similar
productive assets and replaces it with a broader exception for exchanges of nonmonetary
assets that do not have commercial substance. This Statement is effective for the Company
for nonmonetary asset exchanges beginning July 1, 2005. The provisions of this Statement
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

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

| | shall be applied prospectively. The Company does not expect the adoption of this pronouncement
to have a significant impact on its consolidated financial statements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) |  | Warranty Reserve
The warranty reserve rollforward, including provisions and claims, is as follows:
|--- |  | --------------------------------------------------------------------------------------------------

|Three Months Ended: |  | BeginningBalance |   | Warranty
Provisions |  | Warranty
Claims |        | Foreign
Exchange Impact |  | Ending
Balance
|------------------- |  | ---------------- | - | ------------------- |  | --------------- | ------ | ----------------------- |  | --------------
|                   
|March 31, 2005      |  |                  | $ | 187,000             |  |                 | 79,000 |                         |  | (96,000       
|                   
|March 31, 2004      |  |                  | $ | 172,000             |  |                 | 96,000 |                         |  | (61,000       

|(9) |  | Litigation
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.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

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|Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- |  | -------------------------------------------------------------------------------------

| | The following table sets forth, for the periods  indicated,  selected items from
the Companys consolidated statements of operations.
| | -------------------------------------------------------------------------------------------------------------------------------------

|                                   
|-----------------------------------
|
|
|                                   
|
|                                   
|Revenues                           
|Cost of revenues                   
|                                   
|Gross profit                       
|Operating expenses:                
|Research and development           
|Selling, general and administrative
|                                   
|Operating income                   
|Other income, net                  
|                                   
|Income before income taxes         
|Income tax expense                 
|                                   
|Net income                         
|                                   

Overview
Rimage  develops,   manufactures  and  distributes   CD-Recordable   (CD-R)  and
DVD-Recordable (DVD-R) publishing and duplication systems from its operations in
the United States and Germany.  These  systems  allow  customers to benefit from
cost  savings by reducing  their  manual  labor  efforts in  industries  such as
banking,  medical,  photography and  government.  Rimage  anticipates  sales and
marketing  expenditures will continue to grow as a result of applying  increased
resources to further  penetrate  these markets.  As  Rimages  sales within
North  America and Europe have  averaged  94% of total sales over the past three
years, the strength of the economies in each of these regions plays an important
role in determining the success of Rimage.

Rimage earns revenues through the
sale of equipment, consumables (ribbons, ink cartridges and Rimage-branded blank CD-R and
DVD-R media), maintenance contracts, parts and repair services. Rimages recurring
revenues (consumables, maintenance contracts, parts and service) comprised approximately
35% and 36% of consolidated revenues during the three months ended March 31, 2005 and
2004, respectively. Exclusive of a small amount of capital lease obligations, Rimage has
no long-term debt and does not require significant capital investments as all fabrication
of its products is outsourced to vendors.

# Results of Operations

Revenues.    
Revenues  increased  45% to $20.9  million for the three  months ended March 31,
2005 from $14.4  million for the same prior year period.  The growth in revenues
was  primarily  impacted by a 47% or $3.6  million  increase  in  Producer  line
equipment sales, largely driven by strong sales of the DiscLab system introduced
in 2004. Also  contributing to the current  periods  revenue growth was an
increase in the volume of recurring revenues of $2.2 million, including sales of
blank  CD-R  and  DVD-R  media,  printer  ribbons,  ink  cartridges,  parts  and
maintenance  contracts.  International  sales rose 23% in this years first
quarter  over the same  prior  year  period and  comprised  37% of total  sales,
compared  to 43% in last  years  first  quarter.  The  impact of  currency
fluctuations  on  the  Companys  European  operations  increased  reported
revenues  for the three  months  ended  March  31,  2005 by  approximately  $0.4
million, or 2% of consolidated revenues.

As of and for the three months ended
March 31, 2005, foreign revenues from unaffiliated customers generated by the
Companys German operations and the operating income and net identifiable assets of
such operations were

11

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# Managements
Discussion and Analysis of Financial Condition and Results of Operations (Continued)

$6.4 million, $0.2 million and $5.7
million, respectively. Comparable amounts for the Companys German operations as of
and for the three months ended March 31, 2004 were revenues of $5.4 million, operating
income of $0.2 million and net identifiable assets of $4.8 million. The growth in revenues
and assets is due to increased penetration in foreign markets of sales of CD-R and DVD-R
products.

The Company is projecting second
quarter 2005 revenues to range between $19 million and $21 million.

Gross Profit.  Gross profit as
a percentage of revenues was 46% for the three months ended March 31, 2005, compared to
49% for the same period in 2004. The decline in gross profit as a percentage of revenues
was primarily due to increased cost of sales resulting from increased raw materials costs
and increased manufacturing and service labor and overhead in preparation for the launch
of a new desktop product in the second quarter and expected continued growth in total
sales in 2005.

Rimage anticipates that its gross
profit percentage during the remainder of 2005 will be in the low to mid-40% range. Actual
margins will continue to be affected by many factors, including product mix, the timing of
new product introductions, manufacturing volume, foreign currency exchange rate
fluctuations and levels of sales returns.

Operating Expenses.  Research
and development expenses totaled $1.3 million and $1.1 million during the three months
ended March 31, 2005 and 2004, respectively, representing 6.1% and 7.8% of revenues,
respectively. The 14% increase in 2005 expenses was primarily due to materials and
resources required to complete development work on a new desktop product scheduled to be
released in the second quarter 2005 and continued development on other new-generation
products.

Rimage anticipates its research and
development expenditures to range from 7% to 8% of revenues for the full year 2005. These
expenditures will be made to support new product development initiatives and improve
existing products.

Selling, general and administrative
expenses for the three months ended March 31, 2005 and 2004 amounted to $4.4 million and
$3.2 million, respectively, representing 21% and 22% of revenues, respectively. The dollar
growth in expenses primarily reflects the implementation of sales and marketing
initiatives to support new product introductions, the continued expansion of the
Companys sales and marketing organization and incremental expenses associated with
Sarbanes Oxley related initiatives. Sales and marketing expenses grew $0.6 million in the
first quarter 2005, affected by increased costs for product marketing and promotional
activities and a 22% increase in headcount between periods. The Company expects continued
growth in spending on sales and marketing during 2005. General and administrative expenses
contributed the remaining $0.6 million of growth in expenses, impacted primarily by
incremental expenses associated with completion of Sarbanes-Oxley related compliance for
the 2004 fiscal year, and an increase in management compensation costs.

Other Income, Net.  The Company
recognized net interest income on cash investments of $0.3 million during the three months
ended March 31, 2005, compared to $0.1 million during the same period in 2004. The current
period increase was due to a $4 million increase in average cash equivalent and marketable
securities balances and a small increase in effective yields. Other income in each period
was negatively affected by net losses on foreign currency transactions, amounting to
$67,000 in 2005 and $10,000 in 2004.

Income Before Income Taxes.
 Income before income taxes increased 45% to $4.2 million for the first quarter of 2005
from $2.9 million for the same prior year period. This rate of growth is consistent with
the revenue growth rate between periods and reflects the containment of aggregate costs
and expenses at the same proportion of total revenues as occurred in the prior year
period.

12

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# Managements
Discussion and Analysis of Financial Condition and Results of Operations (Continued)

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, 2005 and 2004 amounted to $1.5 million and
$1.1 million, respectively, or 35.5% and 36.5% of income before taxes. The Company
anticipates its effective tax rate will range between 35% and 36% for the full year 2005.
The lower effective tax rate in 2005 reflects the impact of adjustments to the tax
provision as a result of a reassessment of the Companys tax exposures as of December
31, 2004, as well as the net impact of the phase-in beginning in 2005 of the new Internal
Revenue Code Section 199 Manufacturers Tax Deduction for qualified domestic
manufacturing / production activities.

Net income / net income per share.  Resulting net income for the three months ended March 31, 2005 was $2.7 million,
representing 12.9% of revenues. This compares to net income of $1.8 million, or 12.7% of
revenues for the same period in the prior year. Related net income per diluted share
amounts were $0.27 and $0.18 for the three months ended March 31, 2005 and 2004,
respectively. The Company expects second quarter 2005 net income to range between $0.20 to
$0.25 per diluted share.

# Liquidity and Capital
Resources

The Company expects it will be able
to maintain current operations, including anticipated capital expenditure requirements,
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, 2005, no amounts were
outstanding under the credit agreement.

Current assets increased to $72.6
million as of March 31, 2005 from $71.7 million at December 31, 2004, primarily reflecting
increased accounts receivable ($0.6 million) and prepaid expenses ($0.7 million),
partially offset by a reduction in inventory levels ($0.3 million). The increase in
accounts receivable was caused by a concentration of first quarter 2005 sales in March.
The allowance for doubtful accounts and sales returns as a percentage of receivables was
5% at March 31, 2005, compared to 11% at March 31, 2004. The reduction in 2005 reserve
levels is primarily due to improved management of sales returns, improved quality of
receivable balances and a reassessment effective the fourth quarter 2004 of the
Companys bad debt exposure. The increase in prepaid expenses was primarily due to
the renewal during the first quarter of a paid-up software license agreement for a
three-year term. Inventory levels decreased during the first quarter due primarily to
improved inventory management, but remain high relative to historic levels due to the need
to stock long lead-time parts and additional inventory of CD-R and DVD-R media, printer
ribbons and cartridges as a result of expected continued growth in consumable product
sales. The Company intends on utilizing its current assets primarily for its continued
organic growth. In addition, the Company may use its available cash for potential future
acquisitions or strategic alliances. Current liabilities decreased to $9.7 million as of
March 31, 2005 from $11.3 million as of December 31, 2004, primarily reflecting payment of
management bonuses earned in 2004, a reduction in trade payables ($0.3 million) stemming
from the inventory reduction discussed above and timing of income tax payments.

Net cash provided by operating
activities was $0.4 million for the three months ended March 31, 2005, compared to net
cash used in operating activities of $0.3 million for the three months ended March 31,
2004. The approximate $0.7 million increase in cash generated from operations was
primarily impacted by a $0.9 million increase in net income adjusted for non-cash items,
partially offset by a $0.2 million increase in operating assets, net of operating
liabilities, as discussed above.

Net cash provided by investing
activities was $12.4 million for the three months ended March 31, 2005, compared to net
cash used in investing activities of $0.2 million during the same period in 2004. The
increase in cash provided by investing activities was the result of a $13.0 million
increase in maturities of marketable securities, net of related purchases of marketable
securities, partially offset by a $0.3 million increase in capital

13

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# Managements
Discussion and Analysis of Financial Condition and Results of Operations (Continued)

expenditures.
The increased level of capital  expenditures  was driven  primarily by leasehold
improvements for the Companys corporate facility.

Net cash provided by financing
activities totaled $0.3 million for the three months ended March 31, 2005 and 2004,
respectively. Amounts in both periods primarily reflect proceeds from stock option
exercises.

# Critical Accounting
Policies.

Management utilizes its technical
knowledge, cumulative business experience, judgment and other factors in the selection and
application of the Companys accounting policies. The following accounting policies
are considered by management to be the most critical to the presentation of the
consolidated financial statements because they require the most difficult, subjective and
complex judgments:

Revenue Recognition.  Revenue
for product sales (including hardware and consumables), which do not include any
requirement for installation or training, is recognized on shipment, at which point the
following criteria of SAB Topic 13(A)(1) have been satisfied:

- Persuasive evidence of an arrangement exists.  Orders are received for all sales
and sales invoices are mailed on shipment.
- Delivery has occurred. Product has been transferred to the customer or the customers
designated delivery agent, at which time title and the risk of loss transfers.
- The vendors price is fixed or determinable. All sales prices are fixed at the time
of the sale (shipment).
- Collectibility is probable. All sales are made on the basis that collection is expected in
line with the Companys standard payment terms, which are consistent with industry
practice in the geographies in which the Company markets its products.

A standard product sale by the
Company does not require a commitment on the Companys part to provide installation,
set-up or training. When such services are requested, value-added resellers generally
arrange and perform the service directly with the customer, with no financial interest or
obligation on the part of the Company. In the limited situations in which the Company does
provide installation or training services for customers, the Company charges separately
for the service based upon its published list prices, and recognizes revenue upon the
successful completion of the service.

The Company accrues for warranty
costs and sales returns at the time of shipment based upon historical experience and known
trends in the business.

Revenue for maintenance agreements is
recognized on a straight-line basis over the life of the contracts (commencing once the
period covered by standard warranty expires) based on renewal prices.

Revenue Arrangements with Multiple
Deliverables.  EITF 00-21, Revenue Arrangements with Multiple Deliverables,
provides revenue recognition guidance for arrangements with multiple deliverables, and the
criteria to determine if items in a multiple deliverable agreement should be accounted for
separately. In some arrangements, the different revenue-generating activities are
sufficiently separable and there exists sufficient evidence of their fair values to
separately account for some or all of the activities. In other arrangements, some or all
of the deliverables are not independently functional, or there is not sufficient evidence
of their fair values to account for them separately. This issue addresses when and how an
arrangement involving multiple deliverables should be divided into separate units of
accounting. This issue does not change otherwise applicable revenue recognition criteria.
The adoption of EITF 00-21 did not have an impact on the financial position or results of
operations of the Company.

14

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# Managements
Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Allowance for Doubtful Accounts
and Sales Returns.  The Company records a reserve for accounts receivable that are
potentially uncollectible. The reserve is established based on a specific assessment of
accounts with known collection exposure, based upon a review of the age of the receivable,
the customers payment history, the customers financial condition and industry
and general economic conditions, as well as a general assessment of collection exposure in
the remaining receivable population based upon bad debt history. Actual bad debt exposure
could differ significantly from managements estimates if economic conditions
worsened for the Companys customers. The Company also records a reserve for sales
returns from its customers. The amount of the reserve is based upon historical trends,
timing of new product introductions and other factors.

Inventory Reserves.  The
Company records reserves for inventory shrinkage and for potentially excess, obsolete and
slow moving inventory. The amounts of these reserves are based upon historical loss
trends, inventory levels, physical inventory and cycle count adjustments, expected product
lives and forecasted sales demand. Results could be materially different if demand for the
Companys products decreased because of economic or competitive conditions, or if
products became obsolete because of technical advancements in the industry or by the
Company.

Deferred Tax Assets.  The
Company recognizes deferred tax assets for the expected future tax impact of temporary
differences between book and taxable income. A valuation allowance and income tax charge
are recorded when, in managements judgment, realization of a specific deferred tax
asset is uncertain. Income tax expense could be materially different from actual results
because of changes in managements expectations regarding future taxable income, the
relationship between book and taxable income and tax planning strategies employed by the
Company.

Warranty Reserves.  The
Companys non-consumable products are warranted to the end-user to ensure end-user
confidence in design, workmanship and overall quality. Warranty lengths vary by product
type, ranging from periods of six to twelve months. Warranty covers parts, labor and other
associated expenses. The Company performs the majority of warranty work, while authorized
distributors and dealers also perform some warranty work. The Company records a liability
for warranty claims at the time of sale. The amount of the liability is based on an
analysis of historical claims experience, which includes labor and parts costs and
consideration of the proportion of parts that can be re-used. Also considered are the
anticipated impact of changes in product quality, releases of new products and other
factors. Claims experience could be materially different from actual results because of
the introduction of new, more complex products; a change in the Companys warranty
policy in response to industry trends, competition or other external forces; or
manufacturing changes that could impact product quality.

# New Accounting
Pronouncements

In December 2004, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS)
No. 123 (Revised 2004), Share-Based Payment. SFAS No 123R is a revision of
SFAS No. 123, Accounting for Stock-Based Compensation and supersedes
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees and its related implementation guidance. SFAS No. 123R focuses primarily
on accounting for transactions in which an entity obtains employee services through
share-based payment transactions. SFAS No 123R requires a public entity to measure the
cost of employee services received in exchange for the award of equity instruments based
on the fair value of the award at the date of grant. The cost will be recognized over the
period during which an employee is required to provide services in exchange for the award.
In April 2005, the Securities and Exchange Commission amended the compliance dates for
SFAS No. 123R, with the result that the effective date for the Companys
implementation of SFAS No. 123R is deferred from July 1, 2005 to January 1, 2006. While
the Company cannot precisely determine the impact on net earnings that may result from the
adoption of SFAS No 123R, estimated compensation expense related to prior annual periods
can be found in the notes to the Consolidated Financial Statements included in the
Companys

15

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# Managements
Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Form 10-K for the year ended December
31, 2004, and for interim periods, note 3 to the Consolidated Financial Statements
included in this Form 10Q. The ultimate amount of increased compensation expense will be
dependent on whether the Company adopts SFAS 123R using the modified prospective or
retrospective method, the number of option shares granted during the year, their timing
and vesting period, and the method used to calculate the fair value of the awards, among
other factors. In April 2005, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 107, Share-Based Payment, confirming the
latitude in SFAS No. 123Rs provisions on selecting models for valuing share options
and clarified other positions on accounting and disclosure for share-based-payment
arrangements. SAB 107 permits registrants to choose from different valuation models to
estimate the fair value of share options, assuming consistent application, and also
provides guidance on developing assumptions used in valuing employee share options and on
related MD&A disclosures.

FASB Interpretation No. 47,
Accounting for Conditional Asset Retirement Obligations, was issued in March
2005, and provides clarification on certain provisions of SFAS No. 143, Accounting
for Asset Retirement Obligations. Under Interpretation No. 47, an entity is required
to recognize a liability for the fair value of a conditional asset retirement obligation
if the fair value of the liability can be reasonably estimated. The fair value of a
liability for a conditional asset retirement obligation should be recognized when
incurred, generally upon acquisition, construction, development or through the normal
operation of the asset. This Interpretation also clarifies when an entity would have
sufficient information to reasonably estimate the fair value of an asset retirement
obligation. Interpretation No. 47 is effective for the Company no later than December 31,
2005, and is not expected to have a significant impact on the Companys consolidated
financial statements.

FIN 46, Consolidation of
Variable Interest Entities, was issued by the FASB in January 2003, and the
interpretation was revised in December 2003 (FIN 46-R). FIN 46-R provides
accounting requirements for business enterprises to consolidate related entities in which
they are determined to be the primary beneficiary as a result of their variable economic
interests. The interpretation provides guidance in judging multiple economic interests in
an entity and in determining the primary beneficiary. The interpretation is effective for
all such interests entered into after December 31, 2003, and for all others at the
beginning of the fiscal year commencing after December 15, 2004. Adoption of the
interpretation has not affected, and is not expected to affect, the Companys
consolidated financial statements.

In November 2004, the FASB issued
SFAS No. 151, Inventory Costs, an amendment of ARB No. 43, Chapter 4. SFAS No.
151 amends the guidance in ARB No. 43, Chapter 4, Inventory Pricing, to
clarify the accounting for abnormal amounts of idle facility expense, freight, handling
charges and spoilage. This statement requires that those items be recognized as current
period charges regardless of whether they meet the criterion of so abnormal
which was the criterion specified in ARB No. 43. In addition, this Statement requires that
allocation of fixed production overheads to the cost of production be based on normal
capacity of the production facilities. The provisions under SFAS No. 151 are effective for
the Company beginning January 1, 2006, and shall be applied prospectively. The Company
does not expect that the adoption of this pronouncement will have a significant impact on
its consolidated financial statements.

In December 2004, the FASB issued
SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29,
Accounting for Nonmonetary Transactions. The guidance in APB No. 29 is based on the
principle that exchanges of nonmonetary assets should be measured based upon the fair
value of the assets exchanged. SFAS No. 153 amends APB No. 29 to eliminate the narrow
exception for nonmonetary exchanges of similar productive assets and replaces it with a
broader exception for exchanges of nonmonetary assets that do not have commercial
substance. This Statement is effective for the Company for nonmonetary asset exchanges
beginning July 1, 2005. The provisions of this Statement shall be applied prospectively.
The Company does not expect the adoption of this pronouncement to have a significant
impact on its consolidated financial statements.

16

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# Managements
Discussion and Analysis of Financial Condition and Results of Operations (Continued)

# Cautionary Note
Regarding Forward-Looking Statements

This report contains forward-looking
statements that involve risks and uncertainties. For this purpose, any statements
contained in this report that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the foregoing, words such as may,
will, expect, believe, anticipate,
estimate or continue or comparable terminology are intended to
identify forward-looking statements. These statements by their nature involve substantial
risks and uncertainties. The Companys actual results could differ significantly from
those discussed in the forward-looking statements.

Factors that could cause or
contribute to such differences include, but are not limited to, the following, as well as
other factors not now identified: the Companys ability to keep pace with changes in
technology in the computer and storage media industries as well as technology changes in
the photography, medical, banking, government and office 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 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 its annual report on Form 10-K for the year ended December 31, 2004. These
forward-looking statements are made as of the date of this report and the Company assumes
no obligation to update such forward-looking statements, or to update the reasons why
actual results could differ materially from those anticipated in such forward-looking
statements.

|Item 3. |  | Quantitative and Qualitative Disclosures about Market Risk
|------- |  | ----------------------------------------------------------

The Company is exposed to market risk
from foreign exchange rate fluctuations of the European Euro to the U.S. dollar as the
financial position and operating results of the Companys German subsidiary, Rimage
Europe, 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 the eventual dollar cash flow of foreign currency
denominated transactions (principally European Euro) with Rimage Europe. The primary
objective of these hedging activities is to maintain an approximately balanced position in
foreign currencies so that exchange gains and losses resulting from exchange rate changes,
net of related tax effects, are minimized. Gains or losses on forward exchange contracts
are recognized in income on a current basis over the term of the contracts. 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

17

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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 review, they have concluded that
these disclosure controls and procedures are effective.

(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 registrants internal control over financial reporting.

| | PART
II -- OTHER INFORMATION
| | ----------------------------

|Item 1. |  | Legal ProceedingsNot
Applicable.
|------- |  | --------------------------------

|Item 2. |  | Changes in Securities and Use of ProceedsNot
Applicable.
|------- |  | --------------------------------------------------------

|Item 3. |  | Defaults Upon Senior Securities
Not Applicable.
|------- |  | -----------------------------------------------

|Item 4. |  | Submission of Matters to a Vote of Security HoldersNot Applicable.
|------- |  | ------------------------------------------------------------------

|Item 5. |  | Other InformationNot Applicable.
|------- |  | --------------------------------

|Item 6. |  | Exhibits
|------- |  | --------

| | (a) |  | The
following exhibits are included herein:
| | --- |  | -------------------------------------------

| |  | 11.1  Calculation
of Earnings Per Share
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.ss.1350.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

18

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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 CORPORATIONRegistrant                                                                     
|---------------- | -------------------------------------------------------------------------------------------------
|                
|                
|Date:May 6, 2005 | By:            /s/ Bernard P. Aldrich                                                            
|                 | Bernard P. AldrichDirector, Chief Executive Officer,
and President(Principal Executive Officer)  
|                
|Date:May 6, 2005 | By:               /s/ Robert M. Wolf                                                             
|                 | Robert M. WolfChief Financial Officer
(Principal Financial Officer)(Principal Accounting Officer)

19