RIMG » Topics » Liquidity and Capital Resources

This excerpt taken from the RIMG 10-Q filed Aug 8, 2008.

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 June 30, 2008, no amounts were outstanding under the credit agreement.

 

At June 30, 2008, the Company had working capital of $68.4 million, an increase of $1.5 million from working capital reported at December 31, 2007. The increase was primarily the result of year-to-date net income adjusted for non-cash items of $4.6 million and proceeds from employee stock

 

17



Table of Contents

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

 

plans of $1.5 million, partially offset by the Company’s use of $5.0 million to repurchase shares of its Company stock, as described below.

 

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 will 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 using cash on hand. During the six months ended June 30, 2008, the Company repurchased 275,310 shares of its common stock at an average purchase price of $18.16 per share under the authorizations. 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 $2.1 million for the six months ended June 30, 2008, compared to $7.6 million in the same prior-year period. The $5.5 million reduction in cash generated from operations resulted from changes in operating assets and liabilities producing a net use of cash of $1.8 million in 2008 compared to a net increase in cash of $2.2 million in 2007, coupled with a $1.3 million decrease in net income for the six months ended June 30, 2008 compared to the same prior-year period. Contributing to the change in operating assets and liabilities compared to the prior year’s period was a $1.7 million smaller reduction in receivables, a $3.6 million larger aggregate reduction in trade accounts payable, accrued compensation and accrued expenses and a $2.9 million unfavorable variation in the change in deferred income. These changes were partially offset by a $3.3 million favorable variation in the change in inventories and a $0.7 million smaller net increase in prepaid income taxes. The smaller reduction in receivables in the current year’s period was primarily impacted by a $0.3 million increase in revenue in June 2008 relative to December 2007 (last month of each quarter), compared to a $3.0 million decrease in revenue between the comparable prior-year periods. The changes in trade accounts payable, accrued compensation, accrued expenses and prepaid income taxes were primarily due to the timing of related payments. The unfavorable change in deferred income resulted from a larger volume of new maintenance contracts initiated during the first six months of 2007 compared to 2008. The favorable change in inventories resulted from a $1.9 million reduction in inventories during the current-year period, compared to a $1.4 million increase in the same prior-year period. The decrease in inventories in the current period resulted primarily from the Company’s maintenance of lower levels of buffer inventory stock.

 

Investing activities provided a net increase in cash of $16.6 million for the six months ended June 30, 2008 and resulted in a net use of cash of $1.5 million for the same prior-year period. The fluctuations in investing activities were primarily the result of $16.7 million in maturities of marketable securities, net of related purchases, during the six months ended June 30, 2008, compared to $0.7 million in purchases of marketable securities, net of related maturities, in the same prior-year period. Capital expenditures for the six months ended June 30, 2008 and 2007 totaled $0.5 million and $0.8 million, respectively. Capital expenditures in the current period consisted primarily of purchases of manufacturing tooling and office equipment, while expenditures in the prior-year period consisted primarily of costs capitalized as part of the implementation of an enterprise resource planning system and purchases of manufacturing tooling.

 

18



Table of Contents

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

 

Financing activities used net cash of $2.8 million for the six months ended June 30, 2008, and provided net cash of $2.8 million for the same period in 2007. The net use of cash in the current-year period was primarily attributable to the Company’s use of $5.0 million of cash to repurchase 275,310 shares of its common stock. Partially offsetting the Company’s use of cash to repurchase common stock in the current period and generating most of the cash from financing activities in the prior-year period were proceeds from employee stock plans of $1.4 million and $1.8 million, respectively. Additionally, each period includes excess tax benefits recognized as an addition to the additional paid-in capital (“APIC”) pool of $0.7 million and $1.0 million, respectively. Such amounts are required to be reported as an addition to financing activities and a reduction in operating activities in the Statements of Cash Flows under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based Payment.”

 

This excerpt taken from the RIMG 10-Q filed May 9, 2008.

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, 2008, no amounts were outstanding under the credit agreement.

 

At March 31, 2008, the Company had working capital of $67.1 million, an increase of $0.2 million from working capital reported at December 31, 2007. The increase was primarily the result of first quarter net income adjusted for non-cash items of $2.4 million and proceeds from employee stock plans of $0.9 million, partially offset by the impact of a $3.2 million net change in classification of marketable securities. The described net change in marketable securities resulted from a non-cash change in the classification of $4.1 million of marketable securities from non-current as of December 31, 2007 to current as of March 31, 2008, offset by a $7.3 million 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 will 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, and the repurchase program may be discontinued at any time. The Company will finance the purchase of the shares using cash on hand. During the three months ended March 31, 2008, the Company repurchased 26,510 shares of its common stock at an average purchase price of $22.85 per share under the authorizations. 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.

 

Operating activities resulted in a net use of cash of $3.1 million for the three months ended March 31, 2008, and provided a net increase in cash of $4.5 million in the same prior year period. The unfavorable change in cash generated from operations was entirely impacted by a $7.6 million reduction in cash from changes in operating assets and liabilities. Contributing to the change in operating assets and liabilities compared to the prior year’s period was a $4.3 million smaller reduction in receivables, a $1.4 million larger net increase in prepaid income taxes, a $2.7 million larger aggregate reduction in trade accounts payable, accrued compensation and accrued expenses and a $1.1 million unfavorable variation in the change in deferred income. These changes were partially offset by a $1.6 million favorable variation in the change in inventories, resulting from a $0.4 million reduction in inventories during the current year’s first quarter, compared to a $1.2 million increase in the same prior-year period. The smaller reduction in receivables in the current year’s period was primarily impacted by a $0.7 million reduction in revenue in March 2008 relative to December 2007 (last month of the consecutive quarters), compared to a $4.5 million decrease in revenue between the comparable prior-year periods. The changes in prepaid income taxes and accounts payable, accrued compensation and accrued liabilities were primarily due to the timing of related payments. The unfavorable change in deferred income resulted from a larger volume of new maintenance contracts initiated during the first quarter of 2007 compared to 2008. The decrease in inventories in the current period compared to the increase in the same prior-year period resulted primarily from the Company’s maintenance of lower levels of buffer inventory stock.

 

15

 


Table of Contents

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

 

Investing activities provided a net increase in cash of $5.3 million for the three months ended March 31, 2008 and resulted in a net use of cash of $1.8 million for the same prior-year period. The increase in cash from investing activities was the result of $5.5 million in maturities of marketable securities, net of related purchases, during the three months ended March 31, 2008, compared to $1.2 million in purchases of marketable securities, net of related maturities, in the same prior year period. Capital expenditures for the three months ended March 31, 2008 and 2007 totaled $0.2 million and $0.6 million, respectively. Capital expenditures in the current period consisted primarily of purchases of manufacturing tooling and office equipment, while expenditures in the prior-year period consisted primarily of costs capitalized as part of the implementation of an enterprise resource planning system and purchases of manufacturing tooling.

 

Net cash provided by financing activities totaled $0.9 million and $2.3 million for the three months ended March 31, 2008 and 2007, respectively. Financing activities in each period included proceeds from employee stock plans of $0.9 million and $1.3 million, respectively. Additionally, each period includes excess tax benefits recognized as an addition to the Additional Paid-in Capital (“APIC”) pool of $0.6 million and $0.9 million, respectively. Such amounts are required to be reported as an addition to financing activities and a reduction in operating activities in the Statements of Cash Flows under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based Payment.” Partially offsetting the described increases was the Company’s use of cash to repurchase 26,510 shares of its common stock in the first quarter of 2008 for $0.6 million.

 

This excerpt taken from the RIMG 10-Q filed Nov 9, 2007.

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 September 30, 2007, no amounts were outstanding under the credit agreement. At September 30, 2007, the Company had working capital of $67.9 million, an increase of $13.9 million from working capital at December 31, 2006. The increase in working capital occurred in spite of the Company’s use of $12.6 million of cash in the third quarter to repurchase 500,000 shares of its common stock. Offsetting this outflow of cash and contributing to the increase in working capital was year-to-date net income of $11.2 million, proceeds from employee stock plans of $2.0 million and the impact of a $9.9 million net transfer of funds from non-current to current marketable securities. The net transfer resulted from a non-cash change in the classification of $26.3 million of marketable securities from non-current as of December 31, 2006 to current as of September 30, 2007, partially offset by a $16.4 million use of cash to purchase non-current marketable securities. The change in the classification of marketable securities occurred as the remaining term to maturity for these securities is twelve months or less as of September 30, 2007.

 

On July 25, 2007, the Company’s Board of Directors authorized the repurchase of up to 500,000 shares of its common stock. The program adopted by the Company’s Board of Directors in July 2007 replaced the repurchase program adopted in May 1999. During the three months ended September 30, 2007, the Company repurchased 500,000 shares of its common stock at an average purchase price of $25.26 per share under the authorization. On October 17, 2007, the Company’s Board of Directors adopted a new stock repurchase program authorizing the repurchase of up to 500,000 shares of the Company’s common stock. This new program replaces the completed share repurchase program that was adopted in July 2007. Shares will 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, and the repurchase program may be discontinued at any time. The Company will finance the purchase of the shares using cash on hand. The Company also intends on utilizing its current assets 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 $18.0 million for the nine months ended September 30, 2007, compared to $7.8 million in the same prior year period. The $10.2 million increase in cash generated from operations resulted from a $9.2 million increase in cash from changes in operating assets and liabilities and a $1.0 million increase in net income adjusted for non-cash items. The change in operating assets and liabilities compared to the prior year’s period was primarily due to a $4.5 million favorable variation in the change in receivables, a $3.3 million favorable variation in the change in aggregate trade accounts payable, accrued compensation and other accrued expenses, a $2.3 million larger increase in deferred income and customer deposits and a $1.5 million larger increase in income taxes payable. These changes were partially offset by a $1.6 million unfavorable change in inventories and a $0.7 million unfavorable change in prepaid expenses. The favorable variation in receivables resulted from a $1.9 million reduction in receivables in the current period, compared to a $2.6 million increase in the prior year’s period. The current period decline in receivables occurred in spite of a 10% increase in revenue in the third quarter 2007 compared to the fourth quarter 2006, due to a higher concentration of sales in the first two months of this year’s third quarter relative to the fourth quarter of 2006. The change in the timing of sales during the quarter facilitated collection of a significant portion of third quarter sales during the third quarter. The larger increase in deferred income and customer deposits resulted from the sale of maintenance contracts on a growing base of installed CD-R and DVD-R publishing systems. The favorable change in the aggregate amount of payables and accrued expenses as well as income taxes payable was primarily impacted by the timing of payments. The unfavorable change in inventories in the current year’s period was due to a build-up of finished goods inventory in support of expected future demand and parts and assemblies associated with new product introductions.

 

16

 


Table of Contents

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

 

Investing activities resulted in a net use of cash of $10.5 million for the nine months ended September 30, 2007, compared to a net use of cash of $8.5 million for the same prior year period. The larger use of cash in investing activities in the current period was primarily the result of $9.5 million in purchases of marketable securities, net of related maturities, during the nine months ended September 30, 2007, compared to $6.1 million in the same prior year period. Partially offsetting the larger net purchase of marketable securities was a $1.3 million reduction in capital expenditures. Capital expenditures for the nine months ended September 30, 2007 totaled $1.2 million, and consisted primarily of costs capitalized as part of the implementation of an enterprise resource planning system and purchases of manufacturing tooling. Costs capitalized during the nine months ended September 30, 2007 for the enterprise resource planning system amounted to $0.2 million, and consisted primarily of software development costs incurred in the first quarter.

 

Net cash used in financing activities totaled $9.6 million for the nine months ended September 30, 2007, compared to net cash provided by financing activities of $2.8 million for the nine months ended September 30, 2006. The significant variation in financing activities between periods was primarily due to the Company’s use of $12.6 million in cash to repurchase 500,000 shares of its common stock in the third quarter of 2007. Financing activities in each period also included proceeds from employee stock plans of $2.0 million and $1.8 million, respectively. Additionally, both periods include excess tax benefits recognized as an addition to the APIC (additional paid-in capital) pool of $1.0 million. Such amounts are required to be reported as an addition to financing activities and a reduction in operating activities in the Statements of Cash Flows under the provisions of SFAS 123R.

 

This excerpt taken from the RIMG 10-Q filed Aug 9, 2007.

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 June 30, 2007, no amounts were outstanding under the credit agreement.

 

 

16



Table of Contents

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

 

At June 30, 2007, the Company had working capital of $71.4 million, an increase of $17.5 million from working capital at December 31, 2006. The increase was primarily the result of year-to-date net income of $5.0 million, proceeds from employee stock plans of $1.8 million and the non-cash impact of a change in classification of $7.9 million of marketable securities from non-current as of December 31, 2006 to current as of June 30, 2007 as the remaining term to maturity for these securities is twelve months or less as of June 30, 2007.

 

On July 25, 2007, the Company’s Board of Directors authorized the repurchase of up to 500,000 shares of its common stock. Shares will 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, and the repurchase program may be discontinued at any time. The Company will finance the purchase of the shares using cash on hand. The program adopted by the Company’s Board of Directors in July 2007 replaces the repurchase program adopted in May 1999. The Company also intends on utilizing its current assets 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 $7.6 million for the six months ended June 30, 2007, compared to $4.2 million in the same prior year period. The $3.4 million increase in cash generated from operations resulted primarily from a $3.4 million increase in cash from changes in operating assets and liabilities. The change in operating assets and liabilities compared to the prior year’s period was primarily due to a $3.0 million variation in the change in receivables, a $1.7 million larger increase in deferred income and customer deposits and a $0.9 larger net increase in aggregate trade accounts payable, accrued compensation and other accrued expenses. These changes were partially offset by a $1.1 million larger increase in inventories and a $1.1 million larger increase in prepaid income taxes and other prepaid expenses. The variation in receivables resulted from a $2.3 million reduction in receivables in the current period, compared to a $0.7 million increase in the prior year’s period. The change in receivables was largely impacted by a $3.0 million reduction in revenue in June 2007 compared to December 2006 (last month of each quarter), compared to a $2.2 million increase in revenue between the comparable prior year periods. The larger increase in deferred income and customer deposits resulted from the sale of maintenance contracts on a growing base of installed CD-R and DVD-R publishing systems. The larger increase in the aggregate amount of payables and accrued expenses as well as prepaid income taxes was primarily impacted by the timing of payments. The larger increase in inventories in the current year’s period was due to a build-up of finished goods inventory in support of customer order backlog and parts and assemblies associated with new product introductions.

 

Investing activities resulted in a net use of cash of $1.5 million for the six months ended June 30, 2007, compared to a net use of cash of $7.1 million for the same prior year period. The smaller use of cash in investing activities in the current period was primarily the result of $0.7 million in purchases of marketable securities, net of related maturities, during the six months ended June 30, 2007, compared to $6.0 million in the same prior year period. Also contributing to the smaller use of cash was a $0.3 million reduction in capital expenditures. Capital expenditures for the six months ended June 30, 2007 totaled $0.8 million, and consisted primarily of costs capitalized as part of the implementation of an enterprise resource planning system and purchases of manufacturing tooling. Costs capitalized during the six months ended June 30, 2007 for the enterprise resource planning system amounted to $0.2 million, and consisted primarily of software development costs incurred in the first quarter.

 

17



Table of Contents

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

 

Net cash provided by financing activities totaled $2.8 million and $1.7 million for the six months ended June 30, 2007 and 2006, respectively. Financing activities in each period included proceeds from employee stock plans of $1.8 million and $1.0 million, respectively. Additionally, each period includes excess tax benefits recognized as an addition to the APIC (additional paid-in capital) pool of $1.0 million and $0.8 million, respectively. Such amounts are required to be reported as an addition to financing activities and a reduction in operating activities in the Statements of Cash Flows under the provisions of SFAS 123R.

 

This excerpt taken from the RIMG 10-Q filed May 10, 2007.

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, 2007, no amounts were outstanding under the credit agreement.

At March 31, 2007, the Company had working capital of $67.8 million, an increase of $13.9 million from working capital reported at December 31, 2006. The increase was primarily the result of first quarter net income of $2.1 million, proceeds from employee stock plans of $1.3 million and the change in classification of $8.9 million of marketable securities from non-current as of December 31, 2006 to current as of March 31, 2007 as the remaining term to maturity for these securities is twelve months or less as of March 31, 2007. The Company intends on utilizing its current 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 $4.5 million for the three months ended March 31, 2007, compared to $0.8 million in the same prior year period. The $3.7 million increase in cash generated from operations was primarily impacted by a $0.5 million increase in net income adjusted for non-cash items and a $3.4 million increase in cash from changes in operating assets and liabilities. Primarily contributing to the change in operating assets and liabilities compared to the prior year’s period was a $5.5 million larger reduction in receivables, partially offset by a $1.6 million variation in the change in inventories and a $0.7 million larger reduction in trade accounts payable, accrued compensation and accrued expenses. The larger decrease in accounts receivable in the current year’s period was primarily impacted by a $4.5 million reduction in revenue in March

16


Table of Contents

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

2007 relative to December 2006 (last month of the consecutive quarters), compared to a $1.0 million increase in revenue between the comparable prior year periods. Also contributing to the larger decrease in accounts receivable in the first quarter of 2007 compared to the same period in the prior year was a $1.1 million reduction in revenue quarter over quarter. The change in inventories resulted from a $1.2 million increase in inventories during the current year’s first quarter, compared to a $0.3 reduction in the same prior year period. The current period’s increase in inventories resulted from lower sales and a larger build-up of finished goods inventory for expected second quarter sales. The larger current period reduction in accounts payable, accrued compensation and accrued expense accounts is primarily due to the timing of vendor and payroll payments.

Investing activities resulted in a net use of cash of $1.8 million for the three months ended March 31, 2007 and provided a net increase in cash of $2.4 million for the same prior year period. The decrease in cash from investing activities was the result of $1.2 million in purchases of marketable securities, net of related maturities, during the three months ended March 31, 2007, compared to $3.2 million in maturities of marketable securities, net of related purchases, in the same prior year period. Partially offsetting the impact of this change was a $0.2 million reduction in capital expenditures. Capital expenditures for three months ended March 31, 2007 totaled $0.6 million, and consisted primarily of costs capitalized as part of the implementation of an enterprise resource planning system and purchases of manufacturing tooling. Costs capitalized during the quarter for the enterprise resource planning system amounted to $0.2 million, and consisted primarily of software development costs.

Net cash provided by financing activities totaled $2.3 million and $1.7 million for the three months ended March 31, 2007 and 2006, respectively. Financing activities in each period included proceeds from employee stock plans of $1.3 million and $0.9 million, respectively. Additionally, each period includes excess tax benefits recognized as an addition to the APIC (additional paid-in capital) pool of $0.9 million and $0.8 million, respectively. Such amounts are required to be reported as an addition to financing activities and a reduction in operating activities in the Statements of Cash Flows under the provisions of SFAS 123R.

This excerpt taken from the RIMG 10-Q filed Nov 9, 2006.

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 September 30, 2006, no amounts were outstanding under the credit agreement.

At September 30, 2006, the Company had working capital of $61.3 million, a decrease of $12.7 million from working capital reported at December 31, 2005. The decline was primarily impacted by the purchase of $25.1 million of non-current marketable securities and capital expenditures of $2.5 million, partially offset by year-to-date net income of $9.5 million and proceeds from employee stock plans of $1.8 million. The Company intends on utilizing its current assets primarily for its continued organic growth. To help strengthen the Company’s ability to manage anticipated future growth, the Company expects to invest approximately $4 million in 2006 and early 2007 for the implementation of an enterprise resource planning system in its U.S. and German operations. Additionally, the Company may use its available cash for potential future strategic initiatives or alliances.

Net cash provided by operating activities totaled $8.2 million for the nine months ended September 30, 2006, compared to $9.2 million in the same prior year period. The $1.0 million decrease in cash generated from operations was primarily impacted by a $1.8 million increase in net income adjusted for non-cash items, offset by a $1.8 million larger use of cash from changes in operating assets and liabilities and the impact of a $1.0 million non-cash reduction in operating cash flows associated with excess tax benefits recognized as an addition to the APIC (additional paid-in capital) pool

19



Table of Contents

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

under SFAS 123R. SFAS 123R requires such amounts to be reported as an addition to financing activities and a reduction in operating activities in the Statements of Cash Flows. Primarily contributing to the change in operating assets and liabilities compared to the prior year’s year-to-date period was a $4.5 million variation in the change in accounts payable, accrued compensation and accrued expenses, partially offset by a $2.4 million smaller increase in accounts receivable. The change in accounts payable, accrued compensation and accrued expenses resulted from a $2.7 million reduction in these accounts in the current year’s period, compared to a $1.8 million increase in the prior year’s period. The current period reductions in the accounts payable and accrued expense accounts were impacted by the payment of $1.8 million of consulting fees accrued at December 31, 2005, and the timing of payroll and vendor payments. Additionally, accounts payable at September 30, 2005 included an accrual for $1.1 million of consulting fees incurred in the third quarter 2005. The smaller increase in accounts receivable in the current year’s period was impacted by a $3.2 million reduction in revenue in the third quarter 2006 relative to the prior year’s third quarter.

Investing activities resulted in a small net use of cash of $0.03 million for the nine months ended September 30, 2006, and provided a net increase in cash of $6.1 million for the same prior year period. The decrease in cash from investing activities relative to the prior year’s period was the result of a $5.0 million increase in purchases of marketable securities, net of related maturities of marketable securities, and a $1.3 million increase in capital expenditures. Capital expenditures for the nine months ended September 30, 2006 totaled $2.5 million, and consisted primarily of costs capitalized as part of the implementation of an enterprise resource planning system and purchases of furniture and leasehold improvements for a new leased facility for the Company’s operations in Germany. Costs capitalized during the year-to-date period for the enterprise resource planning system amounted to $1.6 million, and consisted of system software, hardware and software development costs required to be capitalized under Statement of Position 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.”

Net cash provided by financing activities totaled $2.8 million and $1.3 million for the nine months ended September 30, 2006 and 2005, respectively. Financing activities in each period included proceeds from stock option exercises and purchases under the Company’s Employee Stock Purchase Plan of $1.8 million and $1.3 million, respectively. Additionally, the current year period includes $1.0 million associated with excess tax benefits recognized as an addition to the APIC pool, which as discussed above, are required to be reported as an addition to financing activities in the Statements of Cash Flows under the provisions of SFAS 123R.

This excerpt taken from the RIMG 10-Q filed Aug 9, 2006.

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 June 30, 2006, no amounts were outstanding under the credit agreement.

 

At June 30, 2006, the Company had working capital of $64.7 million, a decrease of $9.3 million from working capital reported at December 31, 2005. The decline was primarily impacted by the purchase of $16.3 million of non-current marketable securities and capital expenditures of $1.1 million, partially offset by year-to-date net income of $5.0 million and proceeds from stock option exercises of $1.0 million. The Company intends on utilizing its current assets primarily for its continued organic growth. To help strengthen the Company’s ability to manage anticipated future growth, the Company expects to invest approximately $4 million in 2006 for the implementation of an enterprise resource planning system. Additionally, the Company may use its available cash for potential future strategic initiatives or alliances.

 

Net cash provided by operating activities totaled $4.4 million for the six months ended June 30, 2006, compared to $4.2 million in the same prior year period. The $0.2 million increase in cash generated from operations was primarily impacted by a $0.6 million increase in net income adjusted for non-cash items and a $0.4 million smaller use of cash from changes in operating assets and liabilities, partially offset by the impact of an $0.8 million non-cash reduction in operating cash flows associated with excess tax benefits recognized as an addition to the APIC (additional paid-in capital) pool under SFAS 123R. SFAS 123R requires such amounts to be reported as an addition to financing activities and a reduction in operating activities in the Statements of Cash Flows. Primarily contributing to the change in operating assets and liabilities compared to the prior year’s year-to-date period was a $1.0 million variation in the change in prepaid expenses, a $0.5 million smaller increase in accounts receivable and a $0.45 million larger increase in deferred income, partially offset by reductions or smaller increases in accounts payable and accrued expenses. The change in prepaid expenses was primarily due to the impact on the prior year’s six month period of an $0.8 million prepayment in the first quarter for the renewal of a paid-up software license agreement, compared to a decline in prepaid expenses for the first six months of 2006. The increase in deferred income occurred due to the sale of maintenance contracts on a growing base of installed CD-R and DVD-R publishing systems. The net reduction in accounts payable and accrued expenses during the six months ended June 30, 2006 was impacted by the payment of $1.8 million of consulting fees accrued at December 31, 2005.

 

Net cash provided by investing activities was $7.0 million for the six months ended June 30, 2006, compared to $4.7 million during the same period in 2005. The increase in cash provided by investing activities was the result of a $2.2 million increase in maturities of marketable securities, net of related purchases of marketable securities, partially offset by a $0.2 million increase in capital expenditures. Capital expenditures for the six months ended June 30, 2006 totaled $1.1 million, and consisted primarily of the purchase of enterprise resource planning system software and related hardware.


19



Table of Contents

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

 

Net cash provided by financing activities totaled $1.7 million and $0.5 million for the six months ended June 30, 2006 and 2005, respectively. Financing activities in each period included proceeds from stock option exercises of $1.0 million and $0.6 million, respectively. Additionally, the current year period includes $0.8 million associated with excess tax benefits recognized as an addition to the APIC pool, which as discussed above, are required to be reported as an addition to financing activities in the Statements of Cash Flows under the provisions of SFAS 123R.

 

This excerpt taken from the RIMG 10-Q filed May 9, 2006.

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, 2006, no amounts were outstanding under the credit agreement.

 

At March 31, 2006, the Company had working capital of approximately $77 million, an increase of $3 million from working capital reported at December 31, 2005. The increase was primarily impacted by first quarter net income of $1.6 million and proceeds from stock option exercises of $0.9 million, partially offset by $0.8 of capital expenditures. The Company intends on utilizing its current assets primarily for its continued organic growth. To help strengthen the Company’s ability to manage anticipated future growth, the Company expects to invest approximately $4 million in 2006 for the implementation of an enterprise resource planning system. Additionally, the Company may use its available cash for potential future strategic initiatives or alliances.

 

Net cash provided by operating activities totaled $0.8 million for the three months ended March 31, 2006, compared to $0.4 million for the three months ended March 31, 2005. The $0.4 million increase in cash generated from operations was primarily impacted by a $1.9 million smaller use of cash from changes in operating assets and liabilities, partially offset by a $0.7 million decrease in net income adjusted for non-cash items and the impact of an $0.8 million non-cash reduction in operating cash flows associated with excess tax benefits recognized as an addition to the APIC (additional paid-in capital) pool under SFAS 123R. SFAS 123R requires such amounts to be reported as an addition to financing activities and a reduction in operating activities in the Statements of Cash Flows. Primarily contributing to the change in operating assets and liabilities was a $0.8 million variation in the change in accounts receivable for each quarterly period and a $0.8 million smaller increase in prepaid expenses. The change in accounts receivable occurred due to a $0.2 million decline in accounts receivable in the current quarterly period, primarily due to a reduction in first quarter sales relative to the prior year’s fourth quarter, compared to a $0.6 million increase in accounts receivable in the prior year’s first quarter, due largely to a concentration of first quarter 2005 sales in March. Prepaid expenses increased $0.8 million in the first quarter 2005 due to the renewal of a paid-up software license agreement, compared to a nominal increase in the first quarter 2006.

 

 

17




Table of Contents

 

 

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

 

Net cash provided by investing activities was $0.7 million for the three months ended March 31, 2006, compared to $12.4 million during the same period in 2005. The reduction in cash provided by investing activities was the result of an $11.7 million decrease in maturities of marketable securities, net of related purchases of marketable securities, and a $0.1 million increase in capital expenditures. Capital expenditures in the first quarter 2006 totaled $0.8 million, and relate primarily to the purchase of enterprise resource planning system software.

 

Net cash provided by financing activities totaled $1.7 million and $0.3 million for the three months ended March 31, 2006 and 2005, respectively. Financing activities in both periods included proceeds from stock option exercises of $0.9 million and $0.3 million, respectively. Additionally, the current year period includes $0.8 million associated with excess tax benefits recognized as an addition to the APIC pool, which as discussed above, are required to be reported as an addition to financing activities in the Statements of Cash Flows under the provisions of SFAS 123R.

 

This excerpt taken from the RIMG 10-Q filed May 6, 2005.

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


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.

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki