RoninCast in the News

Wireless Ronin Reports 2008 Fourth Quarter and Full Year Results

Key 2008 fourth quarter highlights include: 

• Generates fourth quarter 2008 revenue of $1.9 million, up 18 percent from $1.6 million in 2007
• Implements total workforce reductions of 40 percent and reduces other expenses to align costs with sales and committed projects
• Incurs one-time impairment charges totaling $3.0 million
• Excluding one-time adjustments, expenses decline by $1.0 million during the quarter

MINNEAPOLIS – February 17, 2009 – Wireless Ronin Technologies, Inc. (NASDAQ: RNIN), a leader in digital signage solutions, today announced its financial results for the 2008 fourth quarter and full year.

Fourth Quarter Results

The company reported revenue of $1.9 million for the fourth quarter of 2008, an 18 percent increase from $1.6 million in the fourth quarter of 2007.  The company also reported a fourth quarter 2008 net loss of $6.9 million compared to a net loss of $3.7 million in the year-ago quarterly period, and a basic and diluted loss per share of $0.47 compared to a basic and diluted loss per share of $0.25 last year. The year-over-year increase in the net loss for the 2008 fourth quarter was primarily the result of the impairment of the network equipment held for sale asset of $1.8 million, an impairment charge on intangible assets of $1.3 million and severance cost of $274,000 related to the fourth quarter 2008 workforce reductions.  Fourth quarter 2008 results also included costs of approximately $411,000, or $0.03 per basic and diluted share, of non-cash stock compensation expense related to FAS123R compared to approximately $286,000, or $0.02 per basic and diluted share, in 2007.  

Adjusted operating loss was $2.8 million or $0.19 per basic and diluted share in the fourth quarter of 2008 compared to an adjusted operating loss of $3.3 million or $0.23 per basic and diluted share in the fourth quarter of 2007.  Adjusted operating loss is defined as the GAAP operating loss with the add-back of certain items.  Reconciliation to the GAAP operating loss on a quarterly and full year basis is contained in a table following the financial statements accompanying this release.

For the fourth quarter of 2008, gross margin averaged 12 percent, compared to a gross margin of 25 percent in the fourth quarter of 2007.  The 2008 gross margin was impacted by a one-time lower of cost or market inventory adjustment of approximately $65,000 and a continued net loss from the company’s Network Operations Center, or NOC.  Excluding these costs, adjusted gross margin would have been 25 percent for the fourth quarter of 2008.

The company previously included depreciation and amortization in general and administrative expense. It now shows depreciation and amortization as a separate line on the statement of operations to better reflect the infrastructure investments made to date.

“Our fourth quarter revenue was in line with our expectations, but it’s clear that many companies, including Wireless Ronin, face challenges with regard to the economy.  Many businesses are extremely cautious in making capital expenditures and this has created significant headwinds for us,” said Jim Granger, Wireless Ronin Technologies’ president and CEO.  “However, we remain confident in our ability to take advantage of the eventual shift to the digital signage marketplace.  Wireless Ronin is a recognized leader in this industry and we continue to demonstrate significant value to our current and prospective clients.  To better align our internal resources with sales levels and project commitments we took additional steps to reduce costs.  One step in this process was to further reduce our headcount.  This action has decreased our expense rate and, in the long-term, makes Wireless Ronin a more efficient organization.”  

Full Year Results

For the full year 2008, the company reported revenue of $7.4 million, a 23 percent increase from $6.0 million in 2007.  The company also reported a full year net loss of $20.7 million compared to a net loss of $10.1 million in 2007, and a basic and diluted loss per share of $1.41 compared to a basic and diluted loss per share of $0.82 last year. The increase in net loss for 2008 was primarily attributable to higher operating expenses to support anticipated growth opportunities, investments in the company’s Network Operations Center for customer testing and program pilots, the impairment of the network equipment held for sale and the impairment charge on intangible assets. The 2008 results also included costs of approximately $1,313,000, or $0.09 per basic and diluted share, of non-cash stock compensation expense related to FAS123R compared to approximately $1,167,000 or $0.09 per basic and diluted share, in 2007.

Adjusted operating loss was $14.6 million or $1.00 per basic and diluted share for the full year 2008 compared to an adjusted operating loss of $8.6 million or $0.70 per basic and diluted share for the full year 2007.

For the full year 2008, gross margin averaged 10.7 percent, compared to a gross margin of 35 percent for 2007.  The 2008 gross margin was negatively impacted by the lower of cost or market inventory adjustment and the investments in the company’s NOC.  Excluding the lower of cost or market inventory adjustment and the impact of the NOC, adjusted gross margin would have been 21.8 percent for the year.

Other Items

On November 3rd and December 17th, 2008, Wireless Ronin implemented two separate workforce reductions to better match its infrastructure and expenses with sales levels and current client projects.  As a result, the company reduced its employee and contractor count by 63, or approximately 40 percent, with reductions spread across the organization.  The combined severance charge from the two workforce reductions totaled approximately $274,000 or $0.02 per basic and diluted share in the fourth quarter of 2008. As a result of the two headcount reductions and lower non-employee operating costs, operating expenses, excluding one-time adjustments, declined by approximately $1.0 million in the fourth quarter of 2008 compared to the third quarter of 2008. The company anticipates that quarterly expenses will decline by an additional $1.0 million commencing in the first quarter of 2009 for a total reduction of approximately $2.0 million, as it relates to these actions, or $0.13 per basic and diluted share.

Cash and marketable securities at December 31, 2008 totaled approximately $14.0 million compared to $29.6 million at December 31, 2007.  Both totals include $450,000 of restricted cash.  The decline in cash and marketable securities reflects the funding of the company’s net loss.  ”We believe that cash balances in combination with the actions we have taken to reduce our cash requirements have created a platform that is sufficient to fund our business into 2010,” said Brian Anderson, Wireless Ronin Technologies’ vice president, interim chief financial officer and controller.

In the third quarter of 2008, the company re-classified a receivable balance of $1.9 million to network equipment held for sale when NewSight Corporation defaulted on its note payable obligation and Wireless Ronin took ownership of collateral including in-box inventory and an installed digital signage network in 102 Meijer stores.  At the time of re-classification, Meijer was seeking a new network owner and the company intended to sell the network to the new owner.  Meijer has since abandoned plans to maintain the network.  As a result, Wireless Ronin has moved approximately $171,000 of equipment from the in-box collateral base into inventory and taken an impairment loss on the remaining approximately $1.8 million of network equipment held for sale.

During the fourth quarter, Wireless Ronin also took a charge for the impairment of assets related to the 2007 acquisition of McGill Digital Solutions. The company reviews the carrying value of all long-lived assets, including intangible assets with finite lives, for impairment in accordance with Statement of Financial Accounting Standards No. 144 (FAS 144).  Under FAS 144, impairment losses are recorded whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable.  The company tested the intangible assets acquired in the 2007 acquisition for impairment in the fourth quarter of 2008 and determined that the underlying assumptions and economic conditions surrounding the initial valuation of these assets had significantly changed and an impairment loss was recorded for approximately $1.3 million of net book value of these intangible assets.

 “It is difficult to predict what impact the current economic slowdown will have on customer demand and project implementations but we are encouraged by our ongoing relationship with our many clients.  KFC remains committed to Wireless Ronin and the menu board initiative and our relationship with Thomson Reuters continues to grow as well,” continued Granger. “With our ability to provide a hosted solution while simultaneously giving the customer control of desired features and functions, we believe we will ultimately be successful. Our goal moving forward will be to fulfill our vision by maintaining our position as a recognized leader in the digital signage industry. We strive to continue a steady growth rate year over year, be a great place to work for our employees, and deliver returns to our shareholders by driving more efficient performance, cash flow, and return on invested capital,” concluded Granger.

A conference call to review fourth-quarter and full year results is scheduled for today at 3:30 p.m. (CST). A live webcast of Wireless Ronin’s earnings conference call can be accessed on the Investor section of its corporate website at www.wirelessronin.com. Alternatively, a live broadcast of the call may be heard by dialing (888) 633-9563 inside the United States or Canada, or by calling (706) 679-6372 from international locations. An operator will direct you to the Wireless Ronin conference call. A webcast replay of the call will be archived on Wireless Ronin’s corporate Web site. An archive of the call is also accessible via telephone by dialing (800) 642-1687 domestically and (706) 645-9291 internationally with pass code 81431110. The conference call archive will be available through March 17, 2009.

About Wireless Ronin Technologies, Inc.

Wireless Ronin Technologies (www.wirelessronin.com) is the developer of RoninCast®, a complete software solution designed to address the evolving digital signage marketplace. RoninCast® software provides clients with the ability to manage a digital signage network from one central location and is the only complete, turnkey solution in the digital signage marketplace. The software suite allows for customized distribution with network management, playlist creation and scheduling, and database integration. Wireless Ronin offers an array of services to support RoninCast® software including consulting, creative development, project management, installation, and training. The company's common stock trades on the NASDAQ Global Market under the symbol "RNIN".

VIEW WIRELESS RONIN Q4 2008 FINANCIAL STATEMENTS

Contact: Investor Brian Anderson, vice president, controller and interim chief financial officer banderson@wirelessronin.com (952) 564 - 3500 Media Linda Hofflander, vice president and chief marketing officer lhofflander@wirelessronin.com (952) 564 - 3562