LODGENET INTERACTIVE CORP (Form: 8-K, Filing Date: 07/28/2011)

from a 6.8% reduction in the average number of Guest Entertainment rooms served and a 7.8% decline in Guest Entertainment revenue per room. On a per room basis, total Hospitality and Advertising Services revenue was 0.6% less than last year s second quarter, driven by a 9.8% increase in revenue generated Copyright 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document

LodgeNet Q2 2011 Earnings 3-3-3-3 from non-Guest Entertainment services. Hotel Service revenue was 34.2 million in the second quarter, a 7.7% increase versus last year on a revenue per room basis, driven primarily from price increases on cable television programming versus the prior year. System Sales and Related revenue per room improved 22.2%, due in part to increases in the sale of high definition equipment and installation sales. Additionally, our Healthcare subsidiary generated 3.2 million during the second quarter, an increase of 1.8 million, driven by higher revenue on system sales, installation and other services during the current quarter. The backlog of healthcare installations includes 10 facilities. Total direct costs (exclusive of operating expenses and depreciation and amortization discussed separately below) decreased 2.8 million or 4.4%, to 60.1 million in the second quarter of 2011 as compared to 62.9 million in the second quarter of 2010. Direct costs declined primarily due to lower volume in our Guest Entertainment and Hotel Services product lines. In addition to the volume reductions, the Company continued to recognize benefits from decreased direct costs associated with the average commission rate paid to hotels and lower connectivity costs realized from bandwidth re-provisioning and renegotiating supplier agreements. Advertising Services had lower fixed costs in the current quarter as well, driven primarily by lower satellite distribution costs. Gross margin declined slightly to 43.6% for the second quarter of 2011 as compared to 44.4% for the second quarter of 2010 due to the mix of products and services sold. System Operations and Selling, General and Administrative ( SG&A ) expenses decreased 2.3 million or 10.3%, to 20.6 million in the second quarter of 2011 as compared to 22.9 million in the second quarter of 2010. Workforce reductions completed in the first quarter of 2011, along with reductions in professional services expenses, drove the improvement over the prior year period. Another major decline in operating expenses was attributable to Depreciation and Amortization, which decreased 15.0%, to 17.8 million in the second quarter of 2011 as compared to 20.9 million in the second quarter of 2010. The decline was due to assets becoming fully depreciated and the reduction in capital investments levels over the past years. As a result of factors described above, Operating Income increased 34.9% to 8.2 million in the second quarter of 2011 as compared to 6.1 million in the second quarter of 2010. Adjusted Operating Cash Flow ( AOCF ), a non-GAAP measure which we define as operating income exclusive of depreciation, amortization, share-based compensation and restructuring expenses, decreased to 26.4 million for the second quarter of 2011 as compared to 27.9 million in the second quarter of 2010. As a percent of revenue, AOCF margin increased to 24.8% this quarter versus 24.7% for the prior year quarter. Outstanding debt was 368.0 million at the end of second quarter of 2011 compared to 404.9 million at the end of second quarter of 2010. Cash as of June 30, 2011 was 14.5 million as compared to 8.8 million on June 30, 2010. Interest expense increased 2.3 million to 11.0 million in the second quarter of 2011 versus 8.7 million in the second quarter of 2010, due to 4.5 million of interest expense related to our interest rate swap agreements, which expired at the end of the second quarter of 2011. Our average interest rate for the second quarter of 2011 was 12.0% due to the new 6.5% interest rate on our amended Credit Facility and the final quarterly payment on our interest rate swap agreements at just over 5%. Interest rates for the company will normalize at approximately 6.5% beginning in the third quarter. Net loss attributable to common stockholders was (4.4) million for the second quarter of 2011, a 4.8% improvement compared to (4.6) million in the prior year quarter. Net loss per share attributable to common stockholders was (0.17) for the second quarter of 2011 (basic and diluted), a 5.6% improvement versus (0.18) in the second quarter of 2010 (basic and diluted). For the second quarter of 2011, cash provided by operating activities was 8.4 million as compared to 27.0 million in the second quarter of 2010. The reduction in 2011 cash flow was driven by a 13.5 million change in working capital as accounts payable balances are returning to more normalized levels. Higher interest payments of 3.8 million also contributed to the decline. Cash used for capital investments was 6.0 million during the second quarter of 2011 compared to 4.4 million in the second quarter of 2010. During the quarter, the Company installed 12,250 High Definition interactive TV rooms as compared to 6,511 rooms during the second quarter of 2010. Quarter over quarter, the average capital cost per room for these High Definition rooms declined 32.4% versus to 140 per room. Outlook For the third quarter of 2011, LodgeNet expects to report revenue in the range of 105.0 million to 109.0 million. This guidance reflects a 1% to 6% decline in Guest Entertainment revenue on a per room basis. Additionally, we expect Adjusted Operating Cash Flow to be in a range from 24.0 million to 27.0 million and Net Income (Loss) per common share in a range from (0.08) to 0.02. Copyright 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document

LodgeNet Q2 2011 Earnings 4-4-4-4 The Company will host a teleconference to discuss its results July 27th, 2011, at 5:00 P.M. Eastern Time. A live webcast of the teleconference will also be available and can be accessed on the LodgeNet website at www.lodgenet.com. The webcast will be archived on the LodgeNet website for one month. Additionally, the Company has posted slides at its website under the For Investors, Company Presentations section, which will be referenced during the conference call. Special Note Regarding the Use of Non-GAAP Financial Information To supplement our consolidated financial statements presented in accordance with accounting principles generally accepted in the United States ( GAAP ), we use Adjusted Operating Cash Flow and Net Debt, which are non-GAAP measures derived from results based on GAAP. The presentation of this additional information is not meant to be considered superior to, in isolation of, or as a substitute for, results prepared in accordance with GAAP. Adjusted Operating Cash Flow is a non-GAAP measure which we define as operating income (loss) exclusive of depreciation, amortization, share-based compensation, restructuring and reorganization expenses and debt issuance costs. Net Debt is our total outstanding debt less our cash. These non-GAAP measures are key liquidity indicators but should not be construed as an alternative to GAAP measures or as a measure of our profitability or performance. We provide information about these measures because we believe it is a useful way for us, and our investors, to measure our ability to satisfy cash needs, including one-time charges such as restructuring, reorganization or integration, interest payments on our debt, taxes and capital expenditures. In addition, Net Debt provides an indication of our ability to remain in compliance with financial covenants. Our method of computing these measures may not be comparable to other similarly titled measures of other companies. About LodgeNet Interactive LodgeNet Interactive Corporation is the leading provider of media and connectivity solutions designed to meet the unique needs of hospitality, healthcare and other guest-based businesses. LodgeNet Interactive serves approximately 1.8 million hotel rooms worldwide in addition to healthcare facilities throughout the United States. The Company s services include: Interactive Television Solutions, Broadband Internet Solutions, Content Solutions, Professional Solutions and Advertising Media Solutions. LodgeNet Interactive Corporation owns and operates businesses under the industry leading brands: LodgeNet, eSuite and The Hotel Networks. LodgeNet Interactive is listed on NASDAQ and trades under the symbol LNET. For more information, please visit www.lodgenet.com. Special Note Regarding Forward-Looking Statement Certain statements in this press release constitute forward-looking statements. When used in this press release, the words intends, expects, estimates, believes, and similar expressions, and statements which are made in the future tense or refer to future events or developments including, without limitation, those related to our third quarter 2011 guidance, including revenue, Guest Entertainment revenue, Adjusted Operating Cash Flow, and net loss per common share, are intended to identify such forward-looking statements. Such forwardlooking statements are subject to risks, uncertainties and other factors that could cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: the effects of economic conditions, including general financial conditions; the economic condition of the lodging industry, which can be particularly affected the financial conditions referenced above, as well as by high gas prices, levels of unemployment, consumer confidence, acts or threats of terrorism and public health issues; competition from providers of similar services and from alternative systems for accessing in-room entertainment; competition from HSIA providers; changes in demand for our products and services; programming availability, timeliness, quality and costs; technological developments by competitors; developmental costs, difficulties and delays; relationships with customers and property owners, in particular as we reduce capital investment; the availability of capital to finance growth; compliance with credit facility covenants; the impact of governmental regulations; potential effects of litigation; risks of diversification into new products, services, or markets; risks related to the security of our data systems; and other factors detailed, from time to time, in our filings with the Securities and Exchange Commission. For any of the foregoing reasons, our guidance and our actual financial results may not meet our expectations. These forward-looking statements speak only as of the date of this press release. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. LodgeNet is a registered trademark of LodgeNet Interactive Corporation. All rights reserved. Other names and brands may be claimed as the property of others. Copyright 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document

(See attached financial and operational tables) Copyright 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document

LodgeNet Q2 2011 Earnings 5-5-5-5 LodgeNet Interactive Corporation and Subsidiaries Consolidated Balance Sheets (Dollar amounts in thousands, except share data) (Unaudited) (Audited) June 30, December 31, 2011 2010 Assets Current assets: Cash Accounts receivable, net Other current assets 14,479 45,687 12,038 8,381 49,332 12,728 72,204 70,441 133,814 5,146 95,240 100,081 12,742 156,917 3,681 99,005 100,081 13,881 419,227 444,006 56,228 10,522 19,593 17,910 60,303 4,807 22,327 10,353 23,168 Total current assets Property and equipment, net Debt issuance costs, net Intangible assets, net Goodwill Other assets Total assets Liabilities and Stockholders Deficiency Current liabilities: Accounts payable Current maturities of long-term debt Accrued expenses Fair value of derivative instruments Deferred revenue Total current liabilities Long-term debt Other long-term liabilities Total liabilities 104,253 120,958 357,512 8,335 368,832 8,565 470,100 498,355 1 1 252 386,961 (441,728) 3,641 251 388,961 (437,896 ) (5,666 ) (50,873 ) (54,349 ) Commitments and contingencies Stockholders deficiency: Preferred stock, .01 par value, 5,000,000 shares authorized; Series B cumulative perpetual convertible, 10%, 57,500 issued and outstanding at June 30, 2011 and December 31, 2010, respectively (liquidation preference of 1,000 per share or 57,500,000 total) Common stock, .01 par value, 50,000,000 shares authorized; 25,209,580 and 25,088,539 shares outstanding at June 30, 2011 and December 31, 2010, respectively Additional paid-in capital Accumulated deficit Accumulated other comprehensive income (loss) Total stockholders deficiency Total liabilities and stockholders deficiency 419,227 The accompanying notes are an integral part of these consolidated financial statements. Copyright 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 444,006

LodgeNet Q2 2011 Earnings 6-6-6-6 LodgeNet Interactive Corporation and Subsidiaries Consolidated Statements of Operations (Unaudited) (Dollar amounts in thousands, except share data) Three Months Ended Six Months Ended June 30, June 30, 2011 Revenues: Hospitality and Advertising Services Healthcare Total revenues Direct costs and operating expenses: Direct costs (exclusive of operating expenses and depreciation and amortization shown separately below): Hospitality and Advertising Services Healthcare Operating expenses: System operations Selling, general and administrative Depreciation and amortization Restructuring charge Other operating (income) expense 2010 2011 2010 103,389 3,246 111,658 1,413 209,223 5,140 227,157 3,966 106,635 113,071 214,363 231,123 58,580 1,527 62,181 724 117,939 2,450 127,442 2,070 9,733 10,839 17,783 3 (8 10,627 12,314 20,925 239 19,801 20,528 37,423 1,164 (21 21,142 24,429 43,097 242 6 ) ) Total direct costs and operating expenses 98,457 107,010 199,284 218,428 Income from operations 8,178 6,061 15,079 12,695 Other income and (expenses): Interest expense Loss on early retirement of debt Other (expense) income (10,962 (3 ) Loss before income taxes Provision for income taxes Net loss Preferred stock dividends ) ) (18,633 (158 315 ) ) (17,395 (760 227 ) ) ) (8,712 (267 2 (2,787 (137 ) ) (2,916 (229 ) ) (3,397 (435 ) ) (5,233 (414 ) ) (2,924 (1,437 ) ) (3,145 (1,437 ) ) (3,832 (2,875 ) ) (5,647 (2,875 ) ) Net loss attributable to common stockholders (4,361 ) (4,582 ) (6,707 ) (8,522 ) Net loss per common share (basic and diluted) (0.17 ) (0.18 ) (0.27 ) (0.36 ) Weighted average shares outstanding (basic and diluted) 25,063,669 24,996,955 25,050,469 The accompanying notes are an integral part of these consolidated financial statements. Copyright 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 23,877,958

LodgeNet Q2 2011 Earnings 7-7-7-7 LodgeNet Interactive Corporation and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) (Dollar amounts in thousands) Six Months Ended June 30, 2011 2010 (3,832 ) (5,647 ) 37,423 (1,511 ) 158 869 262 43,097 1,469 760 960 153 2,166 632 (4,126 ) (4,953 ) 526 (1,091 ) 26 15,715 445 (773 ) Net cash provided by operating activities 27,614 55,114 Investing activities: Property and equipment additions (10,595 ) (8,954 ) Net cash used for investing activities (10,595 ) (8,954 ) Financing activities: Repayment of long-term debt Payment of capital lease obligations Borrowings on revolving credit facility Repayments of revolving credit facility Debt issuance costs Proceeds from investment in long-term debt Proceeds from issuance of common stock, net of offering costs Payment of dividends to preferred shareholders Exercise of stock options (5,525 (407 45,000 (45,000 (2,444 323 (2,875 7 (68,636 (559 8,000 (8,000 4,007 13,658 (2,875 41 Net cash used for financing activities (10,921 ) (54,364 ) Effect of exchange rates on cash (40 Increase (decrease) in cash Cash at beginning of period 6,098 8,381 (8,244 ) 17,011 Operating activities: Net loss Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization Unrealized (gain) loss on derivative instruments Loss on early retirement of debt Share-based compensation and restricted stock Other, net Change in operating assets and liabilities: Accounts receivable, net Other current assets Accounts payable Accrued expenses and deferred revenue Other Cash at end of period 14,479 The accompanying notes are an integral part of these consolidated financial statements. Copyright 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document ) ) ) ) ) 8,767 ) ) ) ) )

LodgeNet Q2 2011 Earnings 8-8-8-8 LodgeNet Interactive Corporation and Subsidiaries Supplemental Data Room Base Statistics Total Rooms Served (1) Total Guest Entertainment Rooms (2) Total HD Rooms (3) Percent of Total Guest Entertainment Rooms Total Television Programming (FTG) Rooms (4) Percent of Total Guest Entertainment Rooms Total Broadband Internet Rooms (5) Percent of Total Rooms Served 2nd Qtr 11 1st Qtr 11 4th Qtr 10 3rd Qtr 10 2nd Qtr 10 1,753,132 1,608,0

On July 27, 2011, LodgeNet Interactive Corporation ( LodgeNet ) issued a press release regarding its financial results for the second quarter of 2011 and certain other information. A copy of the press release is furnished as Exhibit 99.1 hereto. LodgeNet will host a conference call on Wednesday, July 27, 2011 at 5:00 pm Eastern Time.