8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) July 29, 2010

LODGENET INTERACTIVE CORPORATION

(Exact Name of Registrant as Specified in Charter)

Delaware	0-22334	46-0371161
(State or Other Jurisdiction of	(Commission File Number)	(IRS Employer
Incorporation)		Identification No.)

3900 West Innovation Street, Sioux Falls, SD	57107
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (605) 988-1000

n/a (Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o   Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

     On July 29, 2010, LodgeNet Interactive Corporation (“LodgeNet”) issued a press release regarding its financial results for the second quarter of 2010 and certain other information. A copy of the press release is furnished as Exhibit 99.1 hereto.

     LodgeNet will host a conference call on Thursday, July 29, 2010 at 5:00 pm 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, LodgeNet has posted slides at its website under the For Investors, Company Presentation section, which will be referenced during the conference call. These slides are furnished as Exhibit 99.2 hereto.

     The press releases and the slides include information regarding operating income which include adjustments to amounts calculated under generally accepted accounting principles. These measures are not in accordance with, or an alternative for, GAAP, and may be different from similar measures used by other companies. The operating income and cash flow information presented in the slides are provided as a complement to results provided in accordance with GAAP and are provided to give investors a more complete understanding of the underlying operational results and trends in LodgeNet’s performance. Management believes this information is useful in analyzing historical results because it shows investors and management the profitability of operations apart from the major non-cash items. In addition, management uses the information as a basis for planning and forecasting future periods. A reconciliation of this information to the most directly comparable financial measure presented in accordance with GAAP is provided in the slides.

     The information in this Item 2.02 and Exhibits 99.1 and 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended.

Item 9.01. Financial Statements and Exhibits.

     (d) Exhibits

     99.1     Press Release (furnished)

     99.2     PowerPoint Slides (furnished)

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 29, 2010	By	/s/ James G. Naro
		James G. Naro
		Its Senior Vice President, General Counsel, Secretary and Chief Compliance Officer

EX-99.1

Exhibit 99.1

Ann Parker, Director
Investor Relations
605-988-1000
ann.parker@lodgenet.com Mike Smargiassi
Brainerd Communicators
212-986-6667
smarg@braincomm.com

LODGENET REPORTS RESULTS FOR SECOND QUARTER 2010

— Focus on Free Cash Flow and Debt Reduction —
— Free Cash Flow of $22.6 Million, Up from $14.5 Million —
— Net Debt Reduced by $21.0 Million —
— Net Debt Now Down To 396.1 Million —

          SIOUX FALLS, SD, July 29, 2010 — LodgeNet Interactive Corporation (Nasdaq:LNET) today reported quarterly revenue of $113.1 million compared to $122.0 million in the second quarter of 2009. The Company reported a net loss of $(3.1) million compared to a net loss of $(5.2) million for the prior year period. Net loss attributable to common stockholders was $(4.6) million or $(0.18) per share (basic and diluted) for the second quarter of 2010 compared to a net loss attributable to common stockholders of $(5.2) million or $(0.23) per share (basic and diluted) for the second quarter of 2009. LodgeNet also reported $22.6 million in free cash flow⁽¹⁾ for the current quarter compared to $14.5 million in the prior year period. During the quarter, net debt⁽²⁾ was reduced by $21.0 million and LodgeNet improved its leverage ratio to 3.44 times on a net debt basis versus a covenant of 3.75 times.

The following financial highlights are in thousands, except per share data:

	Three Months Ended June 30,
	2010			2009
Total revenue	$	113,071		$	121,981
Income from operations		6,061			4,666
Net loss		(3,145	)		(5,213	)
Net loss attributable to common stockholders		(4,582	)		(5,245	)
Net loss per common share (basic and diluted)	$	(0.18	)	$	(0.23	)
Adjusted Operating Cash Flow (3)	$	27,873		$	31,669
Average shares outstanding (basic and diluted)		24,997			22,432

(1)	Free Cash Flow, a non-GAAP measure, is defined by the Company as cash provided by operating activities less cash used for investing activities, including growth related capital.
(2)	Net Debt, a non-GAAP measure, is defined by the Company as total outstanding debt less cash on the balance sheet.
(3)	Adjusted Operating Cash Flow is a non-GAAP measure which we define as Operating Income exclusive of depreciation, amortization, share-based compensation, and restructuring and reorganization expenses.

LodgeNet Q2 2010 Earnings 2-2-2-2

          “During the quarter, we continued our strategic focus on driving free cash flow, reducing debt and de-leveraging our balance sheet; and we outperformed our guidance on all three fronts,” said Scott C. Petersen, LodgeNet Chairman and CEO. “In light of disappointing Guest Entertainment revenue performance, we continued to conservatively operate the company, keeping a tight control on operating costs, working capital and capital investment expenditures. As a result, free cash flow increased 56% to $22.6 million, net debt dropped below the $400 million mark, our debt leverage ratio improved and we significantly enhanced our profitability metrics.”

Second Quarter strategic highlights include:

• Increased Free Cash Flow: $22.6 million in the quarter, an increase of $8.1 million or 56% over Q2 ‘09

• Reduced Net Debt: $396.1 million, down $21.0 million in the quarter

• Improved Bottom Line Performance: Operating Income up 30% to $6.1 million; EPS improved 22% over Q2 ‘09

• Expanded Per-Room Revenue from Strategic Growth Initiatives: Up 7.3% over Q2 ‘09 and now representing 42% of total revenue

          “In the second quarter, we continued to manage the business conservatively by controlling operating expenses, capital investment levels and aggressively paying down our debt. The $21.0 million reduction of net debt this quarter brings our total debt reduction to over $200 million during the last two years,” said Frank P. Elsenbast, LodgeNet Chief Financial Officer. “During the quarter we also increased our gross margins by 40 basis points to 44.4% while continuing our diversification beyond our traditional Guest Entertainment revenue base. Significant growth in our Hotel Services and Advertising businesses offset more than half of the decline we experienced in Guest Entertainment. While we would like to see a stronger recovery in the U.S. economy, we continue to position LodgeNet for long-term sustained growth through prudent management and revenue diversification. Lastly, the company’s balance sheet continued to strengthen as we reduced outstanding debt and managed working capital investment. Our leverage ratio on a net debt basis, at 3.44 times, is already below the final covenant stepdown that takes place at the end of the third quarter.”

          “As we look toward 2011, we believe our strategic initiatives are positioning us for solid revenue growth and enhancement to shareholder value,” continued Petersen. “Our HDTV rooms are generating significantly greater revenue than our average installed room, and our conversion pace should increase substantially as hotel capital spending budgets for high definition television purchases increase next year. Additionally, our diversified revenue initiatives should also accelerate with a more vibrant lodging economy.”

          “We also believe our business will begin benefiting in 2011 from the introduction of Envision, our next generation interactive television platform, which we announced at the hotel technology show in June,” said Petersen. “Envision is an applications-based system that connects our interactive televisions to the Internet, enabling new content choices, information services and transactional capabilities. We believe Envision will make our interactive system more relevant to leading hotels and attractive to hotel guests.”

RESULTS FROM OPERATIONS
THREE MONTHS ENDED JUNE 30, 2010 VERSUS
THREE MONTHS ENDED JUNE 30, 2009

          Total revenue for the second quarter of 2010 was $113.1 million, a decrease of $8.9 million or 7.3%, compared to the same period of 2009. The decrease in revenue resulted from reductions in Guest Entertainment, Healthcare and System Sales and Related Services revenue, which was offset, in part, by increases in revenue from Advertising Services and Hotel Services.

          Hospitality and advertising revenue, which includes Guest Entertainment, Hotel Services, System Sales, and Advertising Services, decreased $7.9 million or 6.6%, to $111.7 million for the second quarter of 2010 as compared to $119.6 million for the prior year quarter. Average monthly Hospitality and Advertising revenue per room was $21.22 for the second quarter of 2010, a decrease of 2.2% as compared to $21.69 per room in the second quarter of 2009.

          Guest Entertainment revenue, which includes on-demand entertainment from movies, television episodes, games and music, declined $9.0 million or 12.0%, to $66.0 million in the second quarter of 2010 versus the second quarter of 2009. The decline in Guest Entertainment revenue resulted from a 4.6% reduction in number of rooms and a 7.8% decline in revenue per room. The decline in per room revenue continued to be driven by conservative consumer buying patterns as well as less popular theatrical content during the quarter as compared to the year-earlier period.

LodgeNet Q2 2010 Earnings 3-3-3-3

          Hotel Services revenue, which includes recurring revenue from hotels for television programming and broadband Internet service and support, increased $0.8 million or 2.5%, to $34.1 million in the second quarter of 2010 versus $33.3 million for the second quarter of 2009. On a per-room basis, monthly Hotel Services revenue for the second quarter of 2010 increased 7.3% to $6.48 compared to $6.04 for the second quarter of 2009. Monthly television programming revenue per room increased 8.0% to $5.92 for the second quarter of 2010 as compared to $5.48 for the second quarter of 2009. This increase resulted primarily from the continued installation of high definition television systems and additional TV programming services.

          System Sales and Related Services revenue, including sales of TV programming equipment, broadband Internet equipment, HDTV installations and other services to hotels, decreased $0.6 million or 6.4%, to $9.0 million during the second quarter of 2010 compared to $9.6 million in the second quarter of 2009. The decrease was primarily from lower sales and installations of broadband systems.

          The Hotel Networks (“THN”), our advertising services subsidiary, generated revenue of $2.6 million, an increase of 52.1% compared to the $1.7 million generated in the second quarter of 2009. This increase was primarily the result of an increase in channel access fees and general advertising revenue as national advertisers expanded their ad buys on our system.

          Healthcare revenue, which includes the sale of interactive systems and services to Healthcare facilities, decreased $1.0 million or 41.3%, to $1.4 million during the current quarter compared to $2.4 million in the prior year quarter. During the quarter, we installed 598 beds and two facilities compared to 1,107 beds and five facilities during the prior year period. We have six signed healthcare contracts in our backlog currently awaiting installation.

          Total direct costs (exclusive of operating expenses and depreciation and amortization discussed separately below) decreased 7.9% or $5.4 million, to $62.9 million in the second quarter of 2010 as compared to $68.3 million in the second quarter of 2009. The decrease in total direct costs was primarily due to decreased hotel commissions and content royalties of $4.4 million, which vary with revenue. Partially offsetting the reductions was an increase in incremental TV programming costs of $0.6 million, which vary with the number of rooms served and the services provided. These changes increased gross margins to 44.4% in the quarter.

          System Operations expenses decreased $0.4 million or 3.5%, to $10.6 million in the second quarter of 2010 as compared to $11.0 million in the second quarter of 2009. The decrease was primarily a result of lower property taxes. As a percentage of revenue, System Operations expenses were 9.4% this quarter as compared to 9.0% in the second quarter of 2009. Per average installed room, System Operations expenses were $2.02 per room per month compared to $2.00 in the prior year quarter.

          Selling, General and Administrative (SG&A) expenses increased $0.6 million or 5.2%, to $12.3 million in the current quarter as compared to $11.7 million in the second quarter of 2009. The increase resulted primarily from higher legal and professional fees. As a percentage of revenue, SG&A expenses were 10.9% in the current quarter as compared to 9.6% in the second quarter of 2009.

          Depreciation and amortization expenses decreased $5.4 million, or 20.3% to $20.9 million in the second quarter of 2010 as compared to $26.3 million in the second quarter of 2009. The decline was due to assets becoming fully depreciated and the reduction in capital investments over the past two years. As a percentage of revenue, total depreciation and amortization expenses were 18.5% in the second quarter of 2010 versus 21.5% in the second quarter of 2009.

          As a result of factors previously described, operating income increased 29.9% or $1.4 million, to $6.1 million in the second quarter of 2010 as compared to $4.7 million in the second quarter of 2009. Adjusted Operating Cash Flow (AOCF), a non-GAAP measure which we define as operating income exclusive of depreciation, amortization, share-based compensation and restructuring and reorganization expenses, was $27.9 million for the second quarter of 2010 as compared to $31.7 million in the second quarter of 2009, which primarily resulted from the decline in Guest Entertainment revenues as previously discussed.

          Interest expense was $8.7 million in the second quarter of 2010 versus $9.8 million in the second quarter of 2009. The decrease resulted primarily from the change in long-term debt at the end of the period, which decreased to $404.9 million during the second quarter of 2010 from $547.2 million at the end of the second quarter of 2009. The cash interest rate during the second quarter of 2010 was 7.0% versus 6.6% for the second quarter 2009. Interest expense for the second quarter of 2010 included $0.8 million of non-cash interest charges related to our interest rate swap position as compared to $0.3 million for the second quarter of 2009.

LodgeNet Q2 2010 Earnings 4-4-4-4

          Net loss for the quarter was $(3.1) million, a 39.7% reduction compared to a net loss of $(5.2) million for the second quarter of 2009. Net loss attributable to common stockholders was $(4.6) million for the second quarter of 2010, a 12.6% improvement compared to a net loss attributable to common stockholders of $(5.2) million in the prior year quarter. Net loss per share attributable to common stockholders was $(0.18) for the second quarter of 2010 (basic and diluted) a 21.7% improvement compared to the net loss per share attributable to common stockholders of $(0.23) (basic and diluted) in the second quarter of 2009.

          For the second quarter of 2010, cash provided by operating activities was $27.0 million, a 33.9% increase as compared to $20.2 million in the second quarter of 2009. Cash used for property and equipment additions, including growth related capital, was $4.4 million during the second quarter of 2010 compared to $5.7 million in the second quarter of 2009. In the quarter, we made debt repayments in the amount of $22.1 million. Additionally, we used $1.4 million of cash for preferred stock dividends in the second quarter of 2010. In the second quarter of 2009, we made the required Term B repayment of $1.5 million. The leverage ratio at the end of this quarter, calculated on a consolidated debt basis, was 3.52 times versus the covenant of 3.75 times. Cash as of June 30, 2010 was $8.8 million. The consolidated leverage ratio net of cash was 3.44 times.

          Continuing with our plan to moderate capital investment, we installed 1,657 new rooms and converted 5,098 rooms to our high definition platform in the second quarter of 2010 as compared to 4,147 new rooms and 6,766 converted rooms during the second quarter of 2009. The average investment per newly-installed HD room decreased to $269 per room during the second quarter of 2010, compared to $339 per room during 2009. Factors contributing to the 20.6%, or $70 per room, decline included reduced overhead and component costs, in addition to a larger average size of HD property installed during the second quarter of 2010 compared to 2009. The average investment per converted room decreased by 22.8% to $186 during the second quarter of 2010, compared to $241 during 2009, due to the same general factors noted above.

Outlook

          For the third quarter of 2010, LodgeNet expects to report revenue in the range of $116.0 million to $120.0 million. This guidance reflects a 3% to 8% decline in Guest Entertainment revenue on a per room basis, and strengthening revenues from our diversification efforts with Healthcare, Advertising Services and System Sales delivering strong double digit sales growth over the prior year.

          Adjusted Operating Cash Flow in a range from $27.0 million to $30.0 million and Net Income (Loss) per common share in a range from $(0.14) to $(0.06).

          For the nine months ending September 30, 2010, Free Cash Flow, excluding the preferred stock dividend, is anticipated to be in a range of $56.0 million to $59.0 million.

The Company will also host a teleconference to discuss its results July 29, 2010, 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 free cash flow, 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 integration and reorganization. Free Cash Flow, a non-GAAP measure, is defined by the Company as cash provided by operating activities less cash used for investing activities, including growth related capital. 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. Our method of computing these measures may not be comparable to other similarly titled measures of other companies.

LodgeNet Q2 2010 Earnings 5-5-5-5

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 1.9 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, LodgeNetRX, 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 and in the prepared remarks during our July 29th conference call, as well as in response to the questions during the conference call, the words “intends,” “expects,” “anticipates,” “estimates,” “believes,” “goal,” “no assurance” 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 2010 guidance, including revenue, adjusted operating cash flow, net income (loss) and free cash flow, are intended to identify such forward-looking statements. Such forward-looking 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 expansion into new 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.

(See attached financial and operational tables)

LodgeNet Q2 2010 Earnings 6-6-6-6

LodgeNet Interactive Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(Dollar amounts in thousands, except share data)

	June 30,			December 31,
	2010			2009
Assets
Current assets:
Cash	$	8,767		$	17,011
Accounts receivable, net		52,810			51,706
Other current assets		9,012			9,189
Total current assets		70,589			77,906
Property and equipment, net		177,123			206,663
Debt issuance costs, net		4,569			6,005
Intangible assets, net		101,877			106,041
Goodwill		100,081			100,081
Other assets		12,214			11,658
Total assets	$	466,453		$	508,354
Liabilities and Stockholders’ Deficiency
Current liabilities:
Accounts payable	$	55,521		$	40,040
Current maturities of long-term debt		5,284			6,101
Accrued expenses		18,436			19,137
Deferred revenue		18,245			17,531
Total current liabilities		97,486			82,809
Long-term debt		399,631			463,845
Other long-term liabilities		25,232			32,687
Total liabilities		522,349			579,341
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, 2010 and December 31, 2009, respectively (liquidation preference of $1,000 per share or $57,500,000 total)		1			1
Common stock, $.01 par value, 50,000,000 shares authorized; 25,088,039 and 22,537,664 shares outstanding at June 30, 2010 and December 31, 2009, respectively		252			225
Additional paid-in capital		390,980			379,223
Accumulated deficit		(431,858	)		(426,211	)
Accumulated other comprehensive loss		(15,271	)		(24,225	)
Total stockholders’ deficiency		(55,896	)		(70,987	)
Total liabilities and stockholders’ deficiency	$	466,453		$	508,354

The accompanying notes are an integral part of these consolidated financial statements.

LodgeNet Q2 2010 Earnings 7-7-7-7

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,
	2010			2009			2010			2009
Revenues:
Hospitality and Advertising Services	$	111,658		$	119,572		$	227,157		$	245,374
Healthcare		1,413			2,409			3,966			4,699
Total revenues		113,071			121,981			231,123			250,073
Direct costs and operating expenses:
Direct costs (exclusive of operating expenses and depreciation and amortization shown separately below):
Hospitality and Advertising Services		62,181			66,869			127,442			138,663
Healthcare		724			1,437			2,070			2,390
Operating expenses:
System operations		10,627			11,016			21,142			21,342
Selling, general and administrative		12,314			11,705			24,429			22,523
Depreciation and amortization		20,925			26,258			43,097			53,363
Restructuring charge		239			75			242			181
Other operating (income) expense		—			(45	)		6			(176	)
Total direct costs and operating expenses		107,010			117,315			218,428			238,286
Income from operations		6,061			4,666			12,695			11,787
Other income and (expenses):
Interest expense		(8,712	)		(9,812	)		(17,395	)		(19,693	)
(Loss) gain on extinguishment of debt		—			(4	)		—			9,292
Loss on early retirement of debt		(267	)		—			(760	)		(541	)
Other income		2			144			227			319
(Loss) income before income taxes		(2,916	)		(5,006	)		(5,233	)		1,164
Provision for income taxes		(229	)		(207	)		(414	)		(419	)
Net (loss) income		(3,145	)		(5,213	)		(5,647	)		745
Preferred stock dividends		(1,437	)		(32	)		(2,875	)		(32	)
Net (loss) income attributable to common stockholders	$	(4,582	)	$	(5,245	)	$	(8,522	)	$	713
Net (loss) income per common share (basic)	$	(0.18	)	$	(0.23	)	$	(0.36	)	$	0.03
Net (loss) income per common share (diluted)	$	(0.18	)	$	(0.23	)	$	(0.36	)	$	0.03
Weighted average shares outstanding (basic)		24,996,955			22,432,311			23,877,958			22,418,286
Weighted average shares outstanding (diluted)		24,996,955			22,432,311			23,877,958			22,590,161

The accompanying notes are an integral part of these consolidated financial statements.

LodgeNet Q2 2010 Earnings 8-8-8-8

LodgeNet Interactive Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(Dollar amounts in thousands)

	Six Months Ended June 30,
	2010			2009
Operating activities:
Net (loss) income	$	(5,647	)	$	745
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		43,097			53,363
Gain on extinguishment of debt (non-cash)		—			(9,292	)
Unrealized loss on derivative instruments		1,469			321
Loss on early retirement of debt		760			541
Share-based compensation and restricted stock		960			942
Other, net		153			(357	)
Change in operating assets and liabilities:
Accounts receivable, net		(1,091	)		3,994
Other current assets		26			75
Accounts payable		15,715			(2,494	)
Accrued expenses and deferred revenue		445			(6,115	)
Other		(773	)		(600	)
Net cash provided by operating activities		55,114			41,123
Investing activities:
Property and equipment additions		(8,954	)		(10,971	)
Net cash used for investing activities		(8,954	)		(10,971	)
Financing activities:
Repayment of long-term debt		(68,636	)		(9,676	)
Payment of capital lease obligations		(559	)		(854	)
Borrowings on revolving credit facility		8,000			—
Repayments of revolving credit facility		(8,000	)		—
Purchase of long-term debt		—			(23,685	)
Proceeds from investment in long-term debt		4,007			656
Proceeds from issuance of common stock, net of offering costs		13,658			—
Proceeds from issuance of preferred stock, net of offering costs		—			53,717
Payment of dividends to preferred shareholders		(2,875	)		—
Exercise of stock options		41			—
Net cash (used for) provided by financing activities		(54,364	)		20,158
Effect of exchange rates on cash		(40	)		49
(Decrease) increase in cash		(8,244	)		50,359
Cash at beginning of period		17,011			10,800
Cash at end of period	$	8,767		$	61,159

The accompanying notes are an integral part of these consolidated financial statements.

LodgeNet Q2 2010 Earnings 9-9-9-9

LodgeNet Interactive Corporation and Subsidiaries
Supplemental Data

	2nd Qtr ’10			1st Qtr ’10			4th Qtr ’09			3rd Qtr ’09			2nd Qtr ’09
Room Base Statistics
Total Rooms Served (1)		1,888,287			1,911,842			1,909,323			1,934,229			1,956,562
Total Guest Entertainment Rooms (2)		1,738,311			1,764,363			1,779,979			1,807,933			1,827,636
Total HD Rooms (3)		246,739			239,984			231,588			221,633			210,262
Percent of Total Guest Entertainment Rooms		14.2	%		13.6	%		13.0	%		12.3	%		11.5	%
Total Television Programming (FTG) Rooms (4)		1,070,081			1,083,837			1,087,860			1,095,719			1,104,660
Percent of Total Guest Entertainment Rooms		61.6	%		61.4	%		61.1	%		60.6	%		60.4	%
Total Broadband Internet Rooms (5)		195,294			200,139			201,936			206,914			219,260
Percent of Total Rooms Served		10.3	%		10.5	%		10.6	%		10.7	%		11.2	%
Revenue Per Room Statistics (per month)
Hospitality and Advertising Services
Guest Entertainment	$	12.54		$	12.99		$	12.61		$	14.01		$	13.60
Hotel Services		6.48			6.48			6.05			6.00			6.04
System Sales and Related Services		1.71			1.80			1.66			1.69			1.74
Advertising Services		0.49			0.44			0.33			0.30			0.31
Total Hospitality and Advertising Services		21.22			21.71			20.65			22.00			21.69
Based on average Guest Entertainment rooms
Summary Operating Results (Dollar amounts in thousands)
Hospitality and Advertising Services Revenue:
Guest Entertainment	$	65,963		$	69,082		$	67,979		$	76,369		$	74,980
Hotel Services		34,125			34,486			32,596			32,699			33,292
System Sales and Related Services		8,986			9,591			8,955			9,230			9,601
Advertising Services		2,584			2,340			1,799			1,657			1,699
Total Hospitality and Advertising Services		111,658			115,499			111,329			119,955			119,572
Healthcare		1,413			2,553			1,967			1,167			2,409
Total Revenue	$	113,071		$	118,052		$	113,296		$	121,122		$	121,981
Adjusted Operating Cash Flow (6)	$	27,873		$	29,122		$	28,016		$	30,039		$	31,669
Reconciliation of Adjusted Operating Cash Flow to Income From Operations (Dollar amounts in thousands)
Adjusted Operating Cash Flow	$	27,873		$	29,122		$	28,016		$	30,039		$	31,669
Depreciation and Amortization		(18,975	)		(19,954	)		(20,483	)		(21,992	)		(24,022	)
Amortization of Acquired Intangibles		(1,950	)		(2,219	)		(2,236	)		(2,236	)		(2,236	)
Share Based Compensation and Restricted Stock		(648	)		(312	)		(394	)		(389	)		(670	)
Restructuring Charge		(239	)		(3	)		(292	)		(128	)		(75	)
Income From Operations	$	6,061		$	6,634		$	4,611		$	5,294		$	4,666

1	Total rooms served represents rooms receiving one or more of our services including rooms served by international licensees.
2	Guest Entertainment rooms, of which 86% are digital, receive one or more Guest Entertainment Services such as movies, video games, music or other interactive services.
3	HD rooms are equipped with high-definition capabilities.
4	Television programming (FTG) rooms receiving basic or premium television programming.
5	Represents rooms receiving high-speed Internet service included in total rooms served.
6	Adjusted Operating Cash Flow is a non-GAAP measure which we define as Income (Loss) From Operations exclusive of depreciation, amortization, share-based compensation and restructuring and reorganization expenses.

EX-99.2

Certain statements in this presentation constitute "forward-looking statements." When used in this presentation and in the prepared remarks during our July 29th conference call, as well as in response to the questions during the conference call, the words "intends," "expects," "anticipates," "estimates," "believes," "goal," "no assurance" 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 2010 guidance, including revenue, adjusted operating cash flow, net income (loss) and free cash flow, as well as information regarding covenant compliance and our strategic initiatives outlook, are intended to identify such forward-looking statements. Such forward-looking 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 expansion into new 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 presentation. 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.

Focus on Free Cash Flow and Debt Reduction Free Cash Flow = $22.6 Million Up 56% from Q2'09 and 110% from Q2'08 Trailing Four Quarters = $81 Million Continued Conservative Operating Plan - Opex and Capex Flat to Recession Reduced Q2'09 - Revenue Challenge Continues re: Guest Entertainment Balance Sheet Strengthened Leverage Ratio Now at 3.44x (Net Debt) Below Lowest Covenant Level Strategic Initiatives Position for Future Revenue Growth Revenue Diversification: Solid Outlook for Hotel Services, Advertising & Healthcare HD Conversions: Poised to Accelerate with Hotel Purchases of HDTVs Envision: Connects Interactive TV Platform "to the Cloud" Second Quarter 2010 Highlights

$113.1 $122.0 Total Revenue Down 7.3% Increased Revenue from: Hotel Services Advertising Growth Initiatives Generate $47 Million (up to 42% of Total Revenue) Guest Entertainment Diversified Revenues Revenue Diversification ($ in millions)

Diversified Revenues - Up 7.3% Q/Q Hotel Services - Expanding HD Free-To-Guest Room Base Advertising Services - New Revenue from Channel Lease Program Guest Entertainment - Impacted by: Conservative Consumer Buying Patterns Fewer Hit Movie Titles Q2 Revenue Per Room Comparison

Gross Margin Expansion 44.4% 44.0% Improved Margins Guest Entertainment up 1.7ppt System Sales up 2.3ppt Advertising up 37.1ppt + 0.4ppt

Managing Operating Expenses ($ in millions) $22.9 $22.7 $28.4 Continued Tight Controls Down 19% from Q2 '08 Levels Maintaining Current Levels for Balance of 2010 - - 19%

Profitability Metrics (in millions) * Adjusted Operating Cash Flow Definition - see slide 18 Adjusted Operating Cash Flow* $29.1 $31.7 $30.0 $28.0 $27.9 Consistent AOCF Steady Results Through Economic Downturn Maintaining Solid Operating Margins: 24.7% in Q2 '10

Profitability Metrics (in millions) Operating Income Up 30% Over Q2 '09 - Lower Depreciation & Amortization v $6.1 $3.3 $4.7 $(0.33) $(0.23) $(0.18) Operating Income Net Loss Per Common Share Net Loss Per Share Improved 22% over Q2 '09 - Lower Depreciation & Interest Expense + 85% + 45%

Increase in Free Cash Flow* ($ in millions) * Free Cash Flow Definition see slide 18 $14.5 $22.6 Free Cash Flow Up 56% Fewer New Room Installations Lower Per Room Investment Management of Working Capital Lower Interest Expense $10.8 + 109%

Free Cash Flow Analysis* ($ in millions except per share) Quarterly comparison * Free Cash Flow Definition see slide 18

Decreasing Debt Levels* ($ in millions) 4.20x 3.72x 3.44x * Debt, Net of Cash Net Debt & Leverage Ratio Net Debt Reduced by $21 Million in Q2 '10 Significant Free Cash Flow Applied to Debt Reduction Leverage Ratio of 3.44x

Reducing Leverage ($ in millions) Net Debt Beneath Lowest Covenant Level of 3.50x

Q3'10 Financial Guidance Reflects: Guest Entertainment Revenue Per Room -3% to -8% vs. Q3 '09 Revenue Diversification Delivers Strong Double Digit Sales Growth From: Healthcare Advertising System Sales Maintaining Current Operating Cost Structure * Free Cash Flow and Adjusted Operating Cash Flow Definitions - see slide 18

* Bank AOCF = AOCF adjusted for severance payments Q3'10 Financial Guidance LodgeNet Achieves Final Covenant Stepdown

2010 - 2011 Outlook Strategic Initiatives Position for Future Growth HDTV Continues to Outperform Analog Platforms Generating 50% Higher Revenues than Average Installed Room Near-Term Growth Limited by Tight Hotel Capex Budgets Other Strategic Initiatives Represent Solid Growth Prospects - Hotel Services: Increases to Come from HDTV and Broadband Upgrades - System Sales: Will Increase with Improved Hotel Results; International - Advertising Service: Solid Growth in H1'10; Continue with Improving Economy - Healthcare: On Track for Solid Revenue Growth in Second Half 2010 Envision: "Cloud Connected" Interactive Television Next Generation Platform Unveiled at Hotel Technology Show New Opportunities from Subscription and Transactional Revenues Initial Deployments to Begin in 2011

Envision Portfolio Cost effective - similar to current HD platform Robust, industry- leading features Most scalable and widely deployable option 1:1 marketing Rich Web media content Future-ready for converged networks Envision DV Envision IP 16

May require integration and subscription fees Wakeup App Hotel Integrated Apps Housekeeping Dining Tee Times Spa Local Area App Local Attractions Restaurant Res. eConcierge News, Weather, Sports App Hometown News App Flight Info App City Info App eConnect Group Event Channel Greeter App Group Event VOD eConference eBranding Hotel Reservation App eCommerce App Vacation Club App Info App Survey App Promo App Events Channel App eCompendium Advanced Applications 17

Reconciliation of Operating Income to Adjusted Operating Cash Flow Reconciliation of Free Cash Flow Cash from Operations Less: Cash Used for Investing Activities, including Growth-Related Capital Equals: Free Cash Flow