LodgeNet Interactive Corporation
Financial Analysis
2006 Pro forma vs 2007 Pro forma vs. 2008 Guidance
$ in millions except per room

																					Midpoint
	2006 Pro forma												2007 Pro forma								2008 Guidance			Change ($)						Change (%)
	LNET			ONCO			StayOnline (1)			Combined			LNET (2)		ONCO			Combined			Combined			07 vs 06			08 vs 07			07 vs 06			08 vs 07
Revenue
Guest Entertainment
Movies	$	208.2		$	173.1		$	—		$	381.2		$	207.4	$	164.5		$	371.9		$	366.0		$	(9.3	)	$	(5.9	)		-2.5	%		-1.6	%
Other Guest Entertainment		18.0			12.5						30.5			16.5		14.1			30.5			27.5			0.0			(3.0	)		0.1	%		-10.0	%
Total Guest Entertainment		226.2			185.5			—			411.7			223.8		178.6			402.4			393.5			(9.3	)		(8.9	)		-2.3	%		-2.2	%
Hotel Services
TV Programming		49.5			32.1						81.6			57.2		36.4			93.6			109.0			12.0			15.4			14.7	%		16.4	%
Broadband		3.3			1.2			4.2			8.8			8.5		2.0			10.5			13.0			1.7			2.5			19.8	%		23.7	%
Total Hotel Services		52.8			33.3			4.2			90.4			65.8		38.4			104.1			122.0			13.7			17.9			15.2	%		17.2	%
Advertising & Other		9.2			14.7			7.7			31.6			27.8		13.6			41.3			62.0			9.7			20.7			30.7	%		50.1	%
Total Revenue		288.2			233.5			12.0			533.7			317.4		230.5			547.9			577.5			14.1			29.6			2.7	%		5.4	%
Direct Costs
Guest Entertainment
Movies		75.7			60.3						136.0			75.8		61.6			137.4			134.5			1.4			(2.9	)		1.0	%		-2.1	%
Other Guest Entertainment		10.9			9.1						20.0			10.0		11.0			21.0			19.5			1.1			(1.5	)		5.4	%		-7.3	%
Total Guest Entertainment		86.6			69.3			—			155.9			85.8		72.6			158.4			154.0			2.5			(4.4	)		1.6	%		-2.8	%
Hotel Services
TV Programming		39.6			43.1						82.7			45.7		45.5			91.2			98.5			8.5			7.3			10.2	%		8.1	%
Broadband		(0.2	)		1.1			4.5			5.4			6.9		1.8			8.7			10.5			3.3			1.8			60.7	%		20.9	%
Total Hotel Services		39.4			44.2			4.5			88.1			52.6		47.3			99.8			109.0			11.7			9.2			13.3	%		9.2	%
Advertising & Other		5.3			9.7			7.2			22.2			20.0		9.9			30.0			40.0			7.8			10.0			35.2	%		33.5	%
Total Direct Costs		131.3			123.2			11.7			266.2			158.4		129.8			288.2			303.0			22.0			14.8			8.3	%		5.1	%
Gross Profit
Guest Entertainment
Movies		132.5			112.8			—			245.3			131.6		102.9			234.5			231.5			(10.8	)		(3.0	)		-4.4	%		-1.3	%
Other Guest Entertainment		7.1			3.4			—			10.5			6.4		3.1			9.5			8.0			(1.0	)		(1.5	)		-9.8	%		-15.9	%
Total Guest Entertainment		139.6			116.2			—			255.8			138.0		106.0			244.0			239.5			(11.8	)		(4.5	)		-4.6	%		-1.8	%
Hotel Services
TV Programming		9.9			(11.0	)		—			(1.1	)		11.5		(9.1	)		2.5			10.5			3.5			8.0			n/m			324.7	%
Broadband		3.5			0.2			(0.3	)		3.4			1.7		0.2			1.8			2.5			(1.5	)		0.7			-45.8	%		36.6	%
Total Hotel Services		13.4			(10.8	)		(0.3	)		2.3			13.2		(8.9	)		4.3			13.0			2.0			8.7			86.6	%		202.1	%
Advertising & Other		3.9			5.0			0.6			9.5			7.7		3.6			11.4			22.0			1.9			10.6			20.2	%		93.6	%
Total Gross Profit		156.9			110.4			0.3			267.6			159.0		100.7			259.7			274.5			(7.9	)		14.8			-2.9	%		5.7	%
Operating Expenses (3)
Baseline Operating Expenses		62.5			54.6			5.3			122.4								122.8			123.1			0.4			0.3			0.3	%		0.2	%
Cost Adjustments											—								3.7			7.5			3.7			3.8
Normal Operating Expenses		62.5			54.6			5.3			122.4								126.5			130.6			4.0			4.1			3.3	%		3.3	%
Growth Initiatives		—			—			—			—								1.2			3.0			1.2			1.8
Synergies		—			—			—			—								(3.2	)		(13.4	)		(3.2	)		(10.2	)
Total Operating Expenses		62.5			54.6			5.3			122.4								124.5			120.2			2.0			(4.3	)		1.7	%		-3.4	%
Less: Integration (incl above)											—								5.6			0.7			5.6			(4.9	)					-87.5	%
Adjusted Operating Cash Flow (4)	$	94.8		$	55.8		$	(5.1	)	$	145.5							$	142.5		$	155.0		$	(3.0	)	$	12.5			-2.1	%		8.8	%
AOCF Margin		32.9	%		23.9	%		-42.5	%		27.3	%							26.0	%		26.8	%

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																						Midpoint
	2006 Pro forma												2007 Pro forma									2008 Guidance			Change ($)						Change (%)
	LNET			ONCO			StayOnline (1)			Combined			LNET (2)			ONCO			Combined			Combined			07 vs 06			08 vs 07			07 vs 06			08 vs 07
Revenue per Room
Guest Entertainment
Movies	$	17.27		$	17.50					$	17.38		$	16.89		$	16.68		$	16.80		$	16.31		$	(0.58	)	$	(0.49	)		-3.3	%		-2.9	%
Other Guest Entertainment		1.50			1.26						1.39			1.34			1.43			1.38			1.23			(0.01	)		(0.15	)		-0.7	%		-11.2	%
Total Guest Entertainment		18.77			18.76						18.77			18.23			18.11			18.18			17.53			(0.59	)		(0.64	)		-3.1	%		-3.5	%
Hotel Services
TV Programming		4.11			3.25			—			3.72			4.66			3.69			4.23			4.86			0.51			0.63			13.7	%		14.8	%
Broadband		0.27			0.12			0.35			0.40			0.70			0.20			0.47			0.58			0.07			0.10			18.7	%		22.0	%
Total Hotel Services		4.38			3.37			0.35			4.12			5.36			3.89			4.70			5.44			0.58			0.73			14.2	%		15.6	%
Advertising & Other		0.76			1.49			0.64			1.44			2.26			1.37			1.87			2.76			0.43			0.90			29.6	%		48.0	%
Total Revenue per Room	$	23.91		$	23.62		$	0.99		$	24.33		$	25.85		$	23.38		$	24.75		$	25.73		$	0.42		$	0.98			1.7	%		4.0	%
Gross Profit per Room
Guest Entertainment
Movies	$	10.98		$	11.41					$	11.17		$	10.73		$	10.43		$	10.60		$	10.32		$	(0.57	)	$	(0.28	)		-5.1	%		-2.6	%
Other Guest Entertainment		0.59			0.34						0.48			0.52			0.31			0.43			0.36			(0.05	)		(0.07	)		-10.8	%		-16.9	%
Total Guest Entertainment		11.58			11.76						11.65			11.25			10.74			11.03			10.68			(0.62	)		(0.35	)		-5.4	%		-3.2	%
Hotel Services
TV Programming		0.82			(1.11	)					(0.05	)		0.94			(0.92	)		0.11			0.47			0.16			0.36			n/m			324.0	%
Broadband		0.29			0.02			(0.02	)		0.15			0.13			0.02			0.08			0.11			(0.07	)		0.03			-46.4	%		34.6	%
Total Hotel Services		1.11			(1.10	)		(0.02	)		0.11			1.08			(0.90	)		0.19			0.58			0.09			0.39			80.0	%		201.6	%
Advertising & Other		0.32			0.51			0.05			0.43			0.63			0.37			0.51			0.98			0.08			0.47			19.2	%		91.1	%
Total Gross Profit per Room	$	13.01		$	11.17		$	0.02		$	12.19		$	12.96		$	10.20		$	11.73		$	12.24		$	(0.46	)	$	0.51			-3.7	%		4.3	%
Operating Expenses per Room (3)
Normal Operating Expenses		5.19			5.52			0.44			5.58									5.71			5.82			0.13			0.11			2.4	%		1.9	%
Growth Initiatives		—			—			—			—									0.05			0.13			0.05			0.08						146.6	%
Synergies		—			—			—			—									(0.14	)		(0.60	)		(0.14	)		(0.45	)					313.1	%
Total Operating Expenses per Room		5.19			5.52			0.44			5.58									5.62			5.36			0.04			(0.27	)		0.7	%		-4.7	%
AOCF per Room (4)	$	7.86		$	5.65		$	(0.42	)	$	6.63								$	6.44		$	6.91		$	(0.20	)	$	0.47			-2.9	%		7.3	%
Gross Profit Margin																								percentage point change
Guest Entertainment
Movies		63.6	%		65.2	%					64.3	%		63.5	%		62.5	%		63.1	%		63.3	%		-1.2	%		0.2	%
Other Guest Entertainment		39.6	%		27.3	%					34.6	%		39.1	%		21.8	%		31.1	%		29.1	%		-3.5	%		-2.0	%
Total Guest Entertainment		61.7	%		62.6	%					62.1	%		61.7	%		59.3	%		60.6	%		60.9	%		-1.5	%		0.3	%
Hotel Services
TV Programming		20.0	%		-34.3	%					-1.3	%		20.2	%		-24.9	%		2.6	%		9.6	%		3.9	%		7.0	%
Broadband		105.9	%		13.8	%		-7.0	%		38.5	%		19.4	%		8.6	%		17.4	%		19.2	%		-21.1	%		1.8	%
Total Hotel Services		25.4	%		-32.5	%		-7.0	%		2.6	%		20.1	%		-23.2	%		4.1	%		10.7	%		1.5	%		6.6	%
Advertising & Other		41.9	%		34.3	%		7.1	%		29.9	%		27.8	%		26.9	%		27.5	%		35.5	%		-2.4	%		8.0	%
Total Gross Margin		54.4	%		47.3	%		2.1	%		50.1	%		50.1	%		43.7	%		47.4	%		47.5	%		-2.7	%		0.1	%
AOCF Margin		32.9	%		23.9	%		-42.5	%		27.3	%								26.0	%		26.8	%		-1.3	%		0.8	%

(1)	Per room metrics for StayOnline based on LNET average rooms installed of 1,004,422. Average room base for StayOnline during 2006 was approximately 136,000.
(2)	Includes business related to StayOnline acquisition
(3)	Net of stock-based compensation
(4)	Adjusted Operating Cash Flow includes other income of $.4mm ($.02/rm) in 2006 and $1.7mm ($.08/rm) in 2007

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