LodgeNet Reports Record First Quarter Results; EBITDA up 11.7% to a Record $17.4 Million; EBITDA Margin up to 34.0%

Apr 19, 2001, 01:00 ET from LodgeNet Entertainment Corporation

    SIOUX FALLS, S.D., April 19 /PRNewswire/ --
     LodgeNet Entertainment Corporation (Nasdaq: LNET) today reported its 30th
 consecutive increase in comparative quarterly revenue and EBITDA (earnings
 before interest, taxes depreciation and amortization).  Revenue in the first
 quarter of 2001 increased 6.9% to $51.0 million in comparison to the first
 quarter of 2000, while EBITDA increased 11.7% to $17.4 million from
 $15.6 million a year earlier.  LodgeNet also reported first quarter operating
 income of $0.9 million, setting a milestone as the first time the company has
 earned operating income in a first quarter.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/20000310/LODGELOGO )
     The following financial highlights are in thousands of dollars, except
 per-share data and average shares outstanding:
 
                                           Three Months Ended March 31,
                                               2001          2000
 
     Total revenue                             $51,038       $47,733
     Operating income (loss)                       876          (865)
     EBITDA                                     17,377        15,557
     Net loss                                   (6,782)       (7,682)
     Net loss per common share                  $(0.56)       $(0.64)
     Average shares outstanding             12,212,210    12,057,243
 
     "The highly predictable nature of our business model coupled with sound
 fundamental trends resulted in record results for the first quarter," said
 Scott C. Petersen, President and Chief Executive Officer of LodgeNet.
 "Despite the weak macro-economic environment, we continued to execute across
 all facets of our business plan and produced significant progress in our drive
 to profitability.
     "Our results reflect our expanding interactive room base and our efforts
 to realize additional operating leverage.  In the first quarter, we installed
 20,000 Guest Pay rooms with our interactive system, reflecting increased sales
 from our general customer base and execution of our relationship with Hilton.
 Overall, we expect to add 80,000 to 90,000 net new rooms to our base in 2001,
 installing our new interactive digital system and its revenue streams into
 more than 100,000 rooms by year-end."
     Gary Ritondaro, Senior Vice President and Chief Financial Officer of
 LodgeNet, said, "Our focus on margin improvement drove an approximately 12%
 increase in EBITDA off a 7% increase in revenue, with our EBITDA margin
 expanding 140 basis points to a quarterly record of 34%.  Looking to the
 bottom line, our increase in margins coupled with an expanding room base led
 to positive operating income and a decrease in our net loss for the quarter, a
 trend we expect to continue throughout the year.  We are committed to
 translating additional efficiencies into further improvements in the bottom
 line and reductions in our debt leverage ratio."
     Petersen continued, "LodgeNet continues to execute on its business model
 from a position of strength, even in this unsettled economy.  Our overall
 financial results continue to improve as we generate predictable cash flows.
 Through the expansion of our room base and rollout of new services we are
 strengthening our distribution platform while diversifying our revenue base."
 
                            RESULTS FROM OPERATIONS
                    THREE MONTHS ENDED MARCH 31, 2001 VERSUS
                       THREE MONTHS ENDED MARCH 31, 2000
 
     EBITDA increased 11.7% to $17.4 million in the first quarter of 2001, from
 $15.6 million in the first quarter of 2000.  As a percentage of total revenue,
 EBITDA increased to 34.0% in the current quarter from 32.6% in the same
 quarter of 2000.
     Total revenue for the first quarter of 2001 was $51.0 million, an increase
 of $3.3 million or 6.9% compared to first quarter 2000.  Revenue from Guest
 Pay interactive services increased $3.4 million or 7.4% resulting from a 9.3%
 increase in average rooms in operation, partially offset by a slight decrease
 in revenue per room from $22.63 per month to $22.24 per month.  Per room
 revenue from movies decreased 3.8% (from $18.74 per month in the first quarter
 of 2000 to $18.03 in the current year quarter) resulting from a less popular
 selection of major motion pictures in the current year quarter compared to the
 first quarter of 2000.  Guest Pay revenue per room from other sources
 increased 8.2%, from $3.89 per month in the first quarter of 2000 to $4.21 in
 the current year quarter, due to expanding revenue from Internet services and
 cable television programming services.  Average installed Guest Pay
 interactive rooms increased 9.3% in the first quarter of 2001.
     Gross profit increased 9.6% to $30.0 million in the first quarter of 2001
 on a 6.9% increase in revenue from the first quarter of 2000.  The overall
 gross profit margin increased to 58.8% in the current quarter from 57.4% in
 the year earlier quarter, primarily due to lower movie royalty costs and lower
 costs for cable television programming content.
     Guest Pay operations expenses increased 4.2%, or $296,000 in the first
 quarter of 2001, compared to the year earlier quarter.  This increase was due
 to a greater number of installed rooms, partially offset by lower per room
 operating costs, including certain non-recurring costs incurred in the first
 quarter of 2000.  Per average installed room, Guest Pay operations expenses
 were $3.35 per month in the first quarter of 2001 compared to $3.51 per month
 in the prior year quarter.
     Selling, general and administrative expenses increased $522,000 or 10.9%
 in the first quarter of 2001 compared to the prior year quarter.  Half of the
 increase is due to a one-time fee related to an employee benefit plan.  As a
 percentage of revenue, such expenses increased to 10.4% in the current quarter
 from 10.0% in the year earlier quarter.
     Depreciation and amortization expenses increased slightly, from
 $16.4 million in the first quarter of 2000 to $16.5 million in the current
 year quarter.  As a percentage of revenue, depreciation and amortization
 expenses decreased to 32.3% in the first quarter of 2001 compared to 34.4% in
 the prior year quarter.
     As a result of factors previously described, the Company generated
 operating income of $876,000 in the first quarter of 2001 compared to an
 operating loss of $865,000 in the year earlier quarter.  The Company's net
 loss decreased to $6.8 million from $7.7 million in the year earlier quarter.
 
     2001 Outlook
     With regard to financial results for the calendar year 2001, LodgeNet
 expects to report revenue of between $222 million and $228 million and EBITDA
 of between $77.5 million and $79.5 million.  With respect to the second
 quarter of 2001, LodgeNet expects to report revenue of between $53 million and
 $56 million, resulting in $18.5 to $19.5 million in EBITDA.  Earnings per
 share estimates are $(0.49) to $(0.56) for the second quarter of 2001 and
 $(1.70) to $(1.85) for the full year 2001.
     The Company will hold a conference call on Thursday, April 19, 2001 at
 4:00 pm CST.  The call is being webcast live over the Internet by Global
 Crossing at the address:  http://www.themeetingson.com (reservation number
 18613149), and will be archived for one month at that site, which can be
 linked to through the LodgeNet company website at: http://www.lodgenet.com
     LodgeNet Entertainment Corporation ( http://www.lodgenet.com ) is a
 broadband, interactive services provider which specializes in the delivery of
 interactive television and Internet access services to the lodging industry
 throughout the United States and Canada as well as select international
 markets.  These services include on-demand movies and music, Nintendo(R) video
 games, high-speed Internet on TV, high-speed Internet access for laptop
 computers and other interactive television services designed to serve the
 needs of the lodging industry and the traveling public.  As one of the largest
 companies in the industry, LodgeNet provides service to more than
 830,000 rooms in more than 5,000 hotel properties.  More than 250 million
 travelers have access to LodgeNet systems on an annual basis.  In addition,
 LodgeNet is co-founder and 50 percent owner of InnMedia LLC, a broadband
 interactive new media and advertising company.  LodgeNet is listed on Nasdaq
 and trades under the symbol LNET.
 
     Except for the historical statements contained herein, all statements made
 in this release are "forward-looking statements" within the meaning of the
 Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
 as amended, and are subject to risks, uncertainties, and other factors that
 could cause actual results, performance or achievements of the Company to be
 materially different from those expressed or implied by such forward-looking
 statements.  Such factors include, among others, the impact of competition and
 changes to the competitive environment for the Company's products and
 services, changes in technology, reliance on strategic partners, uncertainty
 of litigation, changes in government regulation and other factors detailed,
 from time to time, in the Company's filings with the Securities and Exchange
 Commission.
 
 
                       LodgeNet Entertainment Corporation
                    Consolidated Balance Sheets (Unaudited)
                         (Dollar amounts in thousands)
 
                                                     March 31,    December 31,
                                                       2001           2000
                         Assets
     Current assets:
       Cash and cash equivalents                      $6,541         $4,059
       Marketable securities                             176          1,398
       Accounts receivable, net                       28,276         26,553
       Prepaid expenses and other                      4,014          3,610
         Total current assets                         39,007         35,620
 
     Property and equipment, net                     227,560        224,927
     Investments in and advances to
      unconsolidated affiliates                        3,050          3,500
     Debt issuance costs, net                          6,723          7,121
     Other assets, net                                10,152         10,437
                                                    $286,492       $281,605
 
           Liabilities and Stockholders' Deficit
     Current liabilities:
       Accounts payable                              $15,438        $12,671
       Current maturities of long-term debt           26,309         21,563
       Accrued expenses and other                     15,364         11,988
       Deferred revenue                                2,777          2,713
         Total current liabilities                    59,888         48,935
 
     Long-term debt                                  270,720        269,096
     Derivative instruments                            3,628             --
       Total liabilities                             334,236        318,031
 
     Stockholders' deficit:
       Common stock, $.01 par value, 20,000,000 shares
        authorized; 12,212,439 and 12,212,039 shares
        outstanding at March 31, 2001 and December 31,
        2000, respectively                               122            122
       Additional paid-in capital                    150,667        150,663
       Accumulated deficit                          (192,763)      (185,981)
       Accumulated other comprehensive income         (5,770)        (1,230)
         Total stockholders' deficit                 (47,744)       (36,426)
                                                    $286,492       $281,605
 
 
                       LodgeNet Entertainment Corporation
               Consolidated Statements of Operations (Unaudited)
            (Dollar amounts, except per share amounts, in thousands)
 
                                                   Three Months Ended March 31,
                                                       2001           2000
     Revenues:
       Guest Pay                                     $48,781        $45,399
       Other                                           2,257          2,334
         Total revenues                               51,038         47,733
 
     Direct costs:
       Guest Pay                                      19,649         18,764
       Other                                           1,374          1,592
         Total direct costs                           21,023         20,356
 
     Gross profit                                     30,015         27,377
 
     Operating expenses:
       Guest Pay operations                            7,344          7,048
       Selling, general and administrative             5,294          4,772
       Depreciation and amortization                  16,501         16,422
         Total operating expenses                     29,139         28,242
 
     Operating income (loss)                             876           (865)
 
     Investment losses                                  (480)            --
     Interest expense                                 (7,131)        (6,959)
     Interest income                                      66            224
 
     Loss before income taxes                         (6,669)        (7,600)
     Provision for income taxes                         (113)           (82)
     Net loss                                        $(6,782)       $(7,682)
 
     Per common share (basic and diluted):
       Net loss                                       $(0.56)        $(0.64)
     Weighted average shares outstanding          12,212,210     12,057,243
 
 
                       LodgeNet Entertainment Corporation
               Consolidated Statements of Cash Flows (Unaudited)
                         (Dollar amounts in thousands)
 
                                                   Three Months Ended March 31,
                                                       2001           2000
     Operating activities:
       Net loss                                      $(6,782)       $(7,682)
       Adjustments to reconcile net loss to net
        cash provided by operating activities:
         Depreciation and amortization                16,501         16,422
         Investment losses                               480             --
         Change in operating assets and liabilities:
         Accounts receivable                          (1,805)         1,185
         Prepaid expenses and other                     (404)          (517)
         Accounts payable                              2,789          2,326
         Accrued expenses and other                    2,743          3,139
         Other                                          (176)          (164)
     Net cash provided by operating activities        13,346         14,709
 
     Investing activities:
       Property and equipment additions              (17,863)       (17,611)
       Proceeds from sale of investments                 888          7,200
       Proceeds from (investment in) affiliates          267           (104)
     Net cash used for investing activities          (16,708)       (10,515)
 
     Financing activities:
       Borrowings under revolving credit facility      6,000          2,000
       Repayments of revolving credit facility            --         (1,500)
       Repayment of long-term debt                       (10)            (9)
       Repayment of capital lease obligations           (113)          (117)
       Stock option activity                               4          1,467
     Net cash provided by financing activities         5,881          1,841
 
     Effect of exchange rates on cash                    (37)             1
     Increase in cash and cash equivalents             2,482          6,036
     Cash and cash equivalents at beginning of period  4,059          1,644
     Cash and cash equivalents at end of period       $6,541         $7,680
 
     Supplemental cash flow information:
       Cash paid for interest                         $5,010         $3,803
 
 
     LodgeNet Entertainment Corporation
     Five Quarter Summary
                                   1st Qtr  4th Qtr  3rd Qtr  2nd Qtr  1st Qtr
                                     '01      '00      '00      '00      '00
     Room Base Statistics
 
     Total Guest Pay Interactive
      Rooms                        744,587  725,075  708,977  696,935  680,718
 
       On-Demand Rooms             744,587  725,075  708,977  696,935  680,718
 
       Nintendo Video Game Rooms   717,477  697,703  681,807  668,511  651,881
       Percent of Total               96.4%    96.2%    96.2%    95.9%    95.8%
 
       Internet Services Rooms      54,691   31,502   20,254   16,220   13,128
       Total Internet Points of
        Presence                    67,026   44,008   32,208   24,683   20,448
 
     Guest Pay Per Room
      Statistics (per month)
       Movie Revenue                $18.03   $17.16   $19.03   $17.86   $18.74
       Other Interactive Service
        Revenue                       4.21     4.04     4.87     4.28     3.89
       Total Per Guest Pay Room     $22.24   $21.20   $23.90   $22.14   $22.63
 
       Guest Pay Operations Expense  $3.35    $3.00    $3.39    $3.28    $3.51
 
     Summary Operating Results
     (Dollars amount in thousands)
 
       Total Revenue               $51,038  $48,061  $52,894  $48,129  $47,733
       Gross Profit                $30,015  $27,564  $31,460  $27,966  $27,377
       EBITDA*                     $17,377  $16,359  $19,320  $16,528  $15,557
       EBITDA (Twelve Months
        Trailing)                  $69,584  $67,764  $65,968  $63,661  $62,147
 
       Gross Profit Margin            58.8%    57.4%    59.5%    58.1%    57.4%
       SG&A as Percent of Total
        Revenue                       10.4%     9.9%     9.5%     9.7%    10.0%
       EBITDA as Percent of Total
        Revenue                       34.0%    34.0%    36.5%    34.3%    32.6%
 
     *EBITDA is defined as earnings before interest, income taxes,
      depreciation, amortization, and other non-operating income or expenses.
 
 

SOURCE LodgeNet Entertainment Corporation
    SIOUX FALLS, S.D., April 19 /PRNewswire/ --
     LodgeNet Entertainment Corporation (Nasdaq: LNET) today reported its 30th
 consecutive increase in comparative quarterly revenue and EBITDA (earnings
 before interest, taxes depreciation and amortization).  Revenue in the first
 quarter of 2001 increased 6.9% to $51.0 million in comparison to the first
 quarter of 2000, while EBITDA increased 11.7% to $17.4 million from
 $15.6 million a year earlier.  LodgeNet also reported first quarter operating
 income of $0.9 million, setting a milestone as the first time the company has
 earned operating income in a first quarter.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/20000310/LODGELOGO )
     The following financial highlights are in thousands of dollars, except
 per-share data and average shares outstanding:
 
                                           Three Months Ended March 31,
                                               2001          2000
 
     Total revenue                             $51,038       $47,733
     Operating income (loss)                       876          (865)
     EBITDA                                     17,377        15,557
     Net loss                                   (6,782)       (7,682)
     Net loss per common share                  $(0.56)       $(0.64)
     Average shares outstanding             12,212,210    12,057,243
 
     "The highly predictable nature of our business model coupled with sound
 fundamental trends resulted in record results for the first quarter," said
 Scott C. Petersen, President and Chief Executive Officer of LodgeNet.
 "Despite the weak macro-economic environment, we continued to execute across
 all facets of our business plan and produced significant progress in our drive
 to profitability.
     "Our results reflect our expanding interactive room base and our efforts
 to realize additional operating leverage.  In the first quarter, we installed
 20,000 Guest Pay rooms with our interactive system, reflecting increased sales
 from our general customer base and execution of our relationship with Hilton.
 Overall, we expect to add 80,000 to 90,000 net new rooms to our base in 2001,
 installing our new interactive digital system and its revenue streams into
 more than 100,000 rooms by year-end."
     Gary Ritondaro, Senior Vice President and Chief Financial Officer of
 LodgeNet, said, "Our focus on margin improvement drove an approximately 12%
 increase in EBITDA off a 7% increase in revenue, with our EBITDA margin
 expanding 140 basis points to a quarterly record of 34%.  Looking to the
 bottom line, our increase in margins coupled with an expanding room base led
 to positive operating income and a decrease in our net loss for the quarter, a
 trend we expect to continue throughout the year.  We are committed to
 translating additional efficiencies into further improvements in the bottom
 line and reductions in our debt leverage ratio."
     Petersen continued, "LodgeNet continues to execute on its business model
 from a position of strength, even in this unsettled economy.  Our overall
 financial results continue to improve as we generate predictable cash flows.
 Through the expansion of our room base and rollout of new services we are
 strengthening our distribution platform while diversifying our revenue base."
 
                            RESULTS FROM OPERATIONS
                    THREE MONTHS ENDED MARCH 31, 2001 VERSUS
                       THREE MONTHS ENDED MARCH 31, 2000
 
     EBITDA increased 11.7% to $17.4 million in the first quarter of 2001, from
 $15.6 million in the first quarter of 2000.  As a percentage of total revenue,
 EBITDA increased to 34.0% in the current quarter from 32.6% in the same
 quarter of 2000.
     Total revenue for the first quarter of 2001 was $51.0 million, an increase
 of $3.3 million or 6.9% compared to first quarter 2000.  Revenue from Guest
 Pay interactive services increased $3.4 million or 7.4% resulting from a 9.3%
 increase in average rooms in operation, partially offset by a slight decrease
 in revenue per room from $22.63 per month to $22.24 per month.  Per room
 revenue from movies decreased 3.8% (from $18.74 per month in the first quarter
 of 2000 to $18.03 in the current year quarter) resulting from a less popular
 selection of major motion pictures in the current year quarter compared to the
 first quarter of 2000.  Guest Pay revenue per room from other sources
 increased 8.2%, from $3.89 per month in the first quarter of 2000 to $4.21 in
 the current year quarter, due to expanding revenue from Internet services and
 cable television programming services.  Average installed Guest Pay
 interactive rooms increased 9.3% in the first quarter of 2001.
     Gross profit increased 9.6% to $30.0 million in the first quarter of 2001
 on a 6.9% increase in revenue from the first quarter of 2000.  The overall
 gross profit margin increased to 58.8% in the current quarter from 57.4% in
 the year earlier quarter, primarily due to lower movie royalty costs and lower
 costs for cable television programming content.
     Guest Pay operations expenses increased 4.2%, or $296,000 in the first
 quarter of 2001, compared to the year earlier quarter.  This increase was due
 to a greater number of installed rooms, partially offset by lower per room
 operating costs, including certain non-recurring costs incurred in the first
 quarter of 2000.  Per average installed room, Guest Pay operations expenses
 were $3.35 per month in the first quarter of 2001 compared to $3.51 per month
 in the prior year quarter.
     Selling, general and administrative expenses increased $522,000 or 10.9%
 in the first quarter of 2001 compared to the prior year quarter.  Half of the
 increase is due to a one-time fee related to an employee benefit plan.  As a
 percentage of revenue, such expenses increased to 10.4% in the current quarter
 from 10.0% in the year earlier quarter.
     Depreciation and amortization expenses increased slightly, from
 $16.4 million in the first quarter of 2000 to $16.5 million in the current
 year quarter.  As a percentage of revenue, depreciation and amortization
 expenses decreased to 32.3% in the first quarter of 2001 compared to 34.4% in
 the prior year quarter.
     As a result of factors previously described, the Company generated
 operating income of $876,000 in the first quarter of 2001 compared to an
 operating loss of $865,000 in the year earlier quarter.  The Company's net
 loss decreased to $6.8 million from $7.7 million in the year earlier quarter.
 
     2001 Outlook
     With regard to financial results for the calendar year 2001, LodgeNet
 expects to report revenue of between $222 million and $228 million and EBITDA
 of between $77.5 million and $79.5 million.  With respect to the second
 quarter of 2001, LodgeNet expects to report revenue of between $53 million and
 $56 million, resulting in $18.5 to $19.5 million in EBITDA.  Earnings per
 share estimates are $(0.49) to $(0.56) for the second quarter of 2001 and
 $(1.70) to $(1.85) for the full year 2001.
     The Company will hold a conference call on Thursday, April 19, 2001 at
 4:00 pm CST.  The call is being webcast live over the Internet by Global
 Crossing at the address:  http://www.themeetingson.com (reservation number
 18613149), and will be archived for one month at that site, which can be
 linked to through the LodgeNet company website at: http://www.lodgenet.com
     LodgeNet Entertainment Corporation ( http://www.lodgenet.com ) is a
 broadband, interactive services provider which specializes in the delivery of
 interactive television and Internet access services to the lodging industry
 throughout the United States and Canada as well as select international
 markets.  These services include on-demand movies and music, Nintendo(R) video
 games, high-speed Internet on TV, high-speed Internet access for laptop
 computers and other interactive television services designed to serve the
 needs of the lodging industry and the traveling public.  As one of the largest
 companies in the industry, LodgeNet provides service to more than
 830,000 rooms in more than 5,000 hotel properties.  More than 250 million
 travelers have access to LodgeNet systems on an annual basis.  In addition,
 LodgeNet is co-founder and 50 percent owner of InnMedia LLC, a broadband
 interactive new media and advertising company.  LodgeNet is listed on Nasdaq
 and trades under the symbol LNET.
 
     Except for the historical statements contained herein, all statements made
 in this release are "forward-looking statements" within the meaning of the
 Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
 as amended, and are subject to risks, uncertainties, and other factors that
 could cause actual results, performance or achievements of the Company to be
 materially different from those expressed or implied by such forward-looking
 statements.  Such factors include, among others, the impact of competition and
 changes to the competitive environment for the Company's products and
 services, changes in technology, reliance on strategic partners, uncertainty
 of litigation, changes in government regulation and other factors detailed,
 from time to time, in the Company's filings with the Securities and Exchange
 Commission.
 
 
                       LodgeNet Entertainment Corporation
                    Consolidated Balance Sheets (Unaudited)
                         (Dollar amounts in thousands)
 
                                                     March 31,    December 31,
                                                       2001           2000
                         Assets
     Current assets:
       Cash and cash equivalents                      $6,541         $4,059
       Marketable securities                             176          1,398
       Accounts receivable, net                       28,276         26,553
       Prepaid expenses and other                      4,014          3,610
         Total current assets                         39,007         35,620
 
     Property and equipment, net                     227,560        224,927
     Investments in and advances to
      unconsolidated affiliates                        3,050          3,500
     Debt issuance costs, net                          6,723          7,121
     Other assets, net                                10,152         10,437
                                                    $286,492       $281,605
 
           Liabilities and Stockholders' Deficit
     Current liabilities:
       Accounts payable                              $15,438        $12,671
       Current maturities of long-term debt           26,309         21,563
       Accrued expenses and other                     15,364         11,988
       Deferred revenue                                2,777          2,713
         Total current liabilities                    59,888         48,935
 
     Long-term debt                                  270,720        269,096
     Derivative instruments                            3,628             --
       Total liabilities                             334,236        318,031
 
     Stockholders' deficit:
       Common stock, $.01 par value, 20,000,000 shares
        authorized; 12,212,439 and 12,212,039 shares
        outstanding at March 31, 2001 and December 31,
        2000, respectively                               122            122
       Additional paid-in capital                    150,667        150,663
       Accumulated deficit                          (192,763)      (185,981)
       Accumulated other comprehensive income         (5,770)        (1,230)
         Total stockholders' deficit                 (47,744)       (36,426)
                                                    $286,492       $281,605
 
 
                       LodgeNet Entertainment Corporation
               Consolidated Statements of Operations (Unaudited)
            (Dollar amounts, except per share amounts, in thousands)
 
                                                   Three Months Ended March 31,
                                                       2001           2000
     Revenues:
       Guest Pay                                     $48,781        $45,399
       Other                                           2,257          2,334
         Total revenues                               51,038         47,733
 
     Direct costs:
       Guest Pay                                      19,649         18,764
       Other                                           1,374          1,592
         Total direct costs                           21,023         20,356
 
     Gross profit                                     30,015         27,377
 
     Operating expenses:
       Guest Pay operations                            7,344          7,048
       Selling, general and administrative             5,294          4,772
       Depreciation and amortization                  16,501         16,422
         Total operating expenses                     29,139         28,242
 
     Operating income (loss)                             876           (865)
 
     Investment losses                                  (480)            --
     Interest expense                                 (7,131)        (6,959)
     Interest income                                      66            224
 
     Loss before income taxes                         (6,669)        (7,600)
     Provision for income taxes                         (113)           (82)
     Net loss                                        $(6,782)       $(7,682)
 
     Per common share (basic and diluted):
       Net loss                                       $(0.56)        $(0.64)
     Weighted average shares outstanding          12,212,210     12,057,243
 
 
                       LodgeNet Entertainment Corporation
               Consolidated Statements of Cash Flows (Unaudited)
                         (Dollar amounts in thousands)
 
                                                   Three Months Ended March 31,
                                                       2001           2000
     Operating activities:
       Net loss                                      $(6,782)       $(7,682)
       Adjustments to reconcile net loss to net
        cash provided by operating activities:
         Depreciation and amortization                16,501         16,422
         Investment losses                               480             --
         Change in operating assets and liabilities:
         Accounts receivable                          (1,805)         1,185
         Prepaid expenses and other                     (404)          (517)
         Accounts payable                              2,789          2,326
         Accrued expenses and other                    2,743          3,139
         Other                                          (176)          (164)
     Net cash provided by operating activities        13,346         14,709
 
     Investing activities:
       Property and equipment additions              (17,863)       (17,611)
       Proceeds from sale of investments                 888          7,200
       Proceeds from (investment in) affiliates          267           (104)
     Net cash used for investing activities          (16,708)       (10,515)
 
     Financing activities:
       Borrowings under revolving credit facility      6,000          2,000
       Repayments of revolving credit facility            --         (1,500)
       Repayment of long-term debt                       (10)            (9)
       Repayment of capital lease obligations           (113)          (117)
       Stock option activity                               4          1,467
     Net cash provided by financing activities         5,881          1,841
 
     Effect of exchange rates on cash                    (37)             1
     Increase in cash and cash equivalents             2,482          6,036
     Cash and cash equivalents at beginning of period  4,059          1,644
     Cash and cash equivalents at end of period       $6,541         $7,680
 
     Supplemental cash flow information:
       Cash paid for interest                         $5,010         $3,803
 
 
     LodgeNet Entertainment Corporation
     Five Quarter Summary
                                   1st Qtr  4th Qtr  3rd Qtr  2nd Qtr  1st Qtr
                                     '01      '00      '00      '00      '00
     Room Base Statistics
 
     Total Guest Pay Interactive
      Rooms                        744,587  725,075  708,977  696,935  680,718
 
       On-Demand Rooms             744,587  725,075  708,977  696,935  680,718
 
       Nintendo Video Game Rooms   717,477  697,703  681,807  668,511  651,881
       Percent of Total               96.4%    96.2%    96.2%    95.9%    95.8%
 
       Internet Services Rooms      54,691   31,502   20,254   16,220   13,128
       Total Internet Points of
        Presence                    67,026   44,008   32,208   24,683   20,448
 
     Guest Pay Per Room
      Statistics (per month)
       Movie Revenue                $18.03   $17.16   $19.03   $17.86   $18.74
       Other Interactive Service
        Revenue                       4.21     4.04     4.87     4.28     3.89
       Total Per Guest Pay Room     $22.24   $21.20   $23.90   $22.14   $22.63
 
       Guest Pay Operations Expense  $3.35    $3.00    $3.39    $3.28    $3.51
 
     Summary Operating Results
     (Dollars amount in thousands)
 
       Total Revenue               $51,038  $48,061  $52,894  $48,129  $47,733
       Gross Profit                $30,015  $27,564  $31,460  $27,966  $27,377
       EBITDA*                     $17,377  $16,359  $19,320  $16,528  $15,557
       EBITDA (Twelve Months
        Trailing)                  $69,584  $67,764  $65,968  $63,661  $62,147
 
       Gross Profit Margin            58.8%    57.4%    59.5%    58.1%    57.4%
       SG&A as Percent of Total
        Revenue                       10.4%     9.9%     9.5%     9.7%    10.0%
       EBITDA as Percent of Total
        Revenue                       34.0%    34.0%    36.5%    34.3%    32.6%
 
     *EBITDA is defined as earnings before interest, income taxes,
      depreciation, amortization, and other non-operating income or expenses.
 
 SOURCE  LodgeNet Entertainment Corporation