Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - LODGENET INTERACTIVE CORP | c60860e8vk.htm |
| EX-99.2 - EX-99.2 - LODGENET INTERACTIVE CORP | c60860exv99w2.htm |
Exhibit 99.1
Ann Parker, Director
|
Mike Smargiassi | |
Investor Relations
|
Brainerd Communicators | |
605-988-1000
|
212-986-6667 | |
ann.parker@lodgenet.com
|
smarg@braincomm.com |
LODGENET REPORTS RESULTS FOR THIRD QUARTER 2010
— Free Cash Flow of $15.3 Million —
— Operating Income up 28.5% —
— Final Covenant Step Down Achieved —
— Operating Income up 28.5% —
— Final Covenant Step Down Achieved —
SIOUX FALLS, SD, October 20, 2010 — LodgeNet Interactive Corporation (Nasdaq:LNET) today
reported quarterly revenue of $113.8 million compared to $121.1 million in the third quarter of
2009. Net loss attributable to common stockholders was $(3.1) million or $(0.12) per share (basic
and diluted) for the third quarter of 2010 compared to a net loss attributable to common
stockholders of $(6.6) million or $(0.30) per share (basic and diluted) for the third quarter of
2009. LodgeNet also reported $15.3 million in free cash flow(1) for the current quarter
and $80.0 million for the trailing twelve months compared to $16.1 million and $61.8 million for
the prior periods, respectively. For the quarter, the Company achieved a leverage ratio of 3.40
times on a net debt(2) basis versus a covenant of 3.50 times.
The following financial highlights are in thousands, except per share data:
| Three Months Ended September 30, | ||||||||
| 2010 | 2009 | |||||||
Total revenue |
$ | 113,794 | $ | 121,122 | ||||
Income from operations |
6,804 | 5,294 | ||||||
Net loss |
(1,674 | ) | (4,982 | ) | ||||
Net loss attributable to common stockholders |
(3,111 | ) | (6,627 | ) | ||||
Net loss per common share (basic and diluted) |
$ | (0.12 | ) | $ | (0.30 | ) | ||
Adjusted Operating Cash Flow(3) |
$ | 27,893 | $ | 30,039 | ||||
Average shares outstanding (basic and diluted) |
25,022 | 22,459 | ||||||
| (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, restructuring and reorganization expenses and debt issuance costs. |
LodgeNet Q3 2010 Earnings 2-2-2-2
“We continue to make significant progress in executing our strategic initiatives and improving
our bottom line performance,” said Scott C. Petersen, LodgeNet Chairman and CEO. “We are
benefiting from our revenue diversification efforts and ongoing cost controls, as well as the
deleveraging of our balance sheet. In the quarter, we recorded significant revenue growth in every
service line with the exception of Guest Entertainment. Our revenue diversification initiatives
delivered 12.9% more revenue per room this year versus last and now comprise 43.0% of total
revenue. Our expanded array of technology solutions for the Hospitality and Healthcare markets are
clearly gaining ground and we see considerable opportunity for additional revenue and profitability
growth related to all of these solutions.”
Strategic highlights for Q3 2010 include:
| • | Expanded Revenue from Strategic Growth Initiatives: Revenue per room up 12.9% vs. prior year — currently 43.0% of total revenue | ||
| • | Continued Strong Performance in High Definition Rooms: Revenue per room 60.0% higher than analog rooms in the third quarter | ||
| • | Generated Substantial Free Cash Flow: $15.3 million for the quarter; and $80.0 million trailing twelve months | ||
| • | Improved Bottom Line Performance: Operating Income up 28.5%; and a per-share improvement of 60.0% vs. last year | ||
| • | Increased Gross Margins: Total Gross Margin of 43.5%, up 60 basis points over prior quarter, driven by improvements in Guest Entertainment, Hotel Services, System Sales & Other, and Advertising Services | ||
| • | Reduced Net Debt: $382.3 million, down $13.8 million in the quarter. Debt reduced by $216.7 million since the beginning of 2008 | ||
| • | Achieved Final Covenant Step Down: Net debt leverage ratio of 3.40x versus the final covenant stepdown of 3.50x | ||
| • | Reduced Average Capital per HD Upgrade: Cost per room reduced by 22.8% to $186 compared to prior year |
“While our Guest Entertainment revenue decreased over the prior year, that revenue was flat on
a per-room basis as compared to the second quarter of this year,” continued Petersen. “We believe
Guest Entertainment revenues this year are being significantly impacted by a lackluster slate of
titles this year over last, a continuing conservative consumer buying pattern, and a low
penetration of HDTV systems across our installed base. We are focused on accelerating the
installation of our HD systems as hotels increase their purchase of digital televisions since the
revenue generated from the digital quality experience within our installed HD rooms is nearly 60%
higher than our analog rooms. In addition, we have numerous initiatives underway focused on
maximizing the revenue generated in all of our rooms. Some of these opportunities include credit
card payment options for the guest, direct access to our interactive menu upon television turn-on,
and tiered pricing structures.”
“Our third quarter results show considerable progress on our revenue diversification efforts.
Revenue from new service lines grew 12.9% on a per-room basis while significantly expanding their
gross margins,” said Frank P. Elsenbast, senior vice president and chief financial officer.
“Advertising services improved its gross margin from 9.2% last year to 42.1% in the current quarter
driven by 40% revenue growth and reductions to its cost structure. Hotel services revenue per room
is up over 9%, driven by growth in High Definition TV Programming. In Healthcare, revenue improved
by over 90% versus last year. While down versus prior year, our Guest Entertainment footprint of
1.7 million hotel rooms provides the scale, cash flow and technology to drive the growth of these
new service lines.
“We continue to manage expenses conservatively and delever the company during this sustained
economic downturn,” continued Elsenbast. “We lowered our leverage ratio to 3.40 times on a net
debt basis this quarter, as we achieved the final covenant stepdown in our loan agreement. Looking
forward, we are prepared to increase our capital investment levels in support of the rollout of
High Definition TV by our best hotel customers. These investments provide strong financial returns
to LodgeNet and are an essential upgrade that many of our hotel partners are planning as they enter
2011.”
RESULTS FROM OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2010 VERSUS
THREE MONTHS ENDED SEPTEMBER 30, 2009
THREE MONTHS ENDED SEPTEMBER 30, 2010 VERSUS
THREE MONTHS ENDED SEPTEMBER 30, 2009
Total revenue for the third quarter of 2010 was $113.8 million, a decrease of $7.3 million or
6.1%, compared to the same period of 2009. The decrease in revenue resulted from reductions in
Guest Entertainment revenue largely offset by increases in revenue from all of our other service
lines, including System Sales and Related Services, Hotel Services, Healthcare and Advertising
Services.
Hospitality and Advertising revenue, which includes Guest Entertainment, Hotel Services,
System Sales and Advertising Services, decreased $8.5 million or 7.0%, to $111.5 million for the
third quarter of 2010 as compared to $120.0 million for the prior year quarter. Average monthly
Hospitality and Advertising revenue per room was $21.55 for the third quarter of 2010, a decrease
of 2.0% as compared to $22.00 per room in the third quarter of 2009.
LodgeNet Q3 2010 Earnings 3-3-3-3
Guest Entertainment revenue, which includes on-demand entertainment from movies, television
episodes, games and music, declined $11.5 million to $64.8 million in the third quarter of 2010
versus the third quarter of 2009. The decline in Guest Entertainment revenue resulted from a 5.1%
reduction in the average number of rooms served over the prior year period, primarily as a result
of the Company’s decision not to renew certain low performing property contracts, and a 10.6%
reduction in revenue on a per installed room basis. The decline in per room revenue resulted from
less popular Hollywood content this year as compared to last year; continued conservative consumer
buying patterns and a low penetration of High Definition services across our 1.7 million Guest
Entertainment rooms. Our top ten theatrical titles generated $3.3 million less revenue this quarter
vs. prior year. This reduction accounts for approximately 30% of the revenue decline experienced
by Guest Entertainment this quarter.
Hotel Services revenue, which includes recurring revenue from hotels for television
programming and broadband Internet service and support, increased $1.3 million or 3.8%, to $34.0
million in the third quarter of 2010 versus $32.7 million for the third quarter of 2009. On a
per-room basis, monthly Hotel Services revenue for the third quarter of 2010 increased 9.3% to
$6.56 compared to $6.00 for the third quarter of 2009. Monthly television programming revenue per
room increased 9.1% to $5.97 for the third quarter of 2010 as compared to $5.47 for the third
quarter of 2009. This increase resulted primarily from higher priced programming packages
purchased by hotels as they installed high definition television systems and changes to other TV
programming services and products.
System Sales and Related Services revenue, including sales of TV programming equipment,
broadband Internet equipment, HDTV installations and other services to hotels, increased $1.3
million or 14.3%, to $10.5 million during the third quarter of 2010 compared to $9.2 million in the
third quarter of 2009. The increase primarily resulted from a large HDTV equipment conversion
project in this year’s quarter, partially offset by reductions in our broadband equipment sales.
The Hotel Networks (“THN”), our advertising services subsidiary, generated revenue of $2.2
million, an increase of 32.4% compared to the $1.7 million generated in the third quarter of 2009.
This increase was driven primarily by an increase in channel leasing revenue.
Healthcare revenue, which includes the sale of interactive systems and services to Healthcare
facilities, increased 94.5% or $1.1 million to $2.3 million for the third quarter of 2010 compared
to $1.2 million in the prior year quarter. During the quarter, we installed 563 beds and one
facility compared to 270 beds and one facility and provided significant professional installation
services to another major hospital, compared to installing 270 beds at one facility during the
prior year period. We have eight healthcare contracts with more than 2,200 beds in our backlog
currently awaiting installation.
Total direct costs (exclusive of operating expenses and depreciation and amortization
discussed separately below) decreased 7.1% or $4.9 million, to $64.3 million in the third quarter
of 2010 as compared to $69.2 million in the third quarter of 2009. The decrease in total direct
costs was primarily due to decreased hotel commissions and content royalties of $5.3 million, which
vary with revenue. Advertising Services also experienced lower fixed costs this year due to lower
satellite distribution and content costs. Partially offsetting the reductions was an increase in
incremental TV programming costs of $0.3 million, which vary with the increased revenue and the
services provided. These changes increased gross margins to 43.5% in the quarter compared to
42.9% for the same period of last year.
System Operations expenses decreased $0.2 million or 1.6%, to $10.7 million in the third
quarter of 2010 as compared to $10.9 million in the third quarter of 2009. The decrease resulted
from the continued management of our operating expenses. As a percentage of revenue, System
Operations expenses were 9.4% this quarter as compared to 9.0% in the third quarter of 2009. Per
average installed room, System Operations expenses were $2.06 per room per month compared to $1.99
in the prior year quarter.
Selling, General and Administrative (SG&A) expenses increased $0.5 million or 4.2%, to $11.8
million in the current quarter as compared to $11.3 million in the third quarter of 2009. The
increase resulted primarily from debt issuance costs of $0.5 million related to financing options
which were explored in the third quarter. Excluding these non-operating costs, Operating Expenses
for the quarter of $11.3 million were flat to last year and the prior quarter.
Depreciation and amortization expenses decreased $4.1 million, or 16.9% to $20.1 million in
the third quarter of 2010 as compared to $24.2 million in the third quarter of 2009. The decline
was due to assets becoming fully depreciated and the reduction in capital investments levels over
the past two years. As a percentage of revenue, total depreciation and amortization expenses were
17.7% in the third quarter of 2010 versus 20.0% in the third quarter of 2009.
As a result of factors described above, operating income increased 28.5% or $1.5 million, to
$6.8 million in the third quarter of 2010 as compared to $5.3 million in the third 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, restructuring expenses and debt
issuance costs, was $27.9 million for the third quarter of 2010 as compared to $30.0 million in the
third quarter of 2009.
LodgeNet Q3 2010 Earnings 4-4-4-4
Interest expense was $8.1 million in the third quarter of 2010 versus $9.5 million in the
third quarter of 2009. The decrease resulted primarily from the change in long-term debt at the
end of the period, which decreased to $390.5 million during the third quarter of 2010 from $496.0
million at the end of the third quarter of 2009. The average interest rate during the third
quarter of 2010 was 7.5% versus 7.1% for the third quarter 2009.
Net loss attributable to common stockholders was $(3.1) million for the third quarter of 2010,
a 53.1% improvement compared to a net loss attributable to common stockholders of $(6.6) million in
the prior year quarter. Net loss per share attributable to common stockholders was $(0.12) for the
third quarter of 2010 (basic and diluted), a 60.0% improvement compared to the net loss per share
attributable to common stockholders of $(0.30) (basic and diluted) in the third quarter of
2009.
For the third quarter of 2010, cash provided by operating activities was $20.0 million, a
2.8% decrease as compared to $20.6 million in the third quarter of 2009. Cash used for property
and equipment additions was $4.7 million during the third quarter of 2010 compared to $4.5 million
in the third quarter of 2009. In the quarter, we made debt repayments in the amount of $14.4
million. Additionally, we used $1.4 million of cash for preferred stock dividends in the third
quarter of 2010. The leverage ratio at the end of this quarter, calculated on a net debt basis,
was 3.40 times versus the covenant of 3.50 times. Cash as of September 30, 2010 was $8.1 million.
The Company installed 1,854 new rooms and converted 5,640 rooms to our High Definition
platform in the third quarter of 2010 as compared to 4,641 new rooms and 6,487 converted rooms
during the third quarter of 2009. The average investment per newly-installed HD room decreased to
$206 per room during the third quarter of 2010, compared to $339 per room during the full year of
2009. Factors contributing to the 39.2%, or $133 per room reduction, included declining component
and overhead costs during the third quarter of 2010 compared to the full year of 2009. The average
investment per converted HD room decreased by 22.8% to $186 during the third quarter of 2010,
compared to $241 during 2009, due to the same general factors noted above.
Outlook
For the fourth quarter of 2010, LodgeNet expects to report revenue in the range of $108.0
million to $112.0 million. This guidance reflects a 5% to 10% decline in Guest Entertainment
revenue on a per room basis, and strengthening revenues from our diversification efforts with
Healthcare, Advertising Services and System Sales, which are expected to continue delivering strong
double digit sales growth over the prior year. 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 $(0.24) to $(0.16).
The Company will also host a teleconference to discuss its results October 26th, 2010, at 11:00
A.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,
free 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 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. 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.
LodgeNet Q3 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 1.8 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, 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, 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 fourth quarter
2010 guidance, including revenue, adjusted operating cash flow, and net loss per common share, 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 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.
(See attached financial and operational tables)
LodgeNet Q3 2010 Earnings 6-6-6-6
LodgeNet Interactive Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(Dollar amounts in thousands, except share data)
Consolidated Balance Sheets (Unaudited)
(Dollar amounts in thousands, except share data)
| September 30, | December 31, | |||||||
| 2010 | 2009 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash |
$ | 8,110 | $ | 17,011 | ||||
Accounts receivable, net |
53,369 | 51,706 | ||||||
Other current assets |
10,917 | 9,189 | ||||||
Total current assets |
72,396 | 77,906 | ||||||
Property and equipment, net |
165,662 | 206,663 | ||||||
Debt issuance costs, net |
4,127 | 6,005 | ||||||
Intangible assets, net |
100,572 | 106,041 | ||||||
Goodwill |
100,081 | 100,081 | ||||||
Other assets |
12,043 | 11,658 | ||||||
Total assets |
$ | 454,881 | $ | 508,354 | ||||
Liabilities and Stockholders’ Deficiency |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 59,466 | $ | 40,040 | ||||
Current maturities of long-term debt |
5,046 | 6,101 | ||||||
Accrued expenses |
19,764 | 19,137 | ||||||
Deferred revenue |
18,146 | 17,531 | ||||||
Total current liabilities |
102,422 | 82,809 | ||||||
Long-term debt |
385,406 | 463,845 | ||||||
Other long-term liabilities |
21,495 | 32,687 | ||||||
Total liabilities |
509,323 | 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 September 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; 25,088,414 and 22,537,664 shares outstanding at September 30, 2010 and December 31, 2009, respectively |
252 | 225 | ||||||
Additional paid-in capital |
389,939 | 379,223 | ||||||
Accumulated deficit |
(433,532 | ) | (426,211 | ) | ||||
Accumulated other comprehensive loss |
(11,102 | ) | (24,225 | ) | ||||
Total stockholders’ deficiency |
(54,442 | ) | (70,987 | ) | ||||
Total liabilities and stockholders’ deficiency |
$ | 454,881 | $ | 508,354 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
LodgeNet Q3 2010 Earnings 6-6-6-6
LodgeNet Interactive Corporation and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(Dollar amounts in thousands, except share data)
Consolidated Statements of Operations (Unaudited)
(Dollar amounts in thousands, except share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues: |
||||||||||||||||
Hospitality and Advertising Services |
$ | 111,524 | $ | 119,955 | $ | 338,681 | $ | 365,329 | ||||||||
Healthcare |
2,270 | 1,167 | 6,236 | 5,867 | ||||||||||||
Total revenues |
113,794 | 121,122 | 344,917 | 371,196 | ||||||||||||
Direct costs and operating expenses: |
||||||||||||||||
Direct costs (exclusive of operating expenses and
depreciation and amortization shown separately below): |
||||||||||||||||
Hospitality and Advertising Services |
63,180 | 68,644 | 190,622 | 207,307 | ||||||||||||
Healthcare |
1,100 | 563 | 3,170 | 2,953 | ||||||||||||
Operating expenses: |
||||||||||||||||
System operations |
10,674 | 10,852 | 31,816 | 32,194 | ||||||||||||
Selling, general and administrative |
11,797 | 11,324 | 36,226 | 33,847 | ||||||||||||
Depreciation and amortization |
20,141 | 24,228 | 63,238 | 77,590 | ||||||||||||
Restructuring charge |
101 | 128 | 343 | 311 | ||||||||||||
Other operating (income) expense |
(3 | ) | 89 | 2 | (86 | ) | ||||||||||
Total direct costs and operating expenses |
106,990 | 115,828 | 325,417 | 354,116 | ||||||||||||
Income from operations |
6,804 | 5,294 | 19,500 | 17,080 | ||||||||||||
Other income and (expenses): |
||||||||||||||||
Interest expense |
(8,120 | ) | (9,521 | ) | (25,515 | ) | (29,214 | ) | ||||||||
Gain on extinguishment of debt |
— | — | — | 9,292 | ||||||||||||
Loss on early retirement of debt |
(137 | ) | (683 | ) | (898 | ) | (1,224 | ) | ||||||||
Other income |
5 | 166 | 232 | 486 | ||||||||||||
Loss before income taxes |
(1,448 | ) | (4,744 | ) | (6,681 | ) | (3,580 | ) | ||||||||
Provision for income taxes |
(226 | ) | (238 | ) | (640 | ) | (657 | ) | ||||||||
Net loss |
(1,674 | ) | (4,982 | ) | (7,321 | ) | (4,237 | ) | ||||||||
Preferred stock dividends |
(1,437 | ) | (1,645 | ) | (4,312 | ) | (1,677 | ) | ||||||||
Net loss attributable to common stockholders |
$ | (3,111 | ) | $ | (6,627 | ) | $ | (11,633 | ) | $ | (5,914 | ) | ||||
Net loss per common share (basic and diluted) |
$ | (0.12 | ) | $ | (0.30 | ) | $ | (0.48 | ) | $ | (0.26 | ) | ||||
Weighted average shares outstanding (basic and diluted) |
25,022,118 | 22,458,587 | 24,263,536 | 22,431,867 | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
LodgeNet Q3 2010 Earnings 8-8-8-8
LodgeNet Interactive Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(Dollar amounts in thousands)
Consolidated Statements of Cash Flows (Unaudited)
(Dollar amounts in thousands)
| Nine Months Ended September 30, | ||||||||
| 2010 | 2009 | |||||||
Operating activities: |
||||||||
Net loss |
$ | (7,321 | ) | $ | (4,237 | ) | ||
Adjustments to reconcile net loss to net cash provided
by operating activities: |
||||||||
Depreciation and amortization |
63,238 | 77,590 | ||||||
Gain on extinguishment of debt (non-cash) |
— | (9,292 | ) | |||||
Unrealized loss on derivative instruments |
1,688 | 412 | ||||||
Loss on early retirement of debt |
898 | 1,224 | ||||||
Share-based compensation and restricted stock |
1,348 | 1,331 | ||||||
Other, net |
265 | (675 | ) | |||||
Change in operating assets and liabilities: |
||||||||
Accounts receivable, net |
(1,564 | ) | 3,998 | |||||
Other current assets |
(1,906 | ) | 13 | |||||
Accounts payable |
19,668 | (1,270 | ) | |||||
Accrued expenses and deferred revenue |
662 | (5,364 | ) | |||||
Other |
(1,838 | ) | (2,005 | ) | ||||
Net cash provided by operating activities |
75,138 | 61,725 | ||||||
Investing activities: |
||||||||
Property and equipment additions |
(13,703 | ) | (15,441 | ) | ||||
Net cash used for investing activities |
(13,703 | ) | (15,441 | ) | ||||
Financing activities: |
||||||||
Repayment of long-term debt |
(83,740 | ) | (63,768 | ) | ||||
Payment of capital lease obligations |
(804 | ) | (1,148 | ) | ||||
Borrowings on revolving credit facility |
25,000 | — | ||||||
Repayments of revolving credit facility |
(25,000 | ) | — | |||||
Purchase of long-term debt |
— | (23,685 | ) | |||||
Proceeds from investment in long-term debt |
4,889 | 3,814 | ||||||
Proceeds from issuance of common stock, net of offering costs |
13,658 | — | ||||||
Proceeds from issuance of preferred stock, net of offering costs |
— | 53,696 | ||||||
Payment of dividends to preferred shareholders |
(4,312 | ) | — | |||||
Exercise of stock options |
49 | — | ||||||
Net cash used for financing activities |
(70,260 | ) | (31,091 | ) | ||||
Effect of exchange rates on cash |
(76 | ) | 109 | |||||
(Decrease) increase in cash |
(8,901 | ) | 15,302 | |||||
Cash at beginning of period |
17,011 | 10,800 | ||||||
Cash at end of period |
$ | 8,110 | $ | 26,102 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
LodgeNet Q3 2010 Earnings 8-8-8-8
LodgeNet Interactive Corporation and Subsidiaries
Supplemental Data
Supplemental Data
| 3rd Qtr ’10 | 2nd Qtr ’10 | 1st Qtr ’10 | 4th Qtr ’09 | 3rd Qtr ’09 | ||||||||||||||||
Room Base Statistics |
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Total Rooms Served (1) |
1,852,161 | 1,888,287 | 1,911,842 | 1,909,323 | 1,934,229 | |||||||||||||||
Total Guest Entertainment Rooms (2) |
1,706,884 | 1,738,311 | 1,764,363 | 1,779,979 | 1,807,933 | |||||||||||||||
Total HD Rooms (3) |
254,233 | 246,739 | 239,984 | 231,588 | 221,633 | |||||||||||||||
Percent of Total Guest Entertainment Rooms |
14.9 | % | 14.2 | % | 13.6 | % | 13.0 | % | 12.3 | % | ||||||||||
Total Television Programming (FTG) Rooms (4) |
1,051,264 | 1,070,081 | 1,083,837 | 1,087,860 | 1,095,719 | |||||||||||||||
Percent of Total Guest Entertainment Rooms |
61.6 | % | 61.6 | % | 61.4 | % | 61.1 | % | 60.6 | % | ||||||||||
Total Broadband Internet Rooms (5) |
185,153 | 195,294 | 200,139 | 201,936 | 206,914 | |||||||||||||||
Percent of Total Rooms Served |
10.0 | % | 10.3 | % | 10.5 | % | 10.6 | % | 10.7 | % | ||||||||||
Revenue Per Room Statistics (per month) |
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Hospitality and Advertising Services |
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Guest Entertainment |
$ | 12.53 | $ | 12.54 | $ | 12.99 | $ | 12.61 | $ | 14.01 | ||||||||||
Hotel Services |
6.56 | 6.48 | 6.48 | 6.05 | 6.00 | |||||||||||||||
System Sales and Related Services |
2.04 | 1.71 | 1.80 | 1.66 | 1.69 | |||||||||||||||
Advertising Services |
0.42 | 0.49 | 0.44 | 0.33 | 0.30 | |||||||||||||||
Total Hospitality and Advertising Services |
21.55 | 21.22 | 21.71 | 20.65 | 22.00 | |||||||||||||||
Based on average Guest Entertainment rooms |
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Summary Operating Results |
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(Dollar amounts in thousands) |
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Hospitality and Advertising Services Revenue: |
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Guest Entertainment |
$ | 64,833 | $ | 65,963 | $ | 69,082 | $ | 67,979 | $ | 76,369 | ||||||||||
Hotel Services |
33,951 | 34,125 | 34,486 | 32,596 | 32,699 | |||||||||||||||
System Sales and Related Services |
10,546 | 8,986 | 9,591 | 8,955 | 9,230 | |||||||||||||||
Advertising Services |
2,194 | 2,584 | 2,340 | 1,799 | 1,657 | |||||||||||||||
Total Hospitality and Advertising Services |
111,524 | 111,658 | 115,499 | 111,329 | 119,955 | |||||||||||||||
Healthcare |
2,270 | 1,413 | 2,553 | 1,967 | 1,167 | |||||||||||||||
Total Revenue |
$ | 113,794 | $ | 113,071 | $ | 118,052 | $ | 113,296 | $ | 121,122 | ||||||||||
Adjusted Operating Cash Flow (6) |
$ | 27,893 | $ | 27,873 | $ | 29,122 | $ | 28,016 | $ | 30,039 | ||||||||||
Reconciliation of Adjusted Operating Cash Flow to Income From Operations |
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(Dollar amounts in thousands) |
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Adjusted Operating Cash Flow |
$ | 27,893 | $ | 27,873 | $ | 29,122 | $ | 28,016 | $ | 30,039 | ||||||||||
Depreciation and Amortization |
(18,191 | ) | (18,975 | ) | (19,954 | ) | (20,483 | ) | (21,992 | ) | ||||||||||
Amortization of Acquired Intangibles |
(1,950 | ) | (1,950 | ) | (2,219 | ) | (2,236 | ) | (2,236 | ) | ||||||||||
Share Based Compensation and Restricted Stock |
(389 | ) | (648 | ) | (312 | ) | (394 | ) | (389 | ) | ||||||||||
Restructuring Charge |
(101 | ) | (239 | ) | (3 | ) | (292 | ) | (128 | ) | ||||||||||
Debt Issuance Costs |
(458 | ) | — | — | — | — | ||||||||||||||
Income From Operations |
$ | 6,804 | $ | 6,061 | $ | 6,634 | $ | 4,611 | $ | 5,294 | ||||||||||
| 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 87% 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, restructuring and reorganization expenses and debt issuance costs. |