SIOUX FALLS, S.D., Feb. 22, 2012 /PRNewswire/ -- LodgeNet
Interactive Corporation (Nasdaq: LNET) reported that annual revenue
for 2011 was $421.3 million compared
to $452.2 million in 2010.
Operating income increased 21.6% to $28.5 million versus $23.4
million during the prior year; while the Company narrowed
its net loss to only $(0.6) million
for 2011 as compared to $(11.7)
million for 2010. Net loss attributable to common
stockholders was $(0.25) per share, a
64.8% improvement over the $(0.71)
per share loss during 2010. Adjusted Operating Cash Flow (1)
for the year was $104.1 million
compared to $109.5 million for
2010.
(Logo:
http://photos.prnewswire.com/prnh/20080115/AQTU120LOGO)
For the quarter, LodgeNet reported quarterly revenue of
$100.1 million compared to
$107.3 million in the fourth quarter
of 2010. Operating income increased 15.1% to $4.5 million versus $3.9
million during last year's fourth quarter. The
Company earned $1.2 million of net
income (before preferred dividend) in the current fourth quarter
versus a net loss of $(4.4) million
one year ago. Net loss attributable to common stockholders
was $(0.3) million or $(0.01) per share, an improvement over the
$(5.8) million or $(0.23) per share loss during the fourth quarter
of 2010. Adjusted Operating Cash Flow for the quarter was
$22.7 million compared to
$24.6 million in the fourth quarter
of 2010.
The following financial
highlights are in thousands, except per share data:
|
|
|
|
|
Twelve
Months Ended December 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
Total revenue
|
|
$ 421,262
|
|
$ 452,172
|
|
Income from
operations
|
|
28,460
|
|
23,410
|
|
Net loss
|
|
(631)
|
|
(11,685)
|
|
Net loss attributable to common
stockholders
|
|
(6,375)
|
|
(17,435)
|
|
Net loss per common share (basic
and diluted)
|
|
$
(0.25)
|
|
$
(0.71)
|
|
|
|
|
|
|
|
Adjusted Operating Cash
Flow
|
|
$ 104,058
|
|
$ 109,529
|
|
Average shares outstanding
(basic and diluted)
|
|
25,083
|
|
24,455
|
|
|
|
|
|
|
|
|
|
Three Months
Ended December 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
Total revenue
|
|
$ 100,051
|
|
$ 107,255
|
|
Income from
operations
|
|
4,502
|
|
3,910
|
|
Net income (loss)
|
|
1,157
|
|
(4,364)
|
|
Net loss attributable to common
stockholders
|
|
(274)
|
|
(5,802)
|
|
Net loss per common share (basic
and diluted)
|
|
$
(0.01)
|
|
$
(0.23)
|
|
|
|
|
|
|
|
Adjusted Operating Cash
Flow
|
|
$ 22,691
|
|
$ 24,642
|
|
Average shares outstanding
(basic and diluted)
|
|
25,147
|
|
25,022
|
|
|
|
|
|
|
(1) 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.
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"2011 was an important transformational year for us," said
LodgeNet Chairman and CEO Scott C.
Petersen. "First, we launched several strategic growth
initiatives, including our 'Four Screen' strategy, our Mobile App
and our Envision interactive platform, which we believe will power
our growth in 2012 and beyond. Second, Hospitality revenue
per room increased year over year – a first since 2007 – which
signals the growing success of the revenue diversification strategy
we started several years ago. Lastly, the positive impact of
this transformation is being reflected in our profitability metrics
as Operating Income was up 22% and the Net to Common per share
improved 65% over 2010."
Company Highlights:
Mobile Application Launched. The LodgeNet Mobile
App was launched last month and has quickly become a traveler
favorite. The app allows travelers to turn their smart phones
in to a powerful remote for the in-room television as well as a
discovery device for accessing a variety of hotel and local
information. For hoteliers, the app provides a critical
vehicle to connect with their guests through a device that is
always on and central to their guests' travel experience.
Upon launch, the app rose to a top travel app in both the
Apple Store and Android Market given its ease of use and innovative
functionality. For 2012, the Company expects its mobile
footprint to grow to over 750,000 rooms.
Revenue and Profitability Per Room Growing. Revenue
per Hospitality room increased during the fourth quarter by 3.4%
versus last year. This represents the second consecutive
quarter with revenue per room growth vs. prior year. The
strong performance in the second half of 2011 also drove the full
year revenue per room to $21.36, an
improvement of 0.3% vs. last year. The success of the
Company's diversification efforts continues with revenue per room
from non-Guest Entertainment sources increasing 14.9% over last
year's fourth quarter. The profitability of our rooms also
improved during the year as we leveraged our operating scale and
continued to focus on reducing operating expenses. AOCF per
room for the year was $5.29, an
improvement of 3% over last year. For 2012, the Company
expects continued improvement in revenue per Hospitality room
served, with full year revenue per room to increase by
approximately 5%.
High Definition Rollout Accelerating. The Company's
interactive High Definition footprint grew by 15,000 rooms during
the fourth quarter to end the year at 309,000 rooms or 21% of the
Guest Entertainment room base. The fourth quarter growth
compared favorably to the 8,800 room growth in the third quarter.
Revenue performance in these rooms continues to far outpace
our non-HD rooms with over 60% higher revenue per room. The
capital investment required to install the HD platform was
$140 per room in 2011, a reduction of
50% over the last two years. We believe the demand for
interactive HD services will accelerate as hotels strive to improve
the guest experience and more hotels subscribe to our new,
cloud-connected Envision HD platform. This transition
represents a multi-year opportunity for LodgeNet as we migrate our
room base to the higher revenue and higher profit per room HD
offering. For 2012, the Company expects to install
approximately 100,000 rooms with interactive HD services.
Profitability Metrics Improving. Operating Income
for 2011 improved by 22% to $28.5
million due to significant reductions in operating expenses
and the improving revenue performance from our diversified
services. In 2011, operating expenses declined by 11% due to
reductions in headcount, lower depreciation expense and overall
reductions in discretionary spending. Net loss improved 95%
from a loss of $(11.7) million last
year to less than $(1.0) million this
year, while net income available to common shareholders improved by
65% from a loss of $(0.71) per share
to a loss of $(0.25) per share this
year. We remain focused on our improving bottom line
performance from our strategic growth initiatives and an ongoing
focus on controlling costs. For the full year 2012, the
Company expects to be profitable, with Net Income Available to
Common Shareholders in the range of $0.01 to
$0.20 per common share.
Hotels Embracing Envision Apps. The adoption of the
Company's Envision platform by hoteliers accelerated during the
final quarter as the Company signed contracts for 20,000 Envision
rooms bringing the total to 40,000 rooms under contract at year
end. As of today, we have achieved another milestone with 60,000
rooms now under contract with Envision. The cloud-connected
platform delivers a dynamic guest experience by providing essential
hotel services, valuable information about local attractions as
well as delivering the best in-room entertainment options.
Hotels focused on delivering consistent brand messages and engaging
their guests, understand that the HDTV has become a powerful guest
portal and the Envision platform can be customized to deliver the
vision and services unique to their brands and individual
properties. For 2012, we expect our Envision room base to
grow to over 130,000 rooms with over 30% signing up for
subscription-based, premium apps.
"We delivered another solid quarter and met or exceeded all of
our guidance metrics as we continued to execute on our operating
plan" said LodgeNet Senior Vice President and CFO Frank P. Elsenbast. "Our per-room metrics
improved throughout the year and highlight the success of our HDTV,
Envision, and advertising initiatives. Our operating model
remains strong as we delivered a 22% increase in operating income
and improved our operating margin for the full year."
"We have a unique and expanding platform at the crossroads of
technology and hospitality which we believe will power our growth
in the years ahead," continued Petersen. "No company in our
industry has the operating scale, technology resources and content
advantages that we possess. Working with our hotel customers
and the consumers they serve to better understand their needs, our
recently announced 'Four Screen' strategy presents us with proven
and impactful growth opportunities to financially benefit from the
hotel industry's transition to high definition television and
cloud-connected services. In addition, with the recent launch
of the LodgeNet Mobile App, we are uniquely qualified to deliver
innovation and new services that will take the traveler experience
to the next level."
RESULTS
FROM OPERATIONS
|
|
TWELVE
MONTHS ENDED DECEMBER 31, 2011 VERSUS
|
|
TWELVE MONTHS ENDED
DECEMBER 31, 2010
|
|
|
Total revenue for 2011 was $421.3
million, a $30.9 million or
6.8% decline, compared to the same period of 2010. Guest
Entertainment revenue decreased $36.5
million, partially offset by a $5.6
million increase from our non-Guest Entertainment products
and services. The decrease in Guest Entertainment revenue
resulted primarily from a 7.7% reduction in the average number of
Guest Entertainment rooms served and a 7.0% decline in Guest
Entertainment revenue per room. The rooms removed from our
base during the year generated 35% lower Guest Entertainment
revenue than our average room. The vast majority of these
rooms did not switch to a different interactive television ("iTV")
provider, but chose to limit their media offering to only free TV
content.
Guest Entertainment revenue per room benefited from an increase
in the sale of theatrical movies due to our VOD 2.0 marketing
initiatives and more popular Hollywood content through the second half of
the year. This improvement was offset by a decline in revenue
from non-theatrical movies, TV on-demand programming, music, video
games and TV internet access. On a per-room basis, total
Hospitality and Advertising Services revenue was 0.3% higher than
last year, driven by a 10.6% increase in revenue generated from
non-Guest Entertainment services.
Hotel Services revenue was $134.8
million in 2011, a 7.4% increase versus last year on a
revenue per room basis, driven primarily from price increases on
cable television programming versus the prior year. System
Sales & Related revenue per room improved 21.8%, driven
primarily by programming fees, equipment sales and termination fees
related to a group of limited service hotels which elected to only
provide free TV content. Additionally, our Healthcare
subsidiary generated $10.3 million of
revenue during the year, an increase of $1.8
million or 21.4%, resulting from a 31.2% increase in the
number of beds being served as well as higher revenue on current
year system sales, installations and related professional
services.
Total direct costs (exclusive of operating expenses and
depreciation and amortization discussed separately below) decreased
$16.7 million or 6.6%, to
$237.3 million in 2011 as compared to
$254.0 million in 2010. Direct
costs declined primarily due to lower royalties and hotel
commissions. Additionally, we had lower connectivity costs as
a result of bandwidth re-provisioning and renegotiating certain
supplier agreements. Advertising Services fixed costs also
decreased year over year, driven by lower satellite distribution
costs. Gross margin remained stable year over year, at 43.7%
for 2011 as compared to 43.8% for 2010.
System Operations and Selling, General and Administrative
("SG&A") expenses decreased $9.8
million or 10.7%, to $81.3
million in 2011 as compared to $91.1
million in 2010. Factors driving the improvement
period over period include reduced system repair costs,
professional services expenses, property taxes, facilities costs
and administrative labor from the workforce reductions and other
cost savings initiatives instituted at the beginning of the year.
Depreciation and Amortization expenses decreased 13.2%, to
$72.2 million in 2011 as compared to
$83.2 million in 2010. The
decline was due to assets becoming fully depreciated, lower cost
systems being installed, and lower capital investment levels over
the past three years.
As a result of factors described above, Operating Income
increased $5.1 million or 21.6% to
$28.5 million in 2011 as compared to
$23.4 million in 2010. Adjusted
Operating Cash Flow ("AOCF"), a non-GAAP measure, decreased to
$104.1 million for 2011 as compared
to $109.5 million in 2010. As a
percent of revenue, AOCF margin increased to 24.7% this year versus
24.2% for the prior year.
Outstanding debt was $363.3
million at the end of 2011 compared to $373.6 million at the end of the 2010. Cash
as of December 31, 2011 was
$14.0 million as compared to
$8.4 million on December 31, 2010. Interest expense
decreased $2.3 million or 7.0% to
$31.2 million in 2011 versus
$33.5 million in 2010. Our
average interest rate for 2011 was 8.4% versus 7.4% last year, due
to the 6.5% interest rate on our amended credit facility and our
interest rate swap obligations outstanding during the first half of
the year at just over 5%. The interest rate swap agreements
expired at the end of the second quarter of 2011.
For 2011, net loss before dividends was $(0.6) million, an improvement of 94.6% compared
to a net loss before dividends of $(11.7)
million for 2010. Net loss attributable to common
stockholders was $(6.4) million for
2011, a 63.4% improvement compared to a net loss of $(17.4) million in the prior year. Net loss per
share attributable to common stockholders was $(0.25) for 2011 (basic and diluted) versus a net
loss per share of $(0.71) in 2010
(basic and diluted). The results for 2011 included a
$3.3 million, or $0.13 per common share, Canadian tax benefit.
For 2011, cash provided by operating activities was $52.0 million as compared to $101.7 million in 2010. The reduction in
2011 cash flow was driven by a $44.1
million change in working capital as accounts payable
balances are returning to more normalized levels. Cash used
for capital investments was $27.3
million during 2011 compared to $21.8
million in 2010. During the year, the Company
installed and converted 39,144 High Definition interactive rooms, a
3.9% increase, as compared to 37,684 rooms during 2010. Year
over year, the average capital per High Definition room
installation declined 20.9%, to $140
per room. The decrease in the average cost per HD room was
primarily driven by lower component costs and reduced overhead
burden.
RESULTS
FROM OPERATIONS
|
|
THREE
MONTHS ENDED DECEMBER 31, 2011 VERSUS
|
|
THREE MONTHS ENDED
DECEMBER 31, 2010
|
|
|
Total revenue for the fourth quarter of 2011 was $100.1 million, a $7.2
million or 6.7% decline, compared to the same period of
2010. Guest Entertainment revenue decreased $8.9 million, partially offset by a $1.7 million increase from our non-Guest
Entertainment products and services. The decrease in Guest
Entertainment revenue resulted primarily from a 10.2% reduction in
the average number of Guest Entertainment rooms served and a 5.5%
decline in Guest Entertainment revenue per room. The rooms
removed from our base during the quarter generated 37% lower Guest
Entertainment revenue than our average room. The vast
majority of these rooms did not switch to a different interactive
television ("iTV") provider, but chose to limit their media
offering to only free TV content.
Guest Entertainment revenue per room benefited from an increase
in the sale of theatrical movies due to our VOD 2.0 marketing
initiatives and more popular Hollywood content. This improvement was
offset by a decline in revenue from non-theatrical movies, music,
video games and TV internet access. On a per-room basis,
total Hospitality and Advertising Services revenue was 3.4% higher
than last year's fourth quarter, driven by a 14.9% increase in
revenue generated from non-Guest Entertainment services.
Hotel Services revenue was $32.4
million in the fourth quarter, a 7.7% increase versus last
year on a revenue per room basis, driven primarily from price
increases on cable television programming versus the prior year
quarter. System Sales & Related revenue per room improved
39.3%, driven primarily by programming fees, equipment sales and
termination fees related to a group of limited service hotels which
elected to only provide free TV content. Additionally, our
Healthcare subsidiary generated $2.6
million of revenue during the fourth quarter, an increase of
$0.3 million or 12.0%, resulting from
a 31.2% increase in the number of beds being served.
Total direct costs (exclusive of operating expenses and
depreciation and amortization discussed separately below) decreased
$3.3 million or 5.6%, to $56.9 million in the fourth quarter of 2011 as
compared to $60.2 million in the
fourth quarter of 2010. Direct costs declined primarily due
to lower royalties and hotel commissions. Additionally, we
had lower connectivity costs as a result of bandwidth
re-provisioning and renegotiating certain supplier agreements.
Advertising Services fixed costs remained stable quarter over
quarter.
System Operations and Selling, General and Administrative
("SG&A") expenses decreased $2.1
million or 9.4%, to $20.9
million in the fourth quarter of 2011 as compared to
$23.0 million in the fourth quarter
of 2010. Factors driving the improvement period over period
include reduced property taxes, professional services expenses,
system repair costs and administrative labor from the workforce
reductions instituted at the beginning of the year.
Depreciation and Amortization expenses decreased 11.3%, to
$17.7 million in the fourth quarter
of 2011 as compared to $20.0 million
in the fourth quarter of 2010. The decline was due to assets
becoming fully depreciated, lower cost systems being installed and
lower capital investment levels over the past three years.
As a result of factors described above, Operating Income
increased $0.6 million or 15.1% to
$4.5 million in the fourth quarter of
2011 as compared to $3.9 million in
the fourth quarter of 2010. Adjusted Operating Cash Flow
("AOCF"), a non-GAAP measure, decreased to $22.7 million for the fourth quarter of 2011 as
compared to $24.6 million in the
fourth quarter of 2010. As a percent of revenue, AOCF margin
was 22.7% this quarter versus 23.0% for the prior year quarter.
Interest expense decreased $1.8
million or 22.8% to $6.2
million in the fourth quarter of 2011 versus $8.0 million in the fourth quarter of 2010.
Our average interest rate for the fourth quarter of 2011 was
6.6% versus 7.8% last year.
For the fourth quarter, net income before dividends was
$1.2 million, an improvement compared
to a net loss before dividends of $(4.4)
million for the fourth quarter of 2010. Net loss
attributable to common stockholders was $(0.3) million for the fourth quarter of 2011, a
95.3% improvement compared to a net loss of $(5.8) million in the prior year quarter.
Net loss per share attributable to common stockholders was
$(0.01) for the fourth quarter of
2011 (basic and diluted) versus a net loss per share of
$(0.23) in the fourth quarter of 2010
(basic and diluted). The fourth quarter 2011 results included
a $3.3 million, or $0.13 per common share, Canadian tax benefit.
For the fourth quarter of 2011, cash provided by operating
activities was $11.0 million as
compared to $26.6 million in the
fourth quarter of 2010. The reduction in 2011 cash flow was
driven by a $15.6 million change in
working capital as accounts payable balances are returning to more
normalized levels. Cash used for capital investments was
$10.6 million during the fourth
quarter of 2011 compared to $8.1
million in the fourth quarter of 2010. During the
quarter, the Company installed and converted 15,374 High Definition
interactive rooms, as compared to 15,404 rooms during the fourth
quarter of 2010.
Outlook
For 2012 guidance, LodgeNet will provide annual financial
guidance with guidance on additional key operating metrics to give
shareholders increased visibility into Company performance.
We believe that tracking progress on the key metrics cited below
will provide good transparency on the Company's main strategic
initiatives.
For 2012, the Company expects to report annual revenue in the
range of $415 million to $430
million. This guidance reflects an approximate 5% increase
in Hospitality Revenue per Room driven by improvements in Guest
Entertainment Revenue as well as continued double digit growth from
our diversification initiatives. Additionally, we expect
Adjusted Operating Cash Flow to be in a range from $95 million to $100 million on a full year
basis. We expect to be profitable on a full year basis with a
Net Income Available to Common Shareholders to be in the range of
$0.01 to $0.20 per common
share.
Operating Metric
|
2011 Results
|
2012 Guidance
|
|
Hospitality Rev/Room
|
$21.36
|
$22.50
|
|
Guest Entertainment
Rooms
|
1,477,000
|
1,400,000
|
|
High Def Rooms
|
309,000
|
410,000
|
|
Envision Rooms
|
18,500
|
130,000
|
|
Mobile Rooms
|
-0-
|
750,000
|
|
|
|
|
The Company will provide at least quarterly updates for these
metrics during 2012. It is our belief that these are the
initiatives that will drive the future value creation for LodgeNet
as the Company continues to diversify its revenue base and enhance
the services provided to the hospitality and healthcare businesses
and the consumers they serve.
The Company will host a teleconference to discuss its results
February 22, 2012, 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, 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 reorganization expenses and debt
issuance costs. Net Debt is our total outstanding debt less
our cash. These non-GAAP measures are key liquidity
indicators but should not be construed as an alternative to GAAP
measures or as a measure of our profitability or performance.
We provide information about these measures because we
believe it is a useful way for us, and our investors, to measure
our ability to satisfy cash needs, including one-time charges such
as restructuring, reorganization or integration, interest payments
on our debt, taxes and capital expenditures. In addition, Net
Debt provides an indication of our ability to remain in compliance
with financial covenants. Our method of computing these
measures may not be comparable to other similarly titled measures
of other companies.
About LodgeNet
LodgeNet Interactive Corporation is the leading provider of
interactive media and connectivity services to hospitality and
healthcare businesses and the consumers they serve. LodgeNet
Interactive serves approximately 1.6 million hotel rooms worldwide
in addition to healthcare facilities throughout the United States. The Company's services
include: Interactive Television, Broadband, Mobile and Advertising
Media Solutions along with nationwide technical and professional
support services. LodgeNet Interactive Corporation owns and
operates businesses under the industry leading brands: LodgeNet,
The Hotel Networks and LodgeNet Healthcare. LodgeNet Interactive is
listed on NASDAQ and trades under the symbol LNET. For more
information, please visit www.lodgenet.com.
Special Note Regarding Forward-Looking Statement
Certain statements in this press release constitute
"forward-looking statements." When used in this press
release, the words "intends," "expects," "estimates," "believes,"
and similar expressions, and statements which are made in the
future tense or refer to future events or developments including,
without limitation, those related to our 2012 guidance, including
revenue, Adjusted Operating Cash Flow, Net Income Available to
Common Shareholders, Hospitality Revenue Per Room, anticipated HD
and Envision room installations, and number of rooms with our
mobile footprint, 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, the LodgeNet logo, Envision, and PowerPortal are
trademarks or registered trademarks 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
Interactive Corporation and Subsidiaries
|
|
Consolidated
Balance Sheets
|
|
(Dollar
amounts in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
2011
|
|
2010
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash
|
|
$
14,019
|
|
$
8,381
|
|
Accounts receivable,
net
|
|
53,963
|
|
49,332
|
|
Other current
assets
|
|
11,021
|
|
12,728
|
|
Total current
assets
|
|
79,003
|
|
70,441
|
|
|
|
|
|
|
|
Property and equipment,
net
|
|
119,164
|
|
156,917
|
|
Debt issuance costs,
net
|
|
4,373
|
|
3,681
|
|
Intangible assets,
net
|
|
91,642
|
|
99,005
|
|
Goodwill
|
|
100,081
|
|
100,081
|
|
Other assets
|
|
14,409
|
|
13,881
|
|
Total assets
|
|
$
408,672
|
|
$
444,006
|
|
|
|
|
|
|
|
Liabilities
and Stockholders’ Deficiency
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
48,255
|
|
$
60,303
|
|
Current maturities of
long-term debt
|
|
10,395
|
|
4,807
|
|
Accrued
expenses
|
|
18,813
|
|
22,327
|
|
Fair value of derivative
instruments
|
|
-
|
|
10,353
|
|
Deferred
revenue
|
|
19,949
|
|
23,168
|
|
Total current
liabilities
|
|
97,412
|
|
120,958
|
|
|
|
|
|
|
|
Long-term debt
|
|
352,905
|
|
368,832
|
|
Other long-term
liabilities
|
|
9,296
|
|
8,565
|
|
Total
liabilities
|
|
459,613
|
|
498,355
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
deficiency:
|
|
|
|
|
|
Preferred stock, $.01 par
value, 5,000,000 shares authorized;
|
|
|
|
|
|
Series B cumulative
perpetual convertible, 10%, 57,500 issued; 57,266 and
|
|
|
|
|
|
57,500 outstanding at
December 31, 2011 and December 31, 2010, respectively
|
|
|
|
|
|
(liquidation preference of
$1,000 per share; $57,266,000 and $57,500,000 total
at
|
|
|
|
|
|
December 31, 2011 and
December 31, 2010, respectively)
|
|
1
|
|
1
|
|
Common stock, $.01 par
value, 50,000,000 shares authorized;
|
|
|
|
|
|
25,272,734 and 25,088,539
shares outstanding at December 31, 2011
|
|
|
|
|
|
and December 31, 2010,
respectively
|
|
253
|
|
251
|
|
Additional paid-in
capital
|
|
384,843
|
|
388,961
|
|
Accumulated
deficit
|
|
(438,527)
|
|
(437,896)
|
|
Accumulated other
comprehensive income (loss)
|
|
2,489
|
|
(5,666)
|
|
Total stockholders’
deficiency
|
|
(50,941)
|
|
(54,349)
|
|
Total liabilities and
stockholders’ deficiency
|
|
$
408,672
|
|
$
444,006
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated
financial statements.
|
|
|
|
|
|
|
LodgeNet
Interactive Corporation and Subsidiaries
|
|
Consolidated
Statements of Operations
|
|
(Dollar
amounts in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
December 31,
|
|
|
|
2011
|
|
2010
|
|
2009
|
|
Revenues:
|
|
|
|
|
|
|
|
Hospitality and
Advertising Services
|
|
$ 410,919
|
|
$ 443,654
|
|
$ 476,658
|
|
Healthcare
|
|
10,343
|
|
8,518
|
|
7,834
|
|
Total revenues
|
|
421,262
|
|
452,172
|
|
484,492
|
|
|
|
|
|
|
|
|
|
Direct costs and operating
expenses:
|
|
|
|
|
|
|
|
Direct costs (exclusive of
operating expenses and
|
|
|
|
|
|
|
|
depreciation and
amortization shown separately below):
|
|
|
|
|
|
|
|
Hospitality and
Advertising Services
|
|
232,181
|
|
249,745
|
|
269,997
|
|
Healthcare
|
|
5,128
|
|
4,290
|
|
3,918
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
System
operations
|
|
39,386
|
|
42,940
|
|
42,605
|
|
Selling, general and
administrative
|
|
41,918
|
|
48,151
|
|
45,494
|
|
Depreciation and
amortization
|
|
72,235
|
|
83,236
|
|
100,309
|
|
Restructuring
charge
|
|
1,923
|
|
421
|
|
603
|
|
Other operating expense
(income)
|
|
31
|
|
(21)
|
|
(126)
|
|
Total direct costs and
operating expenses
|
|
392,802
|
|
428,762
|
|
462,800
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
28,460
|
|
23,410
|
|
21,692
|
|
|
|
|
|
|
|
|
|
Other income and
(expenses):
|
|
|
|
|
|
|
|
Interest
expense
|
|
(31,206)
|
|
(33,537)
|
|
(38,092)
|
|
Gain on extinguishment of
debt
|
|
-
|
|
-
|
|
9,292
|
|
Loss on early retirement
of debt
|
|
(158)
|
|
(1,050)
|
|
(1,537)
|
|
Other (expense)
income
|
|
(349)
|
|
326
|
|
(747)
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(3,253)
|
|
(10,851)
|
|
(9,392)
|
|
Benefit (provision) for income
taxes
|
|
2,622
|
|
(834)
|
|
(763)
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(631)
|
|
(11,685)
|
|
(10,155)
|
|
Preferred stock
dividends
|
|
(5,744)
|
|
(5,750)
|
|
(3,114)
|
|
|
|
|
|
|
|
|
|
Net loss attributable to common
stockholders
|
|
$
(6,375)
|
|
$
(17,435)
|
|
$
(13,269)
|
|
|
|
|
|
|
|
|
|
Net loss per common share (basic
and diluted)
|
|
$
(0.25)
|
|
$
(0.71)
|
|
$
(0.59)
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding (basic and diluted)
|
|
25,082,921
|
|
24,454,796
|
|
22,439,325
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated
financial statements.
|
|
|
|
|
|
|
|
|
LodgeNet
Interactive Corporation and Subsidiaries
|
|
Consolidated
Statements of Cash Flows
|
|
(Dollar
amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
December 31,
|
|
|
|
2011
|
|
2010
|
|
2009
|
|
Operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$ (631)
|
|
$(11,685)
|
|
$(10,155)
|
|
Adjustments to reconcile
net loss to net cash provided
|
|
|
|
|
|
|
|
by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
72,235
|
|
83,236
|
|
100,309
|
|
Gain on extinguishment of
debt (non-cash)
|
|
-
|
|
-
|
|
(9,292)
|
|
(Gain) loss on derivative
instruments
|
|
(1,511)
|
|
1,511
|
|
-
|
|
Loss on early retirement
of debt
|
|
158
|
|
1,050
|
|
1,537
|
|
Share-based compensation
and restricted stock
|
|
1,618
|
|
1,762
|
|
1,724
|
|
Deferred tax
benefit
|
|
(3,256)
|
|
-
|
|
-
|
|
Other, net
|
|
1,083
|
|
304
|
|
588
|
|
Change in operating assets
and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable,
net
|
|
(6,406)
|
|
2,571
|
|
12,385
|
|
Other current
assets
|
|
2,135
|
|
(1,063)
|
|
1,173
|
|
Accounts
payable
|
|
(11,980)
|
|
21,410
|
|
(5,713)
|
|
Accrued expenses and
deferred revenue
|
|
(2,374)
|
|
4,268
|
|
(4,981)
|
|
Other
|
|
969
|
|
(1,658)
|
|
(1,403)
|
|
Net cash provided by operating
activities
|
|
52,040
|
|
101,706
|
|
86,172
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
Property and equipment
additions
|
|
(27,318)
|
|
(21,825)
|
|
(21,341)
|
|
Net cash used for investing
activities
|
|
(27,318)
|
|
(21,825)
|
|
(21,341)
|
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
Repayment of long-term
debt
|
|
(10,525)
|
|
(101,408)
|
|
(91,109)
|
|
Payment of capital lease
obligations
|
|
(717)
|
|
(1,031)
|
|
(1,437)
|
|
Borrowings on revolving
credit facility
|
|
75,000
|
|
45,000
|
|
-
|
|
Repayments of revolving
credit facility
|
|
(75,000)
|
|
(45,000)
|
|
-
|
|
Debt issuance
costs
|
|
(2,658)
|
|
-
|
|
-
|
|
Purchase of long-term
debt
|
|
-
|
|
-
|
|
(23,685)
|
|
Proceeds from investment
in long-term debt
|
|
614
|
|
5,921
|
|
5,410
|
|
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
|
|
(5,750)
|
|
(5,750)
|
|
(1,677)
|
|
Exercise of stock
options
|
|
9
|
|
49
|
|
2
|
|
Proceeds from issuance of
stock warrants
|
|
-
|
|
46
|
|
-
|
|
Net cash used for financing
activities
|
|
(19,027)
|
|
(88,515)
|
|
(58,800)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rates on
cash
|
|
(57)
|
|
4
|
|
180
|
|
Increase (decrease) in
cash
|
|
5,638
|
|
(8,630)
|
|
6,211
|
|
Cash at beginning of
period
|
|
8,381
|
|
17,011
|
|
10,800
|
|
|
|
|
|
|
|
|
|
Cash at end of period
|
|
$14,019
|
|
$ 8,381
|
|
$ 17,011
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated
financial statements.
|
|
|
|
|
|
|
|
|
LodgeNet
Interactive Corporation and Subsidiaries
|
|
Consolidated
Statements of Operations
|
|
(Dollar
amounts in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
|
|
2011
|
|
2010
|
|
Revenues:
|
|
|
|
|
|
Hospitality and
Advertising Services
|
|
$
97,496
|
|
$ 104,973
|
|
Healthcare
|
|
2,555
|
|
2,282
|
|
Total revenues
|
|
100,051
|
|
107,255
|
|
|
|
|
|
|
|
Direct costs and operating
expenses:
|
|
|
|
|
|
Direct costs (exclusive of
operating expenses and
|
|
|
|
|
|
depreciation and
amortization shown separately below):
|
|
|
|
|
|
Hospitality and
Advertising Services
|
|
55,626
|
|
59,124
|
|
Healthcare
|
|
1,258
|
|
1,119
|
|
Operating
expenses:
|
|
|
|
|
|
System
operations
|
|
9,817
|
|
11,124
|
|
Selling, general and
administrative
|
|
11,065
|
|
11,924
|
|
Depreciation and
amortization
|
|
17,736
|
|
19,998
|
|
Restructuring
charge
|
|
26
|
|
79
|
|
Other operating expense
(income)
|
|
21
|
|
(23)
|
|
Total direct costs and
operating expenses
|
|
95,549
|
|
103,345
|
|
|
|
|
|
|
|
Income from
operations
|
|
4,502
|
|
3,910
|
|
|
|
|
|
|
|
Other income and
(expenses):
|
|
|
|
|
|
Interest
expense
|
|
(6,194)
|
|
(8,023)
|
|
Loss on early retirement
of debt
|
|
-
|
|
(152)
|
|
Other (expense)
income
|
|
(498)
|
|
96
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(2,190)
|
|
(4,169)
|
|
Benefit (provision) for income
taxes
|
|
3,347
|
|
(195)
|
|
|
|
|
|
|
|
Net income (loss)
|
|
1,157
|
|
(4,364)
|
|
Preferred stock
dividends
|
|
(1,431)
|
|
(1,438)
|
|
|
|
|
|
|
|
Net loss attributable to common
stockholders
|
|
$
(274)
|
|
$
(5,802)
|
|
|
|
|
|
|
|
Net loss per common share (basic
and diluted)
|
|
$
(0.01)
|
|
$
(0.23)
|
|
|
|
|
|
|
|
Weighted average shares
outstanding (basic and diluted)
|
|
25,146,733
|
|
25,022,342
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated
financial statements.
|
|
|
|
|
|
|
LodgeNet Interactive Corporation
and Subsidiaries
|
|
Supplemental Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4th Qtr
'11
|
|
3rd Qtr
'11
|
|
2nd Qtr
'11
|
|
1st Qtr
'11
|
|
4th Qtr
'10
|
|
Room Base Statistics (at quarter
end)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Rooms Served
(1)
|
|
1,621,529
|
|
1,693,745
|
|
1,753,132
|
|
1,797,336
|
|
1,829,712
|
|
|
Total Guest Entertainment Rooms
(2)
|
|
1,477,442
|
|
1,551,204
|
|
1,608,079
|
|
1,649,296
|
|
1,680,322
|
|
|
Total HD Rooms (3)
|
|
309,239
|
|
294,396
|
|
285,626
|
|
273,309
|
|
270,384
|
|
|
Percent of Total Guest
Entertainment Rooms
|
|
20.9%
|
|
19.0%
|
|
17.8%
|
|
16.6%
|
|
16.1%
|
|
|
Total Envision Rooms
|
|
18,542
|
|
5,087
|
|
3,785
|
|
1,099
|
|
-
|
|
|
Percent of Total Guest
Entertainment Rooms
|
|
1.3%
|
|
0.3%
|
|
0.2%
|
|
0.1%
|
|
0.0%
|
|
|
Total Television Programming
(FTG) Rooms (4)
|
|
938,270
|
|
960,965
|
|
989,133
|
|
1,013,551
|
|
1,030,437
|
|
|
Percent of Total Guest
Entertainment Rooms
|
|
63.5%
|
|
61.9%
|
|
61.5%
|
|
61.5%
|
|
61.3%
|
|
|
Total Broadband Internet Rooms
(5)
|
|
143,491
|
|
150,581
|
|
164,812
|
|
171,713
|
|
178,047
|
|
|
Percent of Total Rooms
Served
|
|
8.8%
|
|
8.9%
|
|
9.4%
|
|
9.6%
|
|
9.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Per Room Statistics (per
month)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hospitality and Advertising
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
Guest
Entertainment
|
|
$
10.91
|
|
$
11.88
|
|
$
11.56
|
|
$
11.79
|
|
$
11.55
|
|
|
Hotel Services
|
|
7.10
|
|
7.03
|
|
6.98
|
|
6.93
|
|
6.59
|
|
|
System Sales and Related
Services
|
|
2.73
|
|
2.43
|
|
2.09
|
|
1.94
|
|
1.96
|
|
|
Advertising
Services
|
|
0.61
|
|
0.50
|
|
0.46
|
|
0.51
|
|
0.54
|
|
|
Total Hospitality and Advertising Services
|
|
$
21.35
|
|
$
21.84
|
|
$
21.09
|
|
$
21.17
|
|
$
20.64
|
|
|
Based on average Guest
Entertainment rooms
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Operating
Results
|
|
|
|
|
|
|
|
|
|
|
|
(Dollar amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hospitality and Advertising
Services Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Guest
Entertainment
|
|
$ 49,807
|
|
$ 56,691
|
|
$ 56,691
|
|
$ 58,922
|
|
$ 58,738
|
|
|
Hotel Services
|
|
32,426
|
|
33,555
|
|
34,173
|
|
34,679
|
|
33,526
|
|
|
System Sales and Related
Services
|
|
12,471
|
|
11,587
|
|
10,270
|
|
9,700
|
|
9,960
|
|
|
Advertising
Services
|
|
2,792
|
|
2,366
|
|
2,255
|
|
2,534
|
|
2,749
|
|
|
Total Hospitality and
Advertising Services
|
|
97,496
|
|
104,199
|
|
103,389
|
|
105,835
|
|
104,973
|
|
|
Healthcare
|
|
2,555
|
|
2,648
|
|
3,246
|
|
1,894
|
|
2,282
|
|
|
Total Revenue
|
|
$ 100,051
|
|
$ 106,847
|
|
$ 106,635
|
|
$ 107,729
|
|
$ 107,255
|
|
|
Adjusted Operating Cash Flow
(6)
|
|
$ 22,691
|
|
$ 27,010
|
|
$ 26,419
|
|
$ 27,938
|
|
$ 24,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted
Operating Cash Flow to Income From Operations
|
|
(Dollar amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Cash
Flow
|
|
$ 22,691
|
|
$ 27,010
|
|
$ 26,419
|
|
$ 27,938
|
|
$ 24,642
|
|
|
Depreciation and
Amortization
|
|
(16,006)
|
|
(15,344)
|
|
(16,052)
|
|
(17,714)
|
|
(18,048)
|
|
|
Amortization of Acquired
Intangibles
|
|
(1,730)
|
|
(1,731)
|
|
(1,731)
|
|
(1,927)
|
|
(1,950)
|
|
|
Share Based Compensation and
Restricted Stock
|
|
(427)
|
|
(324)
|
|
(455)
|
|
(414)
|
|
(413)
|
|
|
Restructuring Charge
|
|
(26)
|
|
(732)
|
|
(3)
|
|
(1,160)
|
|
(79)
|
|
|
Debt Issuance Costs
|
|
-
|
|
-
|
|
-
|
|
178
|
|
(242)
|
|
|
Income From
Operations
|
|
$
4,502
|
|
$
8,879
|
|
$
8,178
|
|
$
6,901
|
|
$
3,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 91% 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE LodgeNet Interactive Corporation