Lodgenet Interactive: modeFinance Credit Report

If you want to know more, ASKMORE TM

modeFinance’s credit report.

Almost every day millions of peoplearound the world are wondering the realcreditworthiness of the companies withwhich they are in business. Every daythese questions remain unanswered.modeFinance

TM

now aims to answer thesequestions in a simple, complete andimmediate way.

ASKMORETM

is the modeFinanceTM

product which gives the chance toevaluate the credit risk for every companyfrom all around the world.

ASKMORETM plans 3 types of reports:

s-peek Basic Plus

ASKMORETM

Basic:This report includes modeFinance TM

’ sMORE Credit Ratings and MORE CreditLimit to help you in the decision making.It covers all essential information includingfinancial statements of the last three yearsand descriptive information including tradedescription and sector analysis.This report type is ideally suited fordecisions on transactions with each levelof credit risk.

modeFinanceTM HeadquarterBuilding A - AREA Science ParkPadriciano 99 - 34149 Trieste - ItalyPh.: +39 040 375 5337Fax: +39 040 375 [email protected]

askMORETM is a registered mark of modeFinanceTM

LODGENET INTERACTIVECORPORATIONTuesday, 29 January 2013

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D C CC CCC B BB BBB A AA AAA

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D C CC CCC B BB BBB A AA AAAnot

available

non return extremlypathological

pathological highdanger

weak sufficient adequate good very

strongextremely

strong

Company name LODGENET INTERACTIVE CORPORATION

Identification number US460371161

Country United States of America

ZIP code and city 57107 - SIOUX FALLS

Address 3900, WEST INNOVATION STREET

+1 605 988 1000

www.lodgenet.com

Not available

Legal form Not available

Account Consolidated

Incorporation date 1980

NACE 2 Sector 6020 - Television programming and broadcasting activities

Listed

Status Active

MORE Credit limit 1,400,000 e

31/12/2011 31/12/2010 31/12/2009

Turnover (th e) 325,575 338,225 336,313

Rating CCC CCC CCC

Probability of default 16.00% 16.00% 16.00%

Confidence Level 100% 100% 100%

Solvency ratios

Leverage ratio -9.02 -9.17 -8.16

Total asset/Total liabilities 0.89 0.89 0.88

Liquidity ratios

Current Ratio 0.81 0.58 0.94

Quick Ratio 0.81 0.58 0.94

Profitability and economic equili-

brium ratios

Return on investement ROI (%) 6.84 5.11 5.65

Return on equity ROE (%) -12.51 -32.08 -18.69

Asset turnover 1.03 1.02 0.95

Interest paid weight 1.12 1.48 1.33

Gross Profit/Operating revenue 0.43 0.44 0.43

Interest Coverage ratios

EBIT interest coverage ratio 0.97 0.71 0.59

Analysis and trend of financial

strength


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modeFinance TM srlVAT number [email protected]

Area Science Park,Padriciano 99. 34149 Trieste, ItalyTel. +39 040 3755337Fax +39 040 3756741

Sector Analysis

Company Healthy Balanced Vulnerable Risky

Solvency ratios

Leverage ratio -9.02 0.40 1.36 2.05 -1.72

Total asset/Total liabilities 0.89 3.47 1.73 1.17 0.78

Liquidity ratios

Current Ratio 0.81 2.54 1.39 0.97 0.65

Quick Ratio 0.81 2.44 1.20 0.92 0.54

Profitability and economic equilibrium ratios

Return on investement ROI (%) 6.84 8.95 4.66 0.06 -24.91

Return on equity ROE (%) -12.51 9.06 5.37 -13.89 -110.40

Asset turnover 1.03 0.85 0.77 0.74 1.06

Interest paid weight 1.12 0.01 0.11 0.00 -0.04

Gross Profit/Operating revenue 0.43 0.50 0.43 0.37 0.17

Interest Coverage ratios

EBIT interest coverage ratio 0.97 141.60 5.72 -0.22 -17.55

Cash Conversion Cycle (days)

Days Sales Of Inventory (DIO) 0 4 8 8 59

Days Sales Outstanding (DSO) 47 67 52 47 77

Days Payable Outstanding (DPO) 42 10 16 29 65

Cash Conversion Cycle (DIO + DSO - DPO) 5 43 40 25 28

Numer of analyzed companies - 130 230 107 42

(Average) Rating CCC A BBB CCC CC

The sector has been chosen according to:

international companies in the sector NACE 2 6020 with financial data of year 2011.


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Sector Analysis - Graphs


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Balance Sheet

BALANCE SHEET (th e) 31/12/2011 31/12/2010 31/12/2009

Accounting practice Local GAAP Local GAAP Local GAAP

Exchange rate USD - EUR 0.77286 0.748 0.69416

Number of months 12 12 12

Total assets 315,845 332,116 352,876

Fixed assets 254,787 279,427 298,798

Intangible fixed assets 148,175 148,916 143,081

Tangible fixed assets 92,097 117,374 143,456

Other fixed assets 14,516 13,136 12,261

Current assets 61,058 52,690 54,079

Stocks 0 0 0

Debtors 41,706 36,900 35,892

Other current assets 19,352 15,790 18,187

Cash & cash equivalent 10,835 6,269 11,808

Shareholders funds -39,370 -40,653 -49,276

Capital 196 188 157

Other shareholders funds -39,566 -40,842 -49,433

Total liabilities 355,215 372,770 402,152

Non current liabilities 279,930 282,293 344,670

Long term debt 272,745 275,886 321,980

Other non-current liabilities 7,184 6,407 22,690

Current liabilities 75,286 90,477 57,482

Loans 8,034 3,596 4,235

Creditors 37,294 45,107 27,794

Other current liabilities 29,957 41,774 25,453

Total shareh. funds & liab. 315,845 332,116 352,876

NET DEBT (th e) 31/12/2011 31/12/2010 31/12/2009

Short term debts 8,034 3,596 4,235

Long term debt 272,745 275,886 321,980

Cash & cash equivalent 10,835 6,269 11,808

Net debt 269,944 273,213 314,407

31/12/2011 31/12/2010 31/12/2009

Working capital - - -

Net Current Assets -14,228 -37,787 -3,403

31/12/2011 31/12/2010 31/12/2009

Days Sales Of Inventory (DIO) 0 0 0

Days Sales Outstanding (DSO) 47 40 39

Days Payable Outstanding (DPO) 42 49 30

Cash Conversion Cycle (DIO + DSO - DPO) 5 -9 9


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Income Statement

INCOME STATEMENT (th e) 31/12/2011 31/12/2010 31/12/2009

Accounting practice Local GAAP Local GAAP Local GAAP

Exchange rate USD - EUR 0.77286 0.748 0.69416

Number of months 12 12 12

Sales 325,575 338,225 336,313

Revenues growth (%) -4 1 -

Other revenues +/- variation in inventories and contract in progress + Fixed assets

own construction capitalized0 0 0

Operating revenue / turnover 325,575 338,225 336,313

Total operating costs 302,094 320,399 320,836

Costs growth (%) -6 0 -

Service costs - - -

Material costs - - -

Costs of employees - - -

EBITDA 77,968 79,162 83,989

Depreciation 54,486 61,336 68,513

EBIT 23,482 17,826 15,476

Financial P/L -25,996 -25,942 -21,996

Financial revenue - - -

Financial expenses 25,996 25,942 21,996

Interest paid 24,118 25,086 26,442

P/L before tax -2,514 -8,117 -6,520

Extr. and other P/L -4,439 -4,301 -2,162

Extr. and other revenue - - -

Extr. and other expenses - - -

P/L before tax + Extr. and other P/L -6,953 -12,418 -8,681

Taxation -2,026 624 530

P/L for period -4,927 -13,041 -9,211

31/12/2011 31/12/2010 31/12/2009

Costs of Good Sold 184,747 190,943 191,256

Gross Profit 140,829 147,282 145,056

Other Operating Expenses 117,347 129,456 129,580

31/12/2011 31/12/2010 31/12/2009

Cash flow 49,559 48,295 59,302

Added value - - -

31/12/2011 31/12/2010 31/12/2009

Number of employees 963 1,049 1,091


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Evolutions and trends


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Qualitative information

Full overview The company provides interactive media and connectivity solutions for the hospitality industry in the United States,

Canada, and Mexico. It was founded as Satellite Movie Company in 1980 and is headquartered in Sioux Falls,

South Dakota. The company’s guest entertainment services include on - demand movies, on - demand games,

music and music video, Internet on television, and television on - demand. It also offers satellite - delivered

cable television programming; and broadband Internet access, service, and support; and system sales, service,

and support solutions. In addition, the company provides various solutions, including the LodgeNetRX interactive

patient television system, patient education solutions, clinical systems integration applications, and cable television

hardware and programming; and offers professional, technical, and installation services to the healthcare industry.

As of December 2009, it provided interactive media and connectivity solutions to approximately 1.9 million hotel

rooms; and advertising media services to approximately 1.2 million hotel rooms, as well as served 45 healthcare

facilities, representing approximately 9,200 beds. The company is the leading provider of media and connectivity

solutions designed to meet the unique needs of hospitality, healthcare and other guest - based businesses.

History Founded as Satellite Movie Company.

Primary business line Provides interactive media and connectivity solutions for the hospitality industry.

Secondary business line Not available.

Main activity Services.

Secondary activity Not available.

Main products and services Interactive media and connectivity solutions.

Size estimate Leading provider of media and connectivity solutions designed to meet the unique needs of hospitality, healthcare

and other guest - based businesses.

Strategy, organization and policy Not available.

Strategic alliances Not available.

Membership of a network Not available.

Main brand names Not available.

Main domestic country United States Of America.

Main foreign countries or regions Not available.

Main production sites Not available.

Main distribution sites Not available.

Main sales representation sites Not available.

Main customers Not available.


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Auditor/Advisor/Bank

name type address

PRICEWATERHOUSECOOPERS LLP Auditor -

Computershare Investor Services Transfer Agent -

Board

name date of birth nationality function

Mr. Martin L Abbott - United States Independent Director

Mr. Richard L Battista - - President, Chief Executive Officer, Director

Mr. J. Scott Kirby - - Independent Director

Mr. Thomas N Matlack - - Independent Director

Mrs. Vikki I Pachera - - Independent Director

Mr. Scott C Petersen - - Director

Mr. Scott H Shlecter - - Lead Independent Director

Sharehoders (the first twenty shareholders ordered by Direct %)

PAR CAPITAL MANAGEMENT INC via its funds Rating:

Country ISO code US Operating Revenue (MIL $) 0

NACE Rev. 2, Core code - Total Assets (MIL $) 4.69

Direct % - Number of Employees 0

Total % 5.70 Information date 2012/10

Address : Not available

CUBAN MARK Rating:

Country ISO code US Operating Revenue (MIL $) -

NACE Rev. 2, Core code - Total Assets (MIL $) -

Direct % 3.60 Number of Employees -

Total % - Information date 2012/09


MITTLEMAN BROTHERS LLC via its funds Rating:

Country ISO code US Operating Revenue (MIL $) 0.16






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D. E. SHAW INVESTMENTS, L.P. via its funds Rating:






MAST CREDIT OPPORTUNITIES I MASTER FUND LTD Rating:



Direct % 2.90 Number of Employees 0



PENN CAPITAL MANAGEMENT CO INC. via its funds Rating:






MAST CAPITAL MANAGEMENT LLC via its funds Rating:






MANULIFE FINANCIAL CORP via its funds Rating:

Country ISO code CA Operating Revenue (MIL $) 23430.74





BLACKROCK, INC. via its funds Rating: BB


NACE Rev. 2, Core code - Total Assets (MIL $) 179896




GOLDMAN SACHS GROUP, INC via its funds Rating:







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VANGUARD GROUP, INC. THE via its funds Rating:






PETERSEN SCOTT C. Rating:



Direct % 1.21 Number of Employees -



MAST OC I MASTER FUND LP Rating:

Country ISO code KY Operating Revenue (MIL $) -


Direct % 1.20 Number of Employees 0



DIMENSIONAL FUND ADVISORS LP via its funds Rating: A






UBS AG via its funds Rating:

Country ISO code CH Operating Revenue (MIL $) 10970.68





STATE OF CALIFORNIA via its funds Rating:



Direct % - Number of Employees -



ALGERT COLDIRON INVESTORS, LLC via its funds Rating:







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BENNETT JAMES DONALD via its funds Rating:



Direct % - Number of Employees -



PORTER ORLIN LLC via its funds Rating:






NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY (THE) via its funds Rating:






Subsidiaries (the first twenty subsidiaries ordered by Direct %)

HOTEL DIGITAL NETWORK INC Rating:



Direct % MO Number of Employees -


LODGENET HEALTHCARE, INC. Rating:





LODGENET INTERACTIVE CANADA CORPORATION Rating:

Country ISO code CA Operating Revenue (MIL $) -




LODGENET INTERNATIONAL Rating:






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LODGENET STAYONLINE, INC. Rating:



Direct % MO Number of Employees 2


ON COMMAND CORP Rating:





ON COMMAND VIDEO CORPORATION Rating:





PUERTO RICO VEC Rating:





RESNET COMMUNICATIONS, INC. Rating:





SPECTRADYNE INTERNATIONAL INC Rating:





STAYONLINE INCORPORATED Rating:





VIRGIN ISLANDS VEC Rating:






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ASKMORE rating guide

General vision A credit rating is an opinion of the general creditworthiness of an obligor (issuer rating), or the creditworthiness of

an obligor in respect of a specific debt security, or other financial obligation (issue rating), based on relevant risk

factors.

The Multi Objective Rating Evaluation (MORE) model is essentially used to assess the level of distress of industrial

companies by using data included in financial statements.

The basic idea of the model is to analyze a set of financial and economic ratios in a predictive corporate bankruptcy

model with the purpose of creating a fundamental credit rating model for each industrial sector. Results of the

model are obtained by applying newly developed numerical methodologies, drawing together financial theory,

data mining and engineering design methodologies. The heart of MORE is a multi dimensional and multi objective

algorithm that produces a classification of each company, by taking into account any attributes (such as sector and

country) characterizing a firm.

The model gives the opportunity to assign a rating to a company even without considering a complete data analysis

and allows to process quality information. It induces a better understanding of a company’s strength and weakness

thanks to sophisticated data mining tools and taking into account the analyst knowledge.

The MORE rating vision is to look at the fundamental economics of the company. The main idea is to evaluate the

rating observing every aspect of the economical and financial behavior of the company: better is the equilibrium

between the different aspects, better will be the final rating.

This is done studying, evaluating and aggregating the most important sections of the financial and economic

behavior of a company such as: profitability, liquidity, solvency, interest coverage and efficiency.


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Rating scale

Rating class Rating macro class Assessment

AAA

Healthy

The company’s capacity to meet its financial commitments is extremely strong. The company shows an excellent

economic and financial flow and fund equilibrium.

AAThe company has very strong creditworthiness. It also has a good capital structure and economic and financial

equilibrium. Difference from AAA is slight.

AThe company has a high solvency. The company is however more susceptible to the adverse effects of changes in

circumstances and economic conditions than companies in higher rated categories.

BBB

Balanced

Capital structure and economic equilibrium are considered adequate. The company’s capacity to meet its financial

commitments could be affected by serious unfavourable events.

BBA company rated BB is more vulnerable than companies rated BBB. Furthermore the company faces major ongoing

uncertainties or exposure to adverse business, financial, or economic conditions.

B

Vulnerable

The company presents vulnerable signals with regards to its fundamentals. Adverse business, financial, or economic

conditions will be likely to impair the company’s capacity or willingness to meet its financial commitments.

CCC

A company rated CCC has a dangerous disequilibrium on the capital structure and on its economic and financial

fundamentals. Adverse market events and an inadequate management could affect with high probability the

company’s solvency.

CC

Risky

The company shows signals of high vulnerability. In the event of adverse market and economic conditions, the

company’s strong disequilibrium could increase.

CThe company shows considerable pathological situations. The company’s capacity to meet its financial

commitments is very low.

D The company has not any longer the capacity to meet its financial commitments.


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Fundamental Credit Rating Ratios

Analysis area Ratio Assessment

Solvency ratios

Leverage ratioThis measures the level of total liabilities of the company in comparison

with equity.

Assets to debtThis indicates company’s solvency. The company shows a level of deficit

when the value of this ratio is under one unit.

Financial ratios Fixed Assets coverage ratioThis is calculated only for holdings. It measures the capital structure i.e.

whether a company covers the fixed assets with long term capital.

Liquidity ratios

Current ratioThis measures whether a company has sufficient short-term assets to cover

its short-term liabilities.

Quick ratioThis compares current liabilities only to those assets that can be readily

turned into cash.

Profitability and economic ratios

Return on Investement(ROI)This measures the profitability of company investments without regard to

the way the investment is financed.

Return on Equity(ROE) This measures the profitability of the equity.

Asset turnover

This indicates the investments turnover with regards to sales. The level

assumed from the ratio depends on the sector in which the company

operates.

Profit margin This indicates the profitability of sales.

Interest coverage ratio Interest Paid coverage

This indicate the ability of the company to cover interest expenses through

the economic margins (Gross profit and EBIT) and through the cash flow

from operating activities.


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MORE Credit Limit, Probability of default and Confidence Level

MORE Credit Limit MORE Credit limit is the estimation of the amount of maximum credit that is possible to assign on a commercial

relationship with the analyzed company with an outlook of one year.

modeFinance used the following values associated with the company analyzed while computing the credit limit:

• Size;

• Years in Business;

• Average number of suppliers;

• Liquidity of the company and the comparison with its sector;

• The funds dedicated to be paid to suppliers;

• The likelihood that a company may pay its debts in the next 12 months (MORE Ratings).

The credit limit in this report is merely a suggested value of commercial credit limit calculated on the basis of annual

public data. This value should be reviewed by paying attention to the Confidence Level value and by using other

information such as other business information, news... etc; and private information such as the relationship with

client, history of payments, guarantees and the knowledge of the sector.

Probability of default e Confidence

Level

In addition to the MORE Rating, modeFinance also estimates the probability of default and provides a level of

confidence. The probability of default is the degree of certainty (in quantitative terms) that the company will go

into default.

As the probability of default is strongly affected by the economic climate that the company is operating in,

companies in the same MORE class will not necessarily have the same probability of default.

The MORE model can produce a MORE rating even if there is missing data by using an associated confidence level:

Confidence =

∑Available Information∑

Total Information

The level of confidence does not indicate financial confidence in the company. It is a reflection of the variations in

availability of financial data across Europe due to filing regulations and suggests the degree of financial detail the

MORE rating is able to take into account for each company.

For companies with fully populated records a confidence level of 100% would be applied: companies where no

financial data is provided, 0%. This puts the MORE rating in a context for the user and aids interpretation.


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Notes and disclaimer

NOTES modeFinance has based the present analysis on the company available financial statements, coming from one or

more of the following sources: local providers, Commercial Register (Companies House), websites, modeFinance’s

database etc.

DISCLAIMER All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any

form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of

the publisher modeFinance. The facts of this report are believed to be correct at the time of publication but cannot

be guaranteed. Please note that the findings, conclusions and recommendations that modeFinance delivers will

be based on information gathered in good faith from both primary and secondary sources, whose accuracy we

are not always in a position to guarantee. As such modeFinance can accept no liability whatever for actions taken

based on any information that may subsequently prove to be incorrect.

Contacts

Company modeFinance

Products MORE rating

Where AREA Science Park

34149 Trieste, via Padriciano 99 - ITALY

Info [email protected]

web www.modefinance.com

Phone +39 040 3755337

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