##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2008
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File Number 0-22334
 LodgeNet Interactive Corporation
  Delaware
    
    46-0371161(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)
 3900 West Innovation Street, Sioux Falls, South Dakota 57107
  (605) 988-1000
 (Registrants telephone number,
  (Former name, former address and former fiscal year, if changed since last report
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)


    Smaller reporting company o
 o þ




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##### 



LodgeNet Interactive Corporation
    

    Form 10-Q
 LodgeNet Interactive Corporation and Subsidiaries
 Index
 PageNo.Part I. Financial InformationItem 1  Financial Statements:Consolidated Balance Sheets (Unaudited) as of March 31, 2008 and December 31, 2007
    
    
    3Consolidated Statements of Operations (Unaudited) for
the Three Months Ended March 31, 2008 and 2007
    
    
    4Consolidated Statements of Cash Flows (Unaudited) for
the Three Months Ended March 31, 2008 and 2007
    
    
    5Notes to Consolidated Financial Statements (Unaudited)
    
    
    6Item 2  Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    16Item 3  Quantitative and Qualitative Disclosures About Market Risk
    
    
    37Item 4  Controls and Procedures
    
    
    38Part II. Other InformationItem 1  Legal Proceedings
    
    
    39Item 1A  Risk Factors
    
    
    39Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    39Item 3  Defaults Upon Senior Securities
    
    
    39Item 4  Submission of Matters to a Vote of Security Holders
    
    
    39Item 5  Other Information
    
    
    39Item 6  Exhibits
    
    
    39Signatures
    
    
    40Rule 13a-14(a)/15(d)-14(a) Certification of Chief Financial OfficerRule 13a-14(a)/15(d)-14(a) Certification of Chief Executive OfficerSection 1350 Certifications
   ®
 March 31, 2008

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##### Table of Contents



LodgeNet Interactive Corporation
    

    Form 10-Q
 
 Part I  Financial Information
 
 Item 1  Financial Statements
 LodgeNet Interactive Corporation and Subsidiaries
 
 Consolidated Balance Sheets (Unaudited)
 March 31,
    
    
    December 31,2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    18,836
    
    
    $
    25,569Accounts receivable, net
    
    
    77,961
    
    
    
    73,580Other current assets
    
    
    9,762
    
    
    
    11,359Total current assets
    
    
    106,559
    
    
    
    110,508Property and equipment, net
    
    
    313,062
    
    
    
    323,963Debt issuance costs, net
    
    
    10,919
    
    
    
    11,374Intangible assets, net
    
    
    123,376
    
    
    
    126,530Goodwill
    
    
    111,293
    
    
    
    111,293Other assets
    
    
    10,338
    
    
    
    10,155Total assets
    
    $
    675,547
    
    
    $
    693,823Liabilities and Stockholders DeficiencyCurrent liabilities:Accounts payable
    
    $
    49,303
    
    
    $
    50,559Current maturities of long-term debt
    
    
    7,376
    
    
    
    7,398Accrued expenses
    
    
    24,484
    
    
    
    30,118Deferred revenue
    
    
    15,689
    
    
    
    14,354Total current liabilities
    
    
    96,852
    
    
    
    102,429Long-term debt
    
    
    622,763
    
    
    
    617,196Other long-term liabilities
    
    
    39,504
    
    
    
    22,440Total liabilities
    
    
    759,119
    
    
    
    742,065Commitments and contingenciesStockholders deficiency:Preferred stock, $.01 par value, 5,000,000 shares authorized;
no shares issued or outstandingCommon stock, $.01 par value, 50,000,000 shares authorized;
22,989,515 and 22,969,775 shares outstanding at March 31,
2008 and December 31, 2007, respectively
    
    
    230
    
    
    
    230Treasury stock, at cost: 530,000 and 60,000 shares at March
31, 2008
and December 31, 2007, respectively
    
    
    (5,737
    )
    
    
    (1,075
    )Additional paid-in capital
    
    
    330,892
    
    
    
    330,405Accumulated deficit
    
    
    (380,649
    )
    
    
    (367,638
    )Accumulated other comprehensive loss
    
    
    (28,308
    )
    
    
    (10,164
    )Total stockholders deficiency
    
    
    (83,572
    )
    
    
    (48,242
    )Total liabilities and stockholders deficiency
    
    $
    675,547
    
    
    $
    693,823
  March 31, 2008

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##### Table of Contents



LodgeNet Interactive Corporation
    

    Form 10-Q
 LodgeNet Interactive Corporation and Subsidiaries
 
 Consolidated Statements of Operations (Unaudited)
 Three Months EndedMarch 31,2008
    
    
    2007Revenues:Guest Entertainment and hotel services
    
    $
    128,692
    
    
    $
    70,720System sales, advertising and other
    
    
    11,095
    
    
    
    4,565Total revenues
    
    
    139,787
    
    
    
    75,285Direct Costs and Operating Expenses:Direct costs (exclusive of operating expenses and
depreciation and amortization shown separately
below):Guest Entertainment and hotel services
    
    
    67,391
    
    
    
    33,090System sales, advertising and other
    
    
    8,519
    
    
    
    3,370Operating expenses:System operations
    
    
    15,387
    
    
    
    8,534Selling, general and administrative
    
    
    15,225
    
    
    
    7,844Depreciation and amortization
    
    
    33,100
    
    
    
    16,089Restructuring
    
    
    2,002
    
    
    
    241Other operating expense
    
    
    10
    
    
    
    Total direct costs and operating expenses
    
    
    141,634
    
    
    
    69,168(Loss) income from operations
    
    
    (1,847
    )
    
    
    6,117Other Income and (Expenses):Interest expense
    
    
    (10,974
    )
    
    
    (6,204
    )Other income
    
    
    11
    
    
    
    160(Loss) income before income taxes
    
    
    (12,810
    )
    
    
    73Provision for income taxes
    
    
    (201
    )
    
    
    (101
    )Net loss
    
    $
    (13,011
    )
    
    $
    (28
    )Net loss per common share (basic and diluted)
    
    $
    (0.58
    )
    
    $
    Weighted average shares outstanding (basic and diluted)
    
    
    22,606,699
    
    
    
    19,040,156
  March 31, 2008

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##### Table of Contents



LodgeNet Interactive Corporation
    

    Form 10-Q
 LodgeNet Interactive Corporation and Subsidiaries
 
 Consolidated Statements of Cash Flows (Unaudited)
 Three Months Ended March 31,2008
    
    
    2007Operating activities:Net loss
    
    $
    (13,011
    )
    
    $
    (28
    )Adjustments to reconcile net loss to net cash provided
by operating activities:Depreciation and amortization
    
    
    33,100
    
    
    
    16,089Share-based compensation
    
    
    509
    
    
    
    265Other
    
    
    16
    
    
    
    Change in operating assets and liabilities:Accounts receivable, net
    
    
    (4,556
    )
    
    
    (2,613
    )Other current assets
    
    
    1,527
    
    
    
    (1,260
    )Accounts payable
    
    
    (1,190
    )
    
    
    1,777Accrued expenses and deferred revenue
    
    
    (4,287
    )
    
    
    3,823Other
    
    
    (211
    )
    
    
    (26
    )Net cash provided by operating activities
    
    
    11,897
    
    
    
    18,027Investing activities:Property and equipment additions
    
    
    (18,935
    )
    
    
    (15,897
    )Deferred acquisition costs
    
    
    
    
    
    
    (447
    )Acquisition of StayOnline, Inc.
    
    
    
    
    
    
    (14,422
    )Net cash used for investing activities
    
    
    (18,935
    )
    
    
    (30,766
    )Financing activities:Repayment of long-term debt
    
    
    (1,563
    )
    
    
    (375
    )Payment of capital lease obligations
    
    
    (413
    )
    
    
    (636
    )Borrowings on revolving credit facility
    
    
    30,000
    
    
    
    Repayments of revolving credit facility
    
    
    (23,000
    )
    
    
    Purchase of treasury stock
    
    
    (4,662
    )
    
    
    Exercise of stock options
    
    
    
    
    
    
    7,272Net cash provided by financing activities
    
    
    362
    
    
    
    6,261Effect of exchange rates on cash
    
    
    (57
    )
    
    
    3Decrease in cash and cash equivalents
    
    
    (6,733
    )
    
    
    (6,475
    )Cash and cash equivalents at beginning of period
    
    
    25,569
    
    
    
    22,795Cash and cash equivalents at end of period
    
    $
    18,836
    
    
    $
    16,320
  March 31, 2008

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##### Table of Contents



LodgeNet Interactive Corporation
    

    Form 10-Q
 LodgeNet Interactive Corporation and Subsidiaries
 
 Notes to Consolidated Financial Statements (Unaudited)
           Pro Forma2008
    
    2007Total revenue
    
    $
    139,787
    
    
    $
    135,534Net loss
    
    $
    (13,011
    )
    
    $
    (13,047
    )Net loss per share
    
    $
    (0.58
    )
    
    $
    (0.59
    )
 March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
    March 31,
    
    
    December 31,2008
    
    
    2007Land, building and equipment
    
    $
    110,016
    
    
    $
    105,247Guest Pay systems:Installed system costs
    
    
    645,892
    
    
    
    646,095Customer acquisition costs
    
    
    56,097
    
    
    
    55,080System components
    
    
    26,875
    
    
    
    24,966Software costs
    
    
    33,873
    
    
    
    33,783Total
    
    
    872,753
    
    
    
    865,171Less  depreciation and amortization
    
    
    (559,691
    )
    
    
    (541,208
    )Property and equipment, net
    
    $
    313,062
    
    
    $
    323,963
      March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
  March 31, 2008
    
    
    December 31, 2007Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationAssets subject to amortization:Acquired contracts and relationships
    
    $
    120,315
    
    
    $
    (6,485
    )
    
    $
    120,315
    
    
    $
    (4,884
    )Other acquired intangibles
    
    
    12,984
    
    
    
    (8,954
    )
    
    
    12,984
    
    
    
    (8,263
    )Tradenames
    
    
    2,955
    
    
    
    (651
    )
    
    
    2,955
    
    
    
    (225
    )Acquired patents
    
    
    5,032
    
    
    
    (1,820
    )
    
    
    5,032
    
    
    
    (1,384
    )$
    141,286
    
    
    $
    (17,910
    )
    
    $
    141,286
    
    
    $
    (14,756
    )
       March 31,
    
    
    December 31,2008
    
    
    2007Taxes
    
    $
    8,591
    
    
    $
    8,405Compensation
    
    
    8,184
    
    
    
    11,485Interest
    
    
    214
    
    
    
    Programming related
    
    
    1,938
    
    
    
    1,785Restructuring
    
    
    2,537
    
    
    
    5,774Other
    
    
    3,020
    
    
    
    2,669$
    24,484
    
    
    $
    30,118
 March 31, 2008

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##### Table of Contents



LodgeNet Interactive Corporation
    

    Form 10-Q
   March 31,
    
    
    December 31,2008
    
    
    2007Bank Credit Facility:Bank term loan
    
    $
    620,313
    
    
    $
    621,875Revolving credit facility
    
    
    7,000
    
    
    
    9.50% senior notes
    
    
    10
    
    
    
    10Capital leases
    
    
    2,816
    
    
    
    2,709630,139
    
    
    
    624,594Less current maturities
    
    
    (7,376
    )
    
    
    (7,398
    )$
    622,763
    
    
    $
    617,196
 Bank Credit Facility
    March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
 9.50% Senior Notes pari passu
 Capital Leases
  2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    ThereafterLong-term debt
    
    $
    4,688
    
    
    $
    6,250
    
    
    $
    6,250
    
    
    $
    6,250
    
    
    $
    6,250
    
    
    $
    597,635Capital leases
    
    
    1,002
    
    
    
    1,084
    
    
    
    749
    
    
    
    325
    
    
    
    14
    
    
    
    5,690
    
    
    
    7,334
    
    
    
    6,999
    
    
    
    6,575
    
    
    
    6,264
    
    
    
    597,635Less amount
representing
interest on capital
leases
    
    
    (147
    )
    
    
    (125
    )
    
    
    (64
    )
    
    
    (22
    )
    
    
    
    
    
    
    $
    5,543
    
    
    $
    7,209
    
    
    $
    6,935
    
    
    $
    6,553
    
    
    $
    6,264
    
    
    $
    597,635
    Three Months EndedMarch 31,2008
    
    
    2007Net loss
    
    $
    (13,011
    )
    
    $
    (28
    )Foreign currency translation adjustment
    
    
    (997
    )
    
    
    13Unrealized loss on interest rate swap agreements
    
    
    (17,147
    )
    
    
    Comprehensive loss
    
    $
    (31,155
    )
    
    $
    (15
    )
  March 31,
    
    
    December 31,2008
    
    
    2007Unrealized loss on interest rate swap
agreements
    
    $
    (34,044
    )
    
    $
    (16,897
    )Foreign currency translation adjustment
    
    
    5,736
    
    
    
    6,733Accumulated other comprehensive loss
    
    $
    (28,308
    )
    
    $
    (10,164
    )
 March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
    Fair Value Measurements
 The Fair Value Option for Financial Assets and Financial Liabilities 
Including an Amendment of FASB Statement No. 115
 Non-controlling Interests in Consolidated Financial Statements  An amendment of ARB No. 51 prohibited
 March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
 Business Combinations
 §
    
    Acquisition costs will generally be expensed as incurred;§
    
    In Process R&D will be recorded as an indefinite lived intangible asset at
acquisition date;§
    
    Restructuring costs associated with a business combination will generally be
expensed subsequent to the acquisition date;§
    
    Liabilities will be recorded at acquisition date fair value and subsequently
re-measured;§
    
    Minority interests to be valued at fair value at acquisition date; and§
    
    Changes in deferred tax asset valuation allowances and income tax uncertainties
after the acquisition date generally will affect income tax expense.
 prohibited
 Disclosures about Derivative Instruments and Hedging
Activities an amendment of FASB Statement No. 133
  Share-Based Payment
 March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
  Three Months EndedMarch 31,2008
    
    
    2007Compensation cost (benefit):Stock options
    
    $
    245
    
    
    $
    47Non-vested shares
    
    
    264
    
    
    
    218Total share based compensation expense
    
    $
    509
    
    
    $
    265Compensation expense per common share (basic and
diluted):
    
    $
    0.02
    
    
    $
    0.01
  Stock Option Valuation and Expense Information under Statement 123(R)
  Non-Vested Shares (Restricted Stock)
   Accounting for Costs Associated with Exit or Disposal Activities.
 March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
   12/31/07
    
    
    Charges to
    
    
    Cash
    
    
    3/31/08Balance
    
    
    Expense
    
    
    Payment
    
    
    BalanceSeverance and other benefit related costs
    
    $
    5,289
    
    
    $
    1,174
    
    
    $
    (4,831
    )
    
    $
    1,632Cost of closing redundant acquired facilities
    
    
    485
    
    
    
    659
    
    
    
    (239
    )
    
    
    905Other
    
    
    
    
    
    
    169
    
    
    
    (169
    )
    
    
    Total
    
    $
    5,774
    
    
    $
    2,002
    
    
    $
    (5,239
    )
    
    $
    2,537
     March 31, 2008
    
    December 31, 2007Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueInterest rate swaps -
liability position
    
    $
    34,044
    
    
    $
    34,044
    
    
    $
    16,897
    
    
    $
    16,897Long-term debt
    
    $
    630,139
    
    
    $
    518,483
    
    
    $
    624,594
    
    
    $
    599,718
       March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
  Total
    
    Quoted Prices inFair Value
    
    Active Markets for
    
    Significant Other
    
    SignificantMeasurement
    
    Identical Asset
    
    Observable Inputs
    
    Unobservable InputsMarch 31, 2008
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Interest rate swaps -
liability position
    
    $
    34,044
    
    
    $
    
    
    
    $
    34,044
    
    
    $
    
 March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
 
 Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion should be read in conjunction with our Consolidated Financial Statements,
including the notes thereto, appearing elsewhere herein.
 Special Note Regarding Forward-Looking Statements
 Certain statements in this report or document incorporated herein by reference constitute
forward-looking statements. When used in this report, 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 restructuring costs, 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. In addition to the risks and uncertainties discussed in Item 1A of our
most recent Annual Report on Form 10-K for the year ended December 31, 2007 and filed on March 14,
2008, in any prospectus supplement or any report or document incorporated herein by reference, such
factors include, among others, the following:
 Ø
    
    the effects of economic conditions, including in particular the economic condition of
the lodging industry, which can be particularly affected by international crisis, acts or
threats of terrorism and public health issues;Ø
    
    competition from providers of similar services and from alternative sources;Ø
    
    changes in demand for our products and services, programming costs, availability,
timeliness, and quality;Ø
    
    technological developments by competitors;Ø
    
    developmental costs, difficulties, and delays;Ø
    
    relationships with clients and property owners;Ø
    
    the availability of capital to finance growth;Ø
    
    the impact of government regulations;Ø
    
    potential effects of litigation;Ø
    
    risks of expansion into new markets;Ø
    
    risks related to the security of our data systems; andØ
    
    other factors detailed, from time to time, in our filings with the SEC.
 With respect to any proposed or completed acquisition, we are subject to risks that integration
costs will exceed expectations, that synergies we anticipate will not be realized, or will take
longer than anticipated to realize, that our management and management systems will encounter
difficulties in dealing with a bigger, more diversified enterprise, and that the financial results
we expect from the acquisition will not be realized.
 Executive Overview
   March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
      March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
 Guest Entertainment and Hotel Services .
  
    
    The number of rooms on our network.We can increase revenue over time by increasing the
number of rooms served by our interactive television systems. Our ability to expand our room
base is dependent on a number of factors, including the attractiveness of our technology,
service and support to hotels currently operating without an interactive television system,
newly constructed hotel properties, and hotels with expiring contracts that may not meet our
return on investment requirement and may select programming from a local cable provider.
 
    
    The variety of services offered at the hotel.Rooms equipped with our high-definition or
standard digital system generate higher revenue than rooms equipped with our tape-based system
primarily because they offer a greater variety of services and content choices. We plan to
continue to grow the revenue we generate per average room by the installation of our HDTV
system in all newly contracted rooms and by converting selected rooms to our HDTV system in
exchange for long-term contract extensions.
 
    
    The popularity, timeliness and amount of content offered at the hotel.Our revenues vary
to a certain degree with the number, timeliness and popularity of movie content available for
viewing. Historically, a decrease in the availability of popular movie content has adversely
impacted revenue. Although not completely within our control, we seek to program and promote
the most popular available movie content and other content to maximize revenue and gross
profit.
 
    
    The price of the service purchased by the hotel guest.Generally, we control the prices
charged for our products and services and manage pricing in an effort to maximize revenue and
overall gross profit. We establish pricing based on such things as the demographics of the
property served, the popularity of the content and overall general economic conditions. Our
technology enables us to measure the popularity of our content and make decisions to best
position such content and optimize revenue from such content.
 
    
    The occupancy rate at the property.Our revenue also varies depending on hotel occupancy
rates, which are subject to a number of factors, including seasonality, general economic
conditions and world events, such as terrorist threats or public health issues. Occupancy
rates for the properties we serve are typically higher during the second and third quarters
due to seasonal travel patterns. We target higher occupancy properties in diverse demographic
and geographic locations in an effort to mitigate occupancy-related risks.
  Ø
    
    license fees paid to major motion picture studios, which are based on a percent of
guest-generated revenue, for non-exclusive distribution rights of recently released major
motion pictures;Ø
    
    commissions paid to our hotel customers, which are also based on a percent of
guest-generated revenue;Ø
    
    fixed monthly programming charges paid primarily to DIRECTV for satellite-delivered
basic and premium television programming;Ø
    
    broadband Internet connectivity costs and call center support;Ø
    
    license fees, which are based on a percent of guest-generated revenue, for television on
demand, music, music video, video games and sports programming; andØ
    
    one-time license fees paid for independent films, most of which are non-rated and
intended for mature audiences.
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LodgeNet Interactive Corporation
    

    Form 10-Q
 System Sales, Advertising and Other Services.
  Ø
    
    revenue generated from our advertising and media services within the hotels;Ø
    
    revenue generated from the sale of our interactive systems to healthcare facilities,
along with recurring support for interactive content, software maintenance and technical
field service for a fixed fee;Ø
    
    revenue generated from the sale of our interactive systems to hotels, along with
recurring support for interactive content, software maintenance and technical field
service for a fixed fee;Ø
    
    revenue from the sale of miscellaneous system equipment such as multi-service
connection equipment, television remotes and service parts and labor to the hotels;Ø
    
    revenues from the sale of equipment to our international licensees within the hotel or
lodging industry;Ø
    
    revenues from the installation of master antenna low voltage wiring and related
infrastructure to the hotels;Ø
    
    revenues from the sale and installation of DIRECTV satellite systems to the hotels; andØ
    
    revenue generated from delivery of satellite basic and premium television programming
for which the hotel pays us a fixed monthly charge per room.
 March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
 Key Metrics:
 Special Note Regarding the Use of Non-GAAP Financial Information
   Three Months EndedMarch 31,2008
    
    
    2007Net free cash flow
    
    $
    (7,038
    )
    
    $
    (12,739
    )Add:Cash used for property and equipment additions
    
    
    18,935
    
    
    
    15,897Cash used for acquisitions and other activities
    
    
    
    
    
    
    14,869Cash provided by operating activities
    
    $
    11,897
    
    
    $
    18,027
 March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
 Rooms Served
  March 31,2008
    
    2007Total rooms served (1)
    
    
    1,968,000
    
    
    
    1,136,411Total Guest Entertainment rooms (2)
    
    
    1,863,599
    
    
    
    1,010,975Total HD rooms (3)
    
    
    109,980
    
    
    
    37,343Total Television Programming (FTG) rooms (4)
    
    
    1,076,894
    
    
    
    546,516Total Broadband Internet rooms (5)
    
    
    221,906
    
    
    
    178,430Net new Guest Entertainment rooms for the three months ended (6)
    
    
    9,156
    
    
    
    6,038
 
 (1)
    
    Total rooms served include rooms receiving one or more of our services including rooms served
by international licensees. The increase from 2007 is due to the addition of the On Command
room base of approximately 830,000 rooms.(2)
    
    Guest Entertainment rooms are equipped with our interactive television systems.(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)
    
    Amounts shown are net of de-installations during the period. The gross number of new rooms
installed was 17,331 and 17,664 for the three months ended March 31, 2008 and 2007,
respectively. High Definition and Digital Room Growth
  March 31,2008
    
    2007Net new digital rooms for the three months ended
    
    
    18,191
    
    
    
    26,017Net new HDTV rooms for the three months ended (1)
    
    
    23,582
    
    
    
    13,841Total HDTV rooms installed (2)
    
    
    109,980
    
    
    
    37,343Total digital rooms installed
    
    
    1,483,522
    
    
    
    759,379Digital rooms as a percent of total Guest Pay interactive rooms
    
    
    79.6
    %
    
    
    75.1
    %
 
 (1)
    
    HDTV rooms are equipped with high-definition capabilities and are included in total digital
rooms.(2)
    
    HDTV rooms are included in the total digital rooms installed. March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
 Capital Investment Per Room
  Three Months Ended
    
    Years EndedMarch 31,
    
    March 31,
    
    December 31,
    
    December 31,2008
    
    2007
    
    2007
    
    2006Average cost per room  new installation
    
    $
    390
    
    
    $
    366
    
    
    $
    399
    
    
    $
    354Average cost per room  conversion
    
    $
    301
    
    
    $
    285
    
    
    $
    309
    
    
    $
    252Average cost per HD room  new
installation
    
    $
    413
    
    
    $
    430
    
    
    $
    460
    
    
    $
    438Average cost per HD room  conversion
    
    $
    304
    
    
    $
    316
    
    
    $
    312
    
    
    $
    289
  Revenue Per Room
  Three Months EndedMarch 31,2008
    
    
    2007Average monthly revenue per room:Movie revenue
    
    $
    16.51
    
    
    $
    17.13Other interactive service revenue
    
    
    1.32
    
    
    
    1.23Total per Guest Entertainment room
    
    $
    17.83
    
    
    $
    18.36
 March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
 Direct Costs
  Three Months EndedMarch 31,2008
    
    2007Guest Entertainment and hotel services direct costs per
room
    
    $
    12.11
    
    
    $
    10.96Guest Entertainment and hotel services direct costs as a
percent of total revenue
    
    
    48.2
    %
    
    
    44.0
    %
 Operating Expenses
  Net Income (Loss)
  Three Months EndedMarch 31,2008
    
    2007Net loss
    
    $
    (13,011
    )
    
    $
    (28
    )
 Free Cash Flow
  March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
  Three Months EndedMarch 31,2008
    
    
    2007Cash provided by operating activities
    
    $
    11,897
    
    
    $
    18,027Property and equipment additions
    
    
    (18,935
    )
    
    
    (15,897
    )(7,038
    )
    
    
    2,130Cash used for acquisition activities (1)
    
    
    
    
    
    
    (14,869
    )$
    (7,038
    )
    
    $
    (12,739
    )
 
 (1)
    
    Cash used for acquisition activities related to the acquisitions of On Command and
StayOnline.  Three Months EndedMarch 31,2008
    
    
    2007Expansion capital investment (1)
    
    $
    5,869
    
    
    $
    5,631Renewal investment (2)
    
    
    6,072
    
    
    
    4,162Corporate capital and minor extensions (3)
    
    
    6,994
    
    
    
    6,104$
    18,935
    
    
    $
    15,897
 
 (1)
    
    Capital investment to install newly contracted rooms with our digital or HDTV system.(2)
    
    Capital investment to convert rooms to our digital or HDTV system in exchange for long-term
contract extensions.(3)
    
    Capital investment for corporate infrastructure including computers, equipment, software
development and minor system upgrades. Liquidity and Capital Resources
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LodgeNet Interactive Corporation
    

    Form 10-Q
   2008
    
    2007Actual consolidated total leverage ratio (1) (3)
    
    
    4.45
    
    
    
    2.87Maximum per covenant
    
    
    4.75
    
    
    
    3.50Actual consolidated interest coverage ratio (2) (3)
    
    
    3.10
    
    
    
    3.87Minimum per covenant
    
    
    2.50
    
    
    
    2.75
 
 (1)
    
    Our maximum consolidated total leverage ratio is a function of total indebtedness divided by
operating income exclusive of depreciation and amortization and other miscellaneous
non-recurring items as defined by the covenant.(2)
    
    Our minimum consolidated interest coverage ratio is a function of operating income exclusive
of depreciation and amortization and other miscellaneous non-recurring items divided by
interest expense as defined by the covenant.(3)
    
    Maximum consolidated total leverage ratio and minimum consolidated interest coverage ratios
are not based on generally accepted accounting principles and are not presented as alternative
measures of operating performance or liquidity. They are presented here to demonstrate
compliance with the covenants in our Credit Facility, as noncompliance with such covenants
could have a material adverse effect on us.   Q3 2010 toQ3 2008
    
    Q1 2009
    
    Q3 2009
    
    Q1 2010
    
    maturityMaximum consolidated leverage ratio
    
    
    4.50
    
    
    
    4.25
    
    
    
    4.00
    
    
    
    3.75
    
    
    
    3.50Minimum consolidated interest coverage ratio
    
    
    2.50
    
    
    
    2.75
    
    
    
    2.75
    
    
    
    3.00
    
    
    
    3.00
  March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
   9.50% Senior Notes
 March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
  Payments due by periodLess than
    
    
    2-3
    
    
    4-5
    
    
    OverTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsContractual obligations:Long-term debt(s)
    
    $
    630,139
    
    
    $
    7,376
    
    
    $
    13,979
    
    
    $
    12,711
    
    
    $
    596,073Interest on fixed rate debt
    
    
    6
    
    
    
    1
    
    
    
    2
    
    
    
    2
    
    
    
    1Interest on bank term loan
(1)
    
    
    172,555
    
    
    
    29,477
    
    
    
    58,003
    
    
    
    56,812
    
    
    
    28,263Interest on derivative
instruments (net)
    
    
    64,905
    
    
    
    11,729
    
    
    
    21,853
    
    
    
    20,882
    
    
    
    10,441Operating lease payments
    
    
    6,596
    
    
    
    2,847
    
    
    
    3,673
    
    
    
    76
    
    
    
    Uncertain tax positions (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase obligations (3)
    
    
    13,534
    
    
    
    13,534
    
    
    
    
    
    
    
    
    
    
    
    Nintendo minimum royalty
(4)
    
    
    21,700
    
    
    
    4,200
    
    
    
    8,400
    
    
    
    8,400
    
    
    
    700Programming related minimum
royalties and
commissions (5)
    
    
    7,125
    
    
    
    2,462
    
    
    
    4,350
    
    
    
    288
    
    
    
    25Total contractual
obligations
    
    $
    916,560
    
    
    $
    71,626
    
    
    $
    110,260
    
    
    $
    99,171
    
    
    $
    635,503
 Amount of commitment expiration per periodLess than
    
    
    2-3
    
    
    4-5
    
    
    OverTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsOther commercial
commitments:Standby letters of credit
    
    $
    510
    
    
    $
    510
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Interest payments are estimates based on current LIBOR and scheduled amortization.(2)
    
    Effective January 1, 2007, we adopted FASB Interpretation No. 48, Accounting for Uncertainty
in Income Taxes, an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in a companys financial statements and
prescribes a recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax return.
As of March 31, 2008, we do not have unresolved income tax positions.(3)
    
    Consists of open purchase orders primarily for the procurement of system components.(4)
    
    Nintendo video games pursuant to a non-exclusive license agreement with Nintendo, which
expires in May 2013. Under the terms of the agreement, we pay a monthly royalty equal to a
percent of revenue generated from the sale of Nintendo video game services, subject to a
monthly minimum.(5)
    
    In connection with our programming related agreements, we may guarantee minimum royalties for
specific periods or by individual programming content. Seasonality
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LodgeNet Interactive Corporation
    

    Form 10-Q
 Discussion and Analysis of Results of Operations
Three Months Ended March 31, 2008 and 2007
 Revenue Analysis.
 2008
    
    
    2007Percent
    
    
    
    
    
    
    Percentof Total
    
    
    
    
    
    
    of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesRevenues:Guest Entertainment
    
    $
    99,202
    
    
    
    71.0
    %
    
    $
    55,451
    
    
    
    73.6
    %Hotel services
    
    
    29,490
    
    
    
    21.1
    %
    
    
    15,269
    
    
    
    20.3
    %System sales, advertising and other
    
    
    11,095
    
    
    
    7.9
    %
    
    
    4,565
    
    
    
    6.1
    %$
    139,787
    
    
    
    100.0
    %
    
    $
    75,285
    
    
    
    100.0
    %
  Three Months EndedMarch 31,2008
    
    
    2007Average monthly revenue per room:Movie revenue
    
    $
    16.51
    
    
    $
    17.13Other interactive service revenue
    
    
    1.32
    
    
    
    1.23Total per Guest Entertainment room
    
    $
    17.83
    
    
    $
    18.36
   2008
    
    
    2007Average monthly revenue per room:Television programming
    
    $
    4.76
    
    
    $
    4.50Broadband
    
    
    0.54
    
    
    
    0.56Total Hotel Services per room
    
    $
    5.30
    
    
    $
    5.06
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LodgeNet Interactive Corporation
    

    Form 10-Q
    Three Months EndedMarch 31,2008
    
    
    2007Average monthly revenue per room:Guest Entertainment
    
    $
    17.83
    
    
    $
    18.36Hotel services
    
    
    5.30
    
    
    
    5.06System sales, advertising and other
    
    
    1.99
    
    
    
    1.51Total revenue per room
    
    $
    25.12
    
    
    $
    24.93
 Direct Costs (exclusive of operating expenses and depreciation and amortization discussed
separately below).
  2008
    
    2007
    
    ChangeDirect costs as a percent of revenue
(exclusive of operating expenses and depreciation
and amortization discussed separately below):
    
    
    54.3
    %
    
    
    48.4
    %
    
    
    5.9
    %Change drivers:Broadband related
    
    
    
    
    
    
    
    
    
    
    0.8
    %Television programming related (FTG)
    
    
    
    
    
    
    
    
    
    
    2.8
    %Guest Entertainment related costs
    
    
    
    
    
    
    
    
    
    
    1.3
    %Other direct costs (Non Guest Entertainment)
    
    
    
    
    
    
    
    
    
    
    1.0
    %5.9
    %
 March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
 Operating Expenses.
 2008
    
    
    2007Percent
    
    
    
    
    
    
    Percentof Total
    
    
    
    
    
    
    of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesOperating expenses:System operations
    
    $
    15,387
    
    
    
    11.0
    %
    
    $
    8,534
    
    
    
    11.3
    %Selling, general and administrative
    
    
    15,225
    
    
    
    10.9
    %
    
    
    7,844
    
    
    
    10.4
    %Depreciation and amortization
    
    
    29,948
    
    
    
    21.4
    %
    
    
    15,958
    
    
    
    21.2
    %Amortization of acquired intangibles
    
    
    3,152
    
    
    
    2.3
    %
    
    
    131
    
    
    
    0.2
    %Restructuring expense
    
    
    2,002
    
    
    
    1.4
    %
    
    
    241
    
    
    
    0.3
    %Other operating expense
    
    
    10
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %Total operating expenses
    
    $
    65,724
    
    
    
    47.0
    %
    
    $
    32,708
    
    
    
    43.4
    %
     Operating Loss.
 Interest Expense.
 Other (Expense) Income.
 Taxes.
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LodgeNet Interactive Corporation
    

    Form 10-Q
 Net Loss.
 March 31, 2008

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LodgeNet Interactive Corporation
    

    Form 10-Q
 Critical Accounting Policies
  Revenue Recognition 
 
    
    Guest Entertainment Services.Our primary source of revenue is from providing in-room,
interactive television services to the lodging industry, which the hotel guest typically
purchases on a per-view, hourly or daily basis. These services include on-demand movies,
on-demand games, music and music video, Internet on television and television on-demand. We
recognize revenue from the sale of these Guest Entertainment services in the period in which
such services are sold to the hotel guest and when collection is reasonably assured.
Persuasive evidence of a purchase exists through a guest buy transaction recorded on our
system. No future performance obligations exist with respect to these types of services once
they have been provided to the hotel guest. The prices related to our products or services
are fixed or determinable prior to delivery of the products or services.
 
    
    Television Programming Services.We generate revenue from the sale of basic and premium
television programming to individual hotels. In contrast to Guest Entertainment Services,
where the hotel guest is charged directly for the service, we charge the hotel for our
Television Programming Services. We recognize revenue from the sale of Television Programming
Services in the period in which such services are sold and when collection is reasonably
assured. We establish the prices charged to each hotel and no future performance obligations
exist on programming that has been provided to the hotel. Persuasive evidence of an
arrangement exists through our long-term contract with each hotel. We also have advance
billings from one month to three months for certain basic and premium programming services
where the revenue is deferred and recognized in the periods that services are provided.
 
    
    Broadband System Sales.We provide broadband through the sale and installation of
equipment. Revenue from the sale and installation of this equipment is recognized when the
equipment is installed. The delivery and installation of the equipment are concurrent. In
addition, this equipment, which can be acquired from other manufacturers or retailers, has
stand-alone value to the customer. The software used within these systems can also be
supplied by other vendors unrelated to us. Equipment prices are fixed and determinable prior
to delivery and are based on objective and reliable sales evidence from a stand-alone basis.
 
    
    Broadband Service and Support.We provide ongoing maintenance, service and call center
support services to hotel properties that have been installed by us and also to hotel
properties that have been installed by other providers. In addition, we provide, in some
cases, the hotel property with the portal to access the Internet. We receive monthly service
fees from such hotel properties for our maintenance services and Internet access. We
recognize the service fee ratably over the term of the contract. The prices for these
services are fixed and determinable prior to delivery of the service. The fair value of these
services is known due to objective and reliable evidence from contracts and stand-alone sales.
Under the service agreement, which includes maintenance and Internet access, we recognize
revenue ratably over the term of the maintenance and service contract, typically three years.
 
    
    Advertising and Media Services.We generate revenue from the sale of advertising-based
media services within our hospitality media and connectivity businesses through our
wholly-owned subsidiary, The Hotel Networks, and server based channels within our interactive
room base. The Hotel Networks, which was acquired in the On Command transaction, delivers
targeted advertising to more than 350,000 hotel rooms on 10 popular satellite-delivered
channels such as MSNBC, CNBC, Fox News and The Weather Channel. In addition to the
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LodgeNet Interactive Corporation
    

    Form 10-Q
 satellite platform, we generate revenue from server based channels, which we have operating in
approximately 400,000 of our rooms today, and other interactive and location-based applications
that can be delivered by our interactive television platform. Advertising revenue is
recognized, net of agency commissions, when advertisements are broadcast and when collection is
reasonably assured. We establish the prices charged to each advertiser and no future
performance obligations exist on advertising that has been broadcast. Persuasive evidence of an
arrangement exists through our contracts with each advertiser.
 
    
    Healthcare System Sales and Support.We provide our interactive television infrastructure
and content to the healthcare industry. We generate revenue from two sources: 1) the sale and
installation of system equipment and 2) support agreements with the facility to provide
software maintenance, programming and system maintenance for one year. Historically, revenue
from the sale and installation of our interactive system was recognized ratably over the
one-year maintenance period after the equipment is installed. The contracted system hardware,
installation and maintenance elements were not separable during this start-up phase due to
insufficient vendor specific objective evidence (VSOE). The package price of the interactive
system and related maintenance is fixed and determinable prior to delivery. Upon completion
of the initial year, the support arrangement, which includes interactive content, software
maintenance, and system services, is renewable and is recognized ratably over the term of the
related contract. The hospital is under no obligation to contract with us for the support
arrangement. They may contract with other providers and utilize the equipment and software
installed by us. In the fourth quarter of 2007, we attained 100% renewal activity for
maintenance services therefore establishing VSOE. Effective in the fourth quarter of 2007, the
entire selling price of the interactive system is recognized upon installation.
 
    
    System Sales and Support to Travel Centers.We also market and sell our interactive systems
to travel centers. We generate revenue from three sources: 1) the sale of the interactive
system, which includes equipment, operating software and a one-year parts and labor warranty
2) optional extended service and maintenance agreements, which include future software
upgrades as they become available and 3) programming. The interactive system price includes a
non-exclusive, non-transferable right to use the initial software package. Currently, revenue
from the sale of our interactive system and the extended service and maintenance agreement is
recognized ratably over the three-year maintenance period, which includes the original
one-year warranty and the two-year extension, after the equipment is delivered. The
contracted interactive system and extended service and maintenance elements are not separable
during this start-up phase due to insufficient vendor specific objective evidence (VSOE). The
prices of the interactive system and extended service and maintenance agreement are fixed and
determinable prior to delivery. Management expects VSOE to be established after at least
eighteen months of market history and meaningful renewal activity for maintenance services.
Once VSOE has been established, the entire selling price of the interactive system will be
recognized upon delivery. Programming revenue from this arrangement is recognized on a
recurring basis over the term of the related contract.
 
    
    Hotel System Sales and Support.We also market and sell our Guest Pay interactive systems
to hotels, along with recurring support for interactive content, software maintenance and
technical field service for a fixed fee. Revenue from the sale and installation of the
interactive system, including the operating software, is deferred and recognized over the term
of the contract, generally five years, due to inseparable proprietary software elements. The
multiple elements are not separable because the proprietary software is required to operate
the system and we do not license or sell the software separately under this business model.
The interactive system prices are fixed and determinable prior to delivery. Revenue from this
arrangement, which includes equipment, operating software, interactive content, and
maintenance services, is recognized ratably over the term of the related contract.
 
    
    Master Antenna Television (MATV) Services.We generate revenues from the installation of
master antenna wiring and related infrastructure. Revenues are recognized upon completion of
the MATV installation and the prices of the services are fixed and determinable prior to
delivery. MATV equipment and services are not proprietary and can be supplied by other
vendors.
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LodgeNet Interactive Corporation
    

    Form 10-Q
 
    
    Satellite System Sales.We also generate revenues from the sale and installation of DIRECTV
satellite systems. Revenues are recognized upon installation of the satellite system and the
prices for these services are fixed and determinable prior to delivery. DIRECTV equipment and installation services are not proprietary
and can be supplied by other vendors other than us.
 
    
    Other.We also generate revenue from the sale of miscellaneous system equipment such as
television remotes and service parts and labor. These sales are not made under multiple
element arrangements and we recognize the revenue when the equipment is delivered or service
(repair or installation) has been performed. No future performance obligation exists on an
equipment sale or on a repair service that has been provided.
 Allowance for Doubtful Accounts.
 Allowance for Excess or Obsolete System Components.
 Long-Lived Assets.
 Property and Equipment.
 YearsBuildings
    
    
    30Guest Pay systems:Installed system costs
    
    
    2  7Customer acquisition costs
    
    
    5  7System components
    
    
    5  7Software costs
    
    
    3  5Other equipment
    
    
    3  10
 Allowance for System Removal.
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LodgeNet Interactive Corporation
    

    Form 10-Q
 Goodwill and Other Intangibles Assets. Goodwill and Other Intangible Assets
   YearsHotel contracts and relationships
    
    
    10  20Tradenames
    
    
    7Acquired technologies and patents
    
    
    5Content agreements and relationships
    
    
    4
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LodgeNet Interactive Corporation
    

    Form 10-Q
 Recent Accounting Developments
 Fair Value Measurements
 The Fair Value Option for Financial Assets and Financial Liabilities 
Including an Amendment of FASB Statement No. 115
 Non-controlling Interests in Consolidated Financial Statements  An amendment of ARB No. 51 prohibited
 Business Combinations
 §
    
    Acquisition costs will generally be expensed as incurred;§
    
    In Process R&D will be recorded as an indefinite lived intangible asset at
acquisition date;§
    
    Restructuring costs associated with a business combination will generally be
expensed subsequent to the acquisition date;§
    
    Liabilities will be recorded at acquisition date fair value and subsequently
re-measured;§
    
    Minority interests to be valued at fair value at acquisition date; and§
    
    Changes in deferred tax asset valuation allowances and income tax uncertainties
after the acquisition date generally will affect income tax expense.
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LodgeNet Interactive Corporation
    

    Form 10-Q
 prohibited
 Disclosures about Derivative Instruments and Hedging
Activities an amendment of FASB Statement No. 133
 
 Item 3  Quantitative and Qualitative Disclosures About Market Risk
  Interest.
 Carrying
    
    
    Fair
    
    
    Weighted AverageAmount
    
    
    Value
    
    
    Interest RateBank Credit Facility:Bank term loan
    
    $
    620,313
    
    
    $
    508,657
    
    
    
    4.70
    %Revolving credit facility
    
    
    7,000
    
    
    
    7,000
    
    
    
    6.50
    %9.50% senior notes
    
    
    10
    
    
    
    10
    
    
    
    9.50
    %Capital leases
    
    
    2,816
    
    
    
    2,816
    
    
    
    9.21
    %$
    630,139
    
    
    $
    518,483
    
    
    
    4.74
    %
   Economic Condition.
 March 31, 2008

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##### Table of Contents



LodgeNet Interactive Corporation
    

    Form 10-Q
 Foreign Currency Transactions.
 
 Item 4  Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
 Changes in Internal Control over Financial Reporting.
 March 31, 2008

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##### Table of Contents



LodgeNet Interactive Corporation
    

    Form 10-Q
 
 Part II  Other Information
 
 Item 1  Legal Proceedings
   
 Item 1ARisk Factors
  
 Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
 Issuer Purchases of Equity Securities
 Approximate DollarTotal Number of
    
    Value of Shares thatShares Purchased as
    
    May Yet BeTotal Number
    
    
    
    
    
    Part of Publicly
    
    Purchased Under theof Shares
    
    Average Price
    
    Announced Plans or
    
    Plans or ProgramsPeriod
    
    Purchased
    
    Paid per Share
    
    Programs
    
    (in thousands)1/1/2008 - 1/31/08
    
    
    90,000
    
    
    $
    16.03
    
    
    
    90,000
    
    
    $
    12,4792/1/2008 - 2/29/08
    
    
    30,000
    
    
    $
    10.27
    
    
    
    30,000
    
    
    $
    12,1703/1/2008 - 3/31/08
    
    
    350,000
    
    
    $
    8.32
    
    
    
    350,000
    
    
    $
    9,258Total
    
    
    470,000
    
    
    $
    9.92
    
    
    
    470,000
  
 Item 3  Defaults Upon Senior Securities
  
 Item 4  Submission of Matters to a Vote of Security Holders
  
 Item 5  Other Information
  
 Item 6  Exhibits
 31.1
    
    Rule 13a-14(a)/15(d)-14(a) Certification of Chief Financial Officer31.2
    
    Rule 13a-14(a)/15(d)-14(a) Certification of Chief Executive Officer32
    
    Section 1350 Certifications
 March 31, 2008

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##### Table of Contents



LodgeNet Interactive Corporation
    

    Form 10-Q
 LodgeNet Interactive Corporation and Subsidiaries
 
 Signatures
  LodgeNet Interactive Corporation(Registrant)Date: May 9, 2008
    
    / s / Scott C. PetersenScott C. PetersenPresident, Chief Executive Officer andChairman of the Board of Directors(Principal Executive Officer)Date: May 9, 2008
    
    / s / Gary H. RitondaroGary H. RitondaroSenior Vice President, Chief Financial Officer(Principal Financial & Accounting Officer)
 March 31, 2008

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