##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| | x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the quarterly period ended March 31, 2003

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 Entertainment Corporation

---

(Exact name of registrant as specified in its charter)


|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|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

---

(Address of Principal Executive Offices)      (ZIP code)


(605) 988-1000

---

(Registrants telephone number, including
area code)




---

(Former name, former address and former fiscal year, if changed since last report


Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No o.

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes x No o.

At May 7, 2003, there were 12,431,149 shares outstanding of the
Registrants common stock, $0.01 par value.

This report contains a total of 24 pages not including exhibits.



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TABLE OF CONTENTS



|                                              |                                                                                                |                                                        |  |  |  |  |  | 
|--------------------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------------------ |  |  |  |  |  | 
|Part I  Financial Information               
|                                              | Item 1  Financial Statements                                                                 
|                                              |                                                                                                | Consolidated Balance Sheets (Unaudited)               
|                                              |                                                                                                | Consolidated Statements of Operations (Unaudited)     
|                                              |                                                                                                | Consolidated Statements of Cash Flows (Unaudited)     
|                                              |                                                                                                | Notes to Consolidated Financial Statements (Unaudited)
|                                              | Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                              | Item 3  Quantitative and Qualitative Disclosures About Market Risk                           
|Part II  Other Information                  
|                                              | Item 1  Legal Proceedings                                                                    
|                                              | Item 2  Changes in Securities and Use of Proceeds                                            
|                                              | Item 3  Defaults Upon Senior Securities                                                      
|                                              | Item 4  Submission of Matters to a Vote of Security Holders                                  
|                                              | Item 5  Other Information                                                                    
|                                              | Item 6  Exhibits and Reports on Form 8-K                                                     
|Signatures                                   
|EX-99.1 Certification Pursuant to Section 906



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##### Table of Contents



|                                   |  |          
|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q

LodgeNet Entertainment Corporation and Subsidiaries

Index

|                                                                                               |                                                                                                      |                               |                            |   |      |  | 
|---------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | ----------------------------- | -------------------------- | - | ---- |  | 
|                                                                                               |                                                                                                      |                               |                            |   | Page | 
|                                                                                               |                                                                                                      |                               |                            |   | No.  | 
|                                                                                               |                                                                                                      |                               |                            |   |      | 
|                                                                                               |                                                                                                      | Part I. Financial Information |                            |   |      | 
|Item 1  Financial Statements:                                                                 |                                                                                                      |                               |                            |  
|                                                                                               | Consolidated Balance Sheets (Unaudited) as of March 31, 2003 and December 31, 2002                   |                               |                            | 3 |     
|                                                                                               | Consolidated Statements of Operations (Unaudited) for
the Three Months Ended March 31, 2003 and 2002 |                               |                            | 4 |     
|                                                                                               | Consolidated Statements of Cash Flows (Unaudited) for
the Three Months Ended March 31, 2003 and 2002 |                               |                            | 5 |     
|                                                                                               | Notes to Consolidated Financial Statements (Unaudited)                                               |                               |                            | 6 |     
|Item 2  Managements Discussion and Analysis of Financial Condition
and Results of Operations |                                                                                                      |                               | 11                         |  
|Item 3  Quantitative and Qualitative Disclosures About Market Risk                            |                                                                                                      |                               | 20                         |  
|Item 4  Controls and Procedures                                                               |                                                                                                      |                               | 20                         |  
|                                                                                               |                                                                                                      |                               | Part II. Other Information |   |      |  | 
|Item 1  Legal Proceedings                                                                     |                                                                                                      |                               | 21                         |  
|Item 2  Changes in Securities and Use of Proceeds                                             |                                                                                                      |                               | 21                         |  
|Item 3  Defaults Upon Senior Securities                                                       |                                                                                                      |                               | 21                         |  
|Item 4  Submission of Matters to a Vote of Security Holders                                   |                                                                                                      |                               | 21                         |  
|Item 5  Other Information                                                                     |                                                                                                      |                               | 21                         |  
|Item 6  Exhibits and Reports on Form 8-K                                                      |                                                                                                      |                               | 21                         |  
|Signatures                                                                                     |                                                                                                      |                               | 22                         |  

As used herein (unless the context otherwise requires) LodgeNet, the
Company and/or the Registrant means LodgeNet Entertainment Corporation and
its majority-owned subsidiaries.

March 31, 2003

Page 2



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##### Table of Contents



|                                   |  |          
|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q




Part I  Financial Information




Item 1  Financial Statements




LodgeNet Entertainment Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(Dollar amounts in thousands, except share data)

|                                   |                                                                                                                                   |                                         |                                                   |          |          |           |         |          |              |   |  | 
|---------------------------------- | --------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | ------------------------------------------------- | -------- | -------- | --------- | ------- | -------- | ------------ | - |  | 
|                                   |                                                                                                                                   |                                         |                                                   |          |          | March 31, |         |          | December 31, |  
|                                   |                                                                                                                                   |                                         |                                                   |          |          | 2003      |         |          | 2002         |  
|                                   |                                                                                                                                   |                                         |                                                   |          |          |           |         |          |              |  
|                                   |                                                                                                                                   |                                         |                                                   | Assets   |          |           |         |          |              |   |  | 
|Current assets:                    |                                                                                                                                   |                                         |                                                   |          |          |           |         |         
|                                   | Cash and cash equivalents                                                                                                         |                                         | $                                                 | 1,188    |          |           | $       | 1,107    |             
|                                   | Accounts receivable, net                                                                                                          |                                         |                                                   | 29,440   |          |           |         | 28,373   |             
|                                   | Prepaid expenses and other                                                                                                        |                                         |                                                   | 4,868    |          |           |         | 3,772    |             
|                                   |                                                                                                                                   |                                         |                                                   |          |          |          
|                                   |                                                                                                                                   | Total current assets                    |                                                   |          | 35,496   |           |         |          | 33,252       |  
|Property and equipment, net        |                                                                                                                                   |                                         | 242,076                                           |          |          |           | 243,656 |         
|Debt issuance costs, net           |                                                                                                                                   |                                         | 6,930                                             |          |          |           | 7,443   |         
|Intangible assets, net             |                                                                                                                                   |                                         | 11,250                                            |          |          |           | 12,042  |         
|Other assets                       |                                                                                                                                   |                                         | 1,588                                             |          |          |           | 1,691   |         
|                                   |                                                                                                                                   |                                         |                                                   |          |          |          
|                                   |                                                                                                                                   | $                                       | 297,340                                           |          |          | $         | 298,084 |         
|                                   |                                                                                                                                   |                                         |                                                   |          |          |          
|                                   |                                                                                                                                   |                                         | Liabilities and Stockholders Equity (Deficiency) |          |          |           |         |          |              |   | 
|Current liabilities:               |                                                                                                                                   |                                         |                                                   |          |          |           |         |         
|                                   | Accounts payable                                                                                                                  |                                         | $                                                 | 17,700   |          |           | $       | 12,812   |             
|                                   | Current maturities of long-term debt                                                                                              |                                         |                                                   | 8,527    |          |           |         | 9,320    |             
|                                   | Accrued expenses                                                                                                                  |                                         |                                                   | 15,165   |          |           |         | 12,977   |             
|                                   | Deferred revenue                                                                                                                  |                                         |                                                   | 3,358    |          |           |         | 3,371    |             
|                                   |                                                                                                                                   |                                         |                                                   |          |          |          
|                                   |                                                                                                                                   | Total current liabilities               |                                                   |          | 44,750   |           |         |          | 38,480       |  
|Long-term debt                     |                                                                                                                                   |                                         | 344,936                                           |          |          |           | 344,470 |         
|Other long-term liability          |                                                                                                                                   |                                         | 4,995                                             |          |          |           | 4,995   |         
|Derivative instruments             |                                                                                                                                   |                                         | 11,300                                            |          |          |           | 11,443  |         
|                                   |                                                                                                                                   |                                         |                                                   |          |          |          
|                                   | Total liabilities                                                                                                                 |                                         |                                                   | 405,981  |          |           |         | 399,388  |             
|                                   |                                                                                                                                   |                                         |                                                   |          |          |          
|Commitments and contingencies      |                                                                                                                                   |                                         |                                                   |          |          |           |         |         
|Stockholders equity (deficiency): |                                                                                                                                   |                                         |                                                   |          |          |           |         |         
|                                   | Common stock, $.01 par value, 50,000,000 shares authorized;
12,431,149 shares outstanding at March 31,
2003 and December 31, 2002 |                                         |                                                   | 124      |          |           |         | 124      |             
|                                   | Additional paid-in capital                                                                                                        |                                         |                                                   | 153,437  |          |           |         | 153,363  |             
|                                   | Accumulated deficit                                                                                                               |                                         |                                                   | (249,934 | )        |           |         | (241,515 | )           
|                                   | Accumulated other comprehensive loss                                                                                              |                                         |                                                   | (12,268  | )        |           |         | (13,276  | )           
|                                   |                                                                                                                                   |                                         |                                                   |          |          |          
|                                   |                                                                                                                                   | Total stockholders equity (deficiency) |                                                   |          | (108,641 | )         |         |          | (101,304     | )
|                                   |                                                                                                                                   |                                         |                                                   |          |          |          
|                                   |                                                                                                                                   | $                                       | 297,340                                           |          |          | $         | 298,084 |         
|                                   |                                                                                                                                   |                                         |                                                   |          |          |          

The accompanying notes are an integral part of these consolidated financial statements.

March 31, 2003

Page 3



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##### Table of Contents



|                                   |  |          
|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q




LodgeNet Entertainment Corporation and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(Dollar amounts in thousands, except share data)

|                                                                            |                                     |                                                                                   |            |                              |        |   |            |        |        | 
|--------------------------------------------------------------------------- | ----------------------------------- | --------------------------------------------------------------------------------- | ---------- | ---------------------------- | ------ | - | ---------- | ------ | ------ | 
|                                                                            |                                     |                                                                                   |            | Three Months Ended March 31, |       
|                                                                            |                                     |                                                                                   |            |                              |       
|                                                                            |                                     |                                                                                   |            | 2003                         |        |   | 2002       |       
|                                                                            |                                     |                                                                                   |            |                              |        |   |            |       
|Revenues:                                                                   |                                     |                                                                                   |            |                              |        |   |            |       
|                                                                            | Guest Pay                           |                                                                                   | $          | 57,867                       |        |   | $          | 52,637 |       
|                                                                            | Other                               |                                                                                   |            | 1,779                        |        |   |            | 2,372  |       
|                                                                            |                                     |                                                                                   |            |                              |        |  
|                                                                            |                                     | Total revenues                                                                    |            |                              | 59,646 |   |            |        | 55,009 | 
|                                                                            |                                     |                                                                                   |            |                              |        |  
|Direct costs:                                                               |                                     |                                                                                   |            |                              |        |   |            |       
|                                                                            | Guest Pay                           |                                                                                   |            | 25,744                       |        |   |            | 21,174 |       
|                                                                            | Other                               |                                                                                   |            | 852                          |        |   |            | 1,281  |       
|                                                                            |                                     |                                                                                   |            |                              |        |  
|                                                                            |                                     | Total direct costs (exclusive of other operating
expenses shown separately below) |            |                              | 26,596 |   |            |        | 22,455 | 
|                                                                            |                                     |                                                                                   |            |                              |        |  
|Gross profit (exclusive of other operating expenses
shown separately below) |                                     |                                                                                   | 33,050     |                              |        |   | 32,554     |       
|                                                                            |                                     |                                                                                   |            |                              |        |  
|Operating expenses:                                                         |                                     |                                                                                   |            |                              |        |   |            |       
|                                                                            | Guest Pay operations                |                                                                                   |            | 7,623                        |        |   |            | 6,993  |       
|                                                                            | Selling, general and administrative |                                                                                   |            | 5,415                        |        |   |            | 5,760  |       
|                                                                            | Depreciation and amortization       |                                                                                   |            | 19,977                       |        |   |            | 18,393 |       
|                                                                            |                                     |                                                                                   |            |                              |        |  
|                                                                            |                                     | Total operating expenses                                                          |            |                              | 33,015 |   |            |        | 31,146 | 
|                                                                            |                                     |                                                                                   |            |                              |        |  
|Operating income                                                            |                                     |                                                                                   | 35         |                              |        |   | 1,408      |       
|Investment gains                                                            |                                     |                                                                                   |           |                              |        |   | 280        |       
|Interest expense                                                            |                                     |                                                                                   | (8,389     | )                            |        |   | (8,126     | )     
|Other income (expense), net                                                 |                                     |                                                                                   | 64         |                              |        |   | (103       | )     
|                                                                            |                                     |                                                                                   |            |                              |        |  
|Loss before income taxes                                                    |                                     |                                                                                   | (8,290     | )                            |        |   | (6,541     | )     
|Provision for income taxes                                                  |                                     |                                                                                   | (129       | )                            |        |   | (124       | )     
|                                                                            |                                     |                                                                                   |            |                              |        |  
|Net loss                                                                    |                                     | $                                                                                 | (8,419     | )                            |        | $ | (6,665     | )     
|                                                                            |                                     |                                                                                   |            |                              |        |  
|Net loss per common share (basic and diluted)                               |                                     | $                                                                                 | (0.68      | )                            |        | $ | (0.54      | )     
|                                                                            |                                     |                                                                                   |            |                              |        |  
|Weighted average shares outstanding (basic and diluted)                     |                                     |                                                                                   | 12,431,149 |                              |        |   | 12,300,969 |       
|                                                                            |                                     |                                                                                   |            |                              |        |  

The accompanying notes are an integral part of these consolidated financial statements.

March 31, 2003

Page 4



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|                                   |  |          
|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q




LodgeNet Entertainment Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(Dollar amounts in thousands)

|                                                     |                                                                                 |                                             |                                       |         |                              |       |         |         |        |        |  
|---------------------------------------------------- | ------------------------------------------------------------------------------- | ------------------------------------------- | ------------------------------------- | ------- | ---------------------------- | ----- | ------- | ------- | ------ | ------ | -
|                                                     |                                                                                 |                                             |                                       |         | Three Months Ended March 31, |      
|                                                     |                                                                                 |                                             |                                       |         |                              |      
|                                                     |                                                                                 |                                             |                                       |         | 2003                         |       |         | 2002    |       
|                                                     |                                                                                 |                                             |                                       |         |                              |       |         |         |       
|Operating activities:                                |                                                                                 |                                             |                                       |         |                              |       |         |        
|                                                     | Net loss                                                                        |                                             | $                                     | (8,419  | )                            |       | $       | (6,665  | )     
|                                                     | Adjustments to reconcile net loss to net cash provided
by operating activities: |                                             |                                       |         |                              |       |         |         |       
|                                                     |                                                                                 | Depreciation and amortization               |                                       |         | 19,977                       |       |         |         | 18,393 |       
|                                                     |                                                                                 | Investment gains                            |                                       |         |                             |       |         |         | (280   | )     
|                                                     |                                                                                 | Change in operating assets and liabilities: |                                       |         |                              |       |         |         |        |       
|                                                     |                                                                                 |                                             | Accounts receivable                   |         |                              | (975  | )       |         |        | (5,069 | )
|                                                     |                                                                                 |                                             | Prepaid expenses                      |         |                              | (83   | )       |         |        | (237   | )
|                                                     |                                                                                 |                                             | Accounts payable                      |         |                              | 4,863 |         |         |        | 1,455  |  
|                                                     |                                                                                 |                                             | Accrued expenses and deferred revenue |         |                              | 2,115 |         |         |        | 3,538  |  
|                                                     |                                                                                 |                                             | Other                                 |         |                              | 91    |         |         |        | 84     |  
|                                                     |                                                                                 |                                             |                                       |         |                              |      
|Net cash provided by operating activities            |                                                                                 |                                             | 17,569                                |         |                              |       | 11,219  |        
|                                                     |                                                                                 |                                             |                                       |         |                              |      
|Investing activities:                                |                                                                                 |                                             |                                       |         |                              |       |         |        
|                                                     | Property and equipment additions                                                |                                             |                                       | (16,180 | )                            |       |         | (18,817 | )     
|                                                     | Note receivable advances                                                        |                                             |                                       | (1,000  | )                            |       |         |        |       
|                                                     | Proceeds from affiliates, net                                                   |                                             |                                       |        |                              |       |         | 763     |       
|                                                     |                                                                                 |                                             |                                       |         |                              |      
|Net cash used for investing activities               |                                                                                 |                                             | (17,180                               | )       |                              |       | (18,054 | )      
|                                                     |                                                                                 |                                             |                                       |         |                              |      
|Financing activities:                                |                                                                                 |                                             |                                       |         |                              |       |         |        
|                                                     | Borrowings under revolving credit facility                                      |                                             |                                       | 1,000   |                              |       |         | 7,000   |       
|                                                     | Repayments of revolving credit facility                                         |                                             |                                       |        |                              |       |         | (550    | )     
|                                                     | Repayment of long-term debt                                                     |                                             |                                       | (1,176  | )                            |       |         | (385    | )     
|                                                     | Repayment of capital lease obligations                                          |                                             |                                       | (234    | )                            |       |         | (122    | )     
|                                                     | Exercise of stock options                                                       |                                             |                                       |        |                              |       |         | 423     |       
|                                                     |                                                                                 |                                             |                                       |         |                              |      
|Net cash (used for) provided by financing activities |                                                                                 |                                             | (410                                  | )       |                              |       | 6,366   |        
|                                                     |                                                                                 |                                             |                                       |         |                              |      
|Effect of exchange rates on cash                     |                                                                                 |                                             | 102                                   |         |                              |       |        |        
|                                                     |                                                                                 |                                             |                                       |         |                              |      
|Increase (decrease) in cash and cash equivalents     |                                                                                 |                                             | 81                                    |         |                              |       | (469    | )      
|Cash and cash equivalents at beginning of period     |                                                                                 |                                             | 1,107                                 |         |                              |       | 1,528   |        
|                                                     |                                                                                 |                                             |                                       |         |                              |      
|Cash and cash equivalents at end of period           |                                                                                 | $                                           | 1,188                                 |         |                              | $     | 1,059   |        
|                                                     |                                                                                 |                                             |                                       |         |                              |      
|Supplemental cash flow information:                  |                                                                                 |                                             |                                       |         |                              |       |         |        
|                                                     | Cash paid for interest                                                          |                                             | $                                     | 4,903   |                              |       | $       | 4,793   |       
|                                                     |                                                                                 |                                             |                                       |         |                              |      

The accompanying notes are an integral part of these consolidated financial statements.

March 31, 2003

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|                                   |  |          
|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q




LodgeNet Entertainment Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)

Note 1  Basis of Presentation

The accompanying consolidated financial statements as of March 31, 2003, and
for the three month periods ended March 31, 2003 and 2002, have been prepared
by LodgeNet Entertainment Corporation (the Company), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission (the
Commission). The information furnished in the accompanying consolidated
financial statements reflects all adjustments, consisting of normal recurring
adjustments, which, in the opinion of management, are necessary for a fair
presentation of such financial statements.

Certain information and footnote disclosures, normally included in financial
statements prepared in accordance with generally accepted accounting
principles, have been condensed or omitted pursuant to the rules and
regulations of the Commission. Although the Company believes that the
disclosures are adequate to make the information presented herein not
misleading, it is recommended that these unaudited consolidated financial
statements be read in conjunction with the more detailed information contained
in the Companys Annual Report on Form 10-K for 2002, as filed with the
Commission. The results of operations for the three month periods ended March
31, 2003 and 2002 are not necessarily indicative of the results of operations
for the full year due to inherent seasonality within the business among other
factors.

The consolidated financial statements include the accounts of LodgeNet
Entertainment Corporation and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.

Note 2  Property and Equipment, Net

Property and equipment was comprised as follows (in thousands):

|                                     |                            |       |          |           |         |   |              |         |         | 
|------------------------------------ | -------------------------- | ----- | -------- | --------- | ------- | - | ------------ | ------- | ------- | 
|                                     |                            |       |          | March 31, |         |   | December 31, |        
|                                     |                            |       |          | 2003      |         |   | 2002         |        
|                                     |                            |       |          |           |         |   |              |        
|Land, building and equipment         |                            | $     | 73,390   |           |         | $ | 73,152       |        
|Free-to-guest equipment              |                            |       | 29,003   |           |         |   | 28,160       |        
|Guest Pay systems:                   |                            |       |          |           |         |   |              |        
|                                     | Installed                  |       |          | 407,989   |         |   |              | 397,392 |        
|                                     | Customer acquisition costs |       |          | 50,203    |         |   |              | 49,265  |        
|                                     | System components          |       |          | 28,599    |         |   |              | 28,867  |        
|                                     | Software costs             |       |          | 17,962    |         |   |              | 17,224  |        
|                                     |                            |       |          |           |         |  
|                                     |                            | Total |          |           | 607,146 |   |              |         | 594,060 | 
|Less  depreciation and amortization |                            |       | (365,070 | )         |         |   | (350,404     | )      
|                                     |                            |       |          |           |         |  
|Property and equipment, net          |                            | $     | 242,076  |           |         | $ | 243,656      |        
|                                     |                            |       |          |           |         |  

Note 3  Loss Per Share Computation

The Company follows SFAS No. 128, Earnings Per Share, which requires the
computation and disclosure of two EPS amounts, basic and diluted. Basic EPS is
computed based only on the weighted average number of common shares actually
outstanding during the period. Diluted EPS is computed based on the weighted
average number of common shares outstanding plus all potentially dilutive
common shares outstanding during the period. Potential common shares that have
an anti-dilutive effect are excluded form diluted earnings per share.

The loss per common share for the three months ended March 31, 2003 and 2002,
is based on 12,431,149 and 12,300,969 weighted average shares outstanding
during the respective periods. Potential common shares were not included in the
computation of diluted earnings per share because their inclusion would be
anti-dilutive. As of

March 31, 2003

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##### Table of Contents



|                                   |  |          
|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q

March 31, 2003 and 2002, the number of potential common
shares was approximately 5,028,000 and 4,569,000, respectively. Such potential
dilutive common shares consist of stock options and warrants.

Note 4  Stock-Based Compensation

The Company measures compensation costs associated with its stock option plans
using the intrinsic value method. Accordingly, compensation costs for stock
options are measured as the excess, if any, of the quoted market price of the
Companys stock at the date of grant over the amount an employee must pay to
acquire the stock. Had compensation costs been determined based on the fair
value at the date of grant for awards, net loss and loss per share would have
changed to the pro forma amounts as follows for the periods ended March 31 (in
thousands of dollars, except per share amounts):

|                                                                                                              |             |   |                    |       |   |      |        |       |  
|------------------------------------------------------------------------------------------------------------- | ----------- | - | ------------------ | ----- | - | ---- | ------ | ----- | -
|                                                                                                              |             |   | Three Months Ended |      
|                                                                                                              |             |   | March 31,          |      
|                                                                                                              |             |   |                    |      
|                                                                                                              |             |   | 2003               |       |   | 2002 |       
|                                                                                                              |             |   |                    |       |   |      |       
|Net loss, as reported                                                                                         |             | $ | (8,419             | )     |   | $    | (6,665 | )    
|Add: stock based employee compensation expense
determined under fair value method, net
of related tax
effects |             |   | (72                | )     |   |      |       |      
|                                                                                                              |             |   |                    |       |   |     
|Net loss, pro forma                                                                                           |             | $ | (8,491             | )     |   | $    | (6,665 | )    
|                                                                                                              |             |   |                    |       |   |     
|Loss per share (basic and diluted)                                                                            |             |   |                    |       |   |      |        |      
|                                                                                                              | As reported |   | $                  | (0.68 | ) |      | $      | (0.54 | )
|                                                                                                              | Pro forma   |   |                    | (0.68 | ) |      |        | (0.54 | )

Note 5  Long-term Debt and Credit Facilities

Long-term debt was comprised as follows (in thousands):

|                        |                           |   |           |         |   |              |         |         |  
|----------------------- | ------------------------- | - | --------- | ------- | - | ------------ | ------- | ------- | -
|                        |                           |   | March 31, |         |   | December 31, |        
|                        |                           |   | 2003      |         |   | 2002         |        
|                        |                           |   |           |         |   |              |        
|Bank Credit Facility:   |                           |   |           |         |   |              |         |        
|                        | Bank term loan            |   | $         | 147,750 |   |              | $       | 148,125 |  
|                        | Revolving credit facility |   |           | 35,000  |   |              |         | 34,000  |  
|10.25% senior notes     |                           |   | 150,000   |         |   |              | 150,000 |        
|11.50% senior notes     |                           |   | 18,000    |         |   |              | 18,000  |        
|                        | Less unamortized discount |   |           | (154    | ) |              |         | (186    | )
|Capital leases          |                           |   | 2,867     |         |   |              | 3,050   |        
|Other                   |                           |   |          |         |   |              | 801     |        
|                        |                           |   |           |         |   |             
|                        |                           |   | 353,463   |         |   |              | 353,790 |        
|Less current maturities |                           |   | (8,527    | )       |   |              | (9,320  | )      
|                        |                           |   |           |         |   |             
|                        |                           | $ | 344,936   |         |   | $            | 344,470 |        
|                        |                           |   |           |         |   |             

Bank Credit Facility On August 29, 2001, the Company entered into a $225
million bank credit facility, comprised of a $150 million term loan and a $75
million revolving credit facility that may be increased to $100 million,
subject to certain limitations. The term loan matures in June 2006 and
quarterly repayments began in December 2001. The term loan bears interest at
the Companys option of (1) the banks base rate plus a margin of 2.75% or (2)
LIBOR plus a margin of 4.00%. The term loan interest rate as of March 31, 2003
was 5.29%. The revolving credit facility matures in June 2006 and loans bear
interest at the Companys option of (1) the banks base rate plus a margin of
from 1.00% to 1.75%, or (2) LIBOR plus a margin of from 2.25% to 3.00%. The
weighted average interest rate of the revolving credit facility as of March 31,
2003 was 4.29%. Loans under the credit facility are collateralized by a first
priority security interest in all of the Companys assets.

March 31, 2003

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|LodgeNet Entertainment Corporation |  | Form 10-Q

The facility provides for the issuance of letters of credit up to $10 million,
subject to customary terms and conditions. As of March 31, 2003, the Company
had outstanding letters of credit totaling $2 million.

The facility includes terms and conditions which require compliance in
accordance with a material adverse effect covenant as well as the maintenance
of certain financial ratios and place limitations on capital expenditures,
additional indebtedness, liens, investments, guarantees, asset sales and
certain payments or distributions in respect of the common stock. In August
2002, the Company amended its existing bank credit facility. The amendment
modified the covenants for leverage and interest coverage. As of March 31,
2003, the Company was in compliance with all covenants, terms and conditions of
the bank credit facility.

10.25% Senior Notes In December 1996, the Company issued $150 million of
unsecured 10.25% senior notes (the 10.25% Notes), due December 15, 2006. The
10.25% Notes are unsecured, rank pari passuin right of payment with future
unsubordinated unsecured indebtedness and rank senior in right of payment to
all subordinated indebtedness of the Company. The 10.25% Notes require
semi-annual interest payments and contain certain covenants including
limitations on indebtedness, liens, guarantees, asset sales and certain
payments or distributions in respect to capital stock. As of March 31, 2003,
the Company was in compliance with all covenants, terms, and conditions of the
10.25% Notes.

The 10.25% Notes are redeemable at the option of the Company, in whole or in
part at 102.563% of their principal amount (plus accrued and unpaid interest)
declining to 100% of their principal amount (plus accrued and unpaid interest)
on or after December 15, 2003.

11.50% Senior Notes During 1995, the Company issued $30 million principal
amount of unsecured 11.50% senior notes (the 11.50% Notes). Annual principal
payments of $6 million commenced in July 2001 and continue through July 2005.
Semi-annual interest payments are required. The Company issued a total of
480,000 warrants to purchase common stock of the Company in connection with the
issuance of the 11.50% Notes and the value of the warrants, $1.68 million, was
recorded as additional paid-in capital and shown as a discount on the 11.50%
Notes. As part of the refinancing transaction in which the 10.25% Notes were
issued, the holders of the 11.50% Notes adopted the covenants and ranking of
the 10.25% Notes.

Capital Leases As of March 31, 2003, the Company has total capital lease
obligations of $2,867,000. Equipment acquired under capital lease
arrangements totaled $2,208,000 during the year ended December 31, 2002, and
$77,000 during the three months ended March 31, 2003.

Long-term debt has the following scheduled principal maturities for the twelve
months ended March 31 (in thousands of dollars): 2004  $8,527; 2005  $8,418;
2006  $7,989; 2007  $328,529.

The Company does not utilize special purpose entities or off-balance sheet
financial arrangements.

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|LodgeNet Entertainment Corporation |  | Form 10-Q

Note 6  Comprehensive Loss

Statement of Financial Accounting Standard No. 130, Reporting Comprehensive
Income, provides standards for reporting and disclosure of comprehensive loss
and its components. Comprehensive loss reflects the changes in equity during a
period from transactions and other events and circumstances. For the Company,
comprehensive loss was as follows for the periods ended March 31 (in
thousands):

|                                          |  |                    |        |   |      |   |        |  
|----------------------------------------- |  | ------------------ | ------ | - | ---- | - | ------ | -
|                                          |  | Three Months Ended |       
|                                          |  | March 31,          |       
|                                          |  |                    |       
|                                          |  | 2003               |        |   | 2002 |  
|                                          |  |                    |        |   |      |  
|Net loss                                  |  | $                  | (8,419 | ) |      | $ | (6,665 | )
|Foreign currency translation adjustment   |  |                    | 865    |   |      |   | (20    | )
|Unrealized gain on derivative instruments |  |                    | 143    |   |      |   | 1,230  |  
|                                          |  |                    |        |   |      |  
|Comprehensive loss                        |  | $                  | (7,411 | ) |      | $ | (5,455 | )
|                                          |  |                    |        |   |      |  

Components of accumulated other comprehensive loss were as follows (in
thousands):

|                                          |  |           |         |   |              |   |         |  
|----------------------------------------- |  | --------- | ------- | - | ------------ | - | ------- | -
|                                          |  | March 31, |         |   | December 31, |  
|                                          |  | 2003      |         |   | 2002         |  
|                                          |  |           |         |   |              |  
|Unrealized loss on derivative instruments |  | $         | (11,300 | ) |              | $ | (11,443 | )
|Foreign currency translation adjustment   |  |           | (968    | ) |              |   | (1,833  | )
|                                          |  |           |         |   |              |  
|Accumulated other comprehensive loss      |  | $         | (12,268 | ) |              | $ | (13,276 | )
|                                          |  |           |         |   |              |  

Note 7  Effect of Recently Issued Accounting Standards

In November 2002, the FASB Emerging Issues Task Force reached a consensus on
EITF 00-21, Accounting for Revenue Arrangements with Multiple Deliverables.
The EITF addresses how to account for multiple-deliverable revenue arrangements
and focuses on when a revenue arrangement should be separated into different
revenue-generating deliverables or units of accounting and if so, how the
arrangement considerations should be allocated to the different deliverables or
units of accounting. The provisions of EITF 00-21 are effective for fiscal
years beginning after December 15, 2002. The adoption of the EITF had no
impact on the Companys consolidated financial statements.

In November 2002, FASB Interpretation No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others was released and had no impact on the Companys
consolidated financial statements.

In December 2002, the Financial Accounting Standards Board (FASB) issued SFAS
No. 148, Accounting for Stock Based CompensationTransition and Disclosureas
Amendment to FAS 123. SFAS 148 provides two additional transition methods for
entities that adopt the preferable method of accounting for stock based
compensation. In addition, the statement requires disclosure of comparable
information for all companies regardless of whether, when, or how an entity
adopts the preferable, fair value based method of accounting. These disclosures
are now required for interim periods in addition to the traditional annual
disclosure. The Company adopted the additional disclosure provisions of this
statement in the first quarter of 2003. The amendments to SFAS No. 123, which
provide for additional transition methods, are effective for periods beginning
after December 15, 2002. The transition methods were not applicable to the
Company as it continues to account for stock options using the intrinsic value
method.

In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of
Variable Interest Entities. This interpretation of Accounting Research
Bulletin No. 51, Consolidated Financial Statements, addresses consolidation by
business enterprises of variable interest entities that possess certain
characteristics. FIN 46 requires that if a business enterprise has a
controlling financial interest in a variable interest entity, the assets,
liabilities, and results of the activities of the variable interest entity must
be included in the consolidated financial statements with those of the business
enterprise. FIN 46 applies immediately to variable interest entities created
after January 31, 2003 and to

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|LodgeNet Entertainment Corporation |  | Form 10-Q

variable interest entities in which an enterprise obtains an interest after
that date. The Company does not have ownership in any variable interest
entities and will apply the consolidation requirements of FIN 46 in future
periods should an interest in a variable interest entity be acquired.

Note 8  Gamet and PointOne

On March 21, 2003, the Company entered into an agreement with Gamet Technology,
Inc (Gamet), a company engaged in the casino system technology industry, to
form a limited liability company, PointOne Technologies, LLC (PointOne). The
business purpose of PointOne is to engage in the development of server-based
gaming systems for the casino industry by utilizing some of the Companys
intellectual property. The Company entered into a technology licensing
agreement with PointOne, under which the Company may derive revenue through the
sale or license of server-based gaming systems, and for which the Company
received a 37.5% equity interest in PointOne, which could be diluted to less
than 20% under certain circumstances. The Company contributed technology to
PointOne, including in-process research and development, and accordingly has
not recorded the investment in PointOne as an asset. Gamet contributed certain
intellectual property related to server-based gaming to PointOne and entered
into a technology licensing agreement with PointOne for other owned software,
for which Gamet received a 62.5% equity interest in PointOne. Other than the
non-exclusive and non-transferable rights to utilize the Companys licensed
technology, the Company has not provided any funds nor is the Company obligated
or committed to providing any current and future funds to PointOne.
Additionally, the Company reserves the right to terminate its technology
licensing agreement with PointOne if it does not attain a specified level of
funding by September of 2003. As of March 31, 2003, PointOne has initiated
steps to attain capital funding from other sources.

During the first quarter of 2003, the Company advanced $1.0 million to Gamet
pursuant to a written promissory note. The note is personally guaranteed by a
principal owner of Gamet and collateralized by payments due to said principal
owner from a specified stock purchase agreement. The note was due on April 18,
2003; however, the Company is in discussion with Gamet to extend the maturity
date of the note.

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|LodgeNet Entertainment Corporation |  | Form 10-Q




Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis provides information concerning our
results of operations and financial condition. This discussion should be read
in conjunction with the accompanying consolidated financial statements and the
notes thereto.

Special Note Regarding Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q constitute
forward-looking statements. When used in this Quarterly Report, the words
expects, anticipates, estimates, believes, no assurance and similar
expressions and statements which are made in the future tense, are intended to
identify such forward-looking statements. Such forward-looking statements
within the meaning of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, are subject to risks,
uncertainties, and other factors that could cause the Companys 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 the
foregoing sections, such factors include, among others, the following: the
effects of economic conditions, including in particular the economic condition
of the lodging industry, competition, programming availability and quality,
technological developments, developmental difficulties and delays,
relationships with clients and property owners, the availability of capital to
finance growth, the impact of government regulations, and other factors
detailed, from time to time, in the Companys filings with the Securities and
Exchange Commission. These forward-looking statements speak only as of the date
of this Quarterly Report. The Company expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Companys expectations
with regard thereto or any change in events, conditions or circumstances on
which any such statement is based.

Overview

LodgeNet Entertainment Corporation is the worlds largest and leading provider
of broadband, interactive TV systems and services to hotels, resorts and
casinos throughout the United States and Canada as well as select international
markets. More than 260 million guests a year can use a wide range of LodgeNet
interactive services including digital movies, music and television on-demand
programming as well as video games, high-speed Internet access and other
services designed to make their stay more enjoyable, productive and convenient.
As of March 31, 2003, the Company provided interactive television services to
approximately 5,700 hotel properties serving more than 960,000 rooms, more
properties and rooms than any other provider in the world.

Guest Pay Interactive Services.Guest Pay interactive services are purchased by
guests on a per-view, hourly, or daily basis and include on-demand movies,
television on-demand programming, music and music videos, network-based video
games, Internet on television, and high-speed Internet access services. Guest
Pay packages may also include additional satellite-delivered basic and premium
cable television, video review of room charges, video checkout, guest
surveying, and merchandising services that are paid for by the hotel and
provided to guests at no charge.

The Companys Guest Pay interactive revenues depend on a number of factors,
including the number of rooms equipped with the Companys systems, hotel
occupancy rates and guest demographics, and the popularity, pricing, and
availability of programming. The primary direct costs of providing Guest Pay
interactive services are (i) license fees paid to studios for non-exclusive
distribution rights to recently-released major motion pictures; (ii) nominal
one-time license fees paid for independent films, most of which are non-rated
and intended for mature audiences; (iii) license fees for music rights
associated with motion pictures (iv) license fees for other interactive
services; (v) Internet connectivity costs; and (vi) the commission retained by
the hotel. Guest Pay operating expenses include costs of system maintenance
and support, programming delivery and distribution, data retrieval, insurance,
and personal property taxes.

The room installations for the twelve months ended March 31, 2003 represent an
increase of 7.4% for Guest Pay interactive rooms as compared to March 31, 2002.
Additionally, digital services rooms increased 107.9% over the number of
installed rooms at March 31, 2002. De-installation activity is less than 2% of
the total installed number of rooms.

March 31, 2003

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|LodgeNet Entertainment Corporation |  | Form 10-Q

The Companys base of installed rooms was comprised as follows at March 31:

|                                |  |      |         |  |      |  |         |  | 
|------------------------------- |  | ---- | ------- |  | ---- |  | ------- |  | 
|                                |  | 2003 |         |  | 2002 | 
|                                |  |      |         |  |      | 
|Guest Pay interactive rooms (1) |  |      | 889,776 |  |      |  | 828,650 | 
|Digital services rooms (2)      |  |      | 297,592 |  |      |  | 143,177 | 
|Total rooms served (3)          |  |      | 962,852 |  |      |  | 908,487 | 



| | (1) |  | 100% of Guest Pay interactive rooms are served by the Companys
on-demand interactive systems.                                                                                                                                                                                                                                                                                              
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | Digital services rooms are equipped with the interactive digital
systems where on-demand movies, television on-demand programming, and
music content are updated and delivered via satellite to the Companys
systems within respective hotels. Digital rooms are included with the
total Guest Pay interactive rooms and represent more than 33% of the
Guest Pay interactive rooms served.
|
| | (3) |  | Total rooms served represent rooms receiving one or more of the
Companys services, including rooms served by international licensees.                                                                                                                                                                                                                                                      

Free-to-Guest and Other Services.In addition to Guest Pay interactive
services, the Company provides satellite-delivered basic and premium cable
television programming for which the hotel, rather than its guests, pays the
charges. The hotel pays the Company a fixed monthly charge per room for each
programming channel provided. The Company obtains its free-to-guest programming
pursuant to multi-year agreements and pays a monthly fee per room, which varies
depending on incentive programs in effect from time to time.

To meet the needs of its hotel customers related to the Companys service
offerings, the Company provides a variety of other services to its hotel
customers, including the sale of system equipment and service parts and labor.
Results from these other services and free-to-guest services delivered to rooms
not receiving Guest Pay interactive services are included in the other
components of revenues and direct costs related to such revenues are included
in the statements of operations.

Gamet and PointOne.On March 21, 2003, the Company entered into an agreement
with Gamet Technology, Inc (Gamet), a company engaged in the casino system
technology industry, to form a limited liability company, PointOne
Technologies, LLC (PointOne). The business purpose of PointOne is to engage in
the development of server-based gaming systems for the casino industry by
utilizing some of the Companys intellectual property. The Company entered
into a technology licensing agreement with PointOne, under which the Company
may derive revenue through the sale or license of server-based gaming systems,
and for which the Company received a 37.5% equity interest in PointOne, which
could be diluted to less than 20% under certain circumstances. The Company
contributed technology to PointOne, including in-process research and
development, and accordingly has not recorded the investment in PointOne as an
asset. Gamet contributed certain intellectual property related to server-based
gaming to PointOne and entered into a technology licensing agreement with
PointOne for other owned software, for which Gamet received a 62.5% equity
interest in PointOne. Other than the non-exclusive and non-transferable rights
to utilize the Companys licensed technology, the Company has not provided any
funds nor is the Company obligated or committed to providing any current and
future funds to PointOne. Additionally, the Company reserves the right to
terminate its technology licensing agreement with PointOne if it does not
attain a specified level of funding by September of 2003. As of March 31,
2003, PointOne has initiated steps to attain capital funding from other
sources.

During the first quarter of 2003, the Company advanced $1.0 million to Gamet
pursuant to a written promissory note. The note is personally guaranteed by a
principal owner of Gamet and collateralized by payments due to said principal
owner from a specified stock purchase agreement. The note was due on April 18,
2003; however, the Company is in discussion with Gamet to extend the maturity
date of the note.

March 31, 2003

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|LodgeNet Entertainment Corporation |  | Form 10-Q

Critical Accounting Policies

Managements discussion and analysis of financial condition and results of
operations are based upon the Companys financial statements, which have been
prepared in conformity with accounting principles generally accepted in the
United States of America. The Companys primary cost drivers are fact-based
with predetermined rates, such as hotel commissions, license fees paid for
major motion pictures, or one-time flat fees for independent films. However,
the preparation of financial statements requires the Company to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the reported amounts of revenues and expenses during the reporting period. The
Company bases its estimates on historical experience and on various other
assumptions that the Company believes to be reasonable based upon the available
information. The following critical policies relate to the more significant
judgments and estimates used in the preparation of the financial statements:

Revenue Recognition.The Company recognizes revenue from the sale of
interactive television services in the period the related services are provided
to the hotel or guest. No future performance obligations exist on a service
that has been provided. The prices related to the Companys products or
services are fixed prior to delivery of the products or services. Revenue from
the sale of system equipment and service parts and labor is recognized when the
equipment is delivered or the service has been provided. The Company also has
advance billings for certain free-to-guest programming services where the
revenue is deferred and recognized in the periods that services are provided.

Allowance for doubtful accounts.The Company determines the estimate of the
allowance for doubtful accounts considering several factors, including: (1)
historical experience, (2) aging of the accounts receivable, and (3) contract
terms between the hotel and the Company. In accordance with the Companys hotel
contracts, monies collected by hotels for interactive television services are
held in trust on behalf of the Company. Collectibility is reasonably assured as
supported by the Companys nominal write-off history. If the financial
condition of a hotel chain or group of hotels were to deteriorate and reduce
the ability to remit the Companys monies, the Company may be required to
increase its allowance by recording additional bad debt expense.

Allowance for excess or obsolete system components.The Company regularly
evaluates component levels to ascertain build requirements based on its backlog
and service requirements based on its current installed base. When a certain
system component becomes obsolete due to technological changes and it is
determined that the component cannot be utilized within its current installed
base, the Company records a provision for excess and obsolete component
inventory based on estimated forecasts of product demand and service
requirements. The Company makes every effort to ensure the accuracy of its
forecasts of service requirements and future production, however any
significant unanticipated changes in demand or technological advances could
have an impact on the value of system components and reported operating
results.

Property and Equipment.The Companys property and equipment is stated at
cost, net of accumulated depreciation and amortization. Installed Guest Pay
and free-to-guest systems consist of equipment, related costs of installation,
including certain payroll costs, and customer acquisition costs. Maintenance
costs, which do not significantly extend the useful lives of the respective
assets, and repair costs are charged to operations as incurred. The Company
begins depreciating Guest Pay and free-to-guest systems when such systems are
installed and activated. Depreciation of other equipment begins when such
equipment is placed in service. The Company attributes no salvage value to
equipment and depreciation and amortization are computed using the
straight-line method over the following useful lives:

|                   |                   |  |        |       | 
|------------------ | ----------------- |  | ------ | ----- | 
|                   |                   |  | Years 
|                   |                   |  |       
|Buildings          |                   |  | 30     |      
|Guest Pay systems: |                   |  |        |      
|                   | System components |  |        | 5 - 7 | 
|                   | In-room equipment |  |        | 2 - 5 | 
|Other equipment    |                   |  | 3 - 10 |      

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|LodgeNet Entertainment Corporation |  | Form 10-Q

Discussion and Analysis of Results of Operations
Three Months Ended March 31, 2003 and 2002

Revenue Analysis. The Companys total revenue for the first quarter of 2003
increased 8.4%, or $4.6 million, in comparison to the first quarter of 2002.
The following table sets forth the components of revenue (in thousands) for the
quarter ending March 31:

|          |  |        |        |  |         |          |       |        |  |   |         |  |          |  |       | 
|--------- |  | ------ | ------ |  | ------- | -------- | ----- | ------ |  | - | ------- |  | -------- |  | ----- | 
|          |  | 2003   |        |  | 2002    |         
|          |  |        |        |  |         |         
|          |  |        |        |  |         | Percent  |       |        |  |   |         |  | Percent  | 
|          |  |        |        |  |         | of Total |       |        |  |   |         |  | of Total | 
|Revenue:  |  | Amount |        |  | Revenue |          |       | Amount |  |   | Revenue | 
|          |  |        |        |  |         |          |       |        |  |   |         | 
|Guest Pay |  | $      | 57,867 |  |         |          | 97.0  |        |  | $ | 52,637  |  |          |  | 95.7  | 
|Other     |  |        | 1,779  |  |         |          | 3.0   |        |  |   | 2,372   |  |          |  | 4.3   | 
|          |  |        |        |  |         |          |       |        |  |   |         | 
|          |  | $      | 59,646 |  |         |          | 100.0 |        |  | $ | 55,009  |  |          |  | 100.0 | 
|          |  |        |        |  |         |          |       |        |  |   |         | 

Guest Pay interactive revenue increased 9.9%, or $5.2 million, in the first
quarter of 2003 in comparison to the same quarter of 2002. This increase was
attributable to a 7.7% increase in the average number of installed Guest Pay
interactive rooms, including an additional 154,000 digital services rooms
deployed compared to the first quarter of 2002. The following table sets forth
information in regard to average monthly revenue per Guest Pay room for the
quarter ending March 31:

|                                  |                                   |                          |   |       |       |  |      |       |       | 
|--------------------------------- | --------------------------------- | ------------------------ | - | ----- | ----- |  | ---- | ----- | ----- | 
|                                  |                                   |                          |   | 2003  |       |  | 2002 |      
|                                  |                                   |                          |   |       |       |  |      |      
|Average monthly revenue per room: |                                   |                          |   |       |       |  |      |      
|                                  | Movie revenue                     |                          | $ | 17.12 |       |  | $    | 17.04 |      
|                                  | Other interactive service revenue |                          |   | 4.77  |       |  |      | 4.41  |      
|                                  |                                   |                          |   |       |       | 
|                                  |                                   | Total per Guest Pay room |   | $     | 21.89 |  |      | $     | 21.45 | 
|                                  |                                   |                          |   |       |       | 

Average monthly movie revenue per room increased 0.5% despite a decline in
reported occupancy levels (140 basis points) versus the first quarter of 2002.
Other Guest Pay interactive services increased 8.2%, driven by expanding
revenue from TV Internet, TV on demand, digital music and music videos, cable
television programming services, and other interactive TV services available
with the digital system.

Revenue from other sources includes revenue from free-to-guest services
provided to hotels not receiving Guest Pay services and sales of system
equipment and service parts and labor. Other revenue decreased $593,000, or
25.0%, driven by decreased equipment sales to international licensees due to
the civil and economic uncertainties in the international markets the Company
serves.

Gross Profit (exclusive of other operating expenses discussed separately
below).Gross profit totaled $33.1 million for the first quarter ended March
31, 2003, an increase of 1.5% over the first quarter of 2002.

|                     |           |   |        |        |   |      |        |        |  
|-------------------- | --------- | - | ------ | ------ | - | ---- | ------ | ------ | -
|                     |           |   | 2003   |        |   | 2002 |       
|                     |           |   |        |        |   |      |       
|Gross profit:        |           |   |        |        |   |      |        |       
|                     | Guest Pay |   | $      | 32,123 |   |      | $      | 31,463 |  
|                     | Other     |   |        | 927    |   |      |        | 1,091  |  
|                     |           |   |        |        |   |     
|                     |           | $ | 33,050 |        |   | $    | 32,554 |       
|                     |           |   |        |        |   |     
|Gross profit margin: |           |   |        |        |   |      |        |       
|                     | Guest Pay |   |        | 55.5   | % |      |        | 59.8   | %
|                     | Other     |   |        | 52.1   | % |      |        | 46.0   | %
|                     | Composite |   |        | 55.4   | % |      |        | 59.2   | %

March 31, 2003

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|                                   |  |          
|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q

Gross profit on Guest Pay interactive services increased 2.1%, or $660,000, on
a 9.9% increase in related revenue. Guest Pay direct costs (movie license
fees, music license fees within major motion pictures, license fees for other
interactive services, Internet connectivity fees, and the commission retained
by the hotel) are primarily based on related revenue, and such costs generally
vary directly with revenue. As a percentage of revenue, the decrease to gross
profit margin from 59.8% to 55.5%, was primarily due to increased Internet
connectivity costs, programming costs, and hotel commissions.

Gross profit on other services decreased $164,000, or 15.0%, in the first
quarter of 2003 from the prior year quarter and the gross profit margin
increased from 46.0% to 52.1%. The resulting increased gross profit margin was
attributable to the decrease in lower margin sales of equipment to
international licensees.

As a percentage of revenue, the Companys overall gross profit margin of 55.4%
was lower than prior year quarter of 59.2%. In addition to the information
provided above, the following table sets forth the primary change drivers of
composite gross margin for the quarter ended March 31:

|                    |                   |  |      |   |  |      |      |   |        |  |      |      | 
|------------------- | ----------------- |  | ---- | - |  | ---- | ---- | - | ------ |  | ---- | ---- | 
|                    |                   |  | 2003 |   |  | 2002 |      |   | Change | 
|                    |                   |  |      |   |  |      |      |   |        | 
|Gross profit margin |                   |  | 55.4 | % |  |      | 59.2 | % |        |  | -3.8 |     
|Change drivers:     |                   |  |      |   |  |      |      |   |        |  |      |     
|                    | TV Internet       |  |      |   |  |      |      |   |        |  |      | -2.0 | 
|                    | Programming costs |  |      |   |  |      |      |   |        |  |      | -0.9 | 
|                    | Hotel commissions |  |      |   |  |      |      |   |        |  |      | -0.9 | 
|                    |                   |  |      |   |  |      |      |   |        |  |     
|                    |                   |  |      |   |  |      |      |   |        |  | -3.8 |     
|                    |                   |  |      |   |  |      |      |   |        |  |     

Operating Expenses.The following table sets forth information in regard to
the Companys operating expenses for the quarter ending March 31 (dollar
amounts in thousands):

|                    |                                     |                          |   |        |        |  |          |          |      |        |   |        |          |  |          |      |      | 
|------------------- | ----------------------------------- | ------------------------ | - | ------ | ------ |  | -------- | -------- | ---- | ------ | - | ------ | -------- |  | -------- | ---- | ---- | 
|                    |                                     |                          |   | 2003   |        |  | 2002     |         
|                    |                                     |                          |   |        |        |  |          |         
|                    |                                     |                          |   |        |        |  |          | Percent  |      |        |   |        |          |  | Percent  |     
|                    |                                     |                          |   |        |        |  |          | of Total |      |        |   |        |          |  | of Total |     
|                    |                                     |                          |   | Amount |        |  | Revenues |          |      | Amount |   |        | Revenues | 
|                    |                                     |                          |   |        |        |  |          |          |      |        |   |        |          | 
|Operating expenses: |                                     |                          |   |        |        |  |          |          |      |        |   |        |          |  |          |     
|                    | Guest Pay operations                |                          | $ | 7,623  |        |  |          | 12.8     |      |        | $ | 6,993  |          |  |          | 12.7 |     
|                    | Selling, general and administrative |                          |   | 5,415  |        |  |          | 9.1      |      |        |   | 5,760  |          |  |          | 10.5 |     
|                    | Depreciation and amortization       |                          |   | 19,977 |        |  |          | 33.5     |      |        |   | 18,393 |          |  |          | 33.4 |     
|                    |                                     |                          |   |        |        |  |          |          |      |        |   |        |         
|                    |                                     | Total operating expenses |   | $      | 33,015 |  |          |          | 55.4 |        |   | $      | 31,146   |  |          |      | 56.6 | 
|                    |                                     |                          |   |        |        |  |          |          |      |        |   |       

Guest Pay operations expenses consist of costs directly related to the
operation of systems at hotel sites. The increase in Guest Pay operations
expenses of $630,000, or 9.0%, from the prior year quarter was due primarily to
the 7.7% increase in the average number of installed Guest Pay interactive
rooms. Per average installed room, Guest Pay operations expenses were $2.88
per month in the first quarter of 2003 as compared to $2.85 per month in the
first quarter of 2002.

Selling, general and administrative expenses decreased $345,000, or 6.0%, in
the first quarter of 2003 compared to the year earlier quarter. This decrease
was due to reductions in the levels of bad debt and professional fees incurred
in the prior year quarter related to the InnMedia lawsuit and termination of
related InnMedia agreements, partially offset by increases in payroll related
expenses. As a percentage of revenue, such expenses decreased to 9.1% in the
current quarter from 10.5% in the first quarter of 2002.

Depreciation and amortization expenses increased 8.6% to $20.0 million in the
first quarter of 2003 from $18.4 million in the year earlier quarter. The
increase was driven by the 7.7% increase in average rooms in operation and the
amortization of the new media business acquired in August 2002. At the end of
first quarter 2003, the interactive digital

March 31, 2003

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|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q

system had been installed in more than 297,000 rooms, an increase of 154,000
rooms over the prior year quarter. As a percentage of revenue, depreciation
and amortization expenses increased slightly to 33.5% in the current quarter
from 33.4% in the first quarter of 2002.

Operating Income.As a result of the factors described above, the Company
generated operating income of $35,000 in the first quarter of 2003 compared to
$1.4 million in the first quarter of 2002.

Interest Expense.Interest expense increased $263,000, or 3.2%, to $8.4
million during the first quarter of 2003 due to increases in long-term debt to
fund the Companys continuing expansion of its digital platform. Average
principal amount of long-term debt outstanding during the quarter ended March
31, 2003 was approximately $354 million (at an average interest rate of
approximately 9.5%) as compared to an average principal amount outstanding of
approximately $328 million (at an average interest rate of approximately 9.9%)
during the comparable period of 2002.

Taxes.For the first quarter of 2003, the Company incurred franchise tax of
$129,000 versus $124,000 during the first quarter of 2002.

Net Loss.For the reasons previously described, the Companys net loss
increased to $8.4 million in the first quarter of 2003 from a net loss of $6.7
million in the prior year quarter.

Recent Accounting Developments

In November 2002, the FASB Emerging Issues Task Force reached a consensus on
EITF 00-21, Accounting for Revenue Arrangements with Multiple Deliverables.
The EITF addresses how to account for multiple-deliverable revenue arrangements
and focuses on when a revenue arrangement should be separated into different
revenue-generating deliverables or units of accounting and if so, how the
arrangement considerations should be allocated to the different deliverables or
units of accounting. The provisions of EITF 00-21 are effective for fiscal
years beginning after December 15, 2002. The adoption of the EITF had no
impact on the Companys consolidated financial statements.

In November 2002, FASB Interpretation No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others was released and had no impact on the Companys
consolidated financial statements.

In December 2002, the Financial Accounting Standards Board (FASB) issued SFAS
No. 148, Accounting for Stock Based CompensationTransition and Disclosureas
Amendment to FAS 123. SFAS 148 provides two additional transition methods for
entities that adopt the preferable method of accounting for stock based
compensation. In addition, the statement requires disclosure of comparable
information for all companies regardless of whether, when, or how an entity
adopts the preferable, fair value based method of accounting. These disclosures
are now required for interim periods in addition to the traditional annual
disclosure. The Company adopted the additional disclosure provisions of this
statement in the first quarter of 2003. The amendments to SFAS No. 123, which
provide for additional transition methods, are effective for periods beginning
after December 15, 2002. The transition methods were not applicable to the
Company as it continues to account for stock options under APB No. 25.

In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of
Variable Interest Entities. This interpretation of Accounting Research
Bulletin No. 51, Consolidated Financial Statements, addresses consolidation by
business enterprises of variable interest entities that possess certain
characteristics. FIN 46 requires that if a business enterprise has a
controlling financial interest in a variable interest entity, the assets,
liabilities, and results of the activities of the variable interest entity must
be included in the consolidated financial statements with those of the business
enterprise. FIN 46 applies immediately to variable interest entities created
after January 31, 2003 and to variable interest entities in which an enterprise
obtains an interest after that date. The Company does not have ownership in any
variable interest entities and will apply the consolidation requirements of FIN
46 in future periods should interest in a variable interest entity be acquired.

March 31, 2003

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|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q

Seasonality

The Companys quarterly operating results are subject to fluctuation depending
upon hotel occupancy rates and other factors. Typically, occupancy rates are
higher during the second and third calendar quarters due to seasonal travel
patterns.

Liquidity and Capital Resources

The Company historically has required substantial amounts of capital to fund
operations, expand the Companys business and service existing indebtedness.
In 2002, cash flow from operations was sufficient to cover all debt service,
capital expenditures classified as renewal, general corporate, or maintenance
capital as well as a portion of growth capital. The funding for the balance of
the growth capital expenditures was provided by the Companys bank facility.
During the first quarter of 2003, cash flow from operations was sufficient to
cover all long-term debt service as well as additional capital investments.
Capital expenditures for the quarter were $16.2 million as compared to $18.8
million in the first quarter of 2002. Net cash provided by operating
activities was $17.6 million as compared to $11.2 million in the same period of
2002. The change in working capital during the quarter was a source of cash of
$6.0 million driven by timing of vendor payments versus a use of cash of $0.2
million during the first quarter of 2002. As of March 31, 2003, working
capital was negative $9.3 million as compared to negative $5.2 million at
December 31, 2002.

Depending on the rate of growth of its business and other factors, the Company
expects to incur capital expenditures of $60 to $63 million in 2003. Based on
that range, the Company would be able to install 75,000 to 80,000 new rooms and
55,000 to 60,000 major upgrade rooms. As of March 31, 2003, the Company was in
compliance with all covenants related to its bank debt and its Senior notes.
The Company is not aware of any events that qualify under the material adverse
effect clause of the current credit facility. The total amount of long-term
debt outstanding, including that portion of debt classified as current, as of
March 31, 2003 was $353.5 million versus $353.8 million as of December 31,
2002.

The Company does not utilize special purpose entities or off-balance sheet
financial arrangements.

The Company believes that its operating cash flows and borrowing available
under the revolving credit facility will be sufficient for the foreseeable
future to fund the Companys future growth, financing obligations, and its
negative working capital. However, if current economic conditions persist for
an extended period of time resulting in lower than anticipated operating cash
flows, the Company would cover any short fall through any combination of
additional borrowings available under its current revolving credit facility, a
reduction in capital spending and/or a reduction in operating expenses. If the
Company were to reduce its projected capital spending significantly, the
Companys growth rate would be less than historical levels.

In August 2002, the Company received unanimous consent from its lenders to
amend its existing bank credit facility. The amendment modified the covenants
for leverage and interest coverage by deferring the scheduled step-downs in
covenant terms that were to be effective as of December 31, 2002. The Maximum
Consolidated Total Leverage Ratio will remain at 4.5 times debt to EBITDA, as
defined by the bank credit facility, through the third quarter of 2003 with a
step-down to 4.4 times debt to EBITDA at the end of the fourth quarter 2003.
The Maximum Consolidated Senior Secured Leverage Ratio was modified to 2.5
times senior debt to EBITDA from 2.25 times. The 2.5 ratio is in effect through
the fourth quarter of 2004. The Minimum Consolidated Interest ratio coverage
ratio was amended to 2.25 times and will remain at that level through the
second quarter of 2004.

In May 2002, the Company filed a universal shelf registration statement with
the Securities and Exchange Commission (SEC) providing for the offering from
time to time of debt securities, common stock or preferred stock with aggregate
proceeds of up to $225 million. The Company may use the proceeds from possible
sale of securities for general corporate purposes, which include additions to
working capital, repayment or redemption of existing indebtedness, financing of
capital expenditures, research and development of new technologies, future
acquisitions and strategic investment opportunities. The timing and amount of
any offering under the registration statement will depend on the market and
general business conditions. The registration statement was declared effective
by the SEC on June 18, 2002. No securities have been issued under this
registration statement as of March 31, 2003.

March 31, 2003

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|                                   |  |          
|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q

In the event of significant International crises, acts of terrorism, or public
health issues, the Company believes that the general economy and the lodging
industry could be negatively affected. If such a crisis is protracted or the
effects on the lodging industry are severe, the effect on the Companys
financial performance could result in the Company being in violation of one or
more of its bank credit covenants. This could require the Company to
renegotiate its bank covenants, significantly reduce its growth plans and/or
curtail expenditures for operating expenses. While the Company believes it
could renegotiate its bank covenants, there is no assurance that this could be
accomplished, nor can it determine at this time the financial cost of such a
renegotiation or that refinancing, if required, would be available on terms
favorable to the Company.

The foregoing statements regarding capital expenditures and cash requirements
are forward-looking statements and there can be no assurance in this regard.
The Companys actual cash flow and cash requirements will vary (and such
variations could be material) depending upon the number of new contracts for
services entered into by the Company, the cost of installations, demand for the
Companys services, competitive factors, hotel occupancy rates, general
economic factors and other factors including, without limitation, those set
forth above under the Special Note Regarding Forward-Looking Statements.

Obligations and Commitments as of March 31, 2003 (Dollar amounts in thousands):

|                         |                             |                               |   |         |         |  |                        |           |        |       |       |        |        |       |   |         |         |  |   |    |    | 
|------------------------ | --------------------------- | ----------------------------- | - | ------- | ------- |  | ---------------------- | --------- | ------ | ----- | ----- | ------ | ------ | ----- | - | ------- | ------- |  | - | -- | -- | 
|                         |                             |                               |   |         |         |  | Payments due by period |          
|                         |                             |                               |   |         |         |  |                        |          
|                         |                             |                               |   |         |         |  |                        | Less than |        |       | 1  3 |        |        | 4  5 |   |         | Over    | 
|                         |                             |                               |   | Total   |         |  | 1 year                 |           |        | years |       |        | years  |       |   | 5 years |        
|                         |                             |                               |   |         |         |  |                        |           |        |       |       |        |        |       |   |         |        
|Contractual obligations: |                             |                               |   |         |         |  |                        |           |        |       |       |        |        |       |   |         |         |  |   |   
|                         | Long-term debt(s)           |                               | $ | 353,463 |         |  | $                      | 8,527     |        |       | $     | 16,407 |        |       | $ | 328,529 |         |  | $ |   |   
|                         | Interest on senior notes    |                               |   | 64,609  |         |  |                        | 17,101    |        |       |       | 32,132 |        |       |   | 15,376  |         |  |   |   |   
|                         | Other long-term obligations |                               |   | 10,247  |         |  |                        | 2,721     |        |       |       | 3,477  |        |       |   | 3,978   |         |  |   | 71 |   
|                         |                             |                               |   |         |         |  |                        |           |        |       |       |        |        |       |   |        
|                         |                             | Total contractual obligations |   | $       | 428,319 |  |                        | $         | 28,349 |       |       | $      | 52,016 |       |   | $       | 347,883 |  |   | $  | 71 | 
|                         |                             |                               |   |         |         |  |                        |           |        |       |       |        |        |       |  

|                              |                           |  |       |       |  |                                            |           |       |       |       |   |       |       |  |         |      |  |  |   |   | 
|----------------------------- | ------------------------- |  | ----- | ----- |  | ------------------------------------------ | --------- | ----- | ----- | ----- | - | ----- | ----- |  | ------- | ---- |  |  | - | - | 
|                              |                           |  |       |       |  | Amount of commitment expiration per period |          
|                              |                           |  |       |       |  |                                            |          
|                              |                           |  |       |       |  |                                            | Less than |       |       | 1  3 |   |       | 4  5 |  |         | Over | 
|                              |                           |  | Total |       |  | 1 year                                     |           |       | years |       |   | years |       |  | 5 years |     
|                              |                           |  |       |       |  |                                            |           |       |       |       |   |       |       |  |         |     
|Other commercial commitments: |                           |  |       |       |  |                                            |           |       |       |       |   |       |       |  |         |      |  |  |   |  
|                              | Standby letters of credit |  | $     | 2,000 |  |                                            | $         | 2,000 |       |       | $ |      |       |  | $       |     |  |  | $ |  | 
|                              |                           |  |       |       |  |                                            |           |       |       |       |   |       |       |  |         |     

Dependence on Performance of Lodging Industry

The Companys business is closely connected to the performance of the hotel
industry, where occupancy rates may fluctuate as a result of various factors.
Reduction in hotel occupancy resulting from business, economic, or other
events, such as significant international crises, acts of terrorism,or public
health issues could adversely impact the Companys results of operations.

The overall travel industry has been adversely affected by the weaker general
economic climate and the threat of terrorist attacks and the Iraqi situation.
Occupancy rates from the properties served by the Company during 2002 were 110
basis points below the level experienced in 2001. While the average occupancy
rate for the Companys served hotels is typically higher than the average of
the entire lodging industry, the Companys business is clearly linked to the
continued effects of changes in occupancy levels. Occupancy rates have been
below the level experienced in 2001 and prior years. For the first quarter of
2003, occupancy rates were 140 basis points lower than experienced in the first
quarter of 2002. For full year 2003, occupancy rates are forecasted by lodging
industry sources to be flat or slightly lower than 2002 and may be even more
adversely impacted by current events. If hotel occupancy rates were to decline
significantly below forecasted levels, the Companys revenues would be
adversely affected.

To help mitigate the impact of occupancy levels on operating income, the
Company continues to firmly control operating expenses and capital spending.
The Company plans to reassess its operating and capital expenditure plans

March 31, 2003

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|                                   |  |          
|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q

periodically to respond to changes in the economic environment. In addition,
the Companys room base is geographically diversified, with more than
two-thirds of properties served being in highway or suburban locations. In
addition, less than 5% of the room base is concentrated in the top ten urban
areas of the United States. By serving a wide variety of geographically
dispersed properties, the Company mitigates reliance on any one geographic
sector.

March 31, 2003

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|                                   |  |          
|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q




Item 3  Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to various market risks, including potential losses
resulting from adverse changes in interest rates and foreign currency exchange
rates. The Company does not enter into derivatives or other financial
instruments for trading or speculative purposes.

Interest.At March 31, 2003, the Company had debt totaling $353 million. The
Company has interest rate swap arrangements covering debt with a notional
amount of $100 million to effectively change the underlying debt from a
variable interest rate to a fixed interest rate for the term of the swap
agreements. After giving effect to the interest rate swap arrangements the
Company had fixed rate debt of $271 million and variable rate debt of $82
million at March 31, 2003. For fixed rate debt, interest rate changes affect
the fair market value but do not impact earnings or cash flows. Conversely,
for variable rate debt, interest rate changes generally do not affect the fair
market value but do impact future earnings and cash flows, assuming other
factors are held constant. Assuming other variables remain constant (such as
debt levels), a one percentage point increase in interest rates would decrease
the unrealized fair market value of the fixed rate debt by an estimated $24
million. The impact on earnings and cash flow for the next year resulting from
a one percentage point increase in interest rates would be approximately
$828,000 assuming other variables remain constant.

Foreign Currency Transactions.A portion of the Companys revenues are derived
from the sale of Guest Pay services in Canada. The results of operations and
financial position of the Companys operations in Canada are measured in
Canadian dollars and translated into U.S. dollars. The effects of foreign
currency fluctuations in Canada are somewhat mitigated by the fact that
expenses and liabilities are generally incurred in Canadian dollars. The
reported income of the Companys Canadian subsidiary will be higher or lower
depending on a weakening or strengthening of the U.S. dollar against the
Canadian dollar. In addition, a portion of the Companys assets are based in
Canada and are translated into U.S. dollars at foreign currency exchange rates
in effect as of the end of each period. Accordingly, the Companys
consolidated assets will fluctuate depending on the weakening or strengthening
of the U.S. dollar against the Canadian dollar. No significant foreign
currency fluctuations occurred in the first quarter of 2003 to materially
impact consolidated results of operations or financial condition.

Item 4  Controls and Procedures

With the participation of management, the Companys chief executive officer and
chief financial officer evaluated the Companys disclosure controls and
procedures within 90 days of the filing date of this quarterly report (the
Evaluation Date). Based upon this evaluation, the chief executive officer and
chief financial officer concluded that the Companys disclosure controls and
procedures are effective in ensuring that material information required to be
disclosed is included in the reports that it files with the Securities and
Exchange Commission.

There were no significant changes in the Companys internal controls or, to the
knowledge of management of the Company, other factors that could significantly
affect internal controls subsequent to the date of the Companys most recent
evaluation of its disclosure controls and procedures utilized to compile
information in this filing.

March 31, 2003

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|                                   |  |          
|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q




Part II  Other Information




Item 1  Legal Proceedings

The Company is subject to litigation arising in the ordinary course of
business. As of the date hereof, the Company believes the resolution of such
litigation will not have a material adverse effect upon the Companys financial
condition or results of operations.




Item 2  Changes in Securities and Use of Proceeds

Not applicable.




Item 3  Defaults Upon Senior Securities

Not applicable.




Item 4  Submission of Matters to a Vote of Security Holders

None.




Item 5  Other Information

Not applicable.




Item 6  Exhibits and Reports on Form 8-K



| | a. |  | Exhibits:
| | -- |  | ---------



| |  |  | 99.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
| |  |  | -----------------------------------------------------------------------------



| | b. |  | Reports on Form 8-K:
| | -- |  | --------------------



| |  |  | The Company filed a Current Report on Form 8-K with the SEC on
February 6, 2003, including under Item 7 and Item 9 a copy of a
Power Point presentation posted on the Companys website in advance
of an earnings telephone conference held February 5, 2003.                                                                                                         
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The Company filed a Current Report on Form 8-K with the SEC on
February 25, 2003, including under Item 7 and Item 9 a copy of a
Power Point slide presentation presented by the Company at the CIBC
Gaming, Lodging and Leisure Conference on February 25, 2003.                                                                                                      
|
| |  |  | The Company filed a Current Report on Form 8-K with the SEC on
March 12, 2003, including under Item 7 and Item 9 a copy of a Power
Point slide presentation presented by the Company at the Janco
Partners Media & Telecommunications Conference on March 12, 2003.                                                                                                   
|
| |  |  | The Company filed a Current Report on Form 8-K with the SEC on
March 27, 2003, to file as an exhibit under Item 7 a copy of the
Sarbanes-Oxley Act Certifications of the Companys chief executive
officer and chief financial officer with respect to the Companys
2002 financial statements, included in the Companys Report on Form
10-K filed on March 20, 2003.
|
| |  |  | The Company filed a Current Report on Form 8-K with the SEC on
April 24, 2003, including under Item 7 and Item 9 a copy of a Power
Point presentation posted on the Companys website in advance of an
earnings telephone conference held April 23, 2003.                                                                                                             

March 31, 2003

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|                                   |  |          
|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q

LodgeNet Entertainment Corporation and Subsidiaries




Signatures

Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                  |  |                                                                                                            
|----------------- |  | -----------------------------------------------------------------------------------------------------------
|                  |  | LodgeNet Entertainment Corporation                                                                         
|                  |  |                                                                                                            
|                  |  | (Registrant)                                                                                               
|                  |  |                                                                                                            
|                  |  |                                                                                                            
|Date: May 8, 2003 |  | /s/ Scott C. Petersen                                                                                      
|                  |  |                                                                                                            
|                  |  | Scott C. Petersen
President and Chief Executive Officer
(Principal Executive Officer)                      
|                  |  |                                                                                                            
|                  |  |                                                                                                            
|Date: May 8, 2003 |  | /s/ Gary H. Ritondaro                                                                                      
|                  |  |                                                                                                            
|                  |  | Gary H. Ritondaro
Senior Vice President, Chief Financial Officer
(Principal Financial & Accounting Officer)





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|                                   |  |          
|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q

Certification

I, Gary Ritondaro, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of LodgeNet Entertainment
Corporation;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |  | a) designed such disclosure controls and procedures to ensure that
material information
relating to the registrant, including its consolidated subsidiaries, is
made known to us by
others within those entities, particularly during the period in which this
quarterly report is
being prepared;
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of
a date within 90 days prior to the filing date of this report (the
Evaluation Date); and                                                                                                            
|
| |  | c) presented in this quarterly report our conclusions about the
effectiveness of the
disclosure controls and procedures based on our evaluation as of the
Evaluation Date;                                                                                                                        

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| |  | a) all significant deficiencies in the design or operation of internal
controls which could
adversely affect the registrants ability to record, process, summarize
and report financial
data and have identified for the registrants auditors any material
weaknesses in internal
controls; and
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b) any fraud, whether or not material, that involves management or other
employees who
have a significant role in the registrants internal controls; and                                                                                                                                        

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 8, 2003

/s/ Gary H. Ritondaro
Gary H. Ritondaro
Chief Financial Officer (Principal Financial & Accounting Officer)

March 31, 2003

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##### Table of Contents



|                                   |  |          
|---------------------------------- |  | ---------
|LodgeNet Entertainment Corporation |  | Form 10-Q

Certification

I, Scott C. Petersen, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of LodgeNet Entertainment
Corporation;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |  | a) designed such disclosure controls and procedures to ensure that
material information
relating to the registrant, including is consolidated subsidiaries, is
made known to us by
others within those entities, particularly during the period in which this
quarterly report
is being prepared;
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b) evaluated the effectiveness of the registrants disclosure controls and
procedures as
of a date within 90 days prior to the filing date of this report (the
Evaluation Date); and                                                                                                           
|
| |  | c) presented in this quarterly report our conclusions about the
effectiveness of the
disclosure controls and procedures based on our evaluation as of the
Evaluation Date;                                                                                                                       
|

5.      The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

|
|
|
|
|
|

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 8, 2003

/s/ Scott C. Petersen
Scott C. Petersen
Chief Executive Officer (Principal Executive Officer)

March 31, 2003

Page 24