##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2007
 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
  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
 
  (Former name, former address and former fiscal year, if changed since last report
 þ o
  o þ o
 o þ




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##### 



LodgeNet Entertainment Corporation
    
    Form 10-Q
 LodgeNet Entertainment Corporation and Subsidiaries
 Index
 PageNo.Part I. Financial InformationItem 1  Financial Statements:Consolidated Balance Sheets (Unaudited) as of June 30, 2007 and December 31, 2006
    
    
    3Consolidated Statements of Operations (Unaudited) for
the Three Months and Six Months Ended June 30, 2007 and 2006
    
    
    4Consolidated Statements of Cash Flows (Unaudited) for
the Six Months Ended June 30, 2007 and 2006
    
    
    5Notes to Consolidated Financial Statements (Unaudited)
    
    
    6Item 2  Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    15Item 3  Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4  Controls and Procedures
    
    
    35Part II. Other InformationItem 1  Legal Proceedings
    
    
    36Item 1A  Risk Factors
    
    
    36Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 3  Defaults Upon Senior Securities
    
    
    36Item 4  Submission of Matters to a Vote of Security Holders
    
    
    36Item 5  Other Information
    
    
    37Item 6  Exhibits
    
    
    37Signatures
    
    
    38Rule 13a-14(a)/15(d)-14(a) Certification of Chief Financial OfficerRule 13a-14(a)/15(d)-14(a) Certification of Chief Executive OfficerSection 1350 Certifications
     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)
  June 30,
    
    
    December 31,2007
    
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    32,227
    
    
    $
    22,795Restricted cash
    
    
    
    
    
    
    1,006Accounts receivable, net
    
    
    66,159
    
    
    
    32,959Other current assets
    
    
    11,289
    
    
    
    10,728Total current assets
    
    
    109,675
    
    
    
    67,488Property and equipment, net
    
    
    354,637
    
    
    
    185,770Debt issuance costs, net
    
    
    12,286
    
    
    
    5,704Intangible assets, net
    
    
    130,287
    
    
    
    690Goodwill
    
    
    91,753
    
    
    
    Other assets
    
    
    13,957
    
    
    
    3,557Total assets
    
    $
    712,595
    
    
    $
    263,209Liabilities and Stockholders DeficiencyCurrent liabilities:Accounts payable
    
    $
    39,559
    
    
    $
    19,165Current maturities of long-term debt
    
    
    7,504
    
    
    
    2,536Accrued expenses
    
    
    25,894
    
    
    
    18,193Deferred revenue
    
    
    12,596
    
    
    
    8,076Total current liabilities
    
    
    85,553
    
    
    
    47,970Long-term debt
    
    
    620,452
    
    
    
    267,633Other long-term liabilities
    
    
    4,943
    
    
    
    5,728Total liabilities
    
    
    710,948
    
    
    
    321,331Minority interest in consolidated subsidiary
    
    
    764
    
    
    
    Commitments and contingenciesStockholders equity (deficiency):Preferred stock, $.01 par value, 5,000,000 shares authorized;
no shares issued or outstandingCommon stock, $.01 par value, 50,000,000 shares authorized;
22,892,425 and 19,084,734 shares outstanding at June 30,
2007 and December 31, 2006, respectively
    
    
    229
    
    
    
    191Additional paid-in capital
    
    
    328,497
    
    
    
    242,383Accumulated deficit
    
    
    (336,525
    )
    
    
    (302,466
    )Accumulated other comprehensive income
    
    
    8,682
    
    
    
    1,770Total stockholders equity (deficiency)
    
    
    883
    
    
    
    (58,122
    )Total liabilities and stockholders equity (deficiency)
    
    $
    712,595
    
    
    $
    263,209
   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)
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Guest Pay
    
    $
    124,279
    
    
    $
    69,149
    
    
    $
    194,549
    
    
    $
    137,357Other
    
    
    10,659
    
    
    
    2,722
    
    
    
    15,674
    
    
    
    4,707Total revenues
    
    
    134,938
    
    
    
    71,871
    
    
    
    210,223
    
    
    
    142,064Costs and Expenses:Direct costs (exclusive of operating expenses and
depreciation and amortization shown separately
below):Guest Pay
    
    
    61,961
    
    
    
    31,010
    
    
    
    95,112
    
    
    
    61,696Other
    
    
    7,033
    
    
    
    1,270
    
    
    
    10,395
    
    
    
    2,179Operating expenses:Guest Pay operations
    
    
    15,297
    
    
    
    9,064
    
    
    
    23,832
    
    
    
    17,850Selling, general and administrative
    
    
    16,172
    
    
    
    7,128
    
    
    
    23,963
    
    
    
    14,020Depreciation and amortization
    
    
    33,599
    
    
    
    16,868
    
    
    
    49,688
    
    
    
    33,783Restructuring expense
    
    
    2,497
    
    
    
    
    
    
    
    2,738
    
    
    
    Other operating income, net
    
    
    (895
    )
    
    
    (198
    )
    
    
    (895
    )
    
    
    (198
    )Total costs and operating expenses
    
    
    135,664
    
    
    
    65,142
    
    
    
    204,833
    
    
    
    129,330Income (loss) from operations
    
    
    (726
    )
    
    
    6,729
    
    
    
    5,390
    
    
    
    12,734Other Income and Expenses:Interest expense
    
    
    (11,582
    )
    
    
    (6,548
    )
    
    
    (17,786
    )
    
    
    (13,081
    )Loss on early retirement of debt
    
    
    (22,170
    )
    
    
    
    
    
    
    (22,170
    )
    
    
    (129
    )Minority interest in income of subsidiary
    
    
    165
    
    
    
    
    
    
    
    165
    
    
    
    Other income
    
    
    403
    
    
    
    434
    
    
    
    564
    
    
    
    560Income (loss) before income taxes
    
    
    (33,910
    )
    
    
    615
    
    
    
    (33,837
    )
    
    
    84Provision for income taxes
    
    
    (121
    )
    
    
    (182
    )
    
    
    (222
    )
    
    
    (305
    )Net income (loss)
    
    $
    (34,031
    )
    
    $
    433
    
    
    $
    (34,059
    )
    
    $
    (221
    )Net income (loss) per common share (basic)
    
    $
    (1.52
    )
    
    $
    0.02
    
    
    $
    (1.64
    )
    
    $
    (0.01
    )Net income (loss) per common share (diluted)
    
    $
    (1.52
    )
    
    $
    0.02
    
    
    $
    (1.64
    )
    
    $
    (0.01
    )Weighted average shares outstanding (basic)
    
    
    22,428,960
    
    
    
    18,245,841
    
    
    
    20,743,919
    
    
    
    18,186,064Weighted average shares outstanding (diluted)
    
    
    22,428,960
    
    
    
    18,579,380
    
    
    
    20,743,919
    
    
    
    18,186,064
   Page 4




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 LodgeNet Entertainment Corporation and Subsidiaries
 
 Consolidated Statements of Cash Flows (Unaudited)
  Six Months Ended June 30,2007
    
    
    2006Operating activities:Net loss
    
    $
    (34,059
    )
    
    $
    (221
    )Adjustments to reconcile net loss to net cash provided
by operating activities:Depreciation and amortization
    
    
    49,688
    
    
    
    33,783Investment gain
    
    
    
    
    
    
    (238
    )Loss on early retirement of debt
    
    
    3,583
    
    
    
    129Share-based compensation
    
    
    853
    
    
    
    927Other
    
    
    (215
    )
    
    
    Change in operating assets and liabilities:Accounts receivable
    
    
    1,152
    
    
    
    (84
    )Other current assets
    
    
    (2,439
    )
    
    
    (1,524
    )Accounts payable
    
    
    (5,777
    )
    
    
    2,325Accrued expenses and deferred revenue
    
    
    1,915
    
    
    
    3,791Other
    
    
    (586
    )
    
    
    (2,597
    )Net cash provided by operating activities
    
    
    14,115
    
    
    
    36,291Investing activities:Property and equipment additions
    
    
    (38,842
    )
    
    
    (25,157
    )Acquisition of On Command Corporation, net of cash acquired
    
    
    (335,216
    )
    
    
    Acquisition of StayOnline, Inc.
    
    
    (14,388
    )
    
    
    Other investing activity
    
    
    637
    
    
    
    238Net cash used for investing activities
    
    
    (387,809
    )
    
    
    (24,919
    )Financing activities:Proceeds from long-term debt
    
    
    625,000
    
    
    
    Repayment of long-term debt
    
    
    (268,115
    )
    
    
    (10,750
    )Payment of capital lease obligations
    
    
    (1,018
    )
    
    
    (716
    )Debt issuance costs
    
    
    (12,738
    )
    
    
    Contribution from minority interest holder to subsidiary
    
    
    300
    
    
    
    Proceeds from issuance of common stock, net of offering costs
    
    
    23,350
    
    
    
    Exercise of stock options
    
    
    16,036
    
    
    
    2,526Net cash provided by (used for) financing activities
    
    
    382,815
    
    
    
    (8,940
    )Effect of exchange rates on cash
    
    
    311
    
    
    
    92Increase in cash and cash equivalents
    
    
    9,432
    
    
    
    2,524Cash and cash equivalents at beginning of period
    
    
    22,795
    
    
    
    20,742Cash and cash equivalents at end of period
    
    $
    32,227
    
    
    $
    23,266
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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 LodgeNet Entertainment Corporation and Subsidiaries
 
 Notes to Consolidated Financial Statements (Unaudited)
           Page 6




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
    Cash
    
    $
    671Receivables
    
    
    32,218Other current assets
    
    
    3,112Property and equipment
    
    
    172,326Intangible assets
    
    
    127,985Goodwill
    
    
    82,081Other assets
    
    
    5,587Accounts payable
    
    
    (22,413
    )Accrued liabilities
    
    
    (11,843
    )Other long-term liabilities
    
    
    (1,093
    )Minority Interest
    
    
    (930
    )Total purchase consideration
    
    $
    387,701
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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 Pro Forma
    
    
    Pro FormaThree Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:LodgeNet Entertainment
    
    $
    74,061
    
    
    $
    71,871
    
    
    $
    145,905
    
    
    $
    142,064On Command
    
    
    58,006
    
    
    
    59,153
    
    
    
    116,904
    
    
    
    116,387StayOnline
    
    
    4,741
    
    
    
    2,643
    
    
    
    9,709
    
    
    
    4,764Total revenues
    
    $
    136,808
    
    
    $
    133,667
    
    
    $
    272,518
    
    
    $
    263,215Net loss
    
    $
    (34,608
    )
    
    $
    (12,086
    )
    
    $
    (47,215
    )
    
    $
    (26,227
    )Net loss per share
    
    $
    (1.36
    )
    
    $
    (0.57
    )
    
    $
    (1.98
    )
    
    $
    (1.23
    )
    June 30,
    
    
    December 31,2007
    
    
    2006Land, building and equipment
    
    $
    100,868
    
    
    $
    85,642Guest Pay systems:Installed system costs
    
    
    628,200
    
    
    
    473,930Customer acquisition costs
    
    
    54,021
    
    
    
    53,156System components
    
    
    31,410
    
    
    
    26,464Software costs
    
    
    36,745
    
    
    
    22,520Total
    
    
    851,244
    
    
    
    661,712Less  depreciation and amortization
    
    
    (496,607
    )
    
    
    (475,942
    )Property and equipment, net
    
    $
    354,637
    
    
    $
    185,770
      Page 8




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
    June 30, 2007
    
    
    December 31, 2006Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationAssets subject to amortization:Acquired contracts and
relationships
    
    $
    113,980
    
    
    $
    2,123
    
    
    $
    
    
    
    $
    Other acquired intangibles
    
    
    7,733
    
    
    
    6,275
    
    
    
    16,503
    
    
    
    15,813Acquired patents
    
    
    4,940
    
    
    
    433
    
    
    
    
    
    
    
    126,653
    
    
    
    8,831
    
    
    
    16,503
    
    
    
    15,813Assets not subject to amortization:Tradenames
    
    
    12,465
    
    
    
    
    
    
    
    
    
    
    
    $
    139,118
    
    
    $
    8,831
    
    
    $
    16,503
    
    
    $
    15,813
      Page 9




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006Average
shares outstanding  basic
    
    
    22,428,960
    
    
    
    18,245,841
    
    
    
    20,743,919
    
    
    
    18,186,064Dilutive effect of stock options, non-vested shares and warrants
    
    
    
    
    
    
    333,539
    
    
    
    
    
    
    
    Average
shares outstanding  diluted
    
    
    22,428,960
    
    
    
    18,579,380
    
    
    
    20,743,919
    
    
    
    18,186,064Antidilutive securities excluded
from calculation
    
    
    
    
    
    
    2,451,005
    
    
    
    
    
    
    
    
    June 30,
    
    
    December 31,2007
    
    
    2006Accrued taxes
    
    $
    7,677
    
    
    $
    4,088Accrued compensation
    
    
    8,856
    
    
    
    6,842Accrued interest
    
    
    372
    
    
    
    946Accrued programming related
    
    
    2,672
    
    
    
    1,748Other
    
    
    6,317
    
    
    
    4,569$
    25,894
    
    
    $
    18,193
   June 30,
    
    
    December 31,2007
    
    
    2006Bank Credit Facility:Bank term loan
    
    $
    625,000
    
    
    $
    68,125Revolving credit facility
    
    
    
    
    
    
    9.50% senior notes
    
    
    10
    
    
    
    200,000Capital leases
    
    
    2,946
    
    
    
    2,044627,956
    
    
    
    270,169Less current maturities
    
    
    (7,504
    )
    
    
    (2,536
    )$
    620,452
    
    
    $
    267,633
 Bank Credit Facility 3⁄4
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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
   9.50% Senior Notes 3⁄4 pari passu
  Capital Leases
  2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    ThereafterLong-term debt
    
    $
    3,125
    
    
    $
    6,250
    
    
    $
    6,250
    
    
    $
    6,250
    
    
    $
    6,250
    
    
    $
    596,885Capital leases
    
    
    785
    
    
    
    1,168
    
    
    
    803
    
    
    
    502
    
    
    
    104
    
    
    
    3,910
    
    
    
    7,418
    
    
    
    7,053
    
    
    
    6,752
    
    
    
    6,354
    
    
    
    596,885Less amount representing
interest on capital leases
    
    
    (116
    )
    
    
    (161
    )
    
    
    (90
    )
    
    
    (41
    )
    
    
    (8
    )
    
    
    $
    3,794
    
    
    $
    7,257
    
    
    $
    6,963
    
    
    $
    6,711
    
    
    $
    6,346
    
    
    $
    596,885
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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 3⁄4
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    (34,031
    )
    
    $
    433
    
    
    $
    (34,059
    )
    
    $
    (221
    )Foreign currency translation adjustment
    
    
    2,484
    
    
    
    415
    
    
    
    2,497
    
    
    
    426Unrealized gain on derivative instruments
    
    
    4,415
    
    
    
    
    
    
    
    4,415
    
    
    
    156Comprehensive income (loss)
    
    $
    (27,132
    )
    
    $
    848
    
    
    $
    (27,147
    )
    
    $
    361
  June 30,
    
    
    December 31,2007
    
    
    2006Unrealized gain on derivative instruments
    
    $
    4,415
    
    
    $
    Foreign currency translation adjustment
    
    
    4,267
    
    
    
    1,770Accumulated other comprehensive income
    
    $
    8,682
    
    
    $
    1,770
 3⁄4
  3⁄4
 Fair Value Measurements
 The Fair Value Option for Financial
Assets and Financial Liabilities  Including an Amendment of FASB Statement No. 115.
  Share-Based Payment
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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Compensation cost (benefit):Stock options
    
    $
    160
    
    
    $
    (78
    )
    
    $
    207
    
    
    $
    415Non-vested shares
    
    
    428
    
    
    
    336
    
    
    
    646
    
    
    
    512Total share based compensation expense
    
    $
    588
    
    
    $
    258
    
    
    $
    853
    
    
    $
    927Compensation expense per common share
(basic and diluted):
    
    $
    0.03
    
    
    $
    0.01
    
    
    $
    0.04
    
    
    $
    0.05
  Stock Option Valuation and Expense Information under Statement 123(R)
  Non-Vested Shares (Restricted Stock)
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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
    3⁄4
       Page 14




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 
 Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion should be read in conjunction with our Consolidated Financial Statements,
including the notes thereto, appearing elsewhere herein.
 Special Note Regarding Forward-Looking Statements
 Certain statements in this Report on form 10Q constitute forward-looking statements. When used
in this report, the words intends, expects, anticipates, estimates, believes, goal, no
assurance and similar expressions, and statements which are made in the future tense or refer to
future events or developments, including, without limitation, those related to estimated free cash
flow, cash earnings per share, debt ratios and synergies, are intended to identify such
forward-looking statements. Such forward-looking statements are subject to risks, uncertainties,
and other factors that could cause the actual results, performance or achievements to be materially
different from any future results, performance, or achievements expressed or implied by such
forward-looking statements. In addition to the risks and uncertainties discussed herein, such
factors include, among others, the following: the effects of economic conditions, including in
particular the economic condition of the lodging industry, which can be particularly affected by
international crisis, acts or threats of terrorism and public health issues; competition from
providers of similar services and from alternative sources; changes in demand for our products and
services; programming costs, availability, timeliness, and quality; technological developments by
competitors; developmental costs, difficulties, and delays; relationships with clients and property
owners; the availability of capital to finance growth; the impact of government regulations;
potential effects of litigation; risks of expansion into new markets; risks related to the security
of our data systems; and other factors detailed, from time to time, in our filings with the
Securities and Exchange Commission. With respect to any acquisition, we are subject to risks that
integration costs will exceed expectations, that synergies we anticipate will not be realized, or
will take longer than anticipated to realize, that our management and management systems will
encounter difficulties in dealing with a bigger, more diversified enterprise, and that the
financial results we expect from the acquisition will not be realized. These forward-looking
statements speak only as of the date of this report. We expressly disclaim any obligation or
undertaking to release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in our expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based.
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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
   Guest Pay Interactive Services.
  
    
    The number of rooms on our network.We can increase revenue over
time by increasing the number of rooms served by our interactive
systems. With the acquisition of On Command, we have expanded our
room base to over 1.8 million rooms. Our ability to continue
expanding our room base is dependent on a number of factors,
including the attractiveness of our technology, service and
support to hotels currently operating without an interactive
television system and newly constructed hotel properties.
    
    The variety of services offered at the hotel.Rooms equipped with
our digital system generate higher revenue than rooms equipped
with our tape-based system primarily because they offer a greater
variety of services and content choices. We plan to continue to
grow the revenue we generate per average room by the installation
of our digital system in all newly contracted rooms and by
converting selected tape-based rooms to our digital system in
exchange for long-term contract extensions.
    
    The popularity, timeliness and amount of content offered at the
hotel.Our revenues vary to a certain degree with the number,
timeliness and popularity of movie content available for viewing.
Historically, a decrease in the availability of popular movie
content has adversely impacted revenue. Although not completely
within our control, we seek to program and promote the most
popular available movie content and other content to maximize
revenue and gross profit.
    
    The price of the service purchased by the hotel guest.Generally,
we control the prices charged for our products and services and
manage pricing in an effort to maximize revenue and overall gross
profit. We establish pricing based on such things as the
demographics of the property served, the popularity of the content
and overall economic conditions. Our technology enables us to
measure popularity of our content and make decisions to best
position such content and optimize revenue from such content.
    
    The occupancy rate at the property.Our revenue also varies
depending on hotel occupancy rates, which are subject to a number
of factors, including seasonality, general economic conditions and
world events, such as terrorist threats or public health issues.
Occupancy rates are typically higher during the second and third
quarters due to seasonal travel patterns. We target higher
occupancy properties in diverse demographic and geographic
locations in an effort to mitigate occupancy-related risks.
  Page 16




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
  Ø
    
    license fees paid to major motion picture studios, which are based on a percent of
guest-generated revenue, for non-exclusive distribution rights of recently released major
motion pictures;Ø
    
    commissions paid to our hotel customers, which are also based on a percent of
guest-generated revenue;Ø
    
    fixed monthly programming charges paid primarily to DIRECTV for satellite-delivered
basic and premium television programming;Ø
    
    HSIA customer support costs;Ø
    
    Internet connectivity costs;Ø
    
    license fees, which are based on a percent of guest-generated revenue, for television on
demand, music, music video, video games and sports programming; andØ
    
    one-time license fees paid for independent films, most of which are non-rated and
intended for mature audiences.
 Other Products and Services.
 High Speed Internet Access System Sales, Service and Support.
 Healthcare System Sales and Support.
 System Sales and Support to Travel Centers.
  Page 17




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 Other.
 Ø
    
    revenue generated from the sale of our interactive television systems to hotels, along
with recurring support for interactive content, software maintenance and technical field
service for a fixed fee;Ø
    
    revenue from the sale of miscellaneous system equipment such as television remotes and
service parts and labor;Ø
    
    revenues from the sale of equipment to our international licensees;Ø
    
    revenues from the installation of master antenna wiring and related infrastructure;Ø
    
    revenues from the sale of guest connectivity centers;Ø
    
    revenues from the sale and installation of DirecTV satellite systems; andØ
    
    revenue generated from delivery of satellite basic and premium television programming
for which the hotel pays us a fixed monthly charge per room.
  Page 18




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 Key Metrics:
 Special Note Regarding the Use of Non-GAAP Financial Information
   Rooms Served
  June 30,2007
    
    2006Total rooms served (1)
    
    
    1,943,183
    
    
    
    1,055,854Total Guest Pay interactive rooms (2)
    
    
    1,844,451
    
    
    
    1,006,613Total HSIA rooms (3)
    
    
    209,145
    
    
    
    35,461Net new Guest Pay interactive rooms for the three months ended (4)
    
    
    7,921
    
    
    
    100Net new Guest Pay interactive rooms for the six months ended (4)
    
    
    13,959
    
    
    
    4,684
 
 (1)
    
    Total rooms served include guest pay interactive rooms, rooms served by international
licensees, properties receiving only basic and premium television services and properties
receiving only HSIA services.(2)
    
    Guest Pay interactive rooms are equipped with our interactive television systems.(3)
    
    Represents rooms receiving high-speed Internet service included in total rooms served.(4)
    
    Amounts shown are net of de-installations during the period. The gross number of new rooms
installed was 20,623 and 17,244 for the three months ended June 30, 2007 and 2006,
respectively, and 38,287 and 29,869 for the six months ended June 30, 2007 and 2006,
respectively.  Page 19




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 Digital Room Growth
  June 30,2007
    
    2006Net new digital rooms for the three months ended
    
    
    34,235
    
    
    
    28,377Net new digital rooms for the six months ended
    
    
    60,252
    
    
    
    57,468Net new HDTV rooms for the three months ended (1)
    
    
    9,451
    
    
    
    4,219Net new HDTV rooms for the six months ended (1)
    
    
    19,306
    
    
    
    5,974Total HDTV rooms installed (2)
    
    
    48,348
    
    
    
    7,554Total digital rooms installed
    
    
    1,411,560
    
    
    
    686,553Digital rooms as a percent of total Guest Pay interactive rooms
    
    
    76.5
    %
    
    
    68.2
    %
 
 (1)
    
    HDTV rooms are equipped with high-definition capabilities and are included in total
digital rooms.(2)
    
    HDTV rooms are included in the total digital rooms installed. Capital Investment Per Room
  Three Months Ended
    
    Years EndedJune 30,
    
    June 30,
    
    December 31,
    
    December 31,
    
    December 31,2007
    
    2006
    
    2006
    
    2005
    
    2004Average cost
per room 
new installation
    
    $
    387
    
    
    $
    346
    
    
    $
    354
    
    
    $
    340
    
    
    $
    364Average cost
per room 
conversion
    
    $
    307
    
    
    $
    240
    
    
    $
    252
    
    
    $
    262
    
    
    $
    284
  Revenue Per Room
   Page 20




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Average monthly revenue per room:Movie revenue
    
    $
    16.70
    
    
    $
    17.02
    
    
    $
    16.70
    
    
    $
    17.07Other interactive service revenue
    
    
    5.82
    
    
    
    5.85
    
    
    
    5.76
    
    
    
    5.70Total per Guest Pay room
    
    $
    22.52
    
    
    $
    22.87
    
    
    $
    22.46
    
    
    $
    22.77
  Direct Costs
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006Guest Pay direct costs per room
    
    $
    11.23
    
    
    $
    10.26
    
    
    $
    11.23
    
    
    $
    10.23Guest Pay direct costs as a percent of total revenue
    
    
    45.9
    %
    
    
    43.1
    %
    
    
    45.2
    %
    
    
    43.4
    %
  Operating Expenses
  Net Income (Loss)
   Page 21




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006Net income (loss)
    
    $
    (34,031
    )
    
    $
    433
    
    
    $
    (34,059
    )
    
    $
    (221
    )
 Free Cash Flow
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Cash provided by (used for) operating activities (1)
    
    $
    (3,912
    )
    
    $
    14,325
    
    
    $
    14,115
    
    
    $
    36,291Property and equipment additions
    
    
    (22,308
    )
    
    
    (12,401
    )
    
    
    (38,205
    )
    
    
    (24,919
    )(26,220
    )
    
    
    1,924
    
    
    
    (24,090
    )
    
    
    11,372Cash used for acquisition activities (2)
    
    
    (334,735
    )
    
    
    
    
    
    
    (349,604
    )
    
    
    $
    (360,955
    )
    
    $
    1,924
    
    
    $
    (373,694
    )
    
    $
    11,372
 
 (1)
    
    Cash used for operating activities included $9.2 million of acquisition related working
capital, $0.8 million for restructuring and integration activities and $18.6 million for the
redemption of our 9.5% Senior Notes.(2)
    
    Cash used for acquisition activities related to the acquisitions of On Command and
StayOnline. Liquidity and Capital Resources
     Page 22




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
  2007
    
    2006Actual consolidated total leverage ratio (1) (3)
    
    
    4.23
    
    
    
    2.99Maximum per covenant
    
    
    5.00
    
    
    
    3.75Actual consolidated interest coverage ratio (2) (3)
    
    
    4.87
    
    
    
    3.55Minimum per covenant
    
    
    2.25
    
    
    
    2.75
 
 (1)
    
    Our maximum consolidated leverage ratio is a function of total indebtedness divided by
operating income exclusive of depreciation and amortization and other miscellaneous
non-recurring items as defined by the covenant.(2)
    
    Our minimum consolidated interest coverage ratio is a function of operating income exclusive
of depreciation and amortization and other miscellaneous non-recurring items divided by
interest expense as defined by the covenant.(3)
    
    Maximum consolidated total leverage ratio and minimum consolidated interest coverage ratios
are not based on generally accepted accounting principles and are not presented as alternative
measures of operating performance or liquidity. They are presented here to demonstrate
compliance with the covenants in our Credit Facility, as noncompliance with such covenants
could have a material adverse effect on us.   Q1 2008
    
    Q3 2008
    
    Q1 2009
    
    Q3 2009Maximum consolidated total leverage ratio
    
    
    4.75
    
    
    
    4.50
    
    
    
    4.25
    
    
    
    4.00Minimum consolidated interest coverage
ratio
    
    
    2.50
    
    
    
    2.50
    
    
    
    2.75
    
    
    
    2.75
    Page 23




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
  9.50% Senior Notes 3⁄4 pari passu
   Payments due by periodLess than
    
    
    2  3
    
    
    4  5
    
    
    OverTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsContractual obligations:Long-term debt(s)
    
    $
    627,956
    
    
    $
    7,504
    
    
    $
    13,939
    
    
    $
    12,753
    
    
    $
    593,760Interest on bank term loan (1)
    
    
    305,098
    
    
    
    46,465
    
    
    
    91,532
    
    
    
    89,667
    
    
    
    77,434Interest on derivative instruments
    
    
    (9,170
    )
    
    
    (1,358
    )
    
    
    (2,717
    )
    
    
    (2,717
    )
    
    
    (2,378
    )Other long-term obligationsAcquired intangible asset (2)
    
    
    2,500
    
    
    
    2,500
    
    
    
    
    
    
    
    
    
    
    
    Operating lease payments
    
    
    17,647
    
    
    
    5,318
    
    
    
    9,045
    
    
    
    3,284
    
    
    
    Purchase obligations (3)
    
    
    13,329
    
    
    
    13,329
    
    
    
    
    
    
    
    
    
    
    
    Nintendo minimum royalty (4)
    
    
    24,850
    
    
    
    4,200
    
    
    
    8,400
    
    
    
    8,400
    
    
    
    3,850Programming related minimum
royalties and commissions (5)
    
    
    9,911
    
    
    
    2,647
    
    
    
    5,135
    
    
    
    2,129
    
    
    
    Total contractual obligations
    
    $
    992,121
    
    
    $
    80,605
    
    
    $
    125,334
    
    
    $
    113,516
    
    
    $
    672,666
 Amount of commitment expiration per periodLess than
    
    
    2  3
    
    
    4  5
    
    
    OverTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsOther commercial commitments:Standby letters of credit
    
    $
    810
    
    
    $
    810
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Interest payments are estimates based on current LIBOR and scheduled amortization.(2)
    
    In July 2002, we acquired from Hilton Hotels Corporation the right to provide Internet on
television access and television on-demand programming services to participating hotels and
the right to independently pursue and further develop interactive television content
throughout our entire room base.(3)
    
    Consists of open purchase orders primarily for the procurement of system components.(4)
    
    Nintendo video games pursuant to a non-exclusive license agreement with Nintendo, which
expires in May 2013. Under the terms of the agreement, we pay a monthly royalty equal to a
percent of revenue generated from the sale of Nintendo video game services, subject to a
monthly minimum.(5)
    
    In connection with our programming related agreements, we may guarantee minimum royalties for
specific periods or by individual programming content.  Page 24




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 Seasonality
   Page 25




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 Discussion and Analysis of Results of Operations
Three Months Ended June 30, 2007 and 2006
 Revenue Analysis.
 2007
    
    
    2006Percent
    
    
    
    
    
    
    Percentof Total
    
    
    
    
    
    
    of TotalRevenues:
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesGuest Pay
    
    $
    124,279
    
    
    
    92.1
    %
    
    $
    69,149
    
    
    
    96.2
    %Other
    
    
    10,659
    
    
    
    7.9
    %
    
    
    2,722
    
    
    
    3.8
    %$
    134,938
    
    
    
    100.0
    %
    
    $
    71,871
    
    
    
    100.0
    %
  Three Months EndedJune 30,2007
    
    
    2006Average monthly revenue per room:Movie revenue
    
    $
    16.70
    
    
    $
    17.02Other interactive service revenue
    
    
    5.82
    
    
    
    5.85Total per Guest Pay room
    
    $
    22.52
    
    
    $
    22.87
   Direct Costs (exclusive of operating expenses and depreciation and amortization discussed
separately below).
    Page 26




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
  2007
    
    2006
    
    ChangeDirect costs
as a percent of revenue
(exclusive of operating expenses and depreciation
and amortization discussed separately below):
    
    
    51.1
    %
    
    
    44.9
    %
    
    
    6.2
    %Change drivers:HSIA related
    
    
    
    
    
    
    
    
    
    
    3.0
    %Programming-related costs
    
    
    
    
    
    
    
    
    
    
    1.9
    %Other direct costs
    
    
    
    
    
    
    
    
    
    
    1.3
    %6.2
    %
 Operating Expenses.
 2007
    
    
    2006Percent
    
    
    
    
    
    
    Percentof Total
    
    
    
    
    
    
    of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesOperating expenses:Guest Pay operations
    
    $
    15,297
    
    
    
    11.3
    %
    
    $
    9,064
    
    
    
    12.6
    %Selling, general and administrative
    
    
    16,172
    
    
    
    12.0
    %
    
    
    7,128
    
    
    
    9.9
    %Depreciation and amortization
    
    
    33,599
    
    
    
    24.9
    %
    
    
    16,868
    
    
    
    23.5
    %Restructuring expense
    
    
    2,497
    
    
    
    1.9
    %
    
    
    
    
    
    
    0.0
    %Other operating income, net
    
    
    (895
    )
    
    
    (0.7
    )%
    
    
    (198
    )
    
    
    (0.3
    )%Total operating expenses
    
    $
    66,670
    
    
    
    49.4
    %
    
    $
    32,862
    
    
    
    45.7
    %
      Page 27




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
  Operating Loss.
 Interest Expense.
 Loss on Early Retirement of Debt.
 Other (Expense) Income.
 Taxes.
 Net Loss.
  Page 28




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 Discussion and Analysis of Results of Operations
Six Months Ended June 30, 2007 and 2006
 Revenue Analysis.
 2007
    
    
    2006Percent
    
    
    
    
    
    
    Percentof Total
    
    
    
    
    
    
    of TotalRevenues:
    
    Amount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesGuest Pay
    
    $
    194,549
    
    
    
    92.5
    %
    
    $
    137,357
    
    
    
    96.7
    %Other
    
    
    15,674
    
    
    
    7.5
    %
    
    
    4,707
    
    
    
    3.3
    %$
    210,223
    
    
    
    100.0
    %
    
    $
    142,064
    
    
    
    100.0
    %
  2007
    
    
    2006Average monthly revenue per room:Movie revenue
    
    $
    16.70
    
    
    $
    17.07Other interactive service revenue
    
    
    5.76
    
    
    
    5.70Total per Guest Pay room
    
    $
    22.46
    
    
    $
    22.77
   Direct Costs (exclusive of operating expenses and depreciation and amortization discussed
separately below).
    Page 29




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
  2007
    
    2006
    
    ChangeDirect costs
as a percent of revenue
(exclusive of operating expenses and depreciation
and amortization discussed separately below):
    
    
    50.2
    %
    
    
    45.0
    %
    
    
    5.2
    %Change drivers:HSIA related
    
    
    
    
    
    
    
    
    
    
    2.8
    %Programming-related costs
    
    
    
    
    
    
    
    
    
    
    1.7
    %Other direct costs
    
    
    
    
    
    
    
    
    
    
    0.7
    %5.2
    %
 Operating Expenses.
 2007
    
    
    2006Percent
    
    
    
    
    
    
    Percentof Total
    
    
    
    
    
    
    of TotalAmount
    
    
    Revenues
    
    
    Amount
    
    
    RevenuesOperating expenses:Guest Pay operations
    
    $
    23,832
    
    
    
    11.3
    %
    
    $
    17,850
    
    
    
    12.6
    %Selling, general and administrative
    
    
    23,963
    
    
    
    11.4
    %
    
    
    14,020
    
    
    
    9.9
    %Depreciation and amortization
    
    
    49,688
    
    
    
    23.6
    %
    
    
    33,783
    
    
    
    23.8
    %Restructuring expense
    
    
    2,738
    
    
    
    1.3
    %
    
    
    
    
    
    
    0.0
    %Other operating income, net
    
    
    (895
    )
    
    
    (0.4
    )%
    
    
    (198
    )
    
    
    (0.1
    )%Total operating expenses
    
    $
    99,326
    
    
    
    47.2
    %
    
    $
    65,455
    
    
    
    46.1
    %
      Page 30




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
   Operating Income.
 Interest Expense.
 Loss on Early Retirement of Debt.
 Other (Expense) Income.
 Taxes.
 Net Loss.
 Critical Accounting Policies
  Revenue Recognition 
 
    
    Guest Pay Services.Our primary source of revenue is from providing in-room, interactive
television services to the lodging industry, which the hotel guest typically purchases on a
per-view, hourly or daily basis. These services include on-demand movies, on-demand games,
music and music video, Internet on television and television on-demand. We recognize revenue
from the sale of these Guest Pay services in the period in which such services are sold to the
hotel guest and when collection is reasonably assured. Persuasive evidence of a purchase
exists through a guest buy transaction recorded on our system. No future performance
obligations exist with respect to these types of services once they have been provided to the
hotel guest. The prices related to our products or services are fixed or determinable prior
to delivery of the products or services.
  Page 31




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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 
    
    Free-to-Guest Services.We generate revenue from the sale of basic and premium television
programming to individual hotels. In contrast to Guest Pay Services, where the hotel guest is
charged directly for the service, we charge the hotel for our Free-to-Guest Services. We
recognize revenue from the sale of Free-to-Guest Services in the period in which such services
are sold and when collection is reasonably assured. We establish the prices charged to each
hotel and no future performance obligations exist on programming that has been provided to the
hotel. Persuasive evidence of an arrangement exists through our long-term contract with each
hotel. We also have advance billings from one month to three months for certain free-to-guest
programming services where the revenue is deferred and recognized in the periods that services
are provided.
    
    High Speed Internet Access System Sales.We provide
high-speed Internet access through the sale and
installation of equipment. Revenue from the sale and
installation of this equipment is recognized when the
equipment is installed. The delivery and
installation of the equipment are concurrent. In
addition, this equipment, which can be acquired from
other manufacturers or retailers, has stand-alone
value to the customer. The software used within
these systems can also be supplied by other vendors
unrelated to us. Equipment prices are fixed and
determinable prior to delivery and are based on
objective and reliable sales evidence from a
stand-alone basis.
    
    High Speed Internet Access Service and Support.We
provide ongoing maintenance, service and call center
support services to hotel properties that have been
installed by us and also to hotel properties that
have been installed by other providers. In addition,
we provide, in some cases, the hotel property with
the portal to access the Internet. We receive
monthly service fees from such hotel properties for
our maintenance services and Internet access. We
recognize the service fee ratably over the term of
the contract. The prices for these services are
fixed and determinable prior to delivery of the
service. The fair value of these services is known
due to objective and reliable evidence from contracts
and stand-alone sales. Under the service agreement,
which includes maintenance and Internet access, we
recognize revenue ratably over the term of the
maintenance and service contract, typically three
years.
    
    Healthcare System Sales and Support.We provide our
interactive television infrastructure and content to
the healthcare industry. We generate revenue from
two sources: 1) the sale and installation of system
equipment and 2) support agreements with the facility
to provide software maintenance, programming and
system maintenance for one year. Typically, revenue
from the sale and installation of our interactive
system is recognized ratably over the one-year
maintenance period after the equipment is installed.
The contracted system hardware, installation and
maintenance elements are not separable during this
start-up phase due to insufficient vendor specific
objective evidence (VSOE). The package price of the
interactive system and related maintenance is fixed
and determinable prior to delivery. Upon completion
of the initial year, the support arrangement, which
includes interactive content, software maintenance,
and system services, is renewable and is recognized
ratably over the term of the related contract. The
hospital is under no obligation to contract with us
for the support arrangement. They may contract with
other providers and utilize the equipment and
software installed by us. Management expects VSOE to
be established after at least eighteen months of
market history and meaningful renewal activity for
maintenance services. Once VSOE has been
established, the entire selling price of the
interactive system will be recognized upon
installation.
    
    System Sales and Support to Travel Centers.We also
market and sell our interactive systems to travel
centers. We generate revenue from three sources: 1)
the sale of the interactive system, which includes
equipment, operating software and a one-year parts
and labor warranty 2) optional extended service and
maintenance agreements, which include future software
upgrades as they become available and 3) programming.
The interactive system price includes a
non-exclusive, non-transferable right to use the
initial software package. Currently, revenue from
the sale of our interactive system and the extended
service and maintenance agreement is recognized
ratably over the three-year maintenance period, which
includes the original one-year warranty and the
two-year extension, after the equipment is delivered.
The contracted interactive system and extended
service and maintenance elements are not separable
during this start-up phase due to insufficient vendor
specific objective evidence (VSOE). The prices of
the interactive system and extended service and
maintenance agreement are fixed and determinable
prior to delivery. Management expects VSOE to be
established after at least eighteen months of market
history and meaningful renewal activity for
maintenance services. Once VSOE has been
established, the entire selling price of the
interactive system will be recognized
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LodgeNet Entertainment Corporation
    
    Form 10-Q
 upon delivery.
Programming revenue from this arrangement is recognized on a recurring basis
over the term of the related contract.
 
    
    Hotel System Sales and Support.We also market and
sell our Guest Pay interactive systems to hotels,
along with recurring support for interactive content,
software maintenance and technical field service for
a fixed fee. Revenue from the sale and installation
of the interactive system, including the operating
software, is deferred and recognized over the term of
the contract, generally five years, due to
inseparable proprietary software elements. The
multiple elements are not separable because the
proprietary software is required to operate the
system and we do not license or sell the software
separately under this business model. The
interactive system prices are fixed and determinable
prior to delivery. Revenue from this arrangement,
which includes equipment, operating software,
interactive content, and maintenance services, is
recognized ratably over the term of the related
contract.
    
    Master Antenna Television (MATV) Services.We
generate revenues from the installation of master
antenna wiring and related infrastructure. Revenues
are recognized upon completion of the MATV
installation and the prices of the services are fixed
and determinable prior to delivery. MATV equipment
and services are not proprietary and can be supplied
by other vendors.
    
    Satellite System Sales.We also generate revenues
from the sale and installation of DirecTV satellite
systems. Revenues are recognized upon installation
of the satellite system and the prices for these
services are fixed and determinable prior to
delivery. DirecTV equipment and installation
services are not proprietary and can be supplied by
other vendors other than us.
    
    Other.We also generate revenue from the sale of
miscellaneous system equipment such as television
remotes and service parts and labor. These sales are
not made under multiple element arrangements and we
recognize the revenue when the equipment is delivered
or service (repair or installation) has been
performed. No future performance obligation exists
on an equipment sale or on a repair service that has
been provided.
 Allowance for Doubtful Accounts.
 Allowance for Excess or Obsolete System Components.
 Long-Lived Assets.
 Property and Equipment.
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LodgeNet Entertainment Corporation
    
    Form 10-Q
  YearsBuildings
    
    
    30Guest Pay systems:Installed system costs
    
    
    2  7Customer acquisition costs
    
    
    5  7System components
    
    
    5  7Software costs
    
    
    3  5Other equipment
    
    
    3  10
 Allowance for System Removal.
 Goodwill and Other Intangibles Assets. Goodwill and Other Intangible Assets .
  YearsHotel contracts and relationships
    
    
    10  20Acquired technologies and patents
    
    
    5Content agreements and relationships
    
    
    4
 Recent Accounting Developments
 Fair Value Measurements
 The Fair Value Option for Financial
Assets and
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LodgeNet Entertainment Corporation
    
    Form 10-Q
 Financial Liabilities  Including an Amendment of FASB Statement No. 115.
 
 Item 3  Quantitative and Qualitative Disclosures About Market Risk
  Interest.
 Foreign Currency Transactions.
 
 Item 4  Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
 Changes in Internal Control over Financial Reporting.
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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 
 Part II  Other Information
 
 Item 1  Legal Proceedings
  
 Item 1ARisk Factors
  
 Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3  Defaults Upon Senior Securities
  
 Item 4  Submission of Matters to a Vote of Security Holders
  
    
    To elect two directors to three year terms expiring in 2010.
    
    To ratify the Amended and Restated Shareholder Rights Plan
dated as of February 28, 2007 between the Company and
Computershare Investor Services, LLC, a Delaware limited
liability company, as Rights Agent (the Amended Rights
Plan).
    
    To ratify the appointment of PricewaterhouseCoopers LLC as
the Companys independent registered public accounting firm
for the year ending December 31, 2007.
  Election of Directors
 For
    
    WithholdScott C. Petersen
    
    
    17,310,379
    
    
    
    795,392Scott H. Shlecter
    
    
    17,414,765
    
    
    
    691,006
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LodgeNet Entertainment Corporation
    
    Form 10-Q
 Ratification of Amended and Restated Shareholder Rights Plan
 For
    
    Against
    
    Abstain
    
    Non-Votes5,252,230
    
    11,502,871
    
    238,710
    
    1,111,960
 Ratification of Appointment of PricewaterhouseCoopers
 For
    
    Against
    
    Abstain
    
    Non-Votes18,098,846
    
    6,925
    
    0
    
    0
 
 Item 5  Other Information
  
 Item 6  Exhibits
 31.1
    
    Rule 13a-14(a)/15(d)-14(a) Certification of Chief Financial Officer31.2
    
    Rule 13a-14(a)/15(d)-14(a) Certification of Chief Executive Officer32
    
    Section 1350 Certifications
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##### Table of Contents



LodgeNet Entertainment Corporation
    
    Form 10-Q
 LodgeNet Entertainment Corporation and Subsidiaries
 
 Signatures
  LodgeNet
Entertainment Corporation(Registrant)Date: August 8, 2007
    
    / s / Scott C. Petersen

Scott C. PetersenPresident, Chief Executive Officer andChairman of the Board of Directors(Principal Executive Officer)Date: August 8, 2007
    
    / s / Gary H. Ritondaro

Gary H. RitondaroSenior Vice President, Chief Financial Officer(Principal Financial & Accounting Officer)
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