YTD free cash flow (GAAP version, CFO - CAPEX) = $46MM. Projected FCF for Q4 = $11-12MM.

Full year FCF estimated at $57MM.

Diluted shares out, post convertible = 37.6 MM

7x FCF = $10.61 per share
10x FCF = $15.16 per share

This is without economic recovery. If economy recovers, the company has much more operating leverage than pre-recession due to the following:

- Lower fixed operating costs such as outsourcing call center
- Higher percentage of steady revenue from alternative sources which has offset the decline in more volatile guest entertainment revenue
- Higher returns on invested capital due to cost sharing agreements with partners
- Higher returns on invested capital due to technology initiatives which lower installation costs

On slide 18 of the LNET Q3 Earnings presentation the company helpfully estimates the incremental cash flow that will come from a change in revenues. They estimate that a full recovery of guest entertainment revenues to pre-recession levels will lead to $46MM extra in their metric "Adjusted Operating Cash Flow". By way of shorthand, this past Q, AOCF was roughly twice GAAP FCF. Let's assume the same here. In other words, if the business normalizes, LNET will earn an additional $23MM in FCF. This will increase GAAP FCF from an estimated $56MM this year to $79MM. Here's what this does to intrinsic value:

7x FCF = $14.7 per share
10x FCF = $21.0 per share

Slide 18 solely highlighted the ramp in the guest entertainment business. The company is also making headway in other business segments such as healthcare. When the ad market returns they will also have an opportunity to take the Hotel Networks (their in-house ad business) from breakeven to profitability. In other words, there is more operating leverage in the business than was even highlighted in this slide.