Rewards Network Inc. Reports Third Quarter 2010 Results

SOURCE: Rewards Network

CHICAGO, IL–(Marketwire – October 28, 2010) – Rewards Network Inc. (NASDAQ: DINE), a leading
provider of marketing services and dining rewards programs to the
restaurant industry, today reported the following financial and operating
results for the third quarter of 2010 as compared to the prior year period:

--  Growth in Marketing Services Program revenues of 15.6% and a decline in
    Marketing Credits Program revenues of 9.5%. Third quarter total
    revenues decreased 0.7% as compared to the prior year period while
    total revenues for the nine months ended September 30, 2010 grew 2.2%.
--  Gross profit growth of 1.5%.
--  A decline in earnings per share to $0.12 compared to $0.21 in the prior
    year period, driven by an increase in operating expenses and an
    increase in the effective tax rate, partially offset by a decrease in
    the provision for losses.
--  The Company incurred $0.5 million and $0.9 million for the three and
    nine months ended September 30, 2010, respectively, in expenses related
    to the process implemented by the Board of Directors for evaluating
    strategic alternatives as described below.
--  Growth in the net dining credits portfolio of 19.8%.
--  A 40.7% reduction in the provision for losses.
--  Growth in restaurant count of 5.9% to 10,721.
--  $12.1 million of cash at the end of the third quarter with no debt.

The following table presents financial highlights of the Company’s
operations for the three and nine months ended September 30, 2010 and 2009
(in millions, except per share amounts, restaurant count and net dining
credits usage period). All previous periods presented have been revised to
reflect the net presentation of revenues effective beginning the fourth
quarter of 2009. Earnings per share amounts have been adjusted to reflect
the one-for-three reverse stock split effective July 6, 2009.

                                            3Q'10   3Q'09   YTD'10  YTD'09
                                            ------- ------- ------- -------
Total revenues                              $  27.6 $  27.8 $  82.9 $  81.1
Gross profit                                $  17.8 $  17.5 $  55.6 $  51.2
Operating expenses                          $  15.2 $  14.6 $  47.9 $  45.0
Net income                                  $   1.1 $   1.9 $   4.2 $   3.1
Earnings per share                          $  0.12 $  0.21 $  0.46 $  0.34

Total restaurants                            10,721  10,121
Dining credits portfolio, net of reserves   $  66.1 $  55.1
Net dining credits usage period (months)        8.4     6.5
Cash and cash equivalents                   $  12.1 $  26.9

As previously announced on June 9, 2010, a special committee of independent
directors of the Board of Directors of the Company was evaluating bids
received from parties potentially interested in pursuing a strategic
transaction with the Company and other strategic alternatives. As
announced earlier today, the Company has entered into a definitive merger
agreement with EGI Acquisition, L.L.C. (“EGI Acquisition”) under which EGI
Acquisition will offer to acquire all of the shares of the Company’s common
stock not owned by EGI Acquisition for $13.75 per share in cash.

Third Quarter 2010 Results

Third quarter revenues decreased 0.7% compared to the prior year, due to a
9.5% decrease in Marketing Credits Program revenues partially offset by a
15.6% increase in Marketing Services Program revenue. Third quarter
revenues were negatively impacted by a decrease in consumer spending in the
dining segment driven by a 2.4% decrease in average transaction amount as
compared to the prior year.

Third quarter gross profit grew 1.5% over the prior year period primarily
due to a decline in the provision for losses expense. The provision for
losses expense declined 40.7% to $1.1 million, or 3.9% of total revenues in
the quarter, as compared to $1.8 million, or 6.5% of total revenues in the
third quarter of 2009.

In the third quarter, operating expenses increased by $0.7 million or 4.5%
over the third quarter of 2009. Operating expenses for the third quarter
of 2010 included $0.8 million due to an increase in sales and
administrative headcount over the prior year period, $0.5 million of
expenses incurred in connection with the strategic review process and $0.3
million in expenses related to the introduction of a new daily special
product in two metropolitan markets. The increase in operating expenses
was partially offset by $0.9 million reduction in incentive and stock
compensation expenses between periods.

The effective tax rate increased to 57.9% for the third quarter as compared
to 35.7% in the prior year mainly due to a change in annual elections
relating to foreign taxes.

During the third quarter, the Company engaged in member acquisition and
engagement efforts that led to a 6.0% increase in its active member base, a
39.3% increase in completed surveys, and a 10.2% increase in email
addressable members over the prior year. As a result, member benefits
expense as a percentage of total revenues increased to 30.6% in the third
quarter from 29.4% in the prior year period.

Year to Date 2010 Results

Revenues for the nine months ended September 30, 2010 increased 2.2% over
the prior year primarily due to a 35.2% increase in Marketing Services
Program revenues that was partially offset by an 11.5% decrease in
Marketing Credits revenues. Gross profit for the nine months ended
September 30, 2010 increased 8.6% over the prior year period. The provision
for losses expense declined to $2.9 million, or 3.4% of total revenues for
the nine months ended September 30, 2010, as compared to $7.2 million, or
8.9% of total revenues in the prior year period. Member benefit expense
increased to 28.5% of total revenues during the nine month ended September
30, 2010 as compared to 27.0% in the prior year period primarily due to the
shift towards the Marketing Services Program.

Restaurant count grew 5.9% to 10,721 at September 30, 2010 as compared to
the prior year period. Marketing Services Program restaurants increased
18.3% to 6,152, the highest number of Marketing Services Program
restaurants in the Company’s history. Marketing Credits Program restaurants
declined 7.1% to 4,569.

The effective tax rate decreased to 45.2% for the nine months ended
September 30, 2010 compared with 49.6% for the same period in the prior
year mainly due additional tax expense recorded in the nine months ended
September 30, 2009 relating to the distribution of employee and director
stock awards.

The net dining credits portfolio increased $10.9 million to $66.1 million
as of September 30, 2010 from $55.1 million as of September 30, 2009. The
Company’s increased purchases of dining credits during the year while
maintaining its long standing conservative dining credits purchasing
policies.

Cash

During the nine months ended September 30, 2010, the Company generated $2.5
million of cash from operations. The Company paid $87.2 million out of
cash from operations to purchase dining credits during the nine months
ended September 30, 2010. Cash used in financing and investing activities
included $3.6 million in capital expenditures related to investments in
sales force productivity tools and $0.2 million in common stock
repurchases. As of September 30, 2010 the Company had $12.1 million of cash
on hand and was debt free.

About Rewards Network

Rewards Network (NASDAQ: DINE), headquartered in Chicago, IL, operates the
leading dining rewards programs in North America by marketing participating
restaurants to members of these programs and by providing incentives to
members to dine at these restaurants. In addition to operating the dining
rewards program of leading airline frequent flyer programs, hotel
frequent-stay programs, retailer shopping programs, college savings
programs, and other affinity organizations, the Company offers its own
dining rewards program, iDine®, at www.idine.com. Thousands of
restaurants and other clients benefit from the company’s restaurant
marketing efforts, which include millions of email impressions, mobile
access to restaurants via iPhone®, BlackBerry® and Android®
smartphones and dining Web sites. Rewards Network also provides restaurant
ratings and other restaurant business intelligence, as well as the purchase
of dining credits from restaurants in the program. In conjunction with
major airline frequent flyer programs and other affinity organizations,
Rewards Network provides more than three million members with incentives to
dine at participating restaurants. These incentives include airline miles,
college savings rewards, reward program points and cash back benefits. For
additional information about Rewards Network, visit RewardsNetwork.com or
call (866) 539-9792.

Safe Harbor Statement

Statements in this release that are not strictly historical are
“forward-looking” statements that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
statements are based on management’s current expectation or beliefs, and
are subject to risks, trends and uncertainties. Actual results, performance
or achievements may differ materially from those expressed or implied by
the statements herein due to factors that include, but are not limited to,
the following: (i) the impact of the economy on dining activity, (ii) the
Company’s inability to attract and retain restaurants, (iii) the Company’s
susceptibility to restaurant credit risk and the risk that its allowance
for unredeemable dining credits may prove inadequate, (iv) modifications to
the Company’s dining credits purchasing policies that lead to an increase
in the allowance for unredeemable dining credits, (v) network
interruptions, processing interruptions or processing errors, (vi)
susceptibility to a changing regulatory environment, (vii) the Company’s
dependence upon its relationships with payment card issuers, transaction
processors, presenters and aggregators, (viii) the failure of the Company’s
security measures, (ix) the Company’s failure to maintain compliance
certifications, (x) increased operating costs or loss of members due to
privacy concerns of the Company’s program partners, payment card processors
and the public, (xi) a security breach that results in a payment card
issuer re-issuing a significant number of registered payment cards, (xii)
changes to payment card association rules and practices, (xiii) the
Company’s dependence on its relationships with airlines and other reward
program partners for a significant number of members, (xiv) the
concentration of a significant amount of the Company’s rewards currency in
one industry group, the airline industry, (xv) the Company’s inability to
attract and retain active members, (xvi) the Company’s ability to obtain
sufficient cash to operate its business, (xvii) changes in the Company’s
programs that affect the rate of rewards, (xviii) the Company’s inability
to maintain an adequately-staffed sales force, (xix) the Company’s
inability to maintain an appropriate balance between the number of members
and the number of participating restaurants in each market, (xx) changes in
the regulatory environment, (xxi) the Company’s minimum purchase
obligations and performance requirements, (xxii) class action lawsuits,
(xxiii) increasing competition, (xxiv) impairment to goodwill, (xxv)
factors causing our operating results to fluctuate over time, and (xxvi)
adverse weather conditions affecting dining activity. A more detailed
description of the factors that, among others, should be considered in
evaluating our outlook can be found in the Company’s annual report on Form
10-K for the year ended December 31, 2009 filed with the Securities and
Exchange Commission. The Company undertakes no obligation to, and expressly
disclaims any such obligation to, update or revise any forward-looking
statements to reflect changed assumptions, the occurrence of anticipated or
unanticipated events, changes to future results over time or otherwise,
except as required by law.

                  Rewards Network Inc. and Subsidiaries
                               - unaudited-
(amounts in thousands, except per share data, number of restaurants in the
program, average transaction amount and estimated months to consume dining
                            credits portfolio)
(all share and per share amounts have been adjusted to reflect the reverse
            one-for-three stock split effective July 6, 2009)



                                                Three Months Ended
                                                  September 30,
                                        ----------------------------------
                                          2010      %       2009      %
                                        --------  ------  --------  ------
Revenues:
  Revenues (gross amounts billed
   of $50,866, $52,784, $154,919,
   and $161,329, respectively) (1)      $ 27,346   99.13% $ 27,523   99.06%
Membership fees                              239    0.87%      261    0.94%
                                        --------  ------  --------  ------
    Total revenues                      $ 27,585  100.00% $ 27,784  100.00%
                                        --------  ------  --------  ------

Direct expenses:
  Member benefits                          8,431   30.56%    8,164   29.38%
  Provision for losses                     1,074    3.89%    1,811    6.52%
  Processing fees                            287    1.04%      277    1.00%
                                        --------  ------  --------  ------

    Total direct expenses               $  9,792   35.50% $ 10,252   36.90%
                                        --------  ------  --------  ------

    Gross profit                        $ 17,793   64.50% $ 17,532   63.10%
                                        --------  ------  --------  ------

Operating expenses:
  Salaries and benefits                    4,438   16.09%    4,749   17.09%
  Sales commission and expenses            5,084   18.43%    4,932   17.75%
  Professional fees                          979    3.55%      546    1.97%
  Member and merchant marketing              686    2.49%      637    2.29%
  Depreciation and amortization            1,159    4.20%    1,233    4.44%
  General and administrative               2,860   10.37%    2,454    8.83%
                                        --------  ------  --------  ------

    Total operating expenses            $ 15,206   55.12% $ 14,551   52.37%
                                        --------  ------  --------  ------

      Operating income                     2,587    9.38%    2,981   10.73%

Other expenses, net                          (31)  -0.11%      (15)  -0.05%
                                        --------  ------  --------  ------

    Income before income tax provision     2,556    9.27%    2,966   10.68%
                                        --------  ------  --------  ------

Income tax provision                       1,479    5.36%    1,059    3.81%

        Net income                      $  1,077    3.90% $  1,907    6.86%
                                        ========  ======  ========  ======

Net Income per share
  Basic                                 $   0.12          $   0.22
  Diluted                               $   0.12          $   0.21

Weighted average number of common and
 common equivalent shares
  Basic                                    8,953             8,764
  Diluted                                  9,057             8,924



                                                Nine Months Ended
                                                  September 30,
                                        ----------------------------------
                                          2010      %       2009      %
                                        --------  ------  --------  ------
Revenues:
  Revenues (gross amounts billed
   of $50,866, $52,784, $154,919,
   and $161,329, respectively) (1)      $ 82,145   99.09% $ 80,311   99.01%
Membership fees                              754    0.91%      804    0.99%
                                        --------  ------  --------  ------
    Total revenues                      $ 82,899  100.00% $ 81,115  100.00%
                                        --------  ------  --------  ------

Direct expenses:
  Member benefits                         23,606   28.48%   21,898   27.00%
  Provision for losses                     2,851    3.44%    7,249    8.94%
  Processing fees                            855    1.03%      781    0.96%
                                        --------  ------  --------  ------

    Total direct expenses               $ 27,312   32.95% $ 29,928   36.90%
                                        --------  ------  --------  ------

    Gross profit                        $ 55,587   67.05% $ 51,187   63.10%
                                        --------  ------  --------  ------

Operating expenses:
  Salaries and benefits                   14,521   17.52%   14,199   17.50%
  Sales commission and expenses           16,100   19.42%   15,025   18.52%
  Professional fees                        2,487    3.00%    1,806    2.23%
  Member and merchant marketing            2,171    2.62%    1,912    2.36%
  Depreciation and amortization            3,690    4.45%    4,051    4.99%
  General and administrative               8,932   10.77%    8,024    9.89%
                                        --------  ------  --------  ------

    Total operating expenses            $ 47,901   57.78% $ 45,017   55.50%
                                        --------  ------  --------  ------

      Operating income                     7,686    9.27%    6,170    7.61%

Other expenses, net                          (92)  -0.11%      (65)  -0.08%
                                        --------  ------  --------  ------

    Income before income tax provision     7,594    9.16%    6,105    7.53%
                                        --------  ------  --------  ------

Income tax provision                       3,433    4.14%    3,031    3.74%

        Net income                      $  4,161    5.02% $  3,074    3.79%
                                        ========  ======  ========  ======

Net Income per share
  Basic                                 $   0.47          $   0.34
  Diluted                               $   0.46          $   0.34

Weighted average number of common and
 common equivalent shares
  Basic                                    8,913             8,941
  Diluted                                  9,045             9,119


(1) Effective in the fourth quarter of 2009, the Company revised certain
    aspects of its income statement presentation.  Most prominently, the
    Company is now reporting revenues net of the redemption of dining
    credits (previously referred to as cost of sales). The redemption of
    dining credits is now classified as a direct reduction of revenue
    rather than as a direct expense.




                  Rewards Network Inc. and Subsidiaries
                               - unaudited-
(amounts in thousands, except per share data, number of restaurants in the
 program, average transaction amount and estimated months to consume dining
                            credits portfolio)
(all share and per share amounts have been adjusted to reflect the reverse
              one-for-three stock split effective July 6, 2009)


                                            Three months ended
                                            September 30, 2010
                                ------------------------------------------
                                Marketing  Marketing
                                 Credits   Services   Membership
                                 Program    Program     fees       Total
                                ---------  ---------  ---------- ---------
Restaurant count                    4,569      6,152                10,721
Number of qualified
 transactions(1)                    1,290      1,719                 3,009
 Average transaction amount(1)  $   44.35  $   44.79             $   44.60

Qualified transaction
 amounts(1)                     $  57,208  $  76,995             $ 134,203
RN % share of qualified
 transaction amount(1)(2)            69.3%      14.6%                 37.9%
RN share of qualified
 transaction amount and
 membership fees(1)             $  39,646  $  11,219  $      239 $  51,104

Redemption of dining credits(1) $  23,519  $      --             $  23,519
                                ---------  ---------  ---------- ---------
   Total revenues               $  16,127  $  11,219  $      239 $  27,585
                                ---------  ---------  ---------- ---------
Revenues as a % of qualified
 transaction amount(1)(2)            28.2%      14.6%                 20.4%
Member benefits                 $   2,791  $   3,025             $   5,816
Bonus Rewards                         634        838                 1,472
Partner Commissions                   520        623                 1,143
                                ---------  ---------  ---------- ---------
   Total member benefits        $   3,945  $   4,486             $   8,431
Provision for losses            $   1,074  $      --             $   1,074
Processing fees                 $     130  $     157             $     287
                                ---------  ---------  ---------- ---------

                                ---------  ---------  ---------- ---------
Gross Profit                    $  10,978  $   6,576  $      239 $  17,793
                                =========  =========  ========== =========


                                            Three months ended
                                            September 30, 2009
                                ------------------------------------------
                                Marketing  Marketing
                                 Credits   Services   Membership
                                 Program    Program     fees       Total
                                ---------  ---------  ---------- ---------
Restaurant count                    4,920      5,201                10,121
Number of qualified
 transactions(1)                    1,311      1,436                 2,747
 Average transaction amount(1)  $   44.60  $   46.69             $   45.70

Qualified transaction
 amounts(1)                     $  58,473  $  67,053             $ 125,526
RN % share of qualified
 transaction amount(1)(2)            73.7%      14.5%                 42.1%
RN share of qualified
 transaction amount and
 membership fees(1)             $  43,082  $   9,702  $      261 $  53,045

Redemption of dining credits(1) $  25,261  $      --             $  25,261
                                ---------  ---------  ---------- ---------
   Total revenues               $  17,821  $   9,702  $      261 $  27,784
                                ---------  ---------  ---------- ---------
Revenues as a % of qualified
 transaction amount(1)(2)            30.5%      14.5%                 21.9%
Member benefits                 $   2,410  $   2,795             $   5,205
Bonus Rewards                         830        986                 1,816
Partner Commissions                   563        580                 1,143
                                ---------  ---------  ---------- ---------
   Total member benefits        $   3,803  $   4,361             $   8,164
Provision for losses            $   1,811  $      --             $   1,811
Processing fees                 $     128  $     149             $     277
                                ---------  ---------  ---------- ---------

                                ---------  ---------  ---------- ---------
Gross Profit                    $  12,079  $   5,192  $      261 $  17,532
                                =========  =========  ========== =========


                                             Nine months ended
                                             September 30, 2010
                                ------------------------------------------
                                Marketing  Marketing
                                 Credits   Services  Membership
                                 Program    Program     fees      Total
                                ---------  ---------  ---------- ---------
Restaurant count                    4,569      6,152                10,721
Number of qualified
 transactions(1)                    3,871      4,814                 8,685
 Average transaction amount(1)  $   44.99  $   45.90             $   45.49

Qualified transaction
 amounts(1)                     $ 174,157  $ 220,967             $ 395,124
RN % share of qualified
 transaction amount(1)(2)            70.5%      14.5%                 39.2%
RN share of qualified
 transaction amount and
 membership fees(1)             $ 122,773  $  32,145  $      754 $ 155,672

Redemption of dining credits(1) $  72,773  $      --             $  72,773
                                ---------  ---------  ---------- ---------
   Total revenues               $  50,000  $  32,145  $      754 $  82,899
                                ---------  ---------  ---------- ---------
Revenues as a % of qualified
 transaction amount(1)(2)            28.7%      14.5%                 20.8%
Member benefits                 $   7,543  $   8,589             $  16,132
Bonus Rewards                       1,785      2,272                 4,057
Partner Commissions                 1,606      1,811                 3,417
                                ---------  ---------  ---------- ---------
   Total Member Benefits        $  10,934  $  12,672             $  23,606
Provision for losses            $   2,851  $      --             $   2,851
Processing fees                 $     385  $     470             $     855
                                ---------  ---------  ---------- ---------

                                ---------  ---------  ---------- ---------
Gross Profit                    $  35,830  $  19,003  $      754 $  55,587
                                =========  =========  ========== =========



                                             Nine months ended
                                             September 30, 2009
                                ------------------------------------------
                                Marketing  Marketing
                                 Credits   Services  Membership
                                 Program    Program     fees      Total
                                ---------  ---------  ---------- ---------
Restaurant count                    4,920      5,201                10,121
Number of qualified
 transactions(1)                    4,205      3,476                 7,681
 Average transaction amount(1)  $   43.72  $   45.98             $   44.74

Qualified transaction
 amounts(1)                     $ 183,857  $ 159,826             $ 343,683
RN % share of qualified
 transaction amount(1)(2)            74.8%      14.9%                 46.9%
RN share of qualified
 transaction amount and
 membership fees(1)             $ 137,547  $  23,782  $      804 $ 162,133

Redemption of dining credits(1) $  81,018  $      --             $  81,018
                                ---------  ---------  ---------- ---------
   Total revenues               $  56,529  $  23,782  $      804 $  81,115
                                ---------  ---------  ---------- ---------
Revenues as a % of qualified
 transaction amount(1)(2)            30.7%      14.9%                 23.4%
Member benefits                 $   8,569  $   7,001             $  15,570
Bonus Rewards                       1,488      1,470                 2,958
Partner Commissions                 1,868      1,502                 3,370
                                ---------  ---------  ---------- ---------
   Total Member Benefits        $  11,925  $   9,973             $  21,898
Provision for losses            $   7,249  $      --             $   7,249
Processing fees                 $     417  $     364             $     781
                                ---------  ---------  ---------- ---------

                                ---------  ---------  ---------- ---------
Gross Profit                    $  36,938  $  13,445  $      804 $  51,187
                                =========  =========  ========== =========

(1) Supplemental operating and statistical data. See following page for
    details.
(2) Total percentage excludes membership fees.






                  Rewards Network Inc. and Subsidiaries
                               - unaudited-
(amounts in thousands, except per share data, number of restaurants in the
 program, average transaction amount and estimated months to consume dining
                            credits portfolio)
(all share and per share amounts have been adjusted to reflect the reverse
              one-for-three stock split effective July 6, 2009)


Definitions:
---------------------
Qualified transaction
amount(a):                 Represents the total dollar value of all member
                           dining transactions at participating restaurants
                           when a benefit is offered. Qualified transaction
                           amounts are divided by the number of qualified
                           transactions to arrive at the average
                           transaction amount.

Rewards Network percentage
share of qualified
transaction amount(a)      Represents the percentage of qualified
                           transaction amounts that Rewards Network is
                           entitled to receive. The percentage is based on
                           each agreement between the restaurant and
                           Rewards Network.

Rewards Network share of
qualified transaction
amount(a)                  Represents the Company's portion of the member's
                           dining transaction that the Company is entitled
                           to receive in accordance with the terms of the
                           agreement with the participating restaurant.

Redemption of dining
credits(a)                 Represents the amount of dining credits, at
                           cost, redeemed by members when dining at
                           participating restaurants when a benefit is
                           offered. Under the Company's Marketing Services
                           Program, no dining credits are purchased by
                           Rewards Network.

Provision for losses:      Represents the current period expense necessary
                           to maintain an appropriate reserve against the
                           Company's unredeemable dining credits. No
                           provision is applied to the Marketing Services
                           Program, as the Company does not purchase dining
                           credits under that program.

Total member benefits:     Represents the dollar value of benefits paid to
                           members in Cashback Rewards(SM) savings, airline
                           miles, or other benefit currencies, for dining
                           at participating restaurants.

(a) Qualified transaction amount, Rewards Network share of qualified
    transaction amount, redemption of dining credits and related
    statistical measures (number of qualified transactions, average
    transaction amount and revenues as a percentage qualified transaction
    amount) are supplemental information the Company uses in analyzing
    operating results and managing the business. These supplemental
    financial measures provide useful information because they are
    important factors that affect the Company's sales.





        Selected Balance Sheet and Cash Flow
         Information                             September 30, December 31,
                                                      2010         2009
                                                  -----------  -----------
                                                                 (Audited)
        Cash and cash equivalents                 $    12,110  $    12,665
        Dining credits                            $    75,302  $    68,747
        Allowance for unredeemable dining
         credits                                 ($    9,247) ($   11,448)
        Goodwill                                  $     8,117  $     8,117
        Total assets                              $   108,198  $   102,840

        Accounts payable - dining credits         $     4,354  $     4,598
        Stockholders' equity                      $    89,961  $    84,951

                                                      Nine Months Ended
                                                        September 30,
                                                  ------------------------
                                                      2010        2009
                                                  -----------  -----------
        Net cash provided by (used in):
              Operations                          $     2,540  $    24,396
              Investing activities               ($    3,614) ($     2,275)
              Financing activities                $       448 ($     4,125)





                  Rewards Network Inc. and Subsidiaries
                               - unaudited-
(amounts in thousands, except per share data, number of restaurants in the
 program, average transaction amount and estimated months to consume dining
                            credits portfolio)
(all share and per share amounts have been adjusted to reflect the reverse
              one-for-three stock split effective July 6, 2009)


                Q3 2010   Q2 2010   Q1 2010   Q4 2009   Q3 2009   Q2 2009
                --------  --------  --------  --------  --------  --------
Restaurant
 Count Trends
 (period ended):
Marketing
 Credits Program   4,569     4,612     4,737     4,961     4,920     5,343
Marketing
 Services Program  6,152     5,929     5,551     5,279     5,201     4,854
                --------  --------  --------  --------  --------  --------
Total
 restaurants      10,721    10,541    10,288    10,240    10,121    10,197
Sequential Quarterly
 Percentage Change
Marketing Credits
 Program            -0.9%     -2.6%     -4.5%      0.8%     -7.9%     -8.6%
Marketing Services
 Program             3.8%      6.8%      5.1%      1.5%      7.1%     18.9%
Total restaurants    1.7%      2.5%      0.5%      1.2%     -0.7%      2.7%

Qualified Transaction
 Amounts Trends:
Marketing Credits
 Program        $ 57,208  $ 60,246  $ 56,703  $ 57,110  $ 58,473  $ 61,683
Marketing Services
 Program          76,995    76,300    67,672    69,093    67,053    53,583
                --------  --------  --------  --------  --------  --------
Total qualified
 transaction
 amounts        $134,203  $136,546  $124,375  $126,203  $125,526  $115,266
Sequential Quarterly
 Percentage
 Change
Marketing Credits
 Program            -5.0%      6.2%     -0.7%     -2.3%     -5.2%     -3.2%
Marketing Services
 Program             0.9%     12.7%     -2.1%      3.0%     25.1%     36.7%
Total qualified
 transaction
 amounts            -1.7%      9.8%     -1.4%      0.5%      8.9%     12.0%

Rewards Network
 Percentage
 Share of
 Qualified
 Transaction
 Amount Trends:
Marketing Credits
 Program            69.3%     71.1%     71.0%     74.0%     73.7%     75.5%
Marketing Services
 Program            14.6%     14.6%     14.4%     14.5%     14.5%     15.0%
Total               37.9%     39.6%     40.2%     41.4%     42.1%     47.3%

Revenue Trends:
Marketing Credits
 Program        $ 16,127  $ 17,472  $ 16,402  $ 17,218  $ 17,821  $ 19,267
Marketing Services
 Program          11,219    11,168     9,758     9,931     9,702     8,009
Membership fees      239       251       263       288       261       278
                --------  --------  --------  --------  --------  --------
Total revenues  $ 27,585  $ 28,891  $ 26,423  $ 27,437  $ 27,784  $ 27,554
Sequential
 Quarterly
 Percentage
 Change
Marketing Credits
 Program            -7.7%      6.5%     -4.7%     -3.3%     -7.5%     -0.9%
Marketing Services
 Program             0.0%     14.4%     -1.7%      2.4%     21.1%     31.9%
Membership fees     -4.8%     -4.6%     -8.7%     10.3%     -6.1%      4.9%
Total               -4.5%      9.3%     -3.7%     -1.3%      0.8%      6.9%

Redemption of
 Dining Credits
 Trends:
Redemption of
 dining credits $ 23,519  $ 25,387  $ 23,867  $ 24,806  $ 25,261  $ 27,279
Redemption as %
 of Marketing
 Credits Program
 share of qualified
 transaction amount 59.3%     59.2%     59.3%     59.0%     58.6%     58.6%



Dining Credits
 Portfolio and
 Allowance
 Trends:
Ending gross
 dining credits
 portfolio      $ 75,302  $ 69,067  $ 66,384  $ 68,747  $ 68,839  $ 72,888
Ending net
 dining credits
 portfolio      $ 66,055  $ 59,359  $ 56,119  $ 57,299  $ 55,125  $ 56,618
Net write-offs
 (gross
 write-offs
 less
 recoveries)    $  1,551  $  1,843  $  2,140  $  3,507  $  4,811  $  5,332
Ending
 allowance for
 unredeemable
 dining credits $  9,247  $  9,708  $ 10,265  $ 11,448  $ 13,714  $ 16,270
Allowance as %
 of gross
 dining credits     12.3%     14.1%     15.5%     16.7%     19.9%     22.3%
Estimated
 months to
 consume gross
 dining credits *    9.6       8.2       8.3       8.3       8.2       8.0
Estimated
 months to
 consume net
 dining credits *    8.4       7.0       7.1       6.9       6.5       6.2
Member Activity
 Trends:
Member accounts
 active last 12
 months            3,411     3,400     3,349     3,298     3,219     3,142
Number of
 qualified
 transactions
 during quarter    3,009     2,975     2,701     2,664     2,747     2,573


* Calculated as Ending Dining Credits Portfolio / (Quarterly Redemption of
  Dining Credits / 3)