SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1996
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Commission File Number 0-15405
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Data Transmission Network Corporation
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(Exact name of registrant as specified in its charter)
Delaware 47-0669375
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(State of Incorporation) (I.R.S. Employer ID Number)
9110 West Dodge Road, Suite 200, Omaha, Nebraska 68114
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(Address of principal executive office) (Zip Code)
(402) 390-2328
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Number of shares of common stock outstanding as of November 14,
1996...11,021,432.
1
<PAGE>
<TABLE>
<CAPTION>
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FINANCIAL STATEMENTS
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BALANCE SHEETS
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Unaudited September 30, 1996 December 31, 1995
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ASSETS
Current Assets
<S> <C> <C>
Cash $ 728,107 $ 780,018
Accounts receivable, net of allowance for
doubtful accounts of $520,000 and $300,000 9,729,756 6,476,576
Prepaid expenses 811,317 474,135
Deferred commission expense 2,899,367 2,076,262
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Total Current Assets 14,168,547 9,806,991
Property and Equipment
Equipment Used By Subscribers 196,966,507 130,266,792
Equipment and Leasehold Improvements 18,981,342 13,952,173
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215,947,849 144,218,965
Less: Accumulated Depreciation 89,700,096 67,909,419
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Net Property and Equipment 126,247,753 76,309,546
Intangible Asset, net of accumulated
amortization of $2,594,104 and $258,850 37,795,651 4,711,150
Other Assets 3,031,251 1,844,363
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$181,243,202 $ 92,672,050
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 9,095,099 $ 9,385,812
Accrued expenses 6,355,486 1,856,659
Current portion of long-term debt 13,269,583 9,036,458
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Total Current Liabilities 28,720,168 20,278,929
Long-Term Debt 87,907,915 32,536,457
Subordinated Long-Term Notes, net of unamortized
discount of $456,395 and $515,930 14,543,605 14,484,070
Equipment Deposits 523,622 541,720
Unearned Revenue 21,505,167 11,953,909
Stockholders' Equity
Common stock, par value $.001, authorized
20,000,000 shares, issued 11,074,224 and 10,126,224 11,074 10,126
Paid-in capital 29,972,990 14,415,938
Retained earnings (deficit) (1,511,126) (497,687)
Treasury stock, at cost, 57,792 and 180,945 shares (430,213) (1,051,412)
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Total Stockholders' Equity 28,042,725 12,876,965
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$ 181,243,202 $ 92,672,050
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<FN>
See notes to interim financial statements.
</FN>
</TABLE>
2
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<TABLE>
<CAPTION>
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STATEMENTS OF OPERATIONS
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Quarter Ended Nine Months Ended
Unaudited Sept 30, 1996 Sept 30, 1995 Sept 30, 1996 Sept 30, 1995
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REVENUES
<S> <C> <C> <C> <C>
Subscriptions $ 20,976,953 $ 12,110,885 $ 53,297,242 $ 32,817,168
Additional services 1,593,435 1,004,800 4,150,642 2,868,210
Communication services 2,294,722 1,832,330 6,439,859 4,961,047
Advertising 783,333 377,808 2,281,602 1,573,950
Service initiation fees 1,492,896 842,428 4,279,875 2,304,536
------------ ------------ ------------ ------------
27,141,339 16,168,251 70,449,220 44,524,911
EXPENSES
Selling, general
and administrative 12,918,466 8,619,155 35,847,027 24,159,435
Sales commissions 2,462,980 1,375,229 6,746,990 3,631,816
Depreciation and
amortization 9,611,390 4,901,641 23,541,237 13,784,386
----------- ------------ ------------ ------------
24,992,836 14,896,025 66,135,254 41,575,637
------------ ------------ ------------ ------------
OPERATING INCOME 2,148,503 1,272,226 4,313,966 2,949,274
Interest expense 2,498,561 1,135,981 5,974,028 3,219,503
Other income, net 21,555 14,311 72,222 45,615
------------ ------------ ------------ -------------
INCOME (LOSS) BEFORE
INCOME TAXES (328,503) 150,556 (1,587,840) (224,614)
Income tax provision(benefit) (68,500) 54,000 (523,500) (81,000)
------------ ------------ ------------ -------------
NET INCOME (LOSS) $ (260,003) $ 96,556 $ (1,064,340) $ (143,614)
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EARNINGS (LOSS)
PER SHARE (1) $ (0.02) $ 0.01 $ (0.10) $ (0.01)
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Weighted Average
Shares Outstanding (1) 11,008,848 10,504,428 10,536,556 9,898,059
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<FN>
(1) Per share data is shown after the 3 for 1 stock split.
See notes to interim financial statements.
</FN>
</TABLE>
3
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<TABLE>
<CAPTION>
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STATEMENTS OF CASH FLOWS
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Nine Months Ended
Unaudited Sept 30, 1996 Sept 30, 1995
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Cash Flows From Operating Activities
<S> <C> <C>
Net loss $ (1,064,340) $ (143,614)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 23,541,237 13,784,386
Amortization of debt issue costs and discount 102,725 96,570
Deferred income taxes (537,000) (84,500)
Change in assets and liabilities:
Accounts receivable (139,625) (1,688,238)
Prepaid expenses (249,171) (249,984)
Deferred commission expense (402,829) (840,346)
Deferred debt issuance costs (112,078) --
Accounts payable (1,727,047) (51,048)
Accrued expenses 249,172 585,450
Equipment deposits (18,098) (20,874)
Unearned revenue 3,081,053 1,183,699
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Net Cash Provided By Operating Activities 22,723,999 12,571,501
Cash Flows From Investing Activities
Capital expenditures:
Equipment used by subscribers (29,768,564) (15,801,619)
Equipment and leasehold improvements (2,548,234) (1,961,415)
Acquisitions (65,745,794) (1,634,046)
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Net Cash Used By Investing Activities (98,062,592) (19,397,080)
Cash Flows From Financing Activities
Proceeds from long-term debt 66,740,000 13,250,000
Principal payments on long-term debt (7,135,415) (7,104,166)
Proceeds from the exercise of stock options and warrants 672,097 281,479
Proceeds from the issuance of common stock 15,010,000 --
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Net Cash Provided By Financing Activities 75,286,682 6,427,313
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Net Decrease in Cash (51,911) (398,266)
Cash at Beginning of Period 780,018 720,343
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Cash at End of Period $ 728,107 $ 322,077
============ ============
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<FN>
See notes to interim financial statements.
</FN>
</TABLE>
4
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DATA TRANSMISSION NETWORK CORPORATION
NOTES TO INTERIM FINANCIAL STATEMENTS
1. GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The information furnished herein relating to interim periods
has not been audited by independent Certified Public
Accountants. The interim financial information in this report
reflects any adjustments which are, in the opinion of
management, necessary for a fair statement of results for the
interim periods presented in accordance with generally
accepted accounting principles. All such adjustments are of a
normal recurring nature. The accounting policies followed by
the company, and additional footnotes, are set forth in the
audited financial statements included in the company's 1995
Annual Report, which report was incorporated by reference in
Form 10-K for the fiscal period ended December 31, 1995.
2. LONG-TERM DEBT AND LOAN AGREEMENTS:
The company has a senior loan agreement with a group of banks
(the "senior loan agreement"). The senior loan agreement,
which expires June 28, 1997 unless extended, provides for a
total commitment of up to $49,500,000 in new borrowings. As of
September 30, 1996, $39,500,000 of the total commitment had
been borrowed, with the remaining $10,000,000 available to the
company subject to certain restrictions as discussed below.
Additional borrowings under the senior loan agreement are
available to the company, so long as at the time of the
advance, no default exists under the senior loan agreement or
under the subordinated notes agreement (see Note 3), and total
debt outstanding (including term notes outstanding but
excluding long-term subordinated debt) does not exceed
thirty-six times monthly operating cash flow (as defined). As
of September 30, 1996, based on its current operating cash
flow, the company would be able to borrow all of the
$10,000,000 remaining commitment available.
Substantially all of the company's assets are pledged as
collateral under the senior loan agreement. In addition to the
restrictions mentioned above with respect to advances, total
debt outstanding (excluding long-term subordinated debt) is
limited to forty-eight times monthly operating cash flow or
three and one-half times stockholders' equity (defined to
include long-term subordinated debt), whichever is less.
Additionally, total debt outstanding (including subordinated
debt) is limited to sixty times monthly operating cash flow.
The company is also required to maintain total stockholders'
equity of at least $23,500,000 through June 28, 1997 and, a
ratio of quarterly operating cash flow to interest expense (as
defined) of at least 2.25 to 1.
5
<PAGE>
The company is permitted to pay cash dividends in any one
year, which are, in the aggregate, less than 25% of the
company's net operating profit after taxes in the previous
four quarters.
Interest on the outstanding borrowings (prior to when the
borrowings might be converted to term loans, as discussed
below) is at a variable rate, depending on the ratio of the
company's total borrowings (excluding long-term subordinated
debt) to stockholders equity (including long-term subordinated
debt) (the "Ratio"). The base rate is the NY Prime rate, the
prime rate as stated in the Wall Street Journal the first day
of each month, minus 3/4%. So long as the Ratio is below 2.5
to 1, interest is the base rate. When the Ratio is between
2.50 to 1 and 2.99 to 1, the interest rate is the base rate
plus 1/4%. When the Ratio is between 3.0 to 1 and 3.49 to 1,
the interest rate is the base rate plus 3/4%. The company is
not to exceed a Ratio of 3.5 to 1. The prime rate is adjusted
monthly, with the interest rate adjustment (as defined above)
changed quarterly. Through June 27, 1996, the variable rate
borrowings outstanding were accruing interest at the rate of
8.25%. Effective June 28, 1996, the variable rate borrowings
outstanding were accruing at the base rate of 7.50%.
The company has the option to convert the outstanding
borrowings to term loans at any time, payable in forty-eight
equal principal installments, plus interest. Interest on the
converted term loans is, at the company's option, a variable
rate of 1/4% over the base rate (as determined in the
preceding paragraph) or, at a fixed rate of 3/4% over the base
rate, or, 2% over the average of the 3 and 5 year U.S.
treasury securities whichever is greater. As of September 30,
1996, $39,500,000 of the total borrowings outstanding had not
been converted to term loans. As of September 30, 1996,
$13,187,500 of term loans were outstanding with principal
payable in forty-eight equal installments with interest rates
ranging from 6.75% to 9.25%.
The company has a term credit agreement dated May 3, 1996, as
amended, with a group of banks providing for an aggregate
principal amount of $48,490,000 to be repaid in 72 equal
principal installments beginning January 31, 1997. Through
June 30, 1996, the outstanding principal was accruing interest
at the rate of 8.25%. Effective July 17, 1996, interest on
$21,300,000 of the principal balance was variable, accruing at
the NY Prime rate less one-half of one percent. Effective July
31, 1996, interest on $25,400,000 of the principal balance is
variable, accruing at the NY Prime rate less one-half of one
percent. Interest on the remainder is fixed, accruing at
interest rates ranging from 8.25% to 8.36%. Interest payments
are due on the last day of each month beginning May 31, 1996.
The company pays a commitment fee of 1/4% on all unused
portion of the total senior loan commitment. Additionally,
once the Ratio (as described previously) reaches 3.00 to 1,
the company will be required to pay a closing fee of 1/2% on
all new borrowings made after that point in time. In the event
the Ratio exceeds 3.0 to 1, any term note accruing interest
6
<PAGE>
at less than 7.5% is included in a "Trigger Event". The
company is obligated to pay the holders of such term notes a
fee of 0.375% of the outstanding balance of the notes upon the
occurrence of the Trigger Event and like amounts on the six
month anniversary and the twelve month anniversary of the
Trigger Event.
3. SUBORDINATED LONG-TERM NOTES:
On June 30, 1994, the company sold to one investor $15,000,000
of its 11.25% subordinated long-term notes in a private
placement transaction (the "subordinated debt"). The
subordinated debt is subordinate in right of payment to all
current and future senior debt. Interest on the subordinated
debt is to be paid quarterly, with principal due in five equal
annual installments beginning on June 30, 2000.
The company has the option to prepay the subordinated debt on
any date after June 30, 1997 at a premium beginning at 7.5% of
the principal prepaid, and decreasing by 1.5% per year until
June 30, 2002 when no premium is required. There are also
provisions for mandatory prepayment upon a change in ownership
control (as defined), at a premium beginning at 12.0% of the
principal prepaid during the period ended June 30, 1995 and
decreasing by 1.5% per year until June 30, 2002 when no
premium is required.
The subordinated debt agreement contains a cross-acceleration
clause, whereby the subordinated debt will become immediately
due and payable upon a payment default on the senior debt
outstanding. Other subordinated debt financial covenants and
restrictions are generally less restrictive than those of the
senior loan agreement.
The company also issued a warrant to the investor to purchase
75,000 shares of the company's $.001 par value common stock at
$7.39 per share (as adjusted after the three-for-one stock
split) on or before June 30, 2004. In connection with the
issuance of the warrant to purchase common stock, the company
recorded a $635,000 credit to additional paid in capital and a
related debt discount, which represents an estimate of the
fair value of the warrant issued.
Expenses of the subordinated debt offering have been
capitalized and are being amortized, along with the debt
discount mentioned in the previous paragraph, over the life of
the subordinated debt using a level-yield method.
7
<PAGE>
4. EARNINGS (LOSS) PER SHARE:
Earnings (loss) per share were calculated based on the
weighted average number of shares outstanding. Outstanding
warrants and options are included in the calculation of net
income (loss) per share only when their impact is dilutive.
All earnings (loss) per share calculations are after the
three-for-one stock split.
5. ACCOUNTING PRONOUNCEMENT
In October 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS) No.
123, "Accounting for Stock-Based Compensation," which will be
effective for the Company beginning January 1, 1996. SFAS No.
123 requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not
require) compensation cost to be measured based on the fair
value of the equity instrument awarded. Companies are
permitted, however, to continue to apply APB Opinion No. 25,
which recognizes compensation cost based on the intrinsic
value of the equity instrument awarded. The Company will
continue to apply APB Opinion No. 25 to its stock based
compensation awards to employees and will disclose the
required pro forma effect on net income and earnings per
share.
6. ACQUISITION
Effective May 3, 1996, the Company closed on an "Asset
Acquisition" of Broadcast Partners, an information provider
primarily in the agricultural industry. The Company acquired
substantially all the assets of Broadcast Partners for $63.5
million and the assumption of certain current liabilities of
approximately $9.8 million. In the acquisition, the Company
received 39,000 agricultural subscribers. Also included was
approximately $38.2 million of equipment which is being
depreciated using the straight-line method over five years. In
addition, goodwill of approximately $35 million was
capitalized and is being amortized using the straight-line
method over eight years. The acquisition was financed with a
combination of $15,010,000 of privately placed common stock
equity representing, 948,000 split adjusted shares and with
six year term debt of $48,490,000.
8
<PAGE>
The following unaudited pro forma information sets forth the
results of operations as though the acquisition of Broadcast
Partners had occurred at January 1, 1995:
<TABLE>
<CAPTION>
PRO FORMA
Nine Months Ended
---------------------------------------
Sept 30, 1996 Sept 30, 1995
------------- -------------
<S> <C> <C>
Revenues $78,711,580 $60,676,057
Net Loss ($ 1,427,543) ($ 2,124,191)
Loss Per Share ($0.13) ($.20)
</TABLE>
This unaudited pro forma information is based on historical results of
operations as if the acquisition took place on January 1, 1995 adjusted for
acquisition costs, anticipated efficiencies and in the opinion of Management, is
not necessarily indicative of what the results would have been had the Company
operated with the acquisition since the beginning of 1995.
7. STOCK SPLIT
During the second quarter of 1996, the Company effectuated a
three-for-one common stock split, payable June 28, 1996 to
stockholders of record June 14, 1996. The stated par value of
each share was not changed from $.001. A total of $7,381 was
reclassified from the Company's additional paid in capital
account to the Company's common stock account. Average number
of shares outstanding and related per share amounts have been
retroactively restated to reflect the stock split.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL CONDITION
On May 3, 1996, the Company acquired substantially all of the assets of
Broadcast Partners, an electronic information and communications services
company primarily in the agricultural industry for $63.5 million cash and the
assumption of certain "non-interest" bearing current liabilities of
approximately $9.8 million. The Company received 39,000 agricultural
subscribers, increasing the total number of subscribers to over 144,100 at
September 30, 1996. The acquisition was financed with a combination of $15
million of privately place common stock equity and with six year term debt
making up the balance. Included in the acquisition was approximately $38.2
million of equipment used by subscribers and other equipment, which is being
capitalized and amortized using the straight line method over five years.
Approximately $35 million of goodwill is being capitalized and amortized using
the straight line method over eight years.
The equipment used by subscribers is a large capital investment for the
company. This equipment accounts for 65% of the company's total assets. The
company does not have a large amount of current assets compared to capital
equipment.
Net cash provided by operating activities for the nine months ended
September 30, 1996 was $22,724,000 compared to $12,571,500 for the same period
in 1995. The increase was due mainly to an increase in operating cash flow
(operating income before depreciation and amortization). The increase was
partially offset by increases in interest expense.
Net cash used by investing activities increased significantly for the
nine months ended September 30, 1996 compared to 1995 due to the asset
acquisition of Broadcast Partners and the increase in subscriber equipment
needed for the higher sales volume generated by the expanded sales force. In the
early part of 1995, the Company was utilizing a higher than normal inventory
level to meet its subscriber equipment needs which reduced the capital
expenditures for subscriber equipment.
The company had $14,551,600 of negative working capital at September
30, 1996 compared to $12,244,700 at September 30, 1995. The working capital
deficiency was primarily due to Broadcast Partners acquisition which contributed
to the growth in accrued expenses of $3,269,000 for acquisition start up costs
and the growth in current portion of long term debt of $6,061,250 from
additional term debt borrowing needed to finance the acquisition.
The working capital deficiency created by the increases in accrued
expenses and current portion of long term debt was somewhat offset by an
increase in accounts receivable of $4,743,700 for September 30, 1996 over
September 30, 1995. Accounts receivable increased due to the 56% growth in total
subscribers and $3,129,400 was a direct result of the Broadcast Partners
acquisition.
10
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Net cash provided by financing activities increased to $75,286,700 for
the first nine months of 1996 from $6,427,300 for the same period in 1995. This
increase was generated by the $48,490,000 of six year term borrowings needed to
acquire the assets of Broadcast Partners along with borrowings for the equipment
needed for the growth in subscribers generated from operating activities. Also,
$15,010,000 of the increase was from proceeds raised from the private placement
of 948,000 (split adjusted, see note 7) shares of common stock.
The company anticipates that the internally generated cash flow and
bank credit lines will be sufficient to fund operating activities, capital
expenditures and principle payments on long- term debt.
RESULTS OF OPERATIONS
Revenues:
Total revenues for the third quarter and first nine months of 1996
increased 68% and 58% over the same periods in 1995. This increase was
primarily due to a 56% increase in total subscribers to 144,100 at
September 30, 1996 from 92,400 one year ago. Subscriber growth was
attributed to the acquisition of subscribers from Broadcast Partners in
May 1996 and the expansion of the sales force. On a per subscriber per
month basis, operating revenue, (subscription, communication,
additional services, and advertising revenues) increased to $59.77 and
$58.46 for the third quarter and first nine months of 1996 compared to
$57.13 and $54.42 for the same periods in 1995.
Subscriptions:
The 56% growth in total subscribers and the continued
attraction of subscribers to higher revenue services
contributed to the 73% and 62% increases in subscription
revenues for the third quarter and first nine months of 1996
over the same periods in 1995.
Communication Services:
Communication revenue again showed steady growth with
increases of 25% for the third quarter of 1996 over the same
quarter in 1995 and 30% for the first nine months of 1996
compared to 1995. The DTNergy service that transmits refiners'
prices and other communications to wholesalers was the main
contributor to this increase.
Advertising:
The increase in subscribers, due primarily to the acquisition
of Broadcast Partners, contributed to the 107% and 45%
increases in advertising revenue for the third quarter and
first nine months of 1996 over 1995. The larger subscriber
base is attractive to potential new advertisers who will now
be able to reach over 144,100 subscribers.
11
<PAGE>
Service Initiation Fees:
Increased sales, due mainly to the efforts of the expanded
sales force, were the primary reason for service initiation
fees to increase 77% and 86% for the third quarter and first
nine months of 1996 over the same periods in 1995.
Expenses:
The acquisition of Broadcast Partners, the expansion of the sales
force, increased service and support needs for the growing subscriber
base and net development costs associated with the development of new
services were responsible for total expenses for the third quarter of
1996 to increase 68% over the third quarter 1995. Total expenses
increased 59% for the first nine months of 1996 compared to 1995.
Selling, General and Administrative:
Selling, general and administrative expenses increased 50% for
the third quarter of 1996 and 48% for the first nine months of
1996 over the same periods in 1995. This was primarily due to
the 56% growth in total subscribers, a direct result of the
acquisition and the continued investment in the development of
new services. As a percent of revenue, these expenses
decreased from 53% to 48% for the third quarters of 1995 and
1996 and decreased from 54% to 51% for the first nine months
of 1995 and 1996.
Sales Commissions:
Sales commissions increased for the third quarter and first
nine months of 1996 compared to 1995 due to higher sales and
increased revenues in the DTNergy service. DTNergy sales
commissions are based on a combination of total subscribers
and revenues.
Depreciation and Amortization:
Growth in the equipment used by subscribers related to the
acquisitions of Knight-Ridder Financial Commodity Center and
Broadcast Partners subscribers coupled with the amortization
of the goodwill from these acquisitions contributed to the
increases in depreciation and amortization for the third
quarter and first nine months of 1996 compared to the same
periods in 1995. The amortization of the goodwill from the
acquisitions discussed above was $1,277,900 and $2,335,300 for
the third quarter of 1996 and first nine months of 1996,
respectively.
Net Developmental Costs:
As defined, "net developmental costs" include, 1) the costs of
market research activities, 2) the expenses of hardware and
software engineering, research and development and 3) the
negative operating cash flow (prior to corporate allocations
plus interest) of new services. These costs were $1,270,500
and $794,000 for the third quarters of 1996 and 1995,
respectively. For the first nine months, these costs were
$3,965,400 and $2,580,000 for 1996 and 1995. Net developmental
costs is one measurement of the Company's investment in new
services and technology.
12
<PAGE>
Operating Cash Flow:
Operating cash flow (operating income before depreciation and
amortization expense) grew 91% for the third quarter of 1996 over 1995.
For the first nine months, the growth was 67% for 1996 over 1995. As a
percent of revenue, operating cash flow grew to 43% for the third
quarter of 1996, up from 38% in 1995. As a percent of revenue,
operating cash flow grew to 40% for the first nine months of 1996, up
from 38% in 1995.
Interest Expense:
Expanded borrowing requirements needed to fund purchases of equipment
used by subscribers and the debt incurred to acquire subscribers from
Knight-Ridder Financial Commodity Center and the assets of Broadcast
Partners attributed to the increase in interest expense for both the
third quarter and the first nine months of 1996 compared to the prior
year period.
Income Tax (Benefit) Provision:
The Company's effective income tax rate was approximately 21% and 33%
for the third quarter and first nine months of 1996 compared with 36%
for the same periods in 1995.
13
<PAGE>
FORM 10-Q
DATA TRANSMISSION NETWORK CORPORATION
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
(a) Date of Annual Meeting of Stockholders - April 24,
1996.
(b) Directors Elected - Roger R. Brodersen, Robert S.
Herman, David K. Karnes, J. Michael Parks, Jay E.
Ricks, Greg T. Sloma and Roger W. Wallace.
(c) Other Matters Voted Upon
- Ratification of the appointment of Deloitte
and Touche LLP as independent auditors for
1996, 3,089,504 votes for, 1,200 votes
against and 4,902 votes abstained.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits - 11 - Statement re computation of per share
earnings.
(b) Reports on Form 8-K
None
(27) Financial Data Schedule (Required)
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on it's behalf by the
undersigned thereunto duly authorized.
DATA TRANSMISSION NETWORK CORPORATION
By /s/ Roger R. Brodersen
-------------------------------------
Roger R. Brodersen
Chairman and CEO
By /s/ Greg T. Sloma
-------------------------------------
Greg T. Sloma
President and Chief Operating Officer
By /s/ Brian L. Larson
-------------------------------------
Brian L. Larson
V.P., CFO, Secretary and Treasurer
Dated this 14th day of November, 1996.
14
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Exhibit 11
- -------------------------------------------------------------------------------------------------------------------
COMPUTATION OF NET INCOME (LOSS) PER SHARE
- -------------------------------------------------------------------------------------------------------------------
Quarter Ended Nine Months Ended
Sept 30, 1996 Sept 30, 1995 Sept 30, 1996 Sept 30, 1995
- -------------------------------------------------------------------------------------------------------------------
PRIMARY
Computation of income (loss)
per common and common
equivalent share:
<S> <C> <C> <C> <C>
Net income (loss) $ (260,003) $ 96,556 $ (1,064,340) $ (143,614)
=========== ============= ============= ===========
Average shares outstanding 11,008,838 9,923,466 10,536,556 9,898,059
Add shares applicable to stock
options & warrants (1) - 577,674 - -
Add shares applicable to stock
options & warrants prior to
conversion, using average market
price prior to conversion (1) - 3,288 - -
----------- ------------- ------------- -----------
Total shares 11,008,838 10,504,428 10,536,556 9,898,059
=========== ============= ============= ==========
Per common share:
Net income (loss) (1) $ (0.02) $ 0.01 $ (0.10) $ (0.01)
============ ============= ============= ===========
- -------------------------------------------------------------------------------------------------------------------
<FN>
(1) Shares applicable to warrants and stock options are included in the
calculation only when their impact is dilutive.
(2) Per share data is shown after the 3-for-1 split.
</FN>
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11-page 2
- -------------------------------------------------------------------------------------------------------------------
COMPUTATION OF NET INCOME (LOSS) PER SHARE
- -------------------------------------------------------------------------------------------------------------------
Quarter Ended Nine Months Ended
Sept 30, 1996 Sept 30, 1995 Sept 30, 1996 Sept 30, 1995
- -------------------------------------------------------------------------------------------------------------------
FULLY DILUTED
Computation of income
per common and common
equivalent share:
<S> <C> <C> <C> <C>
Net income (loss) $ (260,003) $ 96,556 (1,064,340) $ (143,614)
=========== =========== =========== ===========
Average shares outstanding 11,008,848 9,923,466 10,536,556 9,898,059
Add shares applicable to stock
options & warrants (1) - 698,850 - -
Add shares applicable to stock
options & warrants prior to
conversion, using average market
price prior to conversion (1) - 3,525 - -
----------- ----------- ----------- -----------
Total shares 11,008,848 10,625,841 10,536,556 9,898,059
=========== =========== =========== ===========
Per common share:
Net income (loss) (1) $ (0.02) $ 0.01 $ (0.10) $ (0.01)
=========== =========== =========== ===========
- -------------------------------------------------------------------------------------------------------------------
<FN>
(1) Shares applicable to warrants and stock options are included in the
calculation only when their impact is dilutive.
(2) Per share data is shown after the 3-for-1 split.
</FN>
</TABLE>
16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 728,107
<SECURITIES> 0
<RECEIVABLES> 10,249,756
<ALLOWANCES> 520,000
<INVENTORY> 0
<CURRENT-ASSETS> 14,168,547
<PP&E> 215,947,849
<DEPRECIATION> 89,700,096
<TOTAL-ASSETS> 181,243,202
<CURRENT-LIABILITIES> 28,720,168
<BONDS> 102,451,520
0
0
<COMMON> 11,074
<OTHER-SE> 28,031,651
<TOTAL-LIABILITY-AND-EQUITY> 181,243,202
<SALES> 70,449,220
<TOTAL-REVENUES> 70,449,220
<CGS> 0
<TOTAL-COSTS> 66,135,254
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,974,028
<INCOME-PRETAX> (1,587,840)
<INCOME-TAX> (523,500)
<INCOME-CONTINUING> (1,064,340)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,064,340)
<EPS-PRIMARY> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
