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 June 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 August 14, 1996..11,010,222.
1
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<TABLE>
<CAPTION>
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FINANCIAL STATEMENTS
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BALANCE SHEETS
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Unaudited June 30, 1996 December 31, 1995
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ASSETS
Current Assets
<S> <C> <C>
Cash $ 208,649 $ 780,018
Accounts receivable, net of allowance for
doubtful accounts of $520,000 and $300,000 9,463,782 6,476,576
Prepaid expenses 1,170,233 474,135
Deferred commission expense 2,999,699 2,076,262
------------------- --------------
Total Current Assets 13,842,363 9,806,991
Property and Equipment
Equipment Used By Subscribers 188,276,226 130,266,792
Equipment and Leasehold Improvements 18,605,233 13,952,173
------------------ -------------
206,881,459 144,218,965
Less: Accumulated Depreciation 81,160,966 67,909,419
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Net Property and Equipment 125,720,493 76,309,546
Intangible Asset, net of accumulated
amortization of $1,316,252 and $258,850 39,073,503 4,711,150
Other Assets 2,355,215 1,844,363
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$ 180,991,574 $ 92,672,050
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 13,714,255 $ 9,385,812
Accrued expenses 6,778,984 1,856,659
Current portion of long-term debt 11,682,500 9,036,458
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Total Current Liabilities 32,175,739 20,278,929
Long-Term Debt 86,403,332 32,536,457
Subordinated Long-Term Notes, net of unamortized
discount of $476,240 and $515,930 14,523,760 14,484,070
Equipment Deposits 534,053 541,720
Unearned Revenue 19,804,786 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 29,391,990 14,415,938
Retained earnings (deficit) (1,225,178) (497,687)
Treasury stock, at cost, 91,116 and 180,945 shares (627,982) (1,051,412)
---------------- --------------
Total Stockholders' Equity 27,549,904 12,876,965
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$180,991,574 $ 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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STATEMENT OF OPERATIONS
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Quarter Ended Six Months Ended
Unaudited June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
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REVENUES
<S> <C> <C> <C> <C>
Subscriptions $18,235,511 $10,747,820 $32,320,289 $20,706,284
Additional services 1,416,483 947,370 2,557,207 1,863,410
Communication services 2,146,025 1,671,460 4,145,137 3,128,717
Advertising 829,302 584,150 1,498,269 1,196,142
Service initiation fees 1,567,543 788,650 2,786,979 1,462,107
-------------- -------------- ------------- -------------
24,194,864 14,739,450 43,307,881 28,356,660
EXPENSES
Selling, general
and administrative 12,225,598 7,977,742 22,928,561 15,540,280
Sales commissions 2,376,439 1,169,804 4,284,010 2,256,587
Depreciation and
amortization 8,184,319 4,517,280 13,929,847 8,882,745
-------------- ------------- ------------ -------------
22,786,356 13,664,826 41,142,418 26,679,612
------------- ------------ ------------- ------------
OPERATING INCOME 1,408,508 1,074,624 2,165,463 1,677,048
Interest expense 2,130,222 1,038,741 3,475,467 2,083,522
Other income, net 20,368 15,919 50,667 31,304
---------------- --------------- ---------------- ---------------
INCOME (LOSS) BEFORE
INCOME TAXES (701,346) 51,802 (1,259,337) (375,170)
Income tax provision(benefit) (254,000) 19,000 (455,000) (135,000)
-------------- --------------- -------------- --------------
NET INCOME (LOSS) $ (447,346) $ 32,802 $ (804,337) $ (240,170)
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EARNINGS (LOSS)
PER SHARE (1) $ (0.04) $ - $ (0.08) $ (0.02)
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Weighted Average
Shares Outstanding (1) 10,629,975 10,354,278 10,300,410 9,885,357
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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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Six Months Ended
Unaudited June 30, 1996 June 30, 1995
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Cash Flows From Operating Activities
<S> <C> <C>
Net loss $ (804,337) $ (240,170)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 13,929,847 8,882,745
Amortization of debt issue costs and discount 65,802 64,380
Deferred income taxes (464,000) (134,000)
Change in assets and liabilities:
Accounts receivable 126,349 (839,922)
Prepaid expenses (608,087) (67,029)
Deferred commission expense (503,161) (340,244)
Deferred debt issuance costs (72,964) -
Accounts payable 773,651 526,568
Accrued expenses 372,670 194,909
Equipment deposits (7,667) (17,472)
Unearned revenue 1,380,672 1,365,401
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Net Cash Provided By Operating Activities 14,188,775 9,395,166
Cash Flows From Investing Activities
Capital expenditures:
Equipment used by subscribers (20,931,811) (8,701,195)
Equipment and leasehold improvements (2,284,939) (1,388,594)
Acquisitions (63,567,035) -
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Net Cash Used By Investing Activities (86,783,785) (10,089,789)
Cash Flows From Financing Activities
Proceeds from long-term debt 60,940,000 5,000,000
Principal payments on long-term debt (4,427,083) (4,744,791)
Proceeds from the exercise of stock options and warrants 500,724 132,945
Proceeds from the issuance of common stock 15,010,000 -
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Net Cash Provided By Financing Activities 72,023,641 388,154
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Net Decrease in Cash (571,369) (306,469)
Cash at Beginning of Period 780,018 720,343
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Cash at End of Period $ 208,649 $ 413,874
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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
June 30, 1996, $34,000,000 of the total commitment had been
borrowed, with the remaining $15,500,000 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 June 30, 1996, based on its current operating cash flow,
the company would be able to borrow all of the $15,500,000
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. 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.
5
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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 June 30, 1996,
$34,000,000 of the total borrowings outstanding had not been
converted to term loans. As of June 30, 1996, $15,895,832 were
term loans 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 ($48,190,000 had been borrowed
at June 30, 1996) 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 2.50 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 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.
6
<PAGE>
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.
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
7
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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.
The following pro forma infomration sets forth the results of
operations as though the acquisition of Broadcast Partners had
occurred at January 1, 1995:
<TABLE>
<CAPTION>
PRO FORMA
Six Months Ended
---------------------------------------
June 30, 1996 June 30, 1995
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<S> <C> <C>
Revenues $51,570,241 $38,892,876
Net Loss ($ 1,204,540) ($ 1,473,205)
Loss Per Share ($ 0.11) ($ 0.14)
</TABLE>
This unaudited pro forma information is based on historical
results of operations 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 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.
8
<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 142,000 at June
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 64% 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 six months ended June
30, 1996 was $14,188,800 compared to $9,395,200 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 offset by increases in
interest expense.
Net cash used by investing activities increased significantly for the
six months ended June 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.
The company had $18,333,400 negative working capital at June 30, 1996
compared to $9,406,900 at June 30, 1995. The working capital deficiency was
primarily due to growth in accounts payable for purchases for equipment used by
subscribers of $3,481,800 and for the purchase of Knight Ridder Financial
subscribers of $2,790,900. The Broadcast Partners acquisition contributed to the
growth in accrued expenses of $3,622,800 for acquisition start up costs and the
growth in current portion of long term debt of $4,015,800 from additional term
borrowing needed to finance the acquisition.
The working capital deficiency created by the increases in accounts
payable, accrued expenses and current portion of long term debt was somewhat
offset by an increase in accounts receivable of $5,326,000 for June 30, 1996
over June 30, 1995. Accounts receivable increased due to the 64% growth in total
subscribers and $2,791,000 was a direct result of the Broadcast Partners
acquisition.
9
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Net cash provided by financing activities increased to $72,023,600 for
the first six months of 1996 from $388,200 for the same period in 1995. This
increase was generated by the $48,190,000 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 second quarter and first six months of 1996
increased 64% and 53% over the same periods in 1995. This increase was
primarily due to a 64% increase in total subscribers to 142,000 at June
30, 1996 from 86,700 one year ago. Subscriber growth was attributed to
the acquisition of subscribers from Knight-Ridder Financial Commodity
Center in July 1995, the acquisition of 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 $58.12 and $57.64 for
the second quarter and first six months of 1996 compared to $54.29 and
$53.10 for the same periods in 1995.
Subscriptions:
The 64% growth in total subscribers and the continued
attraction of subscribers to higher revenue services
contributed to the 70% and 56% increases in subscription
revenues for the second quarter and first six months of 1996
over the same periods in 1995.
Communication Services:
Communication revenue showed steady growth with increases of
28% for the second quarter of 1996 over the same quarter in
1995 and 32% for the first six months of 1996 compared to
1995. The DTNergy service that transmits refiners' prices and
other communications to wholesalers contributed significantly
to this increase.
Service Initiation Fees:
Increased sales, due mainly to the efforts of the expanded
sales force created during the past twelve months, was the
primary reason for service initiation fees to increase 99% and
91% for the second quarter and first six months of 1996 over
the same periods in 1995.
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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 caused total expenses for second quarter of 1996 to increase
67% over the second quarter 1995. Total expenses increased 54% for the
first six months of 1996 compared to 1995.
Selling, General and Administrative:
Selling, general and administrative expenses increased 53% for
the second quarter of 1996 and 48% for the first six months of
1996 over the same periods in 1995. This was primarily due to
the 64% growth in total subscribers, mainly brought on by the
acquisition, and the continued investment in the development
of new services. As a percent of revenue, these expenses
decreased from 54% to 51% for the second quarters of 1995 and
1996 and decreased from 55% to 53% for the first six months of
1995 and 1996. On a per subscriber per month basis, these
costs were $30.36 and $30.27 for the second quarter and first
six months of 1996 compared with $31.05 and $30.68 for the
same periods of 1995.
Sales Commissions:
Sales commissions increased for the second quarter and first
six 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:
Depreciation and amortization expense grew 81% and 54% for the
second quarter and first six months of 1996 over the same
periods in 1995 due to growth in equipment used by subscribers
mainly from the acquisitions of subscribers from Knight-Ridder
Financial Commodity Center and Broadcast Partners. In
addition, the amortization expense of $902,092 and $1,057,402
of goodwill from these acquisitions, for the second quarter
and first six months of 1996, also contributed to the
increases.
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 $1,265,100
and $860,100 for the second quarters of 1996 and 1995,
respectively. For the first six months, these costs were
$2,694,900 and $1,786,000 for 1996 and 1995. Net developmental
costs is one measurement of the Company's investment in new
services and technology.
11
<PAGE>
Operating Cash Flow:
Operating cash flow (operating income before depreciation and
amortization expense) grew 72% for the second quarter of 1996 over
1995. For the first six month, the growth was 52% for 1996 over 1995.
As a percent of revenue, operating cash flow remained constant at 37%
for the first six months of 1996 and 1995. For the second quarter of
1996 compared to 1995, operating cash flow grew to 40% up from 38%.
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
second quarter and the first six months of 1996 compared to the prior
year's periods.
Income Tax (Benefit) Provision:
The Company's effective income tax rate was approximately 36% for the
second quarter and first six months of 1996 and 1995.
12
<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
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 August, 1996.
13
<TABLE>
<CAPTION>
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Exhibit 11
- -------------------------------------------------------------------------------------------------------------------
COMPUTATION OF NET INCOME (LOSS) PER SHARE
- -------------------------------------------------------------------------------------------------------------------
Quarter Ended Six Months Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
- -------------------------------------------------------------------------------------------------------------------
PRIMARY
<S> <C> <C> <C> <C>
Computation of income (loss)
per common and common
equivalent share:
Net income (loss) $ (447,346) $ 32,802 $ (804,337) $ (240,170)
=========== ============ =========== ===========
Average shares outstanding 10,629,975 9,893,391 10,300,410 9,885,357
Add shares applicable to stock
options & warrants (1) - 455,529 - -
Add shares applicable to stock
options & warrants prior to
conversion, using average market
price prior to conversion (1) - 5,358 - -
---------- ---------- ---------- ---------
Total shares 10,629,975 10,354,278 10,300,410 9,885,357
=========== =========== =========== ==========
Per common share:
Net income (loss) (1) $ (0.04) $ 0.00 $ (0.08) $ (0.02)
============== ============== ============== ==============
- -------------------------------------------------------------------------------------------------------------------
<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>
14
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11-page 2
- -------------------------------------------------------------------------------------------------------------------
COMPUTATION OF NET INCOME (LOSS) PER SHARE
- -------------------------------------------------------------------------------------------------------------------
Quarter Ended Six Months Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
- -------------------------------------------------------------------------------------------------------------------
FULLY DILUTED
<S> <C> <C> <C> <C>
Computation of income (loss)
per common and common
equivalent share:
Net income (loss) $ (447,346) $ 32,802 $ (804,337) $ (240,170)
=========== ============ =========== ===========
Average shares outstanding 10,629,975 9,893,391 10,300,410 9,885,357
Add shares applicable to stock
options & warrants (1) - 462,969 - -
Add shares applicable to stock
options & warrants prior to
conversion, using average market
price prior to conversion (1) - 5,445 - -
---------- ---------- ---------- ---------
Total shares 10,629,975 10,361,805 10,300,410 9,885,357
=========== =========== =========== ==========
Per common share:
Net income (loss) (1) $ (0.04) $ 0.00 $ (0.08) $ (0.02)
============== ============== ============== ==============
- -------------------------------------------------------------------------------------------------------------------
<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> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 208,649
<SECURITIES> 0
<RECEIVABLES> 9,983,782
<ALLOWANCES> 520,000
<INVENTORY> 0
<CURRENT-ASSETS> 13,842,363
<PP&E> 206,881,459
<DEPRECIATION> 81,160,966
<TOTAL-ASSETS> 180,991,574
<CURRENT-LIABILITIES> 32,175,739
<BONDS> 100,927,092
0
0
<COMMON> 11,074
<OTHER-SE> 27,538,830
<TOTAL-LIABILITY-AND-EQUITY> 180,991,574
<SALES> 43,307,881
<TOTAL-REVENUES> 43,307,881
<CGS> 0
<TOTAL-COSTS> 41,142,148
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,475,467
<INCOME-PRETAX> (1,259,337)
<INCOME-TAX> (455,000)
<INCOME-CONTINUING> (804,337)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (804,337)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
