Registration No. -
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SECURITIES AND EXCHANGE COMMISSION
FORM S-3 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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 or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
9110 West Dodge Road, Suite 200
Omaha, Nebraska 68114
(402) 390-2328
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(Address, including zip code and telephone number, including area code of
registrant's principal executive offices)
Mr. Brian L. Larson
Chief Financial Officer, Secretary and Treasurer
Data Transmission Network Corporation
9110 West Dodge Road, Suite 200
Omaha, Nebraska 68114
(402) 390-2328
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies To:
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Mr. R. Craig Fry
Abrahams, Kaslow & Cassman
8712 West Dodge Road, Suite 300
Omaha, Nebraska 68114
(402) 392-1250
Approximate date of commencement of proposed sale to the public:
The securities to be registered hereby may be offered for sale as soon
as practicable after the effective date of this Registration Statement
in accordance with the provisions of Rule 415 and other laws applicable
to shelf registrations.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933,
other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ X ]
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If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(C) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Proposed Proposed Maximum
Title of Securities Amount to Maximum Offering Aggregate Offering Amount of
to be Registered be Registered(2) Price Per Share(1) Price (1) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, $.001
par value................... 75,000 Shares $ 20.00 $ 1,500,000 $ 517
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<FN>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
(2) The amount of shares to be registered pursuant to this Registration
Statement may change due to adjustments in the amount of shares to be
issued upon exercise of warrants to prevent dilution resulting from
stock splits, stock dividends, or similar transactions.
</FN>
</TABLE>
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DATA TRANSMISSION NETWORK CORPORATION
Cross Reference Sheet For Prospectus
Furnished Pursuant to Rule 501 of Regulation S-K
ITEM NUMBERS & FORM S-3 CAPTION CAPTION IN PROSPECTUS
1. Forepart of the Registration Facing Page; Front Cover Page
Statement and Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Available Information;
Back Cover Pages of Incorporation of Certain Information
Prospectus by Reference; Table of Contents
3. Summary Information; Risk Prospectus Summary; Risk Factors
Factors and Ratio of
Earnings to Fixed Charges
4. Use of Proceeds Not Applicable
5. Determination of Offering Not Applicable
Price
6. Dilution Not Applicable
7. Selling Security Holders Selling Stockholders
8. Plan of Distribution Plan of Distribution
9. Description of Securities Front Cover Page; Prospectus
to be Registered Summary; Risk Factors; Description
of Common Stock
10. Interests of Named Experts None
and Counsel
11. Materials Changes Recent Developments
12. Incorporation of Certain Incorporation of Certain Information
Information by Reference by Reference
13. Disclosure of Commission Not Applicable
Position on Indemnification
for Securities Act Liabilities
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PROSPECTUS
75,000 Shares
DATA TRANSMISSION NETWORK CORPORATION
Common Stock
The shares of common stock (the "Shares") of Data Transmission Network
Corporation (the "Company") offered hereby will be issued to warrant holders
(the "Selling Stockholders") upon the exercise of warrants previously issued by
the Company. See "Selling Stockholders". All of the Shares offered pursuant to
this Prospectus are being sold by the Selling Stockholders and not for the
account of the Company. The Shares are traded on the Nasdaq Stock Market under
the symbol "DTLN." On August 7, 1996, the last reported sale price for the
Shares as reported on the Nasdaq Stock Market was $19.50 per share.
See "Risk Factors" beginning on Page 5 of this Prospectus for a
discussion of certain items that should be considered by prospective investors.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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This Prospectus is applicable to the public sale of Shares to be issued
to and sold by the Selling Stockholders upon the exercise of warrants previously
issued by the Company (the "Warrants"). The Shares offered hereby are being
registered and will be distributed pursuant to Rule 415 of the Securities Act of
1933, as amended. The Selling Stockholders may offer or sell such Shares from
time to time upon terms determined by the market or in privately negotiated
transactions.
The Company is not engaging an underwriter in connection with the shelf
registration or offering of these securities. The Company will incur the
expenses of the registration of the Shares offered hereby, including filing,
printing, legal, accounting and miscellaneous expenses. The Selling Stockholders
shall not incur the expenses of filing, printing, legal, accounting, or other
expenses of issuance and distribution in connection with the registration of
these Shares. However, Selling Stockholders will pay any sales commissions to
the broker/dealer through whom they effect the sale of their securities.
This Prospectus is dated August 7, 1996.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements and
related notes thereto appearing elsewhere in this Prospectus or incorporated by
reference. Prospective investors are urged to read this Prospectus in its
entirety. See "Risk Factors" for a discussion of certain factors that should be
considered carefully in evaluating an investment in the Shares.
THE COMPANY
Data Transmission Network Corporation ("DTN" or the "Company") provides a
broad range of electronic news, information and communication services to
business and individual subscribers across the United States and Canada. The
Company is a leading provider of satellite delivered agricultural information
services as well as the leading information service through which petroleum
refiners in the United States of America communicate with their customers. The
Company targets its services towards niche markets in which its subscribers come
to rely on the timely and valuable information provided by the Company's
services to manage their businesses.
The Company's largest service offers agricultural market information and
quotes, and is the market leader and largest provider of satellite delivered
agricultural news and information services. The Company has recently acquired
the business of its largest direct competitor, Broadcast Partners, in providing
satellite delivered agricultural information. See "Recent Developments." The
Company offers a variety of other basic services which provide news and
information to markets including the energy industry, the financial community
and automobile dealerships, golf, construction, aviation, emergency management
and other weather related industries.
DTN currently has over 142,000 subscriptions to its established primary
services, and is continuing to develop and add new services targeting additional
markets. DTN has consistently shown that it can serve relatively small niche
markets profitably. The Company's dedication to customer service and ability to
provide value-added services has led to a consistently high subscriber retention
rate (91% for the year ended December 31, 1995) and a 17.2% compound annual
growth rate in revenue per subscriber.
DTN provides all of the equipment necessary for subscribers to receive
their service. The equipment includes a receiver, color or monochrome video
monitor and small 30" Ku-band satellite dish or an FM antenna. DTN also provides
solutions for integrating and distributing its information over local area
networks, wide area networks and the Internet.
The Company's revenue is derived principally from: (1) subscription
income from each primary service, (2) premium services, (3) service initiation
income (up-front fees) received from new subscribers, (4) income from
communications services (i.e., one-way messaging, e-mail), and (5) advertising
income from various vendors.
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<PAGE>
- The cost of receiving the Company's various services depends
on the format chosen (i.e., monochrome or color). Customers
pay for the service, which includes the use of a DTN terminal,
on a monthly, quarterly or annual basis.
- Premium services are offered to customers on an "a la' carte
basis", at additional charges.
- Service initiation fees are one-time charges to new
subscribers or subscribers converting to another DTN service
and range from $0 to $318, depending upon the service,
broadcast delivery method and sales discount programs offered.
- The Company sells communications services, particularly in its
DTNergy(R) line, which allow subscribers to cost-effectively
communicate a large amount of time-sensitive information or
data to many of their customers or field offices. 93% of the
communication services revenue in 1995 was derived from
DTNergy(R) (versus 92% in 1994) and 7% was from DTN
AgDaily(R).
- The Company sells advertising space that is interspersed among
the pages of DTN's services. The Company's color graphics and
audio capabilities should enhance DTN's ability to generate
future advertising revenue.
DTN obtains information from various news wires and public information
and also purchases information from third party sources, some of which are
contracted by the Company on an exclusive basis. Certain information received by
DTN is edited by an in-house staff before transmission to subscribers. The
information is delivered to its addressable subscribers primarily via Ku-band
satellite (small dish). Other delivery methods, including FAX, Electronic Mail,
the Internet and FM radio side band channels are also employed in order to
access certain subscribers who cannot be reached directly by satellite. The
Company also has the technology available to deliver some of its services via
the Vertical Blanking Interval transmission within cable TV.
The Company's strategy is to continue to identify and create information
and communication services for industries demanding comprehensive time-sensitive
information. The Company is continually expanding its business within existing
industries it serves by developing additional services and exploring more
efficient distribution channels. For example, while initially only transmitting
price information from petroleum refiners to jobbers and wholesalers, DTN
expanded the information content of its DTNergy(R) service to include invoicing,
electronic funds transfer notification and other communication services critical
to the energy business. Refineries have come to rely upon DTNergy as a highly
efficient, cost effective and customer service oriented service. Current
releases of new services, such as the trucking industry service, have taken the
DTNergy(R) concept one step further by providing two-way, interactive features.
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<PAGE>
The Acquisition
On May 3, 1996, the Company acquired substantially all of the assets of
Broadcast Partners, a Delaware general partnership ("BP"), pursuant to an Asset
Purchase Agreement of the same date between BP and the Company (the
"Acquisition").
BP was an electronic information and communications services company
headquartered in Des Moines, Iowa. Its principle business, operated under the
trade name "Farm Dayta", was an agricultural market information and quotes
service which competed directly with the Company's DTN AgDaily(R) service.
Pursuant to the Acquisition, the Company acquired approximately 39,000
subscription agreements with BP's former subscribers in the United States and
Canada who access the electronic delivery (primarily satellite) of time
sensitive information and communication services using equipment acquired by the
Company from BP pursuant to the Acquisition.
The Offering
In conjunction with the private placement by the Company of $15,000,000
aggregate principal amount of its 11.25% Senior Subordinated Notes, the Company
issued a Common Stock Purchase Warrant dated June 30, 1994, which provided the
holder or holders thereof with the right to purchase an aggregate of 25,000
Shares at $22.17 per share at any time prior to June 30, 2004. As a result of a
3 for 1 stock split of the Shares effected by the Company as of June 14, 1996
(see "Recent Developments"), such warrant now provides for the right to purchase
an aggregate of 75,000 Shares at $7.39 per share. Such warrant and all warrants
issued in substitution thereof are referred to in this Prospectus as the
"Warrants". As a result of the 3 for 1 stock split, the number of common shares
outstanding and earnings (loss) per shares are being retroactively restated. The
restated amounts are as follows:
<TABLE>
<CAPTION>
Three Months Ended
Years Ended December 31, March 31,
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1991 1992 1993 1994 1995 1995 1996
-------------- ----------- ---------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (loss) per share . . $ .14 $ .14 $ .07 $ (.16) $ (.03) $ (.03) $ (.04)
============== =========== ========== ========= ========== ========== ============
Weighted average number
of shares outstanding . . . . 10,004,712 10,004,331 9,860,550 9,760,200 9,908,592 9,877,320 9,970,845
============== =========== ========== ========= ========== ========== ============
</TABLE>
The Shares offered hereby will be issued by the Company to the Selling
Stockholders upon the exercise of the Warrants. The Shares offered hereby will
be distributed pursuant to Rule 415 of the Securities Act of 1933 providing for
a continuous offering and sale of the Shares from time to time by the Selling
Stockholders. The Shares to be offered hereby shall include any additional
Shares issued to the Selling Stockholders upon exercise of the Warrants to
prevent dilution resulting from stock splits, stock dividends, or similar
transactions effected by the Company as provided in the Warrants.
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<PAGE>
RISK FACTORS
The Shares offered hereby involve certain risks and prospective investors
should carefully consider, among other factors, the following matters before
purchasing the securities registered in this offering.
1. INCREASED INDEBTEDNESS. As a result of the Acquisition and the
Acquisition Loan (as hereinafter defined) the Company significantly increased
the amount of its long-term debt. Accordingly, the Company's fixed charges will
require a greater percentage of available cash flow. The degree to which the
Company is leveraged could have important consequences to holders of the Shares,
including the following: (I) a substantial portion of the Company's cash flow
from operations must be dedicated to the payment of the principal of and
interest on indebtedness; (ii) the Company's ability to obtain additional
financing in the future for working capital, capital expenditures, product
development costs or general corporate purposes may be limited; (iii) the
Company's ability to pay dividends is and will be limited by the covenants and
other terms of the financing agreements of the Company, including the
Acquisition Loan, the bank credit facility agreement and the subordinated note
agreement; (iv) the agreements governing the Company's long-term indebtedness
contain certain restrictive financial and operating covenants; and (v) the
Company could be more sensitive to a downturn in general economic conditions or
in the agricultural industries.
2. CERTAIN RISKS ASSOCIATED WITH THE ACQUISITION. There is no assurance
that following the Acquisition the Company can successfully integrate the
business of BP into its business or that economies of scale from the combination
of these businesses will be achieved to the extent anticipated or at all. The
approximately 39,000 subscriber contracts of BP assumed by the Company pursuant
to the Acquisition generally will be terminable by the subscribers within one
year or sooner. Although the Company has consistently maintained subscriber
annualized retention rates of 88% or above (91% for 1995; see
"Business-Retention"), there is no assurance that the acquired subscribers will
continue their contracts when they come up for renewal. The increased business
operations of the Company as a result of the Acquisition and its rapid expansion
in the past several years will place significant demands on its administrative,
operational and financial resources. The Company's future performance and
profitability will depend in part on its ability to successfully integrate the
business of BP into its own.
3. NEW TECHNOLOGY. The business of the Company is subject to the
continuous changes in technology which affect the methods by which information
is distributed to the public. Although the Company is unaware of any new
technology which is likely to replace its present electronic delivery systems
and equipment at a competitive price, new developments in electronic hardware
capabilities and in data distribution technologies could cause the Company's
electronic delivery systems and equipment to become obsolete or economically
inefficient or less attractive when compared to available alternatives. However,
the improvement and enhancement (and subsequent lower prices) of some delivery
technologies such as cable and fiber optics may provide the Company with
economic alternatives to it's current primary delivery method, satellite.
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4. NEED FOR FUTURE FINANCING. Along with projected internally generated
funds (including funds generated from the assets acquired in the Acquisition)
and its present bank credit facility, the Company's financing to date is
believed to be sufficient for the Company's operating requirements. However, the
Company could be required to seek additional financing if its rate of
subscription growth significantly exceeds that experienced during the past
twelve months (not including the subscription growth as a result of the
Acquisition). There is no assurance that such financing, if required, could be
obtained or that such additional financing will be available on favorable terms.
5. LIMITED SOURCE OF SUPPLY. The Company currently contracts for the
manufacture of its receiver equipment from MidWestern Electronics. While there
are other sources of manufacturing, an interruption in the delivery of the
equipment could be costly to the Company. The manufacturer, MidWestern
Electronics, has a disaster recovery plan in place so the supply of receiver
equipment should not be interrupted for any extended period of time. In case of
a disaster, the Company's revenue stream is protected by $1,000,000 of business
interruption insurance. The companies policy is to have a 30 day supply of
receivers in inventory which should minimize the effects of any interruptions in
supply.
6. COMPETITION. The Company operates in a highly competitive environment,
competing with information and communication services utilizing various types of
electronic media including satellite delivery, TV cable delivery, the Internet,
electronic bulletin boards, television, radio, cellular, and telephone
communications. In addition to the various electronic information publishers,
the Company competes with print media and "old information gathering habits".
Many of the Company's actual and potential competitors have substantially
greater resources than the Company.
7. CONTROL BY AFFILIATES. The current executive officers and directors of
the Company and stockholders who beneficially own 5% or more of the outstanding
Shares together with their respective affiliates, beneficially own approximately
46% of the Shares outstanding (approximately 50% assuming the exercise of all
options exercisable by them on July 1, 1996).
8. DEPENDENCE ON KEY PERSONNEL. The Company is highly dependent on the
efforts of its senior management team, particularly Roger Brodersen, Chief
Executive Officer, Greg Sloma, President and Chief Operating Officer, Robert
Herman, Senior Vice President, and Roger Wallace, Senior Vice President. The
loss of the services of any of these individuals could have a material adverse
effect on the Company.
9. EFFECT OF AN ADVERSE AGRICULTURAL ECONOMY. As a result of the
Acquisition, approximately 115,500 of the Company's 142,000 total subscribers
will be subscribing to information services directed at agribusinesses.
Consequently, a significant downturn in the agricultural economy could have an
adverse effect upon the business of the Company.
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RECENT DEVELOPMENTS
THE ACQUISITION
On May 3, 1996, the Company acquired substantially all of the assets of
BP pursuant to an Asset Purchase and Sale Agreement of the same date between the
Company and BP. The primary business of BP was providing time-sensitive
information and communication services to agricultural producers via a satellite
delivery system.
The acquisition consideration consisted of $63,500,000 and the Company's
assumption of certain liabilities of BP consisting generally of trade accounts
payable, accrued payroll and other accrued liabilities incurred in the ordinary
course of the business of BP. These liabilities are approximately $9,800,000.
The Company also assumed the obligations of BP under various customer contracts
and assignable operating agreements and leases which become due or are to be
performed after the closing of the Acquisition.
The funds used to finance the Acquisition were obtained from (i) the
Company's private placement of Shares for an aggregate sales price of
$15,010,000 and (ii) secured term loans with a group of lenders in an aggregate
principal amount of $48,490,000 borrowed by the Company pursuant to a 1996 Term
Credit Agreement dated May 3, 1996, as amended by a First Amendment to 1996 Term
Credit Agreement dated July 17, 1996 and by a Second Amendment to 1996 Term
Credit Agreement dated July 31, 1996 (as amended, the "Acquisition Loan"). The
Acquisition Loan provides for the unpaid principal amount to accrue interest at
both fixed and floating interest rates depending on the particular lender. The
principal amount of the Acquisition Loan is to be repaid in 72 equal monthly
principal installments beginning January 31, 1997. The total amount of all
unpaid principal and accrued interest hereunder shall be due and payable no
later than December 31, 2002.
The Acquisition Loan requires the Company to maintain total stockholders'
equity of at least $23,500,000 during the term of the loan. In the event of
default, interest shall accrue on the fixed rate loans at a fluctuating rate
equal to the rate announced from time to time by First National Bank of Omaha as
its National Base Rate plus four percent (4%). In the event of default, interest
shall accrue on the floating rate loans at four percent (4%) above the rate
otherwise in effect from time to time with respect to such loans.
Pursuant to the Acquisition Loan, the Company is to maintain a ratio of
total borrowings (excluding long-term subordinated debt) to stockholders' equity
(including existing long-term subordinated debt) (the "Ratio") not to exceed 3.5
to 1. In the event the Ratio exceeds 3.0 to 1, any term note under the
Acquisition Loan or the Company's senior loan agreement (described below)
accruing interest at less than seven and one-half percent (7.5%) is included in
a "Trigger Event". The Company is obligated to pay the holders of such term
notes a fee of three-eighths of one percent (.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.
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Pursuant to the Acquisition Loan, the Company shall not permit the sum of
the total borrowings under the Acquisition Loan and the senior loan agreement to
exceed forty-eight times operating cash flow (operating income before
depreciation and amortization expense). Additionally, total debt outstanding
(including existing long-term subordinated debt) is limited to sixty times
operating cash flow of the Company.
The Company is also required to maintain a ratio of quarterly operating
cash flow (as defined above) to interest expense of at least 2.25 to 1.0.
Pursuant to the Acquisition Loan, 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.
The Company currently has a senior loan agreement with a group of banks
(the "senior loan agreement"). The senior loan agreement, which expires June 30,
1997, unless extended, provides for a total commitment of up to $49,500,000 in
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.
For more detailed information concerning the Acquisition, prospective
investors should read the Company's Current Report on Form 8-K dated May 16,
1996, as amended by the Company Current Report on Form 8-K/A dated June 20,
1996, which are incorporated by reference into this Prospectus.
STOCK SPLIT OF SHARES
On June 3, 1996, the Board of Directors of the Company approved a 3 for 1
stock split of the Shares outstanding or held in the treasury of the Company as
of June 14, 1996. As a result of the stock split, the holders of the Warrants
became entitled to purchase 75,000 Shares at a price of $7.39 per share (rather
than the original 25,000 Shares at a price of $22.17 per share) pursuant to the
anti-dilution provisions contained in the Warrants.
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BUSINESS
General
DTN delivers a broad range of news and information services targeted at
niche markets in the United States and Canada. The Company is a leader in the
electronic satellite delivery of their information and communication services to
those niche markets. The Company's subscribers are businesses and individuals
that rely upon timely information at an affordable cost to manage their business
operations. DTN's business strategy of emphasizing customer service to build
subscriber loyalty has led to a consistently high subscriber retention rate (91%
for the year ended December 31, 1995).
DTN's information comes from various news wires, public information and
information purchased from third party sources, some of which are under contract
with the Company on an exclusive basis. The Company maintains in-house news
staff to edit certain information before it is transmitted to subscribers. The
news and information is delivered to subscribers primarily via Ku- Band
satellite (small dish) transmission. Other delivery methods include FM radio
side band channels, TV cable, FAX, E-Mail and the Internet. DTN provides each
subscriber with a receiver specifically built for the Company, as well as a
monitor and antenna.
The Company's revenue is derived primarily from five categories: (1)
monthly, quarterly or annual subscriptions, (2) optional service subscriptions,
(3) communication services, (4) advertising and (5) service initiation fees.
The percentage of total revenue for each category over the last three
fiscal years was:
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Subscriptions 72% 73% 74%
Optional Service 7% 8% 6%
Communication Service 9% 10% 11%
Advertising 5% 4% 3%
Service Initiation Fees 7% 5% 6%
</TABLE>
DTN subscribers are charged monthly subscription rates of between $27.00
and $160.00, depending on the service and delivery technology utilized.
Optional services are offered to subscribers on an "a la carte basis",
similar to premium channels on cable TV. The information for these services is
primarily provided by a third party with DTN receiving a share of the
subscription revenue paid by the subscriber. Optional services revenue continues
to grow but has decreased as a percentage of total revenue primarily due to the
growth in subscription revenue.
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In addition to subscription fees described above, the Company sells
communication services to companies that allows them to cost-effectively
communicate a large amount of time-sensitive information to DTN subscribers.
This category includes revenue generated from FAX and E-Mail services.
The Company sells advertising space interspersed among the pages of news
and information, similar to a newspaper or magazine. The advantage of an
electronic advertisement over typical print media is the time-sensitive delivery
of the ad, as well as the ability to change the advertising message quickly and
as frequently as market conditions dictate. Advertising revenue continues to
grow but has decreased as a percentage of total revenue primarily due to the
growth in subscriptions revenue.
Service initiation fees are one-time charges to new subscribers which
vary in amount depending on the service and the information distribution
technology. DTN also charges an initiation fee for those subscribers who convert
to another service (ie: from a monochrome FM to a Ku color service).
DTN currently has over 142,000 subscribers to its services, and is
continuing to develop and add new services targeting additional markets. The
Company also continues to invest in the enhancement and development of its
delivery technology, in order to take advantage of the engineering and software
advancements in the electronic delivery of information and communications
services.
The table below sets forth a summary of the industries and niche markets
the Company currently serves and the number of subscribers and revenues from
each of such industries.
<TABLE>
<CAPTION>
Subscribers (Thousands) Revenues (Millions)
------------------------------- --------------------------------
Industry Niche Market Served 1993 1994 1995 1993 1994 1995
-------- ------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Agribusiness - Production Agriculture 61.7 67.1 77.4 $27.0 $33.7 $45.0
- Ag Commodity
Wholesaler/Broker and
Trader
- Ag Equipment Dealers
- Weather Impacted Business
Financial - Financial Planners, 7.7 8.8 9.6 4.1 5.1 6.1
Services Brokers and Individual
Investors
Energy - Refiners and Wholesalers 5.8 6.7 7.1 4.9 7.2 9.9
Services of Petroleum Products
Other - Automobile Dealers
- Truck and Load Matchers
- Miscellaneous -- .5 2.8 .1 .1 1.2
--- --- --- --- -- ---
TOTAL 75.2(1) 83.1(1) 96.9(1) $36.1 $46.1 $62.2
==== ==== ==== ==== ==== ====
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<FN>
(1) These figures count subscribers receiving multiple services for each
primary service received as reported consistently with prior filings
with the Securities and Exchange Commission.
</FN>
</TABLE>
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BUSINESS STRATEGY
The Company has demonstrated an ability to execute its strategy of
identifying and creating services for niche markets. The recent introduction of
DTN Weather Center is an example of identifying a new industry and creating an
information service to fill a need for time-sensitive information. Through
extensive research, the Company identified the need for "Real-time" weather at
an affordable cost. Initial marketing efforts have indicated promising results
from a number of weather-impacted businesses, including construction, aviation,
golf/turf managers, emergency management agencies, departments of transportation
and government agencies of all sizes.
In 1995 the Company acquired 2,900 real-time commodity customers from
Knight-Ridder Financial, Inc. and approximately doubled the number of customers
to their Real-Time Commodity product, now called DTNstant(R)/Knight-Ridder. The
companies' strong commitment to outstanding customer service and desire to
expand the real-time product were the catalyst to this acquisition.
The Company believes DTNergy(R) is the business model to emulate as it
executes its growth strategy. After identifying the opportunity to serve the
petroleum industry, the Company developed an affordable and efficient product to
satisfy the need for time-sensitive information. While initially only
transmitting price information from petroleum refiners to their jobbers and
wholesales, DTN's customer service expanded the information content to include
invoicing, electronic funds transfer notification and other information critical
to the energy business. Refineries have come to rely upon DTNergy(R) as a highly
efficient, cost-effective and customer service oriented product.
The Acquisition will increase DTN's agricultural-related subscribers to
over 115,500. DTN believes that this will create a subscriber base (much like
DTNergy(R)) which will attract business from companies which desire to market
their products and services to those subscribers. The Acquisition demonstrates
the Company's execution of its growth strategy of expanding and servicing
existing markets.
INDUSTRIES, SERVICES AND MARKETS
Agribusiness Industry
The DTN services targeted at the agribusiness industry accounted for 80%
of the subscribers and 72% of the revenue of the Company for 1995. The table
below sets forth information regarding the DTN services targeted to agribusiness
markets.
11
-14-
<PAGE>
<TABLE>
<CAPTION>
1995 1995
Market Subscribers Revenue
Entry Service Description Market (thousands) (millions)
- ----- ----------------- ------------------- ----------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1984 DTN AgDaily(R) Agricultural Farmers, 67.6 $35.7
market information Livestock
delayed Commodity Producers, Grain
quotes, weather Elevators, other
and crop analysis Agribusinesses.
1994 DTN Pro-SeriesSM Advanced weather, Same as AgDaily (1) (1)
charts, Intraday
analysis, and
equity information
1993 DTNstant(R) Real-time version Large Ag 5.4 6.5
Knight-Ridder of DTN AgDaily Producers, Grain
with expanded news Elevators,
Commodity Brokers
1993 DTN IronSM Equipment locator Agricultural .8 .8
and inventory Equipment Dealers
management for farm
implement dealers
1994 DTN ProduceSM Weather, prices, Growers, shippers, 1.4 1.0
transportation and news packers, brokers,
for produce businesses retailers, institutions
1995 DTN Weather CenterSM Advanced weather Golf courses, 2.2 1.0
information service construction,
emergency manage-
ment, aviation,
public works, etc
----- -----
TOTAL 77.0 $45.0
- -------------------------- ===== =====
<FN>
(1) Included in AgDaily.
</FN>
</TABLE>
DTN Ag Daily Service
The Company's first service, DTN AgDaily, remains its largest service.
All Agribusiness Industry subscriptions are primarily sold by DTN's
employee sales force of district sales representatives as well as by
independent, commission-only sales representatives. The Company obtains leads
for the employee sales force through telemarketing, direct mail, print media
advertising, and customer referrals. The price of the monochrome FM service is
$27.00 per month, $34.00 per month for monochrome Ku service, and $50.00 per
month for color Ku service.
The biggest competitors to this service are considered by DTN to be the
combination of printed advisory services, radio, television, telephone, other
satellite information services, on-line services, and the changing of old
information gathering habits.
12
-15-
<PAGE>
The addition of approximately 39,000 subscribers from the Acquisition (in
addition to DTN's existing subscription base of 68,700) enhances the
marketability of communication services and advertising, and provides an
attractive communication path for companies marketing products and information
to "America's best" agricultural producers.
The combined subscribers of DTN and BP produce a significant percentage
of total U.S. agricultural production. The table below sets forth approximations
of the total acres of certain crops farmed in the United States by the combined
subscribers, the total head of certain livestock fed in the United States by the
combined subscribers, and the corresponding percentages of total United States
production.
Total Acres % of Total
Farmed by United States
Crop Subscribers (1) Acres (2)
- ---- --------------- ---------
Corn 34,721,000 50%
Soybeans 27,488,000 45%
Sorghum 4,180,000 38%
Wheat 20,767,000 32%
Total Head Fed % of Total
Livestock by Subscriber (1) U.S. Livestock Fed (2)
- --------- ----------------- ----------------------
Hogs 47,326,000 68%
Cattle 25,902,000 57%
(1) With respect to DTN subscribers, these figures were derived from
questionnaires completed by the subscribers upon becoming initial
subscribers of DTN or upon updated questionnaires should the
subscribers convert to other DTN services. With respect to BP
subscribers, these figures were derived from surveys conducted by a
group of agricultural businesses consisting of Pioneer Hi-Breds
International, Case International, Farm Progress, Purina and American
Cyanamid.
(2) These percentages are determined based upon comparisons of the DTN
and BP subscriber data with data published by the U.S. Department of
Agriculture in 1995.
DTN PRO SERIES SERVICES
The DTN Pro Series services are an advanced information sources designed
for agricultural subscribers who require more extensive information that can be
customized for their specific needs and operations. The DTN Pro Series services
13
-16-
<PAGE>
consist of five separate services: Weather Pro, News Pro, Chart Pro, Intraday
Pro, and Stock Pro.
Each individual DTN Pro Series service is bundled together with DTN
AgDaily. Each individual DTN Pro Series service is $62.00 per month except Stock
Pro which is $66.00 a month. The Company also offers DTN Premier which is a
package of Weather Pro, News Pro, Chart Pro and Intraday Pro, priced at $79.00
per month. DTN Premier Plus is a package of DTN Premier and Stock Pro, priced at
$82.00 a month. The DTN Pro Service services are only available by color Ku-band
satellite transmission.
DTNSTANT/KNIGHT-RIDDER SERVICE
The July 1995 acquisition by DTN of 2,900 subscribers from Knight-Ridder
Commodity Center made the DTNstant/Knight-Ridder service a leader in the
satellite delivery of instant commodity information to agribusinesses. This
acquisition more than doubled DTN's instant commodity subscriber base with
revenue from such subscribers increasing 84% in 1995 compared to 1994.
DTNstant/Knight-Ridder operates in a very competitive market with numerous
national and regional providers of instant commodity quotes. This service is
available only by color Ku-band satellite transmission and is priced at $160.00
a month.
DTNIRON SERVICE
The DTNiron service provides detailed listing of farm implement equipment
for sale by dealers as well as equipment needed by the dealers. Subscribers
receive industry news, financial information, economic indicators, and
information from the DTN AgDaily color service. This service is only available
by color Ku-band satellite transmission and is priced at $98.00 a month.
DTN PRODUCE SERVICE
The DTNPROduce service provides the produce industry with timely weather,
prices, transportation and news information.
The market for the service is the entire produce food chain of growers,
shippers, packers, brokers, retailers and institutional buyers. This service is
available only by color Ku-band satellite transmission and is priced at $88.00
per month.
DTN WEATHER CENTER SERVICE
The DTN Weather Center service was unveiled at the corporation's annual
meeting held in April 1995. This service can be sold to virtually any industry
where timely, accurate, accessible weather information would cause a decision to
be made concerning the deployment of resources. This service
14
-17-
<PAGE>
is available only via color Ku-band satellite transmission and is priced at
$68.00 per month. DTN's 1995 marketing efforts have demonstrated promising
acceptance of this service by a variety of weather impacted businesses.
Financial Services Industry
DTN's services targeted to the financial services industry accounted for
10% of the subscribers and 10% of the revenues of the Company for 1995. The
table below sets forth a summary of the DTN services targeting the financial
services industry and the number of subscribers and revenues for such services.
<TABLE>
<CAPTION>
1995 1995
Subscribers Revenues
Entry Market Service Description Market (thousands) (millions)
- ----- --------------- ----------------- --------------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1989 DTN Wall St.(R) Delated stock Financial Advisors, 9.3 $5.9
quotes, financial Independent Brokers,
and market news Individual Investors,
Financial Inst.
Other Services Mortgage Quotes Mortgage Industry .3 .2
U.S. Gov't Small Public and
Security Quotes Private Treasurers
--- ----
TOTAL 9.6 $6.1
=== ====
</TABLE>
The strength of the Company's Wall Street service is that the service
provides a comprehensive in-depth array of information at an affordable cost.
The service is designed for the subscriber who desires a continuous feed of
delayed quotes and information. The primary competitors of the DTN Wall Street
service are satellite, TV cable and dial-up quote services. New subscribers to
this service are obtained through direct response marketing, primarily print
media, television, advertising and telemarketing. This service is available by
Ku- band satellite and TV cable and is price at $41.95 per month.
ENERGY INDUSTRY
DTN's service targeted to the petroleum industry accounted for 7% of the
subscribers and 16% of the revenues of the Company for 1995. The table below
sets forth a summary of the DTNergy service and the number of subscribers and
revenues for such service.
<TABLE>
<CAPTION>
1995 1995
Market Subscribers Revenues
Entry Service Description Market (thousands) (millions)
- ------ ---------- ----------------- ----------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1991 DTNergy(R) Delayed energy Petroleum, Whole- 7.1 $9.9
futures & options Salers, Refiners === ===
quotes, news and
weather.
</TABLE>
15
-18-
<PAGE>
DTNERGY SERVICE
DTNergy(R) is designed to connect refiners (producers of refined fuels)
to wholesalers (distributor of refined fuels). This service has become the
communications tool most widely used by the petroleum industry. The strength of
the DTNergy(R) service is the ability to deliver, within seconds, accurate
refiner terminal prices and other vital communications to the wholesalers.
DTNergy(R) generates revenue from two primary sources, the wholesaler and
the refiner. The wholesaler pays a monthly subscription fee of $36.00 for the
monochrome Ku-band satellite service. The refiner pays fees based upon the
number and length of communications sent to wholesalers. The service is only
available by color Ku-band satellite.
OTHER INDUSTRIES AND SERVICES
The Company is always looking for new services and ventures to provide
growth for the future. DTN's additional services include a service for the
automobile industry and two joint ventures. The joint ventures serve the
electrical equipment and freight and load matching markets. This group of
services account for 3% of the subscribers and 2% of the revenue of the Company
for 1995.
SUBSCRIBER RETENTION
The Company's subscriber retention rate is one of the key elements of its
success. The Company's overall subscriber retention rate was 91% for the year
ended December 31, 1995. This rate is significantly higher than cable TV,
magazines and other comparable industries. This retention rate is the result of
the Company's commitment to customer service and its ability to continually
"tweak" the product information content to fulfill subscriber demands. Listening
to subscribers is a full-time vocation at DTN.
INFORMATION DISTRIBUTION TECHNOLOGY
The Company currently utilizes predominantly Ku satellite delivery
technology for its services. Ku satellite is one of the most efficient and
economical ways to deliver information from a point to multiple points. It is a
major factor in achieving the Company's daily communication cost per subscriber
of approximately 6(cent). The Company continues to explore new and different
technologies and will utilize those technologies which meet the customers
demands at an affordable cost.
The first delivery technology used by the Company was FM radio side-band
channels. The Ku satellite technology was added in 1989, providing the ability
to reach customers outside the geographic territories of the signals of the FM
stations. FAX, TV cable (VBI), E-Mail and the Internet have since been added to
further expand our distribution network.
16
-19-
<PAGE>
The Company provides all of the equipment necessary for subscribers to
receive their service. This equipment includes a receiver, specifically built
for the Company, a video monitor, a small 30" Ku-band satellite dish (or an FM
antenna). A keyboard, mouse and printer may be provided depending on the
service. DTN is responsible for the normal maintenance and repair of the
subscriber equipment.
Prior to 1992, the Company utilized a monochrome system. The monochrome
system translates the Company's data stream into text and has the capability,
depending on capacity, to receive and display from 126 to 246 different pages of
information. The monochrome receiver has the capability to download information
to a printer or computer.
In 1992, the Company introduced the Advanced Communications EngineSM
(ACE) receiver, a color graphics receiver system, that expanded the ability to
provide information and communication services. This receiver has multiple
processors that capture, manipulate and display high resolution color pictures,
graphics, and text. A separate processor provides the ability to play audio
clips such as weather forecasts, voice advertisements or audio alarms used when
a futures contract reaches a pre-set price. In addition, this processor may send
and retrieve information by using an internal modem. The receiver has the
ability to download information to a printer or computer. This receiver is
equipped with an internal hard drive that allows processed information to be
stored, archived (versus frequent rebroadcasting) and then displayed using the
receivers built-in control panel, a keyboard or a mouse at the subscribers
convenience.
One of the unique aspects of the Company's information distribution
technology is the computer software developed by the Company specifically for
use with the DTN receivers. This software manages information from a wide array
of input sources, runs routines, sets priorities and then initiates
transmissions to the satellite. The software provides the capability to
individually address each receiver unit placed with a subscriber, permitting the
Company to transmit specified information to a specific subscriber or
subscribers.
The Company leases satellite channels, FM radio side-band channels and TV
cable (VBI) to deliver the information to the Company's receivers used by its
subscribers. All information is up- linked from Omaha to satellite (except FAX
and other telephone delivery technology) and down- linked from the satellite to
the subscriber based on the distribution technology. The Ku subscribers utilize
a 30" satellite dish, a direct down-link, to receive their information. The FM
monochrome subscribers receive their information using an FM antenna that
receives the information via the side- band transmitted from the radio stations.
Early in 1994, the Company began using a new TV cable distribution
technology involving vertical blanking intervals (VBI). The Company has
contracted with a major cable TV superstation to transmit information along with
the station's TV signal. This technology eliminates the need for an FM antenna
or satellite dish and is available to businesses or residences that are wired
for cable TV and receive the superstation's service.
17
-20-
<PAGE>
The Company has approximately 8,000 DTNergy customers receiving
information using FAX technology. The E-Mail business is primarily a subscriber
(an E-Mail source) communicating specific messages to a group of subscribers.
Currently, there are over 200 E-Mail sources delivering over 1,000 pages of
information per day to subscribers. The Company began to deliver services on the
Internet in 1995 and plans to continue researching this information distribution
technology.
18
-21-
<PAGE>
SELLING STOCKHOLDERS
The Selling Stockholders listed in the table below are the registered
holders of the Warrants as of August 7, 1996. Assuming the exercise of the
Warrants in their entirety, the Selling Stockholders may sell the number of
Shares set forth opposite their respective names. The table sets forth
information as of August 7, 1996 and as adjusted to reflect the sale of Shares
offered by this Prospectus with respect to record ownership of the Shares by the
Selling Stockholders:
<TABLE>
<CAPTION>
Owned After Offering
Shares Percent of Shares --------------------------------
Owned Shares to be No. of Shares
Name of Record Outstanding Sold(1) Shares Outstanding
- ---- --------- ----------- ------- ------------------ -----------
<S> <C> <C> <C> <C> <C>
Equitable Capital Private Income -- -- 75,000 -- --
and Equity Partnership II, L.P.
- ----------
<FN>
(1) These Shares are to be issued upon the exercise of the Warrants.
</FN>
</TABLE>
19
-23-
<PAGE>
PLAN OF DISTRIBUTION
The Shares offered pursuant to this Prospectus will be issued by the
Company upon the exercise of the Warrants and will generally be sold by the
Selling Stockholders through securities broker-dealers in ordinary broker
transactions. The brokers will receive commission not in excess of the usual and
customary broker's commissions. The Company is not engaging an underwriter in
connection with the shelf registration or offering of these Shares.
20
-24-
<PAGE>
DESCRIPTION OF COMMON STOCK
The Shares are registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and prospective investors
are urged to read the Company's registration statement on Form 8-A, as amended,
filed pursuant to the Exchange Act for a description of and information relating
to the Shares.
21
-25-
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, files reports and other information with the
Securities and Exchange Commission (the "Commission"). Copies of reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following
regional offices of the Commission: Citicorp Center, 500 West Madison, Suite
1400, Chicago, Illinois 60661; and Seven World Trade Center, 13th Floor, New
York, New York 10048. Copies of such material also can be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549.
The Shares are currently listed with the National Association of
Securities Dealers Automated Quotations National Market System (NASDAQ/NMS)
under the symbol DTLN. Reports, proxy statements and other information filed by
the Company with NASDAQ can be inspected and copied at the public reference
facilities maintained by NASDAQ at NASDAQ Reports Section, 1735 K Street, N.W.,
Washington, D.C. 20006-1506.
The Company has filed a registration statement on Form S-3 (together with
all amendments and exhibits filed or to be filed in connection therewith, the
"Registration Statement") under the Securities Act of 1933 (the "Securities
Act") with respect to the Shares offered hereby. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. Statements contained or incorporated by reference herein concerning
the provisions of documents are necessarily summaries of such documents, and
each statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.
22
-26-
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents of the Company which have been filed with the
Commission are hereby incorporated by reference in this Prospectus:
(a) the Company's Annual Report on Form 10-K for the Fiscal Year
Ended December 31, 1995.
(b) the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1996.
(c) the description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, as amended, filed
with the Commission pursuant to Section 12 of the Exchange Act.
(d) the Company's Current Report on Form 8-K dated May 16, 1996, as
supplemented by its amended Current Report on Form 8-K/A dated
June 20, 1996.
(e) the Company's Report on Form 10-C dated May 13, 1996, filed
with the Commission pursuant to Section 13 of the Exchange Act.
(f) the Company's Report on Form 10-C dated July 8, 1996, filed
with the Commission pursuant to Section 13 of the Exchange Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the respective dates
of filing such documents. Any statement contained herein or in a document all or
part of which is incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by reference herein
modified or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents incorporated by reference (other than exhibits to
such documents which are not specifically incorporated by reference in such
documents). Requests for such copies should be directed to Secretary, Data
Transmission Network Corporation, 9110 West Dodge Road, Suite 200, Omaha,
Nebraska 68114, telephone number (402) 390-2328.
23
-27-
<PAGE>
No person has been authorized to give any information or to make any
representation not contained in this Prospectus in connection with the offer
made by this Prospectus and, if given or made, such information or
representation should not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy the securities offered hereby in any jurisdiction in which
such offer or solicitation would be unlawful. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances create an
implication that information contained herein is correct as of any time
subsequent to the date hereof.
--------------------
TABLE OF CONTENTS
Page
Prospectus Summary............................ 2
Risk Factors.................................. 5
Recent Developments............................ 7
Business....................................... 9
Selling Stockholders........................... 19
Plan of Distribution........................... 20
Description of Common Stock................... 21
Available Information......................... 22
Incorporation of Certain
Information by Reference.................... 23
75,000 Shares
DATA TRANSMISSION
NETWORK
CORPORATION
Common Stock
PROSPECTUS
August 7, 1996
-28-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses payable by the
Company in connection with the sale of Shares being registered. All amounts are
estimates except the SEC registration fee.
Registration Fee -- Securities and Exchange Commission $ 517
Blue Sky Fees and Expenses $ 300
Legal Fees and Expenses $ 2,000
Accounting Fees and Expenses $ 3,000
Miscellaneous $ 2,000
----------
Total $ 7,817
===========
Item 15. Indemnification of Officers and Directors
The Certificate of Incorporation of the Company, as permitted by the laws
of the State of Delaware, provides for the limitation of liability of directors
with respect to monetary damages for breach of fiduciary duty. However, such
certificate does not limit the liability of a director for breaching his duty of
loyalty to the Company or its shareholders, for acts or omissions not in good
faith, for engaging in intentional misconduct, under Section 174 of the General
Corporation Law of the State of Delaware pertaining to unlawful payment of
dividends or unlawful stock purchase or redemption, or for any transaction from
which the director derived an improper benefit.
Section 145 of the General Corporation Law of the State of Delaware
permits indemnification of directors, officers, employees and agents of
corporations under certain conditions and subject to certain limitations. The
bylaws of the Company provide that the officers and directors of the Company
shall be indemnified by the Company to the fullest extent permitted by the laws
of Delaware, as amended from time to time.
The Company presently maintains insurance to protect itself and its
directors and officers against certain liabilities, costs and expenses arising
out of claims or suits against such directors and officers resulting from their
service in such capacity.
II-1
-29-
<PAGE>
Item 16. Exhibits
<TABLE>
<CAPTION>
Number Description Page Number
<S> <C> <C>
2. Plan of acquisition
(This document is filed as an exhibit to the Registrant's
Current Report on Form 8-K dated May 16, 1996.)
4.(a) Specimen copy of stock certificate (This document is filed as
an exhibit to the Company's Registration Statement on Form
S-1 as filed November 4, 1988.)
(b) Certificate of Incorporation of registrant
By-Laws of registrant
(These documents are filed as exhibits to the Company's
Registration Statement on Form S-1 as filed December 4,
1987.)
5. Opinion of counsel II-6
23.(a) Consent of Deloitte & Touche LLP II-7
(b) Consent of KPMG Peat Marwick II-8
Consent of Counsel (included in Exhibit 5.)
</TABLE>
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any such action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-2
-30-
<PAGE>
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10 (a) (3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually, or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
Provided, however, that paragraphs (i) and (ii) above
do not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15 (d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the Securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-3
-31-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized in the City of Omaha and the State of Nebraska on August 7, 1996.
DATA TRANSMISSION NETWORK CORPORATION
By: /s/ Roger R. Brodersen
-------------------------------------------
Roger R. Brodersen, Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Roger R. Brodersen and Greg T. Sloma, and each of
them individually, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place, and
stead, in any and all capacities (including, if applicable, his capacity as a
director and/or officer of Data Transmission Network Corporation), to sign any
and all amendments (including post-effective amendments) to this Registration
Statement and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them individually, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
II-4
-32-
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and Power of Attorney have been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- -------------------------------------------- ----------------------------- ----------------
<S> <C> <C>
/s/ Roger R. Brodersen Chairman of the Board, August 7, 1996
- --------------------------------------------
ROGER R. BRODERSEN Chief Executive Officer
and a Director
/s/ Greg T. Sloma Chief Operating Officer, August 7, 1996
- -----------------------------------------------
GREG T. SLOMA President and a Director
/s/ Roger W. Wallace Senior Vice President and August 7, 1996
- -------------------------------------------- a Director
ROGER W. WALLACE
/s/ Robert S. Herman Senior Vice President and August 7, 1996
- --------------------------------------------- a Director
ROBERT S. HERMAN
/s/ Brian L. Larson Vice President, Chief August 7, 1996
- --------------------------------------------- Financial Officer,
BRIAN L. LARSON Secretary and Treasurer
- --------------------------------------------- Director
JAY E. RICKS
- --------------------------------------------- Director
DAVID K. KARNES
- --------------------------------------------- Director
J. MICHAEL PARKS
</TABLE>
II-5
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<PAGE>
Exhibit 5.
August 7, 1996
Data Transmission Network Corporation
9110 West Dodge Road, Suite 200
Omaha, NE 68114
Gentlemen:
We have examined the Registration Statement on Form S-3 (the
"Registration Statement") to be filed by Data Transmission Network Corporation
(the "Company") with the Securities and Exchange Commission in connection with
the shelf registration of 75,000 shares of the $.001 par value Common Stock of
the Company (the "Shares") to be issued to and sold by warrant holders upon the
exercise of warrants previously issued by the Company.
Based upon the foregoing, in our opinion the Shares will be, when
issued and paid for upon exercise of the warrants underlying the Shares as
contemplated in the Registration Statement, legally issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement.
Very truly yours,
ABRAHAMS, KASLOW & CASSMAN
By: /s/ R. Craig Fry
-------------------------
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Exhibit 23.(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Data Transmission Network Corporation on Form S-3 of our reports dated January
30, 1996, appearing in and incorporated by reference in the Annual Report on
Form 10-K of Data Transmission Network Corporation for the year ended December
31, 1995.
DELOITTE & TOUCHE LLP
August 5, 1996
Omaha, Nebraska
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<PAGE>
Exhibit 23.(b)
INDEPENDENT AUDITORS' CONSENT
The Partners
Broadcast Partners:
We consent to the use of our report incorporated herein by reference.
KPMG Peat Marwick LLP
Des Moines, Iowa
August 5, 1996
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<PAGE>
