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 March 31, 1997
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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 May 15, 1997...11,089,052.
<PAGE>
<TABLE>
<CAPTION>
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FINANCIAL STATEMENTS
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BALANCE SHEETS
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Unaudited March 31, 1997 December 31, 1996
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ASSETS
Current Assets
<S> <C> <C>
Cash $ 890,397 $ 708,053
Accounts receivable, net of allowance for
doubtful accounts of $520,000 6,423,759 9,653,766
Prepaid expenses 665,935 583,985
Deferred commission expense 3,007,614 2,807,330
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Total Current Assets 10,987,705 13,753,134
Property and Equipment
Equipment Used By Subscribers 207,475,852 203,310,661
Equipment and Leasehold Improvements 20,463,506 19,702,330
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227,939,358 223,012,991
Less: Accumulated Depreciation 107,488,846 98,564,288
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Net Property and Equipment 120,450,512 124,448,703
Intangible Assets From Acquisitions, net of accumulated
amortization of $5,204,199 and $3,871,956 39,710,617 36,517,799
Other Assets 2,816,501 3,010,126
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$ 173,965,335 $ 177,729,762
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 6,823,707 $ 7,485,517
Accrued expenses 7,221,009 5,923,628
Current portion of long-term debt 24,331,666 15,092,083
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Total Current Liabilities 38,376,382 28,501,228
Long-Term Debt 69,585,832 83,184,373
Subordinated Long-Term Notes, net of unamortized
discount of $416,705 and $436,550 14,583,295 14,563,450
Equipment Deposits 509,043 515,142
Unearned Revenue 21,911,940 22,675,280
Stockholders' Equity
Common stock, par value $.001, authorized
20,000,000 shares, issued 11,074,224 11,074 11,074
Paid-in capital 30,025,990 30,025,990
Retained earnings (deficit) (1,017,589) (1,404,602)
Treasury stock, at cost, 2,567 and 45,919 shares (20,632) (342,173)
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Total Stockholders' Equity 28,998,843 28,290,289
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$ 173,965,335 $ 177,729,762
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<FN>
See notes to interim financial statements.
</FN>
</TABLE>
2
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<TABLE>
<CAPTION>
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STATEMENTS OF OPERATIONS
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Quarter Ended
Unaudited March 31, 1997 March 31, 1996
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REVENUES
<S> <C> <C>
Subscriptions $ 23,109,539 $ 14,084,778
Additional services 1,638,786 1,140,724
Communication services 2,313,358 1,999,112
Advertising 1,176,732 668,967
Service initiation fees 1,228,458 1,219,436
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29,466,873 19,113,017
EXPENSES
Selling, general and administrative 13,992,613 10,702,963
Sales commissions 2,333,055 1,907,571
Depreciation and amortization 10,211,971 5,745,528
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26,537,639 18,356,062
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OPERATING INCOME 2,929,234 756,955
Interest expense 2,394,864 1,345,245
Other income, net 32,249 30,299
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INCOME (LOSS) BEFORE INCOME TAXES 566,619 (557,991)
Income tax (benefit) provision 205,000 (201,000)
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NET INCOME (LOSS) $ 361,619 $ (356,991)
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EARNINGS (LOSS) PER SHARE $ 0.03 $ (0.04)
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Weighted Average Number of Shares
Outstanding 12,014,402 9,970,845
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<FN>
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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Quarter Ended
Unaudited March 31, 1997 March 31, 1996
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Cash Flows From Operating Activities
<S> <C> <C>
Net income (loss) $ 361,619 $ (356,991)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 10,211,971 5,745,528
Amortization of debt issue costs and discount 36,970 32,190
Deferred income taxes 176,500 (205,500)
Change in assets and liabilities:
Accounts receivable 1,927,097 399,234
Prepaid expenses (20,426) (270,743)
Deferred commission expense (105,111) (428,775)
Accounts payable (144,394) (167,473)
Accrued expenses 146,374 264,211
Equipment deposits (6,099) (12,402)
Unearned revenue 1,461,660 762,621
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Net Cash Provided By Operating Activities 14,046,161 5,761,900
Cash Flows From Investing Activities
Capital expenditures:
Equipment used by subscribers (4,326,454) (9,217,459)
Equipment and leasehold improvements (571,747) (1,808,088)
Acquisition of Subscribers (4,953,593) --
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Net Cash Used By Investing Activities (9,851,794) (11,025,547)
Cash Flows From Financing Activities
Proceeds (payments) from revolving credit agreement (500,000) 6,750,000
Principal payments on long-term debt (3,858,959) (2,296,875)
Proceeds from the exercise of stock options 346,936 240,686
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Net Cash Provided (Used) By Financing Activities (4,012,023) 4,693,811
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Net Increase (Decrease) in Cash 182,344 (569,836)
Cash at Beginning of Period 708,053 780,018
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Cash at End of Period $ 890,397 $ 210,182
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<FN>
See notes to interim financial statements.
</FN>
</TABLE>
4
<PAGE>
NOTES TO INTERIM FINANCIAL STATEMENTS
1. 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 1996 Annual Report,
which report was incorporated by reference in Form 10-K for the fiscal
period ended December 31, 1996. The results of operations for the three
months ended March 31, 1997 and 1996 are not necessarily indicative of
the results to be expected for the full year.
2. EARNINGS (LOSS) PER SHARE
Earnings (loss) per share is calculated on the basis of the
weighted average outstanding common shares and, when applicable, those
outstanding options and warrants that are dilutive. All share and per
share data, for all periods presented, have been adjusted to reflect a
three-for-one stock split effectuated on June 28, 1996, for shares of
record on June 14, 1996.
3. ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board
issued SFAS No. 128, Earnings Per Share which specifies the
computation, presentation and disclosure requirements for earnings per
share. The objective of the statement is to simplify the computation of
earnings per share. The impact on the Company's earning per share is
not materially different than earnings per share determined in
accordance with current guidance. SFAS No. 128 is applicable for fiscal
years ending after December 15, 1997.
4. ACQUISITIONS
BROADCAST PARTNERS
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, an intangible asset (goodwill) of approximately $35 million
was capitalized and is being amortized using the straight-line method
over eight years.
5
<PAGE>
Unaudited pro forma revenue, net loss and net loss per share
of the Company and Broadcast Partners, for the three months ended March
31, 1996, as though the acquisition had occurred at the beginning of
the period would have been: $25,264,024, ($646,092) and ($0.06),
respectively.
MARKET QUOTERS, NORTHERN DATA & MARKET COMMUNICATIONS GROUP
During the first quarter of 1997, the Company acquired 2,900
real-time commodity subscribers through two separate acquisitions.
Approximately 500 of the subscribers were acquired from Market Quoters
and Northern Data Services for $750,000. The remaining 2,400
subscribers were acquired from Market Communications Group, LLC (MCG),
a joint venture between Reuters America Inc., and Farmland Industries,
Inc.. The Company paid $3.6 million cash for the 2,400 subscribers,
certain assets and certain assumed associated liabilities. In total,
approximately $4.5 million was capitalized as intangible assets
(goodwill) and is being amortized using the straight line method over
eight years. Also important with the MCG acquisition was the
acquisition of the preferred rights to distribute relevant Reuters
real-time news and information to the commodities, energy and metals
markets.
5. LONG-TERM DEBT AND LOAN AGREEMENTS
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
Revolving Credit Agreement
<S> <C> <C>
Revolving credit line $ 0 $38,500,000
Term notes 47,072,915 10,786,456
Term Credit Agreement
Term notes 46,469,583 48,490,000
Stock Repurchase Agreement
Term notes 375,000 500,000
Total Loan Agreements 93,917,498 98,276,456
Less current portion 24,331,666 15,092,083
Total Long-Term Debt $69,585,832 $83,184,373
</TABLE>
The Company has a revolving credit agreement, as amended, with a group
of banks (the "Revolving Credit Agreement"). The Revolving Credit Agreement,
which expires June 30, 1998 unless extended, provides for a total commitment of
up to $71,000,000 in new borrowings. As of March 31, 1997, $38,000,000 of the
total commitment had been borrowed, with the remaining $33,000,000 available to
the Company subject to certain restrictions as discussed below.
6
<PAGE>
Additional borrowings under the Revolving Credit Agreement are
available to the Company, as long as at the time of the advance, no default
exists with any of the Company loan agreements or the subordinated notes
agreement (see Note 6), 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 March 31, 1997
based on current operating cash flow, the Company would be able to borrow all of
the $33,000,000 remaining commitment available.
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. 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 plus fifty percent (50%) of net
income (but not losses) at fiscal year end through June 30, 1998 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.
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 operating cash flow (the "Leverage Ratio"). The following
table outlines the "Leverage Ratio", the applicable Margin, Unused Commitment
Fees and Fixed Note Margin to be discussed below.
<TABLE>
<CAPTION>
Leverage Ratio Margin Unused Commitment Fee Fixed Note Margin
<S> <C> <C> <C>
Greater than 42 .250% .375% 2.25%
Greater than 36 and less than or equal to 42 .500% .250% 2.25%
Greater than 30 and less than or equal to 36 .750% .250% 2.00%
Greater than 24 and less than or equal to 30 1.000% .250% 2.00%
Greater than 18 and less than or equal to 24 1.250% .125% 1.75%
Less than or equal to 18 1.375% .125% 1.75%
</TABLE>
The Revolving Credit Rate is the First National Bank of Omaha's
"National Base Rate", minus the applicable Margin. The base rate is adjusted
monthly, with the interest rate margin (as defined above) changed quarterly.
Effective March 31, 1997, the Revolving Credit Rate is 7.25%.
The Company has the option to convert the outstanding revolving credit
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 interest rate of 1/4% over the Revolving Credit
Rate or at a fixed rate of 1/2% over the Revolving Credit Rate or the applicable
Fixed Note Margin (based on the "Leverage Ratio") over the average of the 3 and
5 year U. S. treasury securities, as quoted in the prior month "Federal Reserve
Statistical Release", whichever is greater.
7
<PAGE>
As of March 31, 1997, all of the total borrowings outstanding had been converted
to term loans. As of March 31, 1997, all term loans outstanding with monthly
installments due up through 2001 have interest rates ranging from 6.75% to
9.25%.
The Company pays a commitment fee of 1/8 - 3/8% on the unused portion
of the total revolving credit commitment based on the "Leverage Ratio".
Effective March 31, 1997 the commitment fee was 1/8% on all unused revolving
credit commitment. Additionally, if total borrowings (excluding long-term
subordinated debt) exceed 36 times the Operating Cash Flow (as defined), 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 total borrowings exceed 36 times
Operating Cash Flow, 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.
The Company has a Term Credit Agreement dated January 26, 1997, with a
group of banks providing for an aggregate principal amount of $48,490,000 to be
repaid in 72 equal principal installments beginning January 31, 1997. Effective
January 1, 1997, interest on $25,400,000 of the principal balance is variable,
accruing at the NY Prime rate less one-half of one percent, or 7.75%. Interest
on the remainder is fixed, accruing at interest rates ranging from 8.25% to
8.36%.
During 1992, the Company entered into a loan agreement and borrowed
$2,000,000 solely for the repurchase of the Company's outstanding common stock
(the "Stock Repurchase" Agreement). Currently, this commitment is being repaid
in equal quarterly principal payments, plus interest, due through December,
1997. As of March 31, 1997, the amounts borrowed under the Stock Repurchase
Agreement, are accruing interest at 7.69% and 8.00%.
Substantially all of the Company's assets are pledged as collateral
under the Company's long-term debt and loan agreements.
The revolving credit lines are classified as long-term debt since the
Company has the ability and the intent to maintain these obligations for longer
than one year.
6. 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 subordinated 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.
8
<PAGE>
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 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 revolving and term credit agreements. Other subordinated
debt financial covenants and restrictions are generally less restrictive
than those of the other loan agreements.
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.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL CONDITION
GENERAL OVERVIEW
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 has also made significant investments during 1995, 1996 and the first
quarter of 1997 to acquire subscribers. The net intangible assets (goodwill)
resulting from the acquisition of subscribers is 23% of the Company's total
assets. The acquisitions of subscribers is expected to enhance the long-term
operating performance and financial condition of the Company. The investments in
subscriber equipment require the Company to increase long-term debt until cash
generated from operating activities is sufficient to support future investments.
The Company's strategy is to utilize long-term debt financing versus equity,
whenever possible, to prevent the dilution of shareholders value.
NET CASH PROVIDED BY OPERATING ACTIVITIES
Net cash provided by operating activities for the first quarter of 1997
was $14,046,161 compared to $5,761,900 for the same period in 1996. This
increase of $8,284,261 was primarily the result of the $6,638,722 increase in
operating cash flow (operating income before depreciation and amortization
expense) plus the $3,094,428 of additional cash generated from the change in
assets and liabilities, including taxes, offset by the $1,049,619 increase in
interest expense related to the Company's investing activities.
NET CASH USED BY INVESTING ACTIVITIES
Net cash used by investing activities for the first quarter of 1997 was
$9,851,794 compared to $11,025,547 for the same period in 1996. This decrease
was primarily the result of the Company's ability to utilize a build-up of
subscriber equipment inventory created at the end of 1996, thus reducing the
need for new purchases. The decrease in subscriber equipment purchases was
offset by the purchase of 2,900 subscribers through two separate acquisitions.
During the first quarter of 1997, the Company acquired 2,900 real-time
commodity subscribers through two separate acquisitions. Approximately 500 of
the subscribers were acquired from Market Quoters and Northern Data Services for
$750,000. The remaining 2,400 subscribers were acquired from Market
Communications Group, LLC (MCG), a joint venture between Reuters America Inc.,
and Farmland Industries, Inc. The Company paid $3.6 million cash for the 2,400
subscribers, certain assets and certain assumed associated liabilities. In
total, approximately $4.5 million was capitalized as intangible assets
(goodwill) and is being amortized using the straight line method over eight
years. Also important with the MCG acquisition was the acquisition of the energy
and metals markets. With these two acquisitions, the total Company real-time
commodity subscribers now exceed 9,000.
10
<PAGE>
The Company had $27,388,677 of negative working capital compared to
$10,890,121 for the first quarter of 1997 and 1996, respectively. This increase
in working capital deficiency was primarily created by the growth in the current
portion of long-term debt of $16,321,250, from the debt related to subscriber
acquisitions and the converion of revolving credit borrowings to term notes.
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES
Net cash provided(used) by financing activities resulted in a use of
funds of $4,012,023 for the first quarter of 1997 and a source of funds of
$4,693,811 for the first quarter of 1996. For the first quarter of 1997, the
Company was able to pay down its debt by $4.4 million primarily due to the
excess cash generated by operating activities and the ability to use existing
inventory for its subscriber equipment needs.
The Company anticipates that internally generated cash flow and its
bank credit lines will be sufficient to fund operating activities, capital
expenditures and principal payments on long-term debt.
FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company believes that inflationary trends have a limited effect on
the business. However, since a large percentage of the Company's subscribers and
revenues are related to agricultural industries, the general state of the
agricultural economy may impact the Company's business operations and financial
condition.
RESULTS OF OPERATIONS
GENERAL OVERVIEW
The financial dynamics of the Company's business operations are similar
to businesses that sell monthly subscriptions such as electronic publications
and communications and cable TV companies. The financial dynamics are such that
the Company makes an initial investment of variable marketing costs to obtain
new subscribers and the Company makes a capital expenditure to provide the
subscriber with the necessary equipment to receive the Company's services.
REVENUES
Total revenues for the first quarter of 1997 grew 54% compared with the
first quarter of 1996. This increase was primarily due to the 52% growth in
total subscribers to 151,800 from 99,600. Much of the subscriber growth was done
through several acquisitions resulting in 41,900 of the new subscribers. In
addition, the expansion of the sales force along with an increasing number of
available services led to this subscriber growth. The ability to increase the
revenue per subscriber was also a factor in the strong growth. On a per
subscriber per month basis, revenues increased from $64.97 to $66.26 for the
three months ended March 31, 1996 and 1997.
11
<PAGE>
Subscriptions:
Subscription revenue grew 64% for the first quarter of 1997 compared to
the same period of 1996 on a strong 52% increase in subscribers. The
revenue on a per subscriber per month basis on all new subscription
sales increased to $65, up from $64 one year ago. This increase is due
to the Company's offering of higher priced new services.
Additional Services:
Additional service revenue increased 44% during the first three months
of 1997 over the same period in 1996, on strong subscriber growth and
with an ever expanding list of services available on an "a la carte"
basis.
Communication Services:
Communication services revenue continued steady growth with a 16%
increase during the first quarter of 1997 compared to the same period
of 1996. This growth is primarily due to the refiners continuing to
send more messages and other communications to its wholesalers via the
DTNergy services.
Advertising:
Advertising revenue is still showing impressive growth, mainly due to
the larger subscriber base which advertisers are finding attractive,
especially in the agricultural industries. Revenue grew 76% for the
period ending March 31, 1997 over the same period one year ago.
Service Initiation Fees:
Service initiation fees revenue remained steady for the first quarter
of 1997 compared to the same period of 1996. The increased sales volume
in the first quarter of 1997 over the first quarter of 1996, was offset
by the recognition of previously deferred revenues during early 1996.
These revenues were no longer deferred due to marketing costs exceeding
the initiation fees.
EXPENSES
Total expenses increased 46% for the first three months of 1997
compared to the same period of 1996. The primary factor for this increase was
the higher depreciation and amortization costs brought on by the subscriber
acquisitions. In addition, expanding sales and distribution support areas has
also led to these increases.
Selling, General & Administrative:
Selling, general and administrative expenses rose 31% during the first
quarter of 1997 over the same period in 1996. This growth is modest
considering the 52% growth in subscribers and the costs associated with
the acquisitions and expanding sales force. As a percentage of revenue,
these expenses declined to 47% from 56% one year earlier. On a per
subscriber per month basis, these costs were $31.46 and $36.39 for the
first quarter of 1997 and 1996 respectively.
12
<PAGE>
Sales Commissions:
Sales commissions rose 22% for the first three months of 1997 over the
same period of 1996 primarily due to increased sales activities and
continued growth in DTNergy revenues on which these commissions are
based. However, as a percentage of revenue, commission expense
decreased to 8% compared to 10% one year ago.
Depreciation And Amortization:
Depreciation and amortization expense rose 78% for the first quarter of
1997 over the first quarter of 1996. This increase was brought on by
the subscriber equipment and intangible assets (goodwill) from the
acquisitions and also by the increase in total subscribers.
Net Development Costs:
Net development costs are defined as 1) 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
remained steady, growing 1% during the first quarter of 1997 over the
same period of 1996.
OPERATING CASH FLOW
Operating cash flow (operating income before depreciation and
amortization expense) grew sharply by 102% in the first quarter of 1997 compared
to the first quarter of 1996. This increase can be attributed to the above
mentioned growth in revenue and corresponding efficiencies gained in operating
expenses. As a percentage of revenue, operating cash flow grew to 45% in the
first quarter of 1997, up from 34% one year earlier. This is one measurement the
Company uses to monitor its momentum and success.
INTEREST EXPENSE
Interest expense grew by 78% for the first quarter of 1997 over the
same period of 1996. This increase was primarily due to the $48.5 million of
borrowings needed for the acquisition in May of 1996.
NET INCOME (LOSS)
Net income for the first quarter of 1997 was $361,619 or $.03 per share
compared to a net loss of $356,991 or ($0.04) per share for the first quarter of
1996. These results were primarily due to increased revenues and improved
efficiencies throughout the Company.
INCOME TAX PROVISION (BENEFIT)
The Company's effective income tax rate was 36% for both the first quarters
of 1997 and 1996.
13
<PAGE>
FORM 10-Q
DATA TRANSMISSION NETWORK CORPORATION
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
----------------------------------------------------
(a) Date of Annual Meeting of Stockholders - April 23,
1997.
(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
- Proposal to amend the Company's Stock Option
Plan of 1989, 6,083,324 votes for, 1,136,353
votes against and 84,595 votes abstained.
- Ratification of the appointment of Deloitte
and Touche LLP as independent auditors for
1997, 9,732,690 votes for 6,270 votes
against and 19,852 votes abstained.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K:
---------------------------------
(a) Exhibits - 11 - Statement re computation of per share
earnings.
(b) Reports on Form 8-K
None
(27) Financial Data Schedule (Required)
SIGNATURE
- ---------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on it's behalf by the
undersigned thereunto duly authorized.
DATA TRANSMISSION NETWORK CORPORATION
By /s/ Roger R. Brodersen
--------------------------------------------
Roger R. Brodersen
Chairman and CEO
By /s/ Greg T. Sloma
--------------------------------------------
Greg T. Sloma
President and Chief Operating Officer
By /s/ Brian L. Larson
--------------------------------------------
Brian L. Larson
V.P., CFO, Secretary and Treasurer
Dated this 15th day of May, 1997.
14
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<TABLE>
<CAPTION>
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Exhibit 11
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COMPUTATION OF NET INCOME (LOSS) PER SHARE
- ------------------------------------------------------------------------------------------------------------------------------------
Quarter Ended
March 31, 1997 March 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Computation of income (loss)
per common and common
equivalent share:
<S> <C> <C>
Net income (loss) $ 361,619 $ (356,991)
=========== ===========
Average shares outstanding 11,054,973 $ 9,970,845
Add shares applicable to stock
options & warrants (1) 948,008 --
Add shares applicable to stock
options & warrants prior to
conversion, using average market
price prior to conversion (1) 11,421 --
----------- -----------
Total Primary Shares 12,014,402 9,970,845
=========== ===========
Additional dilutive stock options
using ending market price 47,261 --
--------- -----------
Total Fully Dilutive Shares 12,061,663 9,970,845
=========== ===========
Net income (loss) per common share:
Primary earnings per share (1) $ 0.03 $ (0.04)
=========== ===========
Fully Dilutive earnings per share (1) $ 0.03 $ (0.04)
=========== ===========
- ------------------------------------------------------------------------------------------------------------------------------------
<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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 890,397
<SECURITIES> 0
<RECEIVABLES> 6,943,759
<ALLOWANCES> 520,000
<INVENTORY> 0
<CURRENT-ASSETS> 10,987,705
<PP&E> 227,939,358
<DEPRECIATION> 107,488,846
<TOTAL-ASSETS> 173,965,335
<CURRENT-LIABILITIES> 38,376,382
<BONDS> 84,169,127
0
0
<COMMON> 11,074
<OTHER-SE> 28,987,769
<TOTAL-LIABILITY-AND-EQUITY> 173,965,335
<SALES> 29,466,873
<TOTAL-REVENUES> 29,466,873
<CGS> 0
<TOTAL-COSTS> 26,537,639
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,394,864
<INCOME-PRETAX> 566,619
<INCOME-TAX> 205,000
<INCOME-CONTINUING> 361,619
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 361,619
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
