United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 11-K
( X ) Annual Report Pursuant To Section 15(d) Of The Securities and Exchange Act
of 1934
For the year ended December 31, 1998.
or
( ) Transition Report Pursuant to Section 15(d) Of The Securities Exchange Act
of 1934
Commission File Number 0-15405 or 33-50412
KAVOURAS, INC.
401(k) SAVINGS PLAN
Subsidiary of Data Transmission Network Corporation
Full Title of the Plan
DATA TRANSMISSION NETWORK CORPORATION
9110 W. Dodge Road, Suite 200
Omaha, NE 68114
Name of Issuer of Securities and Address
of Principal Executive Office
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: June 25, 1999 Name of Plan: Kavouras 401(k) Plan
Signature: /s/ Greg T. Sloma
---------------------------------
Greg T. Sloma
Plan Administrator
<PAGE>
KAVOURAS, INC. 401(k) SAVINGS PLAN
TABLE OF CONTENTS
(a) Financial Statements:
Independent Auditors' Report 3
Statements of Net Assets Available for
Benefits as of December 31, 1998 and 1997 4 - 8
Statements of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1998 9 - 12
Notes to Financial Statements 13 - 16
(b) Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment
Purposes - December 31, 1998 17
Item 27d - Schedule of Reportable Transactions - For The
Year Ended December 31, 1998 18 - 19
(c) Exhibits:
Exhibit A - Independent Auditors' Consent 20
REQUIRED INFORMATION
The Plan financial statements and schedules are prepared in accordance with the
financial reporting requirements of ERISA and are included herein as listed in
the Table of Contents shown above.
2
<PAGE>
INDEPENDENT AUDITORS' REPORT
Kavouras, Inc. 401(k) Savings Plan
Subsidiary of Data Transmission Network Corporation
Omaha, Nebraska
We have audited the accompanying statements of net assets available for benefits
of Kavouras, Inc., subsidiary of Data Transmission Network Corporation, 401(k)
Plan as of December 31, 1998 and 1997, and the related statement of changes in
net assets available for benefits for the year ended December 31, 1998. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Kavouras, Inc. 401(k)
Savings Plan as of December 31, 1998 and 1997, and the changes in net assets
available for benefits for the year ended December 31, 1998 in conformity with
generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets Held
for Investment Purposes at December 31, 1998 and Reportable Transactions for the
year ended December 31, 1998, are presented for the purpose of additional
analysis and are not a required part of the basic financial statements, but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental information by fund in the statements of
net assets available for benefits and the statement of changes in net assets
available for benefits is presented for the purpose of additional analysis
rather than to present the net assets available for benefits and changes in net
assets available for benefits of the individual funds. The supplemental
schedules and supplemental information by fund are the responsibility of the
Plan's management. Such supplemental schedules and supplemental information by
fund have been subjected to the auditing procedures applied in our audit of the
basic financial statements and, in our opinion, are fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
Deloitte & Touche LLP
June 16, 1999
Omaha, Nebraska
3
<PAGE>
<TABLE>
<CAPTION>
KAVOURAS, INC 401(k) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998
Supplemental Information By Fund
----------------------------------------------------------------------------------------
DTN Short Term Intermediate Fixed Income Equity Stock
Common Stock Government Term Bond Mutual Fund Mutual Fund
Fund Securities Mutual Fund
----------------------------------------------------------------------------------------
Investments, At Fair
Value:
<S> <C> <C> <C> <C> <C>
DTN Common Stock $470,373 $ - $ - $ - $ -
Intermediate Term Bond
Mutual Fund - - 72,740 - -
Fixed Income Mutual Fund - - - 200,495 -
Equity Stock Mutual Fund - - - - 492,083
Balanced Mutual Fund - - - - -
Small Cap Mutual Fund - - - - -
Templeton Foreign Fund - - - - -
Vanguard Index 500 Fund - - - - -
Vanguard US Growth Fund - - - - -
Money Market Fund - 292,600 - - -
----------------------------------------------------------------------------------------
Total Investments 470,373 292,600 72,740 200,495 492,083
Cash & Cash Equivalents - - - - -
----------------------------------------------------------------------------------------
Net Assets Available For
Benefits $470,373 $292,600 $72,740 $200,495 $492,083
========================================================================================
See notes to financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
KAVOURAS, INC 401(k) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998
(continued)
Supplemental Information By Fund
----------------------------------------------------------------------
Balanced Small Cap Mutual Templeton Vanguard Index
Mutual Fund Fund Foreign Fund 500 Fund
----------------------------------------------------------------------
Investments, At Fair
Value:
<S> <C> <C> <C> <C>
DTN Common Stock $ - $ - $ - $ -
Intermediate Term Bond
Mutual Fund - - - -
Fixed Income Mutual Fund - - - -
Equity Stock Mutual Fund - - - -
Balanced Mutual Fund 346,121 - - -
Small Cap Mutual Fund - 224,377 - -
Templeton Foreign Fund - - 179,816 -
Vanguard Index 500 Fund - - - 1,142,218
Vanguard US Growth Fund - - - -
Money Market Fund - - - -
----------------------------------------------------------------------
Total Investments 346,121 224,377 179,816 1,142,218
Cash & Cash Equivalents - - - -
======================================================================
Net Assets Available For
Benefits $346,121 $224,377 $179,816 $1,142,218
======================================================================
See notes to financial statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
KAVOURAS, INC 401(k) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998
(continued)
Supplemental Information By Fund
-----------------------------------
Vanguard US Cash Transfer
Growth Fund Fund Total
-----------------------------------------------------
Investments, At Fair
Value:
<S> <C> <C> <C>
DTN Common Stock $ - $ - $ 470,373
Intermediate Term Bond
Mutual Fund - - 72,740
Fixed Income Mutual Fund - - 200,495
Equity Stock Mutual Fund - - 492,083
Balanced Mutual Fund - - 346,121
Small Cap Mutual Fund - - 224,377
Templeton Foreign Fund - - 179,816
Vanguard Index 500 Fund - - 1,142,218
Vanguard US Growth Fund 809,342 - 809,342
Money Market Fund - - 292,600
-----------------------------------------------------
Total Investments 809,342 - 4,230,165
Contributions Receivable - - -
Cash & Cash Equivalents - 57,203 57,203
=====================================================
Net Assets Available For
Benefits $809,342 57,203 $4,287,368
=====================================================
See notes to financial statements.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
KAVOURAS, INC 401(k) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997
Supplemental Information By Fund
----------------------------------------------------------------------------------------
Norwest Norwest Norwest Norwest Norwest
Stable Return Diversified Growth Balanced Diversified Growth Equity
Fund Bond Fund Fund Equity Fund Fund
----------------------------------------------------------------------------------------
Investments, At Fair
Value:
<S> <C> <C> <C> <C> <C>
Stable Return Fund $204,846 $ - $ - $ - $ -
Diversified Bond Fund - 107,061 - - -
Growth Balanced Fund - - 328,558 - -
Diversified Equity Fund - - - 795,251 -
Growth Equity Fund - - - - 1,140,060
International Fund - - - - -
Income Equity Fund - - - - -
Small Cap Opportunities - - - - -
Fund
Participant Loans - - - - -
Receivable
----------------------------------------------------------------------------------------
Total Investments 204,846 107,061 328,558 795,251 1,140,060
Dividends Receivable - - - - -
----------------------------------------------------------------------------------------
Net Assets Available For
Benefits $204,846 $107,061 $328,558 $795,251 $1,140,060
========================================================================================
See notes to financial statements.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
KAVOURAS, INC 401(k) SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997
(continued)
Supplemental Information By Fund
--------------------------------------------------------------------------------------
Norwest Norwest Norwest Norwest
International Income Equity Small Cap Loan/Cash
Fund Fund Opport. Fund Fund Total
--------------------------------------------------------------------------------------
Investments, At Fair
Value:
<S> <C> <C> <C> <C> <C>
Stable Return Fund $ - $ - $ - $ - $ 204,846
Diversified Equity Fund - - - - 107,061
Growth Balanced Fund - - - - 328,558
Diversified Equity Fund - - - - 795,251
Growth Equity Fund - - - - 1,140,060
International Fund 193,171 - - - 193,171
Income Equity Fund - 296,820 - - 296,820
Small Cap Opportunities - - 160,395 - 160,395
Fund
Participant Loans
Receivable - - - 176,611 176,611
--------------------------------------------------------------------------------------
Total Investments 193,171 296,820 160,395 176,611 3,402,773
Dividends Receivable - - - 23,851 23,851
======================================================================================
Net Assets Available For
Benefits $193,171 $296,820 $160,395 $200,462 $3,426,624
======================================================================================
See notes to financial statements.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
KAVOURAS, INC 401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1998
Supplemental Information By Fund
---------------------------------------------------------------------------
DTN Short Term Intermediate Fixed Equity Stock
Common Stock Government Term Bond Income Mutual Fund
Fund Securities Mutual Fund Mutual Fund
---------------------------------------------------------------------------
Net Assets Available for
Benefits, Beginning of
<S> <C> <C> <C> <C> <C>
Period $ - $ - $ - $ - $ -
Additions:
Investment Income:
Net Appreciation
(Depreciation) in Fair
Value of Investments 33,316 1,370 (3,303) (7,875) 7,261
Interest - - - - -
Dividends - - 932 3,604 38,903
---------------------------------------------------------------------------
Total Investment Income 33,316 1,370 (2,371) (4,271) 46,164
(Loss)
Contributions
Employer 5,212 1,984 2,001 4,172 7,370
Employee 12,849 7,854 7,335 9,883 15,363
---------------------------------------------------------------------------
Total Contributions 18,061 9,838 9,336 14,055 22,733
---------------------------------------------------------------------------
Total Additions 51,377 11,208 6,965 9,784 68,897
Deductions:
Distributions to Plan
Participants - (111,550) (704) (3) (1,410)
Transfer of Assets (To)
From Other Funds 418,996 392,942 66,479 190,714 424,596
---------------------------------------------------------------------------
Net Increase (Decrease) 470,373 292,600 72,740 200,495 492,083
---------------------------------------------------------------------------
Net Assets Available for
Benefits, End of Period $470,373 $292,600 $72,740 $200,495 $492,083
===========================================================================
See notes to financial statements.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
KAVOURAS, INC 401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1998
(Continued)
Supplemental Information By Fund
------------------------------------------------------------------------------------
Balanced Mutual Small Cap Templeton Vanguard Index Vanguard US
Fund Mutual Fund Foreign Fund 500 Fund Growth Fund
------------------------------------------------------------------------------------
Net Assets Available for
Benefits, Beginning of
<S> <C> <C> <C> <C> <C>
Period $ - $ - $ - $ - $ -
Additions:
Investment Income:
Net Appreciation
(Depreciation) in Fair
Value of Investments (10,988) 21,166 (2,135) 221,544 60,149
Interest - - - - -
Dividends 13,392 7,603 16,637 - 126,471
------------------------------------------------------------------------------------
Total Investment Income 2,404 28,769 14,502 221,544 186,620
(Loss)
Contributions
Employer 7,629 4,088 2,831 18,088 16,613
Employee 17,403 8,691 5,805 35,591 34,361
------------------------------------------------------------------------------------
Total Contributions 25,032 12,779 8,636 53,679 50,974
------------------------------------------------------------------------------------
Total Additions 27,436 41,548 23,138 275,223 237,594
Deductions:
Distributions to Plan
Participants (2,820) - (2,114) (52) -
Transfer of Assets (To)
From Other Funds 321,505 182,829 158,792 867,047 571,748
------------------------------------------------------------------------------------
Net Increase (Decrease) 346,121 224,377 179,816 1,142,218 809,342
====================================================================================
Net Assets Available for
Benefits, End of Period $346,121 $224,377 $179,816 $1,142,218 $809,342
====================================================================================
See notes to financial statements.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
KAVOURAS, INC 401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1998
(Continued)
Supplemental Information By Fund
--------------------------------------------------------------------------------------
Norwest Norwest Norwest Norwest Norwest
Stable Return Diversified Growth Balanced Diversified Growth Equity
Fund Bond Fund Equity Fund Fund
Fund
--------------------------------------------------------------------------------------
Net Assets Available for
Benefits, Beginning of
<S> <C> <C> <C> <C> <C>
Period $204,846 $107,061 $328,558 $795,251 $1,140,060
Additions:
Investment Income:
Net Appreciation
(Depreciation) in Fair
Value of Investments 12,406 16,480 6,543 (43,403) (96,522)
Interest 2,231 232 1,246 1,011 2,072
Dividends - 6,062 7,653 5,516 1,305
--------------------------------------------------------------------------------------
Total Investment Income 14,637 22,774 15,442 (36,876) (93,145)
(Loss)
Contributions
Employer 11,216 2,065 8,870 15,182 17,464
Employee 24,378 9,853 30,237 70,359 78,989
--------------------------------------------------------------------------------------
Total Contributions 35,594 11,918 39,107 85,541 96,453
--------------------------------------------------------------------------------------
Total Additions 50,231 34,692 54,549 48,665 3,308
Deductions:
Distributions to Plan
Participants - (6,977) (1,855) (3,399) (23,331)
Transfer of Assets (To)
From Other Funds (255,077) (134,776) (381,252) (840,517) (1,120,037)
--------------------------------------------------------------------------------------
Net Increase (Decrease) (204,846) (107,061) (328,558) (795,251) (1,140,060)
======================================================================================
Net Assets Available for
Benefits, End of Period - - - - -
======================================================================================
See notes to financial statements.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
KAVOURAS, INC 401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1998
(Continued)
Supplemental Information By Fund
--------------------------------------------------------------------
Norwest Norwest Norwest Norwest
International Income Equity Small Cap Loan / Cash
Fund Fund Opport. Fund Fund Total
------------------------------------------------------------------------------------
Net Assets Available for
Benefits, Beginning of
<S> <C> <C> <C> <C> <C>
Period $193,171 $296,820 $160,395 $200,462 $3,426,624
Additions:
Investment Income:
Net Appreciation
(Depreciation) in Fair
Value of Investments (10,072) (8,061) (10,373) 59,038 246,541
Interest 449 379 627 - 8,247
Dividends 2,107 4,668 - (23,852) 211,001
------------------------------------------------------------------------------------
Total Investment Income (7,516) (3,014) (9,746) 35,186 465,789
(Loss)
Contributions
Employer 4,464 4,975 2,449 - 136,673
Employee 17,230 26,218 13,371 - 425,770
------------------------------------------------------------------------------------
Total Contributions 21,694 31,193 15,820 - 562,443
------------------------------------------------------------------------------------
Total Additions 14,178 28,179 6,074 35,186 1,028,232
Deductions:
Distributions to Plan
Participants - (5,272) (1,740) (6,261) (167,488)
Transfer of Assets (To)
From Other Funds (207,349) (319,727) (164,729) (172,184) -
------------------------------------------------------------------------------------
Net Increase (Decrease) (193,171) (296,820) (160,395) (143,259) 860,743
====================================================================================
Net Assets Available for
Benefits, End of Period - - - 57,203 $4,287,368
====================================================================================
See notes to financial statements.
</TABLE>
12
<PAGE>
KAVOURAS, INC 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998
1. Description of the Plan
The following is a brief description of the Kavouras, Inc. 401(k) Savings
Plan (the Plan), which is provided for general information only. On July
1, 1998, all the outstanding shares of capital stock of Kavouras, Inc.
were acquired by Data Transmission Network. As a result of this
acquisition, the Plan was amended effective October 1, 1998 to have terms
consistent with the Data Transmission Network Corporation 401(k) Plan
(Master Plan), including the ability to invest in Data Transmission
Network common stock. Participants should refer to the Master Plan
Agreement for more complete information.
General - The Master Plan, which first became effective on July 1, 1988,
was established to provide certain employees of Data Transmission Network
Corporation (the Corporation or DTN) a formal plan to save for retirement.
Effective January 1, 1998, all full-time employees who have completed 90
days of service are eligible to participate in the Master Plan, although
participation by eligible employees is voluntary. Effective October 1,
1998, the Plan assets were transferred from Norwest Bank - Minneapolis to
the Master Plan funds at First National Bank of Omaha. The Master Plan is
administered by the Corporation. The Trustee for the Master Plan and the
Plan is First National Bank of Omaha. The Master Plan and the Plan is
subject to the provisions of the Employee Retirement Income Security Act
of 1974, as amended (ERISA).
Contributions - Each participant may, subject to the maximum limitations
under ERISA, authorize the Corporation to reduce their compensation by a
percentage between 1/2% and 15%, and have such amount contributed to the
Plan on their behalf as a basic contribution. Currently, the Corporation
will make a matching contribution equal to 100% of the participant's basic
contribution after the participant has completed one year of service, but
such matching contribution shall not exceed 4% of the participant's
compensation. The Corporation may make discretionary contributions in
addition to the matching contributions mentioned above. The Corporation
has elected not to make any discretionary contributions since the Master
Plan's inception.
Prior to October 1, 1998, the Plan matched 100% of the first 1% and 50% of
the next 2% of participant eligible contributions to the Plan. Additional
amounts in the form of a qualified nonelective contribution were
contributed at the discretion of the Kavouras, Inc. Advisory Committee.
The qualified contributions are allocated to all eligible employees based
on the employee's relative compensation as defined by the Plan. Kavouras,
Inc. elected not to make any discretionary contributions for 1998.
The Master Plan and the Plan permits participants to rollover qualified
contributions from other qualified plans into the Master Plan and the
Plan.
Contributions are invested at the participant's discretion in one or more
of ten funds: a DTN Common Stock Fund consisting of common stock of the
Corporation; a Short Term Government Securities Fund consisting of U.S.
Treasury Bills and other money market type investments; an Intermediate
Term Bond Mutual Fund investing primarily in government and corporate
bonds; a Fixed Income Mutual Fund investing in longer-term corporate
bonds; an Equity Stock Mutual Fund investing in common stock and other
equity investments; a Balanced Mutual Fund investing in common stocks and
investment grade fixed income securities; a Small Cap Mutual Fund
investing primarily in common stock of small capitalization companies; a
Templeton Foreign Fund investing in stocks and debt obligations of
companies and governments outside the United States; a Vanguard Index 500
Fund investing in 500 stocks that make up the Standard & Poor's 500
Composite Stock Price Index; and a Vanguard US Growth Fund investing in
large, high-quality, seasoned U.S. companies with records of exceptional
growth and above-average prospects for future growth.
Prior to October 1, 1998, contributions to the Plan were invested at the
participant's discretion in one or more of eight Norwest funds: a Stable
Return Fund which invested in high-grade government and corporate bonds; a
Diversified Bond Fund that invested in a variety of marketable corporate
bonds, mortgage securities and floating rate notes; a Growth Balanced Fund
13
<PAGE>
which invested in a combination of stock and bonds, with an emphasis on
stocks; a Diversified Equity Fund which invested in stocks of large and
small companies; a Growth Equity Fund which invested in stocks of large,
small and international companies; an International Fund which invested in
stocks of international companies; an Income Equity Fund which invested in
stocks of high-quality, large capitalization companies; and a Small Cap
Opportunities Fund which invested in stocks of emerging companies.
A participant's basic contributions are made on a pre-tax basis (i.e.:
excluded from gross income for the participant's personal tax purposes).
Such contributions are subject to social security taxes. Amounts
contributed by the Corporation are deductible currently by the
Corporation. A participant does not become subject to federal income taxes
on basic contributions or on the amount of Corporation contributions and
Master Plan earnings until such amounts are withdrawn or distributed. The
tax consequences of distributions to participants will vary depending on
the circumstances at the time of distribution. If a participant does not
direct his distribution at termination to another qualified plan, the
distribution will be subject to a 20% tax/penalty.
Participant Loans Receivable - The Master Plan does not provide a 401(k)
loan benefit to participants.
Prior to October 1, 1998, the Plan participants could borrow from their
accounts a minimum of $1,000 up to a maximum of the lesser of $50,000 or
50% of their vested balance. Loan activity was included as interfund
transfers on the Statement of Changes in Net Assets Available for Plan
Benefits, with Fund Information. Loan terms could not exceed five years.
The loans were collateralized by the participant's account and beared
interest at local prevailing rates. Principal and interest were paid
ratably through monthly payroll deductions.
Vesting - All participants on the Master Plan are 100% vested in their
basic, matching and rollover contributions at all times.
Prior to October 1, 1998, participants of the Plan were immediately vested
in their own contributions and rollovers. Participants became vested in
employer matching contributions and earnings thereon at a rate of 20% per
year after the second year of service and were 100% vested after seven
years of service. All participants became fully vested if employment
terminated as a result of death, disability, or retirement. If a
participant terminated employment for any reason other than death,
disability or retirement, the unvested portion of the participant's
account, if any, was forfeited. Forfeited amounts were retained in the
Plan and used to reduce future employer contributions.
Distributions - The normal form of benefit for a participant who is
terminating or retiring is a lump sum payment in Corporation common stock,
cash or both. Retiring participants may elect installment payments
generally over their assumed life expectancy.
Plan Termination - Although it has not expressed any intent to do so, the
Corporation has the right under the Master Plan to discontinue it's
matching contributions at any time and to terminate the Master Plan and
the Plan subject to the provisions of ERISA. In the event of plan
termination, participants will remain 100 percent vested in their
accounts.
Fees and Expenses
All administrative expenses of the Master Plan are paid out of the Master
Plan assets.
Prior to October 1, 1998, substantially all expenses related to
maintaining the plan was paid by Kavouras, Inc. Subsequent to October 1,
1998, administrative expenses of the plan will be paid out of plan assets.
2. Summary of Significant Accounting Policies
Investments in common stock of DTN are recorded at fair value as
determined by the closing bid price quoted on the National Association of
Securities Dealers Automated Quotation System (NASDAQ-NMS) on the last
business day of the year.
14
<PAGE>
Investments in U.S. Treasury Bills within the Short Term Government
Securities Fund are recorded at fair market value based on quoted bond
prices. Investments in the Intermediate Term Bond Mutual Fund, Fixed
Income Mutual Fund, Equity Stock Mutual Fund, Balanced Mutual Fund, Small
Cap Mutual Fund, the Templeton Foreign Fund, the Vanguard Index 500 Fund,
and the Vanguard US Growth Fund are recorded at the net asset value of the
mutual fund as quoted by each mutual fund on the last business day of the
year, which approximates fair value.
Prior to October 1, 1998, Norwest investments were stated at fair value
based on quoted market values supplied by the Plan trustee. Participant
loans receivable were valued at cost, which approximates fair value.
Net appreciation (depreciation) in the fair value of investments is based
upon the fair value of the investments at the beginning of the year or
cost, if purchased during the year.
Interest and dividend income are recorded on the accrual basis.
The Plan's policy is to record benefit payments upon distribution of
balances to participants. Benefits due and unpaid to terminated
participants were $57,203 at December 31, 1998.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3. Income Tax Status
The Plan obtained its latest determination letter on March 21, 1997, in
which the Internal Revenue Service stated that the Plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue
Code. The Plan has been amended since receiving the determination letter.
However, the plan administrator believes that the Plan is currently
designed and being operated in compliance with the applicable requirements
of the Internal Revenue Code. Therefore, no provision for income taxes has
been included in the Plan's financial statements.
15
<PAGE>
4. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500.
December 31,
1998
--------------
Net Assets Available For Benefits Per
The Financial Statements $4,287,368
Amounts Allocated to Withdrawing Participants (57,203)
==============
Net Assets Available for Benefits Per
the Form 5500 $4,230,165
==============
The following is a reconciliation of distributions to plan participants
per the financial statements to the Form 5500.
Year Ended
December 31, 1998
-----------------
Distributions to Plan Participants Per The Financial
Statements $167,488
Add: Amounts Allocated To Withdrawing Participants At
Current Year End 57,203
Less: Amounts Allocated to Withdrawing Participants
Participants At Prior Year End -
=================
Distributions to Plan Participants Per the Form 5500 $224,691
=================
Amounts allocated to withdrawing participants are recorded on the Form
5500 for benefit claims that have been approved for payment at December 31
but not yet paid as of that date.
5. Related Party Transactions
Certain Plan investments are shares of mutual funds managed by First
National Bank of Omaha. First National Bank of Omaha is the trustee as
defined by the Plan and, therefore, these transactions qualify as
party-in-interest.
The Plan has an investment in DTN common stock. DTN is the Master Plan
sponsor and, therefore, these transactions qualify as party-in-interest.
Prior to October 1, 1998, certain Plan investments were shares of mutual
funds managed by Norwest Bank Minnesota, N.A. (Norwest). Norwest was the
Trustee as defined by the Plan and, therefore, these transactions qualify
as party-in-interest.
16
<PAGE>
<TABLE>
<CAPTION>
KAVOURAS, INC 401(k) SAVINGS PLAN
SUPPLEMENTAL SCHEDULES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
Column B Column C Column D Column E
Identity of Issue, Borrower, Lessor or Description of Investment Including Collateral, Rate of Current Value
Similar Party Interest, Maturity Date, Par or Maturity Value Cost
- ------------------------------------------------------------------------------------------------------------------------------------
Data Transmission Network Corporation
<S> <C> <C> <C>
Common Stock* 16,290.000 shares $ 432,454 $ 470,373
First Omaha Balance Mutual Fund*
29,659.044 units 340,205 346,121
First Omaha Equity Stock Mutual Fund*
34,148.708 units 474,036 492,083
First Omaha Fixed Income Mutual Fund*
18,668.054 units 203,135 200,495
First Omaha Intermediate Term Bond
Mutual Fund* 7,131.397 units 73,588 72,740
First Omaha Small Cap Mutual Fund*
19,786.342 units 196,005 224,377
Templeton Foreign Fund 21,432.241 units 176,496 179,816
Vanguard Index 500 Fund 10,023.854 units 904,349 1,142,218
Vanguard US Growth Fund 21,588.188 units 655,837 809,342
Money Market Fund Short-term Investment Fund 292,601 292,600
========== ==========
Total Investments $3,748,706 $4,230,165
========== ==========
*Represents a Party-In-Interest
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
KAVOURAS, INC 401(k) SAVINGS PLAN
SUPPLEMENTAL SCHEDULES
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1998
Series Transactions, When Aggregated, Involving an Amount in
Excess of Five Percent of the Current Value of Plan Assets
Column A Column C Column D Column E Column F Column G
Number of Number of Sales Total Dollar Value Total Dollar Realized
Identity of Party Involved Purchases of Purchase Value of Sales Gain or
(Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
Data Transmission Network Corporation
<S> <C> <C> <C> <C> <C>
Common Stock* 9 0 $432,454 $ 0 $ 0
First Omaha Balance Mutual Fund*
16 1 344,720 4,514 0
First Omaha Equity Stock Mutual Fund*
15 1 476,292 2,257 0
First Omaha Fixed Income Mutual Fund*
11 1 203,137 1 0
First Omaha Small Cap Mutual Fund*
13 0 196,005 0 0
Templeton Foreign Mutual Fund 13 1 179,881 3,385 0
Vanguard Index 500 Fund 9 1 904,393 44 0
Vanguard US Growth Fund 14 0 655,836 0 0
Norwest Stable Return Fund* 48 14 358,494 574,873 21,378
Norwest Small Cap Opportunities* 40 22 96,858 246,872 (13,003)
Norwest Diversified Bond Fund* 46 18 220,657 350,182 14,764
Norwest Growth Balanced Fund* 36 9 60,048 402,807 48,951
Norwest Income Equity Fund* 47 27 146,574 436,592 46,611
Norwest International Fund* 39 10 135,508 320,727 (4,081)
Norwest Growth Equity Fund* 45 12 168,955 1,213,824 20,680
Norwest Diversified Equity Fund* 53 28 393,351 1,150,855 84,554
*Represents a Party-In-Interest
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
KAVOURAS, INC 401(k) SAVINGS PLAN
SUPPLEMENTAL SCHEDULES
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1998
(continued)
Single Transactions, When Aggregated, Involving an Amount in
Excess of Five Percent of the Current Value of Plan Assets
Column A Column C Column D Column G Column H Column I
Current Value of
Purchase Selling Cost of Asset on Realized
Identity of Party Involved Price Price Asset Transaction Date Net Gain or
(Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Norwest Stable Return Fund* - 238,459 228,262 238,459 10,197
Norwest Diversified Bond Fund* - 205,759 192,277 205,759 13,482
Norwest Growth Balanced Fund* - 397,310 349,372 397,310 47,938
Norwest Income Equity Fund* - 335,681 309,928 335,681 25,752
Norwest International Fund* - 209,303 224,712 209,303 (15,409)
Norwest Growth Equity Fund* - 1,176,995 1,162,661 1,176,995 14,334
Norwest Diversified Equity Fund* - 962,603 915,812 962,603 46,791
DTN Common Stock* 200,550 - 200,550 200,550 -
First Omaha Equity* 417,639 - 417,639 417,639 -
First Omaha Small Cap* 175,769 - 175,769 175,769 -
First Omaha Balanced* 288,706 - 288,706 288,706 -
Vanguard U.S. Growth 542,630 - 542,630 542,630 -
Vanguard 500 Index 840,091 - 840,091 840,091 -
First Omaha Fixed Income* 188,112 - 188,112 188,112 -
*Represents a Party-In-Interest
</TABLE>
19
<PAGE>
Exhibit A
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Post-Effective Amendment No. 1
to Registration Statement No. 33-50412 and Registration Statement No. 333-37999
on Forms S-8 of our report dated June 16, 1999, appearing in this Annual Report
on Form 11-K of the Kavouras, Inc 401(k) Savings Plan, subsidiary of Data
Transmission Network Corporation, for the year ended December 31, 1998.
DELOITTE & TOUCHE LLP
Omaha, Nebraska
June 16, 1999
20
