<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 14, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission file Number: 0-22334
LODGENET ENTERTAINMENT CORPORATION 401(K) PLAN AND TRUST
--------------------------------------------------------
(Title of the Plan)
LODGENET ENTERTAINMENT CORPORATION
----------------------------------
(Name of Issuer of the Securities Held Pursuant to the Plan)
DELAWARE 46-0371161
-------- ----------
(State of Incorporation) (IRS Employer Identification Number)
808 WEST AVENUE NORTH, SIOUX FALLS, SOUTH DAKOTA 57104
-------------------------------------------------------
(Address of Principal Executive Offices)
(605) 330-1330
-------------
(Registrant's Telephone Number, including Area Code)
<PAGE>
INDEX
PAGE
----
Form 11-K cover page for the LodgeNet Entertainment Corporation
401(k) Plan and Trust .................................................. Cover
Index .................................................................... 2
Signature ................................................................ 3
FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements of The LodgeNet Entertainment Corporation
401(k) Plan and Trust for the time periods specified below are submitted
herewith together with the independent auditor's report thereon:
Independent Auditor's Report ............................................. F-1
Statement of Net Assets Available for Benefits
as of December 31, 1996 and 1995 ....................................... F-3
Statements of Changes in Net Assets Available for Benefits for the
year ended December 31, 1996............................................ F-5
Notes to Financial Statements ............................................ F-6
Supplementary Schedules:
Schedule of assets held for investment purposes ........................ F-10
Schedule of reportable transactions .................................... F-11
Consent of Independent Public Accountants................................. F-12
All other schedules are omitted since the required information is not present,
or is not present in the amounts sufficient to require submission of a schedule;
or because the information required is included in the financial statements and
notes thereto.
2
<PAGE>
SIGNATURES
- ----------
THE PLAN. 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.
LODGENET ENTERTAINMENT CORPORATION 401(K) PLAN AND TRUST
--------------------------------------------------------
(Name of Plan)
Date: July 14, 1997 /s/ Tim C. Flynn
-------------------------------------------------
Tim C. Flynn
President, Chief Executive Officer, and Plan
Trustee
3
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of
LodgeNet Entertainment Corporation 401(k) Plan:
We have audited the accompanying statements of net assets available for benefits
of LodgeNet Entertainment Corporation 401(k) Plan as of December 31, 1996 and
1995, and the related statement of changes in net assets available for benefits
for the year ended December 31, 1996. 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.
Except as explained in the following paragraph, 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.
As permitted by 29 CFR 2520.103-8 of the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, investment assets held by Nationwide Life Insurance
Company and Harris Trust and Savings Bank, the custodians of the Plan, and
transactions in those assets were excluded from the scope of our audit of the
Plan's 1995 financial statements, except for comparing the information provided
by the custodians, which is summarized in Note 3, with the related information
included in the financial statements.
Because of the significance of the information that we did not audit, we are
unable to, and do not, express an opinion on the Plan's financial statements as
of December 31, 1995. The form and content of the information included in the
1995 financial statements, other than that derived from the information
certified by the custodians, have been audited by us and, in our opinion, are
presented in compliance with the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974.
In our opinion, the financial statements, referred to above, of LodgeNet
Entertainment Corporation 401(k) Plan as of and for the year ended December 31,
1996, present fairly, in all material respects, the financial status of LodgeNet
Entertainment Corporation 401(k) Plan as of December 31, 1996, and the changes
in its financial status for the year then ended in conformity with generally
accepted accounting principles.
Our audit of the Plan's financial statements as of and for the year ended
December 31, 1996, was made for the purpose of forming an opinion on the
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions, as of and for the year
ended December 31, 1996, are presented for the purposes of additional analysis
and are not a required part of the basic financial statements, but are
supplementary
F-1
<PAGE>
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 schedules have been subjected to the auditing procedures
applied in the audit of the basic financial statements as of and for the year
ended December 31, 1996, and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
The schedule of assets held for investment purposes that accompanies the Plan's
financial statements does not disclose the historical cost of certain plan
assets held by the Plan's custodians. The schedule of reportable transactions
does not disclose the number of purchases and sales of certain plan assets, the
historical cost of certain investments sold, and the net gain or loss of
certain investments sold. Disclosure of this information is required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974.
ARTHUR ANDERSON LLP
Minneapolis, Minnesota,
June 10, 1997
F-2
<PAGE>
LODGENET ENTERTAINMENT CORPORATION 401(K) PLAN
Statement of Net Assets Available for Benefits
As of December 31, 1996
<TABLE>
<CAPTION>
Dreyfus Fidelity Neuberger/
Peoples Asset Berman Oppenheimer 20th Century Nation-wide
Index Manager Ltd. Bond Global Ultra Virtuoso II
----------- --------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENTS, at market value:
Growth fund $529,697 $ - $ - $ - $ - $ -
Balanced fund - 420,748 - - - -
Bond funds - - 62,807 - - -
International fund - - - 275,507 - -
Aggressive growth fund - - - - 733,166 -
Stable value fund - - - - - 66,228
Money market fund - - - - - -
Stock fund - - - - - -
Participant loans - - - - - -
---------- ---------- ---------- ----------- ---------- ---------
Total investments 529,697 420,748 62,807 275,507 733,166 66,228
CONTRIBUTIONS RECEIVABLE:
Participants 3,574 2,446 424 1,661 4,933 260
Employer 501 351 72 225 552 59
---------- ---------- ---------- ----------- ---------- ---------
Net assets available for benefits $533,772 $423,545 $63,303 $277,393 $738,751 $66,547
---------- ---------- ---------- ----------- ---------- ---------
---------- ---------- ---------- ----------- ---------- ---------
Dreyfus Nation-wide LodgeNet
A Bond Money Common
Fund Market Fund Stock Loan Fund Total
--------- -------------- ---------- --------- -----------
INVESTMENTS, at market value:
Growth fund $ - $ - $ - $ - $ 529,697
Balanced fund - - - - 420,748
Bond funds 43,807 - - - 106,614
International fund - - - - 275,507
Aggressive growth fund - - - - 733,166
Stable value fund - - - - 66,228
Money market fund - 8,889 - - 8,889
Stock fund - - 97,934 - 97,934
Participant loans - - - 88,204 88,204
-------- --------- --------- --------- -----------
Total investments 43,807 8,889 97,934 88,204 2,326,987
CONTRIBUTIONS RECEIVABLE:
Participants 211 63 - - 13,572
Employer 26 4 - - 1,890
-------- --------- --------- --------- -----------
Net assets available for benefits $44,044 $8,956 $97,934 $88,204 $2,342,449
-------- --------- --------- --------- -----------
-------- --------- --------- --------- -----------
</TABLE>
The accompanying notes are an integral part of this statement.
F-3
<PAGE>
<TABLE>
<CAPTION>
LODGENET ENTERTAINMENT CORPORATION 401(k) PLAN
Statement of Net Assets Available for Benefits
As of December 31, 1995
Dreyfus Fidelity Neuberger/ 20th
Peoples Asset Berman Ltd. Oppenheimer Century
Index Manager Bond Global Ultra
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENTS, at market value:
Growth fund $270,186 $ - $ - $ - $ -
Balanced fund - 240,758 - - -
Bond funds - - 36,494 - -
International fund - - - 141,647 -
Aggressive growth fund - - - - 396,456
Stable value fund - - - - -
Stock fund - - - - -
Participant loans - - - - -
-------- -------- -------- -------- --------
Total investments 270,186 240,758 36,494 141,647 396,456
CONTRIBUTIONS RECEIVABLE:
Participants 8,764 8,082 1,280 4,190 11,252
Employer 1,153 1,079 235 595 1,408
-------- -------- -------- -------- --------
Net assets available for benefits $280,103 $249,919 $38,009 $146,432 $409,116
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Nation- Dreyfus LodgeNet
wide A Bond Common Loan
Virtuoso II Fund Stock Fund Total
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENTS, at market value:
Growth fund $ - $ - $ - $ - $270,186
Balanced fund - - - - 240,758
Bond funds - 9,426 - - 45,920
International fund - - - - 141,647
Aggressive growth fund - - - - 396,456
Stable value fund 54,625 - - - 54,625
Stock fund - - 36,259 - 36,259
Participant loans - - - 50,341 50,341
-------- -------- -------- -------- --------
Total investments 54,625 9,426 36,259 50,341 1,236,192
CONTRIBUTIONS RECEIVABLE:
Participants 2,557 1,283 - - 37,408
Employer 219 120 - - 4,809
-------- -------- -------- -------- --------
Net assets available for benefits $57,401 $10,829 $36,259 $50,341 $1,278,409
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part of this statement.
F-4
<PAGE>
LODGENET ENTERTAINMENT CORPORATION 401(k) PLAN
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Dreyfus Fidelity Neuberger/ 20th
Peoples Asset Berman Ltd. Oppenheimer Century
Index Manager Bond Global Ultra
-------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
December 31, 1995 $280,103 $249,919 $38,009 $146,432 $409,116
--------- --------- -------- --------- ---------
INCREASE (DECREASE) DURING THE YEAR:
Contributions-
Employee 164,965 141,698 23,232 94,415 257,132
Employer 22,123 17,356 3,879 12,346 30,850
--------- --------- -------- --------- ---------
Total contributions 187,088 159,054 27,111 106,761 287,982
Interest income - - - - -
Net unrealized gains/realized gains 74,904 35,917 1,380 30,253 62,448
Distributions to participants (8,262) (14,457) (446) (3,271) (44,029)
Net loan activity (12,433) (5,247) (675) (1,263) (14,580)
Fund transfers, net 12,372 (1,641) (2,076) (1,519) 37,814
--------- --------- -------- --------- ---------
Net increase during the year 253,669 173,626 25,294 130,961 329,635
--------- --------- -------- --------- ---------
NET ASSETS AVAILABLE FOR BENEFITS,
December 31, 1996 $533,772 $423,545 $63,303 $277,393 $738,751
--------- --------- -------- --------- ---------
--------- --------- -------- --------- ---------
<CAPTION>
Nation-
Nation- wide LodgeNet
wide Dreyfus Money Common Loan
Virtuoso II A Bond Market Stock Fund Total
----------- --------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
December 31, 1995 $57,401 $10,829 $ - $ 36,259 $50,341 $1,278,409
-------- -------- -------- --------- -------- -----------
INCREASE (DECREASE) DURING THE YEAR:
Contributions-
Employee 43,840 29,372 10,339 30,060 - 795,053
Employer 5,976 3,066 664 3,945 - 100,205
-------- -------- -------- --------- -------- -----------
Total contributions 49,816 32,438 11,003 34,005 - 895,258
Interest income 3,148 - - - 4,489 7,637
Net unrealized gains - 1,012 185 27,826 - 233,925
Distributions to participants (581) (215) (283) (156) (1,080) (72,780)
Net loan activity (6) (250) - - 34,454 -
Fund transfers, net (43,231) 230 (1,949) - - -
-------- -------- -------- --------- -------- -----------
Net increase during the year 9,146 33,215 8,956 61,675 37,863 1,064,040
-------- -------- -------- --------- -------- -----------
NET ASSETS AVAILABLE FOR BENEFITS, $66,547 $44,044 $ 8,956 $ 97,934 $88,204 $2,342,449
December 31, 1996 -------- -------- -------- --------- -------- -----------
-------- -------- -------- --------- -------- -----------
</TABLE>
The accompanying notes are an integral part of this statement.
F-5
<PAGE>
LODGENET ENTERTAINMENT CORPORATION 401(k) PLAN
Notes to Financial Statements
December 31, 1996 and 1995
1. DESCRIPTION OF PLAN:
The following description of the LodgeNet Entertainment Corporation 401(k) Plan
(the Plan) provides only general information. Participants should refer to the
plan agreement for a more complete description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan covering all full-time employees of
LodgeNet Entertainment Corporation (the Company) who have six months of service
and are age 18 or older. It is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
CONTRIBUTIONS
The Plan includes 401(k) basic and supplemental cash deferred arrangements.
Participants in the Plan may make a basic voluntary contribution by salary
deferral in amounts ranging from 1% to 15% of their compensation, as defined.
The Company matches participant contributions in an amount equal to 25% of each
participant's basic voluntary contribution, not to exceed 1% of their
compensation, as defined. Total rollover contributions brought into the Plan in
1996 were $100,403.
VESTING
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the Company's matching contribution portion of their
accounts plus actual earnings thereon is based on years of continuous service.
A participant is 100% vested after five years of credited service based on the
following percentages:
Less than one year of service 0% vested
One year but less than two 20% vested
Two years but less than three 40% vested
Three years but less than four 60% vested
Four years but less than five 80% vested
Five years or more 100% vested
If a participant dies or becomes disabled while still employed by the employer,
his or her entire plan interest becomes 100% vested. Forfeitures of the
nonvested employer contributions, resulting from participants who withdraw from
the Plan, are used to reduce future employer contributions.
F-6
<PAGE>
ADMINISTRATION
The Corporation functions as the plan administrator. The plan administrator
utilizes Fringe Benefits Design, Inc. and Nationwide Life Insurance Company to
provide record-keeping and reporting services. Nationwide Life Insurance
Company and Harris Bank and Trust are the asset custodians of the Plan.
Administrative expenses of the Plan are paid by the Company and were $17,643 in
1996.
PARTICIPANT LOANS
Participants may borrow funds from the Plan up to 50% of their vested interest.
Loans will not be granted in amounts less than $1,000 or greater than $50,000.
Loans are evidenced by a promissory note and have a repayment period of no
longer than five years unless the loan qualifies as a home loan. The plan
administrator will determine the appropriate interest rate by obtaining at least
one quote from a financial institution, as chosen by the plan administrator,
that is in the business of lending money.
DISTRIBUTION OF BENEFITS
Upon retirement, death, disability or attainment of age 62, a participant or a
participant's beneficiary, in the case of death, may receive the vested portion
of the amount credited to the participant's account by a lump-sum payment or, if
the vested portion exceeds $3,500, the participant may elect to receive periodic
installment payments.
AMENDMENT
Effective January 1, 1996, the Plan was amended to eliminate the 1,000-hour
requirement and change the time requirement from one year of service to six
months of service following the employee's employment commencement date.
TAX STATUS
The Internal Revenue Service has determined and informed the Company by a letter
dated February 14, 1995, that the Plan is designed in accordance with applicable
sections of the Internal Revenue Code (IRC). The Plan has been amended since
receiving the determination letter. However, the plan administrator and the
Plan's tax counsel believe that the Plan continues to operate in compliance with
the applicable requirements of the IRC and remains tax exempt.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of the Plan's
termination, participants will become 100% vested in their accounts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF ACCOUNTING
The financial statements have been prepared on the accrual basis of accounting.
F-7
<PAGE>
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires the Company to make estimates and assumptions
that affect the reported amounts of net assets available for benefits at the
date of the financial statements and the reported amounts of changes in net
assets available for benefits during the reporting period. Ultimate results
could differ from those estimates.
INVESTMENTS
Participants have the opportunity to direct all money allocated to their
accounts. Participants have nine investments from which to choose. A
description of each investment is as follows:
DREYFUS PEOPLES INDEX--Seeks investment results that correspond to the
price and yield performance of publicly traded common stocks in the
aggregate, as represented by the Standard & Poor's 500 Composite Stock
Price Index. Considered to be a relatively volatile mutual fund option.
FIDELITY ASSET MANAGER--Seeks capital appreciation. Considered to be a
moderately volatile investment option.
NEUBERGER/BERMAN LIMITED BOND--Seeks income, consistent with low risk to
principal and liquidity. Considered to be a slightly volatile fund.
OPPENHEIMER GLOBAL--Seeks capital appreciation; current income is not an
objective. Considered to be the most volatile investment option.
20TH CENTURY ULTRA--Seeks capital growth. This fund is viewed as next to
the most volatile mutual fund option.
NATIONWIDE VIRTUOSO II--Seeks the guarantee of principal and interest
through an unallocated insurance contract. A new interest rate is declared
annually. Considered to be the least volatile fund.
DREYFUS A BOND FUND--Seeks current income consistent with preservation of
capital and maintenance of liquidity. Considered to be a slightly volatile
fund.
NATIONWIDE MONEY MARKET FUND--Seeks to provide a high level of current
income while preserving capital and maintaining liquidity. Considered to
be a slightly volatile fund.
LODGENET COMMON STOCK--Invests in LodgeNet Entertainment Corporation common
stock, limited to 10% of contributions made.
All of the investments described above, except for Nationwide Virtuoso II and
LodgeNet common stock, are part of an unallocated insurance contract pooled
separate account with Nationwide Life Insurance Company.
Net unrealized gains represent the increase in the market value of an investment
from the end of the prior year or from the date of purchase, if purchased during
the year, to the end of the current year.
F-8
<PAGE>
3. INFORMATION CERTIFIED BY ASSET CUSTODIANS:
The asset custodians of the Plan have certified that the following information
included in the accompanying financial statements and supplemental schedules is
complete and accurate:
a. Net assets available for benefits as of December 31, 1996 and 1995.
b. Changes in net assets available for benefits for the year ended December
31, 1996.
c. Assets held for investment purposes as of December 31, 1996.
d. Reportable transactions for the year ended December 31, 1996.
F-9
<PAGE>
LODGENET ENTERTAINMENT CORPORATION 401(k) PLAN
(Employer Identification Number: 46-0371161) (Plan Number: 001)
Item 27a--Schedule of Assets Held for Investment Purposes
As of December 31, 1996
Market
Description of Investment Cost Value
- -------------------------------------------------- --------- ----------
Nationwide Virtuoso II unallocated insurance
contract** $ 66,228 $ 66,228
Pooled separate accounts:
Nationwide Arranger unallocated insurance
contract pooled separate account 1,682,932 2,074,621
LodgeNet Entertainment Corporation common stock** * 97,934
Loans to participants, with interest ranging from
8.0% to 9.85% 88,204
----------
Total investments $2,326,987
----------
----------
*Information is not available from the asset custodians of the Plan.
**Denotes party in interest.
F-10
<PAGE>
LODGENET ENTERTAINMENT CORPORATION 401(k) PLAN
(Employer Identification Number: 46-0371161) (Plan Number: 001)
Item 27d--Schedule of Reportable Transactions
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Cost of Net
Number of Number Total Value of Total Sales Investments Gain
Description Purchases of Sales Purchases Proceeds Sold (Loss)
- --------------------------------------------------------- --------- -------- -------------- ----------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Nationwide Virtuoso II unallocated insurance contract** * * $ 52,274 $ 43,821 $43,821 -
Nationwide Arranger unallocated insurance contract pooled
separate account** * * 920,930 147,372 * *
</TABLE>
*Information is not available from the asset custodians of the Plan.
**Denotes party in interest.
F-11
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 11-K, into the Company's previously filed
Registration Statement (Form S-8 No. 33-75906).
ARTHUR ANDERSON LLP
Minneapolis, Minnesota,
July 11, 1997
F-12
