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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, 1999
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)
3900 WEST INNOVATION STREET, SIOUX FALLS, SOUTH DAKOTA 57107
(Address of Principal Executive Offices)
(605) 988-1000
(Registrant's Telephone Number, including Area Code)
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INDEX
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<CAPTION>
PAGE
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<S> <C>
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, 1999 and 1998.............................................................. F-2
Statements of Changes in Net Assets Available for Benefits for the
year ended December 31, 1999.................................................................. F-3
Notes to Financial Statements.................................................................... F-4
Supplementary Schedules:
Schedule of assets held for investment purposes at end of year................................ F-7
Consent of Independent Auditors.................................................................. F-8
</TABLE>
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
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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
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(Name of Plan)
Date: June 28, 2000 /s/ Scott C. Petersen
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Scott C. Petersen
President, Chief Executive Officer, and
Plan Trustee
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LODGENET ENTERTAINMENT
CORPORATION 401(K) PLAN
Financial statements as of December 31, 1999 and 1998 together with report of
independent public accountants
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<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE PAGE
<S> <C>
Report of independent public accountants 1
Statements of net assets available for benefits 2
Statement of changes in net assets available for benefits 3
Notes to financial statements 4
Schedule of assets held for investment purposes at end of year 7
</TABLE>
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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, 1999 and
1998, and the related statement of changes in net assets available for benefits
for the year ended December 31, 1999. 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 auditing standards generally accepted
in the United States. 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, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of LodgeNet
Entertainment Corporation 401(k) Plan as of December 31, 1999 and 1998, and the
changes in net assets available for benefits for the year ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedule of assets held for
investment purposes is presented for the purpose of additional analysis and is
not a required part of the basic financial statements, but is 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. This supplementary schedule is the responsibility of the Plan's
management. The supplement schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
Arthur Andersen LLP
Minneapolis, Minnesota,
June 2, 2000
F-1
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LODGENET ENTERTAINMENT CORPORATION 401(K) PLAN
Statements of net assets available for benefits
As of December 31
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
INVESTMENTS $10,539,580 $6,804,273
CONTRIBUTIONS RECEIVABLE:
Participant 177 44,740
Employer 25,386 55,548
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Total contributions receivable 25,563 100,288
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Net assets available for benefits $10,565,143 $6,904,561
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</TABLE>
The accompanying notes are an integral part of these statements.
F-2
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LODGENET ENTERTAINMENT CORPORATION 401(K) PLAN
Statement of changes in net assets available for benefits
For the year ended December 31, 1999
<TABLE>
<S> <C>
ADDITIONS:
Contributions-
Participant $ 1,433,571
Employer 560,267
Rollover 18,369
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Total contributions 2,012,207
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Investment income-
Interest income 44,428
Net increase in fair value of investments 2,432,458
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Total investment income 2,476,886
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Total additions 4,489,093
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DEDUCTIONS:
Expenses (164)
Distributions to participants (827,236)
Forfeitures, net (1,111)
------------
Total deductions (828,511)
------------
Net increase 3,660,582
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 6,904,561
------------
End of year $ 10,565,143
============
</TABLE>
The accompanying notes are an integral part of this statement.
F-3
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LODGENET ENTERTAINMENT CORPORATION 401(K) PLAN
Notes to financial statements
December 31, 1999 and 1998
1 DESCRIPTION OF THE PLAN
The following is not a comprehensive description of LodgeNet Entertainment
Corporation 401(k) Plan (the Plan) and, therefore, does not include all
situations and limitations covered by the plan. 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 completed 90 days of
service and are age 18 or older. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA), as amended.
PLAN OPERATIONS
The Company 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
Charles Schwab Retirement Plan Services are the asset custodians of the Plan.
Administrative expenses of the Plan are paid by the Company and were $29,355 in
1999.
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 percent to 15 percent of their compensation,
as defined. The Company matches participant contributions in an amount equal to
50 percent of the first 6 percent of each participant's eligible contribution
for the plan year, not to exceed 3 percent of their compensation, as defined.
The Company may make discretionary contributions to the Plan. In a year in which
the Company chooses to make discretionary contributions, the contributions will
be allocated based upon a participant's proportionate share of total
compensation for all participants. There were no discretionary contributions in
1999.
VESTING
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the Company's matching contribution portion of participant
accounts plus actual earnings thereon is based on years of continuous service. A
participant is 100 percent vested after five years of credited service based on
the following percentages:
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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
</TABLE>
If a participant dies or becomes disabled while still employed by the Company,
his or her entire plan interest becomes 100 percent vested. Forfeitures of the
nonvested employer contributions, resulting from participants who withdraw from
the Plan, are used to reduce future employer contributions.
PARTICIPANT LOANS
Participants may borrow funds from the Plan up to 50 percent of their vested
balance. 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
up to 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.
F-4
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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 invested portion exceeds $3,500, the participant may elect to receive
periodic installment payments.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements have been prepared on the accrual basis of accounting.
USE OF ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States 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 14 investments from which to choose. A description
of each investment is as follows:
DREYFUS STANDARD & POOR'S 500 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.
FIDELITY ASSET MANAGER--Seeks capital appreciation.
NEUBERGER/BERMAN LIMITED BOND--Seeks income, consistent with low risk to
principal and liquidity.
OPPENHEIMER GLOBAL--Seeks capital appreciation; current income is not an
objective.
AMERICAN CENTURY 20TH CENTURY ULTRA--Seeks capital growth.
NATIONWIDE VIRTUOSO II--Seeks the guarantee of principal and interest
through an unallocated insurance contract. A new interest rate is declared
annually.
DREYFUS A BOND--Seeks current income consistent with preservation of
capital and maintenance of liquidity.
NATIONWIDE MONEY MARKET--Seeks to provide a high level of current income
while preserving capital and maintaining liquidity.
WARBURG PINCUS EMERGING GROWTH--Seeks maximum capital appreciation.
JANUS WORLDWIDE--Seeks long-term growth of capital. This fund is considered
to be moderately volatile.
JANUS TWENTY--Seeks stocks with strong current financial positions and the
potential for future growth. It may invest without limit in foreign
securities. This fund is nondiversified.
FIDELITY ADVISOR GROWTH OPPORTUNITY--Seeks to provide capital growth.
Considered to be a moderately volatile investment option.
AMERICAN CENTURY INCOME & GROWTH--Seeks long-term growth of capital as well
as current income. Considered to be a relatively volatile investment
option.
LODGENET ENTERTAINMENT CORPORATION COMMON STOCK--Invests in LodgeNet
Entertainment Corporation common stock. Limited to 10 percent of
contributions made.
All of the investments described above, except for Nationwide Virtuoso II and
the Company's common stock, are part of an unallocated insurance contract pooled
separate account with Nationwide Life Insurance Company.
F-5
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VALUATION OF ASSETS
Investments, except for Nationwide Virtuoso II which is valued at contract
value, are valued at market value as reported by the asset custodian as of
December 31, 1999 and 1998, based on quoted market prices of investments held by
the funds. 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.
3 INVESTMENTS
The following presents investments that represent 5 percent or more of the
Plan's net assets at December 31:
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
Dreyfus S&P 500 Index Fund, 540,069 and 516,301
shares, respectively $2,161,068 $1,762,114
Fidelity Asset Manager Fund, 351,903 and 406,582
shares, respectively 713,845 746,666
Oppenheimer Global Fund, 177,867 and 209,591
shares, respectively 630,519 481,143
American Century 20th Century Ultra Fund, 529,902 and 551,926
shares, respectively 2,423,032 1,829,588
Janus Worldwide Fund, 332,722 and 205,344 shares, respectively 827,952 322,431
Janus Twenty Fund, 327,887 and 80,895 shares, respectively 1,131,644 175,081
LodgeNet Entertainment Corporation common stock, 23,768 and
19,066, respectively 593,898 135,316
</TABLE>
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value as
follows:
Mutual funds $1,917,519
Common stock 418,217
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$2,335,736
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4 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 (the 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.
5 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 percent vested in their accounts.
F-6
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LODGENET ENTERTAINMENT CORPORATION 401(K) PLAN
(EMPLOYER IDENTIFICATION NUMBER: 46-0371161) (PLAN NUMBER: 001)
Schedule of assets held for investment purposes at end of year
As of December 31, 1999
<TABLE>
<CAPTION>
Number
of units or
shares Description Cost Market value
----------- ---------------------------------------------------------------------------- ---- ------------
<S> <C> <C>
161,595 Nationwide Virtuoso II unallocated insurance contract** * $ 207,681
Nationwide Arranger pooled separate accounts**:
540,069 Dreyfus Standard & Poor's 500 Index * 2,156,868
351,903 Fidelity Asset Manager * 712,039
111,465 Neuberger/Berman Limited Bond * 134,434
177,867 Oppenheimer Global * 628,782
529,902 American Century 20th Century Ultra * 2,418,566
115,851 Dreyfus A Bond * 139,341
240,534 Nationwide Money Market * 456,071
81,530 Fidelity Advisor Growth Opportunity * 160,468
47,020 Warburg Pincus Emerging Growth * 96,515
332,722 Janus Worldwide * 825,400
327,887 Janus Twenty * 1,129,448
199,425 American Century Income & Growth * 422,147
23,768 LodgeNet Entertainment Corporation common stock** * 592,194
Loans to participants, with interest ranging from 8.25 percent to 9.75 percent** 459,626
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Total investments $10,539,580
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</TABLE>
*Historical cost is omitted for participant-directed investments.
**Denotes party in interest.
F-7
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated June 2, 2000 included in this Form 11K, into the Company's
previously filed Registration Statement, (Form S-8 No. 33-75906).
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
June 28, 2000
F-8
