-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IyfoElbPQipg7a4wGgwG1x0gUwsq1UYNMRsJtwZs4XriH4dmeopkPbaCzQTufuKj 4rxRsme+UMA1Ot0Gm+NYMg== 0000790498-99-000020.txt : 19990701 0000790498-99-000020.hdr.sgml : 19990701 ACCESSION NUMBER: 0000790498-99-000020 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATA TRANSMISSION NETWORK CORP CENTRAL INDEX KEY: 0000790498 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 470669375 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 000-15405 FILM NUMBER: 99656094 BUSINESS ADDRESS: STREET 1: 9110 W DODGE RD STE 200 CITY: OMAHA STATE: NE ZIP: 68114 BUSINESS PHONE: 4023902328 MAIL ADDRESS: STREET 1: 9110 WEST DODGE ROAD STREET 2: SUITE 200 CITY: OMAHA STATE: NE ZIP: 68114 FORMER COMPANY: FORMER CONFORMED NAME: DATALINE INC DATE OF NAME CHANGE: 19871214 11-K 1 FORM 11-K FOR KAVOURAS, INC. 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 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 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
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: 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.
4
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: 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.
5
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: 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.
6
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: 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.
7
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: 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.
8
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 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.
9
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 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.
10
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 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.
11
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 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.
12 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 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 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 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
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 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
17
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 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
18
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) - ------------------------------------------------------------------------------------------------------------------------------------ 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
19 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 -----END PRIVACY-ENHANCED MESSAGE-----