The Corporate Profile
      Data Transmission Network Corporation (DTN(R)), an electronic  information
and  communications  services  company  headquartered in Omaha,  Nebraska,  is a
leader in the delivery of time-sensitive  information  (NEWS...NOT  HISTORY(R)).
DTN is  committed  to  providing  comprehensive,  timely and  affordably  priced
information to our customers.  DTN's services are tailored to meet  subscribers'
needs and are valuable tools in managing business and personal affairs.

      The Company  began  operations in 1984,  went public in January 1987,  and
continues to evolve into a full-service  information provider and communications
network.  DTN  distributes  information  via small dish Ku-band  satellite,  the
Internet, FM radio side-band channels, TV cable (VBI-vertical  blanking interval
via satellite delivery to cable stations), FAX and e-mail. Subscribers receiving
information via satellite utilize a DTN receiver  capturing  information  around
the clock and converting it to text, graphics and audio.

      Prior to 1992, DTN supported only a monochrome  receiver system capable of
receiving  and  displaying  information.  In 1992,  the Company  introduced  the
Advanced  Communications  EngineSM (ACE) receiver that expanded the  information
and  communication  services  provided by the  Company.  DTN  receivers  contain
multiple processors for capturing,  manipulating and displaying  high-resolution
color video pictures,  graphics and text. In addition,  these processors provide
the ability to play audio clips and to utilize a phone  modem.  The ACE receiver
is equipped with an internal hard drive  allowing  processed  information  to be
stored,  archived  and then  displayed by using the built-in  control  panel,  a
keyboard or a mouse. In 1995, DTN began to offer services on the Internet.  This
distribution  technology has become a significant part of the Company's strategy
for the future.

      DTN's  services  reach  subscribers  in the U.S.  and Canada.  The Company
receives the majority of its revenues from the agricultural,  weather, financial
and energy industries. These industries and the services offered are profiled on
pages 16-19 of this report.

      DTN's  strategy is to focus on growing the business  organically,  through
acquisitions and by pursuing  opportunities to provide services to niche markets
within other industries.

      Led  by  customer  suggestions  and  demands,  Data  Transmission  Network
Corporation  has engineered  growth and evolution  from what we were--the  first
low-cost, electronically delivered agricultural commodities information service,
to what we are today--a  multi-faceted  information  provider,  utilizing a full
range of  technological  communication  systems to deliver the most  valuable of
commodities, timely information.

                            Our Mission is to provide
                  the best information and analysis available,
                                       as
          quickly as possible, at an affordable cost to our customers.
                               Among many things
                        critical to successfully meeting
                 these commitments, the three most important are
           customer service, customer service, and customer service.
                     As fellow shareholders of the Company,
                        DTN employees' number one goal is
             the long-term enhancement of the value of the Company.

                                       1
                                    - 735 -
<PAGE>

Contents
<TABLE>
<CAPTION>

<S>                                                                                     <C>
Selected Consolidated Financial Highlights                                              2
Five Years in Review                                                                    3
Letter to Shareholders                                                                  4
Information Technology Update                                                           8
Business Review                                                                        10
Information Distribution Technology                                                    10
Services and Equipment Offered                                                         15
Industries and Services at a Glance                                                    16
The Agricultural Industry                                                              20
The Weather Industry                                                                   26
The Financial Services Industry                                                        32
The Energy Industry                                                                    36
The Transportation Industry                                                            38
Selected Historical Consolidated Financial Data                                        40
Management's Discussion and Analysis                                                   41
Management's Responsibility for Financial Statements and Independent Auditor's Report  49
Consolidated Financial Statements                                                      50
Notes to Consolidated Financial Statements                                             54
Quarterly Data and Trading Information                                                 63
Board of Directors and Corporate Officers                                              64

                                       2
                                    - 736 -
<PAGE>


Selected Consolidated Financial Highlights

</TABLE>

<TABLE>
<CAPTION>
                                                                                                    Percent
                                                                  1998             1997              Change
For the Year
<S>                                                           <C>                <C>                   <C> 
  Revenues                                                    $148,986,346       $126,374,352          18 %
  Operating cash flow(1)                                        53,013,798         54,698,708          (3)%
  Cash provided by operating activities(2)                      42,415,869         47,543,395         (11)%
  Income (loss) before income taxes and extraordinary item(3)   (4,068,563)         3,407,081           -
  Net income (loss)(4)                                          (3,742,759)         2,236,081           -
  Diluted income (loss) per share(4)                          $       (.33)      $        .19           -
  
At Year End
  Total assets                                                $197,185,082       $162,430,898           21 %
  Long-term debt and subordinated notes                        100,619,998         72,891,370           38 %
  Shareholders' equity                                          32,149,886         32,196,173           -
  Book value per share                                        $       2.79       $       2.89           (3)%

Key Indicators
  Total subscribers at year-end                                    159,300            158,800           -
  Subscriber retention rate                                         80.6 %             88.1 %           (9)%
  Net development costs(5)                                    $  6,533,965       $  5,199,605           26 %
  Operating cash flow from core services(6)                   $ 59,434,670       $ 59,701,141           -

As a Percent of Revenue
  Operating cash flow(1)                                            35.6 %             43.3 %
  Cash provided by operating activities(2)                          28.5 %             37.6 %
  Operating cash flow from core services(6)                         40.8 %             48.5 %
  Depreciation and amortization                                     32.8 %             33.5 %
  Interest expense                                                   5.7 %              7.2 %
  Net income (loss) before income taxes and
    extraordinary item                                              (2.7)%              2.7 %


<FN>

1  Operating  income before  depreciation  and  amortization  expense  (EBITDA).
   Excluding the $5.8 million non-recurring satellite costs, operating cash flow
   would have been $58.8  million in 1998  compared to $54.7 million in 1997, an
   increase of 8%. As a percent of revenue,  operating cash flow would have been
   39.5% and 43.3% for 1998 and 1997, respectively.

2  Excluding the $5.8 million  non-recurring  satellite costs,  cash provided by
   operating  activities would have been $48.2 million in 1998 compared to $47.5
   million  in 1997.  As a  percent  of  revenue,  cash  provided  by  operating
   activities would have been 32.4% and 37.6% for 1998 and 1997, respectively.
  
3  Income  (loss)  before  income  taxes,  extraordinary  item and $5.8  million
   non-recurring  satellite costs would have been income of $1.7 million in 1998
   compared to $3.4 million in 1997.

4  Net income  before  the $5.8  million  non-recurring  satellite  costs  ($3.7
   million  net of tax) and  $1.7  million  debt  extinguishment  charges  ($1.1
   million  net of tax) would  have been $1.0  million of $.09 per share in 1998
   compared to $2.2 million or $.19 per share in 1997.

5  Net  Development  Costs  are  defined  as  the  sum  of  1)  market  research
   activities,  2) hardware and software  engineering,  research and development
   and 3) the negative operating cash flow (prior to corporate  allocations plus
   interest) of new services.

6  Core  services  are  services no longer in the initial  development  process.
   Operating  cash flow from core services as a percent of revenue is calculated
   on core services revenue.  Excluding the $5.8 million non-recurring satellite
   costs,  operating  cash flow from core services would have been $65.2 million
   in 1998 compared  $59.7  million in 1997. As a percent of revenue,  operating
   cash flow from core  services  would  have been  44.7% and 48.5% for 1998 and
   1997, respectively.

</FN>
</TABLE>

                                      3
                                    - 737 -
<PAGE>
<TABLE>
<CAPTION>

                              FIVE YEARS IN REVIEW
--------------------------------------------------------------------------------
GRAPHS IN TABULAR FORM:
<S>                       <C>       <C>       <C>       <C>       <C>  
                          1994      1995      1996      1997      1998
                          ----      ----      ----      ----      ----

  Revenues
($ millions)              46.1      62.3      98.4     126.4      149.0


                          1994      1995      1996      1997      1998
                          ----      ----      ----      ----      ----
Operating Cash Flow
    ($ millions)          15.8      23.2      40.4      54.7      53.0
                                                                  58.8*

          

                          1994      1995      1996      1997      1998
                          ----      ----      ----      ----      ----
Operating Cash Flow
(percent of revenue)       34%       37%       41%      43.3%      36%
                                                                   40%*


                          1994      1995      1996      1997      1998
                          ----      ----      ----      ----      ----
Net Development Costs
    ($ millions)           4.3       3.7       5.3       5.2       6.5


                          1994      1995      1996      1997      1998
                          ----      ----      ----      ----      ----
Subscribers At Year End
      (thousands)         82.0      95.9      145.9     158.8     159.3


                          1994      1995      1996      1997      1998
                          ----      ----      ----      ----      ----
Subscriber Retention Rate
       (percent)          89.8      91.0      89.3      88.1      80.6


                          1994      1995      1996      1997      1998
                          ----      ----      ----      ----      ----
Annual Revenue
Per Subscriber
($ based on average
 subscribers)             591       700       775       830       937



                          1994      1995      1996      1997      1998
                          ----      ----      ----      ----      ----
Annual Operating Cash
Flow Per Subscriber
($ based on average
 subscribers)             202       260       318       359       333
                                                                  370*


*Pro-forma results before $5.8 million non-recurring satellite costs.
</TABLE>




                                       4
                                    - 738 -
<PAGE>

Letter to Shareholders

      Those of you that have been reading my letter to shareholders for the last
several years have become  accustomed  to me leading off with various  financial
highlights,  i.e. subscriber numbers, revenue, cash flow, cash flow as a percent
of revenue,  etc.  Some of these  financial  highlights  are not too stellar for
1998. So, in keeping with my propensity to brag, I am  rearranging  this writing
vs.   previous   years  and  will  first   discuss   some   powerful   strategic
accomplishments concluded in 1998.

      The combination of organic growth and strategic  acquisitions  has enabled
us to grow the  Company's  revenues,  operating  cash flow  (EBITDA)  (excluding
non-recurring  satellite  costs) and per share value at compounded rates of 33%,
35% and 26%, respectively, for the past five years. I am proud of, and will take
some credit for, our revenue and cash flow growth. However, I prefer to minimize
reference  to influence on price per share  changes,  as these are  subjected to
vagaries of the market place and a myriad of influences beyond my control.

      Keeping with our strategy to acquire businesses that fit into our business
model, the following is a summary of our accomplishments for 1998:

      Market Information of Colorado, Inc. (MIC) - In February, DTN acquired 100
      subscribers  receiving real-time  commodities and futures information from
      MIC for $135,000 cash.

      CDS Group,  Inc. - In March,  DTN  acquired  CDS Group,  Inc. for $250,000
      cash.  CDS is engaged in the business of  marketing  software for tracking
      bales of cotton for businesses in the cotton  industry.  This  acquisition
      compliments our July, 1997 acquisition of The Network, Inc., an electronic
      cotton trading network.

      SmartServ  Online,  Inc. In April,  DTN acquired the  exclusive  rights to
      market the  Internet-based  financial  services  information  products  of
      SmartServ Online and their Internet  information  distribution  technology
      for a total of $1,905,000  cash  commitment  for the first twelve  months.
      These services include: DTN.IQ, a real-time,  tick-by-tick stock quote and
      news service,  and TradeNet and BrokerNet,  real-time  trading and account
      information   products  for  the  brokerage   industry.   This   agreement
      transferred  the 850 subscribers  using  SmartServ  Online to DTN. All new
      subscribers  to these  services  will be DTN  customers,  and DTN will pay
      SmartServ Online, Inc. an ongoing royalty based on revenues.
         

      Through this alliance, DTN received the following:

      1)  a  proven  Internet   real-time  quote  and  news  service   providing
      convenience and advanced features for the user;

      2) the ability to facilitate electronic trading via the Internet, good for
      many applications, but more specifically applicable to broker-dealers that
      do not possess this technology;

      3) access to a talented  development  team to support  and enhance the new
      products; and

      4) an additional 850 subscribers.

      National Datamax, Inc. - In June, DTN completed the acquisition of 100% of
      the capital stock outstanding of National Datamax, a software  development
      and information  services firm specializing in integrated  systems for the
      financial  services  industry.  DTN paid  $3.0  million  in cash,  plus an
      earn-out  based on revenue  growth from the quarter  ending  December  31,
      1997, through the quarter ending September 30, 1999, which is estimated to
      be approximately $2.0 million,  based on growth projections.  Through this
      acquisition, DTN acquired the following:

      1) advanced  software  programs for investment  professionals  with useful
      "back office" and client applications;

      2) a developed  and stable  private  network  (WAN) and Internet  site for
      delivering information to professional and institutional customers;

      3) established vendor  relationships  providing historical and fundamental
      data for mutual funds, variable annuities and equities; and

      4)  2,000  customers   (investment   professionals  in  the  higher  level
      institutional market).

      Kavouras,  Inc.  - In July,  DTN  closed  the  acquisition  of 100% of the
      capital  stock  outstanding  of  Kavouras  for a total  purchase  price of
      approximately  $22.7  million.  Kavouras  is engaged  in the  development,
      design, manufacture, marketing and service of meteorological equipment and
      provides  weather-related  services to  government,  aviation,  commercial
      broadcast and other  industries.  Among the products  provided by Kavouras
      are the Triton Doppler Radar, the most advanced and powerful Doppler radar

                                       5
                                    - 739 -
<PAGE>

      in the world, and the Triton RT, a  multiprocessor-based  high performance
      on-air graphics and animation weather workstation.  The Triton RT features
      real-time  processing  of  exclusive  4-D  Flythrough/Lookdown   animation
      sequences using a complete array of weather graphic images.

      Through this acquisition, DTN accomplished the following:

      1) control of a major source of content that will enable DTN to strengthen
      its role as a leading provider of timely weather information;
  
      2) the ability to expand its weather services into the middle market;

      3) entry into high-end weather markets (commercial broadcasting);
 
      4)vertical  integration  from the weather source (radar) to the final data
      display;

      5) exposure to international markets; and

      6) an experienced management and R&D team.

      Weather Services Corporation - In December,  DTN closed the acquisition of
      100% of the capital  stock  outstanding  of Weather  Services  Corporation
      (WSC) for $3.8 million cash and a warrant to purchase 20,000 shares of DTN
      common  stock  at  $34.00.   WSC  is  one  of  the  largest   sources  for
      meteorological consulting and worldwide commercial weather information.

      The strategic  acquisition of WSC provides name awareness for DTN Kavouras
      Weather Services,  a division of DTN, through valuable contracts with high
      profile customers including America Online, Inc.  (NYSE:AOL),  the world's
      largest online service,  USA Today and numerous  utilities,  broadcasters,
      agribusinesses and municipalities.

      Current  annualized  revenue from the above  acquisitions is approximately
$25 million. These acquisitions are strategically  significant to DTN and should
make a significant contribution to our growth.

      Our  strategy  also  includes  the  growth  of our core  businesses;  and,
therefore,  we made a decision  related to our sales force,  which we think will
have a positive impact on sales going forward. We de-centralized our sales force
in the third  quarter of 1998.  Our  district  sales  representatives  and sales
management  were assigned to a specific  division and  specialize in the sale of
those  services  targeted at that industry.  We believe this is an  evolutionary
process and that the  day-to-day  management  of the sales  personnel by product
management will have a positive impact on the sales of our core services.

      In addition to our plans for organic growth and strategic acquisitions, we
are focusing on our Internet technology and services (www.dtn.com).  The company
had 4,700 Internet subscribers at the end of fiscal 1998.

      The  agricultural  division,  DTN's largest  industry niche, has grown its
Internet  subscribers  (www.agdayta.com)  from approximately 1,100 at the end of
1997 to 2,700 at the end of 1998.

      DTN's  Internet  real-time  financial  service,   DTN.IQ  (www.dtniq.com),
released  in June 1998,  had 1,800  subscribers  at the end of fiscal  1998.  In
January 1999, DTN announced  plans to merge SmartServ  Online,  Inc. (SSOL) into
DTN. SSOL is the company that licensed its Internet technology to DTN to provide
the DTN.IQ service.  This transaction will expand DTN's presence in the Internet
and  wireless  communications  arena with  services  for equity and bond trading
transactions on the Internet.

      DTN Financial  Services  will  continue to focus on  developing  strategic
online brokerage alliances to provide quotes, news, charts and other services to
the brokers'  customers such as the agreement  announced in October of 1998 with
Atlantic Financial  (www.atlanticfinancial.com)  and Wang Investment  Associates
(www.Wangvest.com),  in January of 1999.  The company will  aggressively  target

                                       6
                                    - 740 -
<PAGE>

broker-dealers  and their  representatives  with the National  Datamax  services
acquired in 1998. 

      In December of 1998, DTN and GlobalView  Software,  Inc. (GVSI)  announced
the   release   of  a   new   Internet   service   for   the   energy   industry
(www.energyview.com).  The service  provides  Internet  users with real-time and
historical energy market information including quotes, news and weather.

      DTN  continues to develop new  technologies  for the  distribution  of its
information  and  communication  services.  The company has developed  satellite
technology to provide our  information  products using  DIRECTV's  eighteen-inch
dish. DIRECTV,  including its recent acquisition of PrimeStar, has approximately
7 million  subscribers.  We have  just  begun to  market  our first  information
service via this delivery.  Most of our information  services will be offered on
this  platform  by  May  of  1999.  To  help  facilitate  implementation  of our
strategies,  DTN secured a $122.9  million  revolving  credit line from our bank
group  which was closed in January of 1999.  The  company is also  working  with
cable TV providers to offer other information services.

      That's about it for the  bragging,  now comes the grueling  reality of the
numbers.  Bear in mind as you read our 1998 operating  results that we had three
major adverse and unusual  circumstances  to deal with in 1998.  During 1998 the
agricultural  community saw some very tough times. The satellite  delivering our
services  went out of control  creating the need for us to assist our  customers
with  the  realignment  of  tens of  thousands  of  satellite  dishes;  and,  by
shareholder  direction,  the  company  was  pursuing  the sale or  merger of the
Company.

      The following is a brief summary of our operating  results for fiscal 1998
compared to fiscal  1997  followed  by a  discussion  of the impact of the above
mentioned adverse and unusual circumstances effecting 1998.

      o Total  subscribers  were 159,300 at the end of 1998  compared to 158,800
      for 1997.

      o  Total  revenues  for  1998  grew  18%  to   $148,986,346   compared  to
      $126,374,352 for 1997.

      o  Operating  cash flow  (EBITDA)  for 1998  decreased  3% to  $53,013,798
      compared to $54,698,708 for 1997.

      o The net loss for 1998 was  $3,742,759 or $.33 per diluted share compared
      to net income of $2,236,081 or $.19 per diluted share for 1997.

      o Operating  cash flow  (EBITDA) for 1998 as a  percentage  of revenue was
      35.6% compared to 43.3% for 1997.

      o Subscription  revenue for all  subscribers on a per subscriber per month
      basis for 1998 was $62.63 compared to $55.10 for 1997.

      o Subscription  revenue for all new subscription sales on a per subscriber
      per month basis for 1998 was $77 compared to $68 for 1997.

      o Operating  revenue,  consisting of subscriptions,  additional  services,
      communications  and  advertising  for 1998  increased  11% to  $73.80  per
      subscriber per month compared to $66.29 for 1997.

      A couple of material  non-recurring  events occurred in 1998 that affected
our results.  First, we retired our $15,000,000 11.25% Senior Subordinated Notes
Due 2004. This retirement  included a one-time charge, net of tax, of $1,076,880
in the first quarter of 1998. The one-time charge consisted of a pre-payment fee
of $1,125,000  plus  unamortized  debt issuance and discount  costs,  less a tax
benefit of $606,000.  The present value of this  decision  based on our analysis
was a benefit of $940,000.

      Second,  DTN released  information  to investors  and our  customers  that
PanAmSat  lost control of the Galaxy IV  satellite on May 19, 1998.  The Company
switched DTN FarmDayta  subscribers to the Galaxy 3R satellite and all other DTN
subscribers  to the Telestar 5 satellite.  The  Company's  costs  related to the
failure  of Galaxy IV include  telecommunications,  labor,  satellite  costs and
customer communications.  These unusual non-recurring costs, on a pre-tax basis,
were  estimated to be $5.8 million ($3.7 million after tax) and were recorded in
May,  impacting  the second  quarter  1998  results.  In  addition  to the above
identified  non-recurring costs, our entire sales force spent the better part of
eight weeks (mid May to early July) assisting  customers with the realignment of
their  satellite  dish.  Needless to say, this event had a significant  one-time
affect on our 1998 operating results.

                                       7
                                    - 741 -
<PAGE>

      For comparative purposes, if we exclude these two non-recurring items from
operating cash flow (EBITDA) and net income we get the following results:

      o  Operating  cash flow for 1998 would have  increased  8% to  $58,813,798
      compared to $54,698,708 for 1997.

      o Net Income for 1998 would have been $1,046,121 or $.09 per diluted share
      compared to $2,236,081 or $.19 per diluted share for 1997.

      Due to our acquisition and development  activities,  a further analysis of
our results is  necessary.  DTN's July 1st  acquisition  of Kavouras,  Inc.,  in
Minneapolis,  added a new market niche for the Company, the manufacture and sale
of various meteorological  equipment and radar systems. The Kavouras acquisition
added $4.8 million of  meteorological  equipment  and radar sales for the second
half of 1998.  Total  Kavouras  revenues  for fiscal 1998 were $9.2 million on a
consolidated basis.

      Kavouras  equipment  sales have lower  EBITDA  margins  than  subscription
sales,  and will tend to lower the Company's total operating cash flow margin. A
further  analysis  shows  that  excluding  Kavouras  operating  results  and the
non-recurring  satellite  costs,  operating  cash flow margin for 1998 was 41.5%
compared with 43.3% for 1997.

      During the second half of 1998, the Company expanded activities related to
the development of new services. Net Development Costs are defined as:

      1) market research activities;

      2) the  expenses  of  hardware  and  software  engineering,  research  and
      development; and

      3) the negative  operating cash flow (prior to corporate  allocations plus
      interest) of new services,  for the fiscal year of 1998  increased to $6.5
      million compared to $5.2 million for the fiscal year of 1997. The Kavouras
      operations  contributed  $1.3 million to net development  costs for fiscal
      1998.

      Operating  cash flow margin from core services (core services are services
no longer in the initial  development  process)  for the fiscal year of 1998 was
40.8%. This margin,  excluding  Kavouras operating results and the non-recurring
satellite  costs,  for the fiscal year 1998 was 47.2%  compared to 48.5% for the
same period of 1997.

      The  decrease  in  operating  income  is  primarily  related  to the  $5.8
non-recurring   satellite  costs  and  lower  operating   income  from  acquired
operations due to lower  operating cash flow margins and increased  amortization
expense  related  to  these  acquisitions.   Amortization   expense  related  to
acquisitions  for the  second  half of 1998 was $5.3  million  compared  to $3.1
million  for  the  second  half  of  1997.   Amortization   expense  related  to
acquisitions was $8.4 million in 1998 compared to $5.9 million for 1997.

      The above concludes my summary (with a lot of help from Brian Larson,  our
able CFO) of our 1998 operating results. In signing off, I would like for you to
reflect on my boastful part of this communique while reading the following quote
from Samuel Rayburn,  "Readiness for opportunity makes for success.  Opportunity
often comes by accident; readiness never does."

      As always,  many thanks to our  customers,  shareholders,  financiers  and
suppliers for their  support.  And a special  thanks to all of our employees and
their families for an extraordinary effort in 1998.
                                                                

                                                  Very sincerely yours,



                                                  Roger Brodersen
                                                  Chairman and CEO

                                       8
                                    - 742 -
<PAGE>


Information Technology Update
Our Philosophy

      Since the inception of DTN, our  philosophy has always been to utilize any
technology that allows delivery of services in an affordable,  reliable, easy to
use method. Coupled with this philosophy is our strategy (and I now quote Robert
Herman, my predecessor) to adopt "leading edge technology but avoid the bleeding
edge."  Millions  of  dollars  are  spent  trying  to  develop  "bleeding  edge"
technology  while  "leading  edge"  normally  offers an advantage that is within
sight. This being said, you may have guessed that the Internet will be one of my
next  topics  for  discussion.  Prior  to  this,  I would  like to share a quick
overview of the technologies that we currently employ.

Where we are 
      While  a more  detailed  description  of our  distribution  technology  is
contained in the next  section,  the following is a quick summary of our current
technology and a hint of where we are headed in the future.

Pre-1998
      Prior to 1998, DTN developed and  implemented  the following  distribution
technologies for its services.  As you can see from the list, DTN has progressed
from 100% DTN proprietary  hardware to new solutions including 100% client owned
hardware. This is a result of the increasing capabilities of PC's.

      o FM Side  Band into a  Monochrome  System 

      o C-Band  Satellite  

      o Ku-Band  Satellite  into a  Monochrome  System  

      o Ku-Band Satellite into a Color Ace Receiver System 

      o VBI (Cable TV) into a Monochrome or Color System o Ku-Band  Satellite 
        into a D8000 Receiver System  connected to the customer's  PC 
      
      o Fax 

      o E-mail/"Mailbox"  

      o Internet  (browser  based and "thin client"  based)  

1998
      In 1998 we continued to use all the  distribution  technologies  discussed
above while expanding and improving many of them. We also began  delivering some
of our information content on leased lines into major metropolitan areas. Leased
lines provide delivery of information where a satellite dish is not practical or
where the customer prefers a redundant path to a stand-alone service or one that
serves the  customer's  PC  network.  In  addition,  our Energy  division  began
transmitting  data  over  the  Atlantic  Ocean to  London,  England,  our  first
non-North American City to receive a direct data feed.

      The acquisition of Kavouras, Inc. in July 1998 was an exciting addition to
our ever-increasing array of content. Most Kavouras weather customers are served
by  C-Band   technology.   C-Band  is  recognized  as  a  large  dish  apparatus
(approximately  8 feet in  diameter).  At the end of 1998,  DTN  Kavouras  began
delivering  some of their data via  Ku-Band  technology,  which  provides a much
smaller  dish  and  a  more  user-friendly  installation.   This  allows  for  a

                                       9
                                    - 743 -
<PAGE>

substantially  lower  price  entry  point into the market for  high-end  weather
services  provided by Kavouras.  

Where we're going
      In addition to improving and expanding our current technologies, 1999 will
mark the year for two large additional steps in distribution technology.  First,
we will  officially  roll  out  several  of our  products  on  DIRECTV's  direct
broadcast  satellite  18" dish  technology.  The 18" dish will be connected to a
special  card  installed  inside the  subscribers'  PC.  DTN will  provide a new
software package, DTN for Windows, allowing customers to access data. Along with
DTN for Windows,  the same 18" dish can feed set top boxes for viewing DIRECTV's
television  products.  As many of you know,  DIRECTV is the largest  provider of
direct broadcast services and with their recent  acquisition of PrimeStar,  they
will clearly  dominate the direct broadcast  satellite field with  approximately
seven million  current  subscribers.  The  combination  of DIRECTV's  television
products  and  DTN's  data  services   will  render  a  reliable,   high  speed,
user-friendly, PC-driven product.

      The second major  technological step for DTN in 1999 is the Internet.  The
company is placing  significant  emphasis on the  improvement and development of
current and future Internet services.  Read on for more discussion regarding DTN
and the Internet.


The  Internet  or Bust?  
      1998 was a banner year for the Internet. Not only did Internet stocks gain
huge  momentum,  it is  clear  that  the  Internet  is  being  adopted  for many
applications.  As it relates to DTN, two of our  divisions  provide  information
that is highly sought after by folks gravitating to the Internet, financial data
and weather.  The introduction of DTN.IQ (which is our Internet-based  financial
services  product)  has been well  received  by the  market  and is the  fastest
selling  product  ever  released  by our  Financial  Services  division.  DTN.IQ
represents  the  beginning  of an ongoing  process  for  developing  content and
functionality on the Internet for delivering all sorts of financial-related data
to the varying segments of an ever-growing industry.

      Even  more  sought  after  than  financial  services  information,  recent
independent  surveys  have  shown  that  weather  is one of the top draws to the
Internet.  Historically,  our weather services have been subscription-based.  In
1999,  we will  concentrate  on  finding  the  appropriate  business  model  for
weather-based  information on the Internet.  Our acquisition of Weather Services
Corporation  (WSC) in December of 1998 was just the  beginning of this  process.
With the  acquisition  of WSC, we "acquired" a business  relationship  with some
significant  Internet and non-DTN  traditional  businesses,  specifically,  AOL,
Lycos, USA Today, Metro Networks, Inc., and others.

      Our plan is to continue the  development  and  allocation of resources for
creating exciting weather products for the Internet.

      While we are not ready to sell bumper  stickers  which read  "INTERNET  OR
BUST", we will focus our energy on finding appropriate  business models to offer
our vast array of comprehensive, time-sensitive data on the Internet.
                                                                     
                                                      Sincerely,



                                                      Scott Fleck
                                                      Vice President
                                                      Director of Engineering



                                       10
                                    - 744 -
<PAGE>

Business Review
     Data Transmission  Network Corporation (DTN) began operations in April 1984
and  continues  to  provide   comprehensive,   time-sensitive   information  and
communication services for a variety of industries via all relevant distribution
technologies. DTN had over 159,000 subscribers throughout the U.S. and Canada at
the end of 1998 with the majority receiving agricultural, weather, financial and
energy  related  services.  A review of these  industries  and services with the
year's highlights are discussed in this report.

     The Company's  subscription services are targeted at niche business markets
and  designed  to be  timely,  simple  to use,  and  convenient.  The  Company's
distribution  technology  provides  an  efficient  means  of  sending  data  and
information  from point to  multi-point.  The  development  and  enhancement  of
cost-effective  distribution  methods such as electronic  satellite delivery and
the  Internet,  plus a total  commitment  to customer  service  and  information
quality has enabled the Company to become a major  player in the  communications
industry.

     The Company  continues to take advantage of many  engineering  and software
advancements  available for developing and improving distribution in an exciting
and growing industry.

Information  Distribution Technology
     The  Company  is  committed  to  researching  and  developing  distribution
technologies  to  cost-effectively  deliver  the  timely  information  that  the
Company's  subscribers  demand.  DTN supports several  information  distribution
technologies  allowing the  distribution,  reception and display of information.
These technologies  include small dish Ku-band satellite (Ku), the Internet,  FM
radio  side-band  channels (FM),  Fax, the vertical  blanking  interval within a
television signal sent via Cable TV (VBI), e-mail, leased lines and DIRECTV.

     The first  technology  used by the Company was FM radio  side-band.  The Ku
technology was added in 1989,  providing the ability to reach customers  outside
the  geographic  territory of the signal of the FM stations.  Fax, VBI,  e-mail,
Internet,  leased lines and DIRECTV have since been added to further  expand the
distribution network.

     The Company  provides the equipment  necessary for  subscribers  to receive
certain services using FM, Ku or VBI technologies. This equipment includes a DTN
receiver,  a video monitor,  FM antenna or a small 30" Ku-band satellite dish. A
keyboard,  mouse and printer may be provided  depending on the  service.  DTN is
responsible for the normal maintenance and repair of subscriber equipment.

     Prior to 1992, the Company utilized a "page-based"  receiver and monochrome
display system.  The monochrome system translates the Company's data stream into
text and is capable of receiving and  displaying  up to 246  different  pages of
information.  The monochrome receiver can also download information to a printer
or computer.

     In 1992, the Company  introduced the Advanced  Communications  Engine (ACE)
receiver,  a color graphics receiver system,  expanding the Company's ability to
provide  information  and  communication  services.  The ACE  receiver  contains
multiple  processors.  One is dedicated to data communications and storage.  The
second  processor  is for  manipulating  data,  interacting  with  the  user and
displaying high-resolution color pictures,  graphics and text. A third processor
enables the unit to play audio clips for weather forecasts, voice advertisements
or audio alarms set for when a futures contract or stock price reaches a pre-set
price. In addition, this processor can send and retrieve information by using an
internal modem connected to a phone line.  Additional processors may be present,
as necessary,  based on the method of information  distribution technology used,
such as satellite, VBI, etc.

     The ACE receiver can also  download  information  to a printer or computer.
This  receiver  is  equipped  with an  internal  hard drive  allowing  processed
information  to be stored,  archived  and  displayed.  The  receiver's  built-in
control panel,  keyboard or mouse allows  subscribers to conveniently  view this
information.

      One of  the  unique  aspects  of the  Company's  information  distribution
technology  is the computer  software  developed by the Company for use with the
broadcast  system that feeds data to the ACE  receivers.  This software  manages
information from a wide array of input sources,  runs routines,  sets priorities
and then  initiates  transmission  to the satellite.  The software  provides the
capability to individually  address each receiver unit placed with a subscriber.
This  permits  the  Company  to  transmit  specific  information  to a  specific
subscriber or group of subscribers.

     The Company leases FM radio side-band channels,  satellite channels and VBI
space to deliver the information to receivers used by the Company's subscribers.
All information is up-linked from Omaha to satellite (except  Internet,  Fax and
other  telephone  delivery  technology)  and  downlinked  from the  satellite to
subscribers based on their distribution technology.

                                       11
                                    - 745 -
<PAGE>

     FM monochrome  subscribers receive their information using FM antennas that
receive the information via side-band  signals  transmitted from radio stations.
The Ku subscribers  utilize a 30" satellite dish, a direct downlink,  to receive
their information.

     Early  in  1994,  the  Company  began  using a new  cable  TV  distribution
technology   involving  vertical  blanking  intervals  (VBI).  The  Company  has
contracted with a major cable TV superstation to transmit information along with
the station's TV signal. This technology  eliminates the need for FM antennas or
satellite dishes and is available to businesses or residences that are wired for
cable TV and receive the superstation's service.

     The  Company has  introduced  several  Internet  products  since 1995.  DTN
currently  offers  services  via the  Internet  for the  agricultural,  weather,
financial and energy  industries and plans to expand the services  offered using
this information  distribution  technology. A major milestone for DTN's Internet
services was the leasing of Internet  technology from SmartServ Online, Inc. for
the  real-time  streaming  quote  service  offered  by the  Company's  Financial
Services Division (www.dtniq.com)(see page 33).

     In 1998,  the Company  began  delivering  services to customers  via direct
leased line  circuits.  This gives  customers  in major  metropolitan  areas the
ability to receive the Company's  information  where options,  such as satellite
dishes, are impractical. In many instances, this technology provides a redundant
delivery method to insure maximum availability of the Company's information.

     At the end of 1998, DTN Marine Center, a specialty  weather service,  began
delivering  its  information  via DIRECTV's  satellite  system.  Information  is
received  directly into the subscriber's  computer from an 18-inch DIRECTV dish.
This  initial  product  rollout  is  expected  to be the first of many using the
newest information  distribution  technology.  The new product launch also marks
the  introduction  of DTN for  Windows,  a software  product  for the PC using a
satellite  dish which is capable of  operating  without an ACE receiver or other
external hardware devices.

     The  following  is a summary of  subscribers  by  information  distribution
technology at December 31, 1998.


<TABLE>
<CAPTION>

Information Distribution Technologies       Subscribers

<S>                                          <C>    
Ku-Band Satellite                            144,800
Internet                                       4,700
FM Radio Side-band                             8,400
VBI                                            1,300
Lease Lines/DIRECTV                              100
TOTAL                                        159,300

</TABLE>

     The Company has approximately 15,000 customers receiving  information using
Fax technology. The e-mail business is primarily a subscriber (an e-mail source)
communicating specific messages to a group of subscribers.  There are over 1,200
e-mail sources delivering over 3,500 pages of information to subscribers daily.

                                       12
                                    - 746 -
<PAGE>



Services and Equipment Offered

     The  Company's  revenue  is  derived  primarily  from six  categories:  (1)
monthly,  quarterly or annual subscriptions,  (2) equipment sales (3) additional
(optional) services, (4) communication services, (5) advertising and (6) service
initiation fees. The percentage of total revenue for each category over the last
three fiscal years was:


<TABLE>
<CAPTION>

                           1998     1997     1996
<S>                         <C>      <C>     <C> 
Subscriptions               80 %     80 %    76 %
Equipment Sales              3 %      -       -
Optional Services            5 %      5 %     6 %
Communication Services       7 %      8 %     9 %
Advertising                  3 %      3 %     3 %
Service initiation fees      2 %      4 %     6 %
</TABLE>

     Subscription  revenue  is  generated  from  monthly,  quarterly  or  annual
subscription  fees  for one of the  Company's  services.  The  Company  offers a
discount  to  subscribers  who  pre-pay  their  subscriptions  annually.  A more
detailed review of each service is found later in this report.

     A new  business  unit  of  the  Company,  DTN  Kavouras  Weather  Services,
generates  equipment sales of weather  systems,  workstations  and weather radar
systems.  DTN Kavouras Weather Services' weather systems and workstations  allow
customers  to receive  weather  information  provided by the Company for monthly
subscriptions.  This  business  unit also builds small and large  doppler  radar
systems.

     Optional  services  are offered to  subscribers  on an "a la carte"  basis,
similar  to  premium  channels  on cable TV. A third  party  primarily  provides
information  for these  services with DTN receiving a share of the  subscription
revenue paid by the subscriber.  Optional  services revenue continues to grow in
total dollars at a rate commensurate with the overall growth of the Company due,
in part, to new technological innovations using the Internet.

     The  Company   sells   communication   services   allowing   companies   to
cost-effectively  communicate  a large  amount  of timely  information  to their
customers or field offices.  This category  includes revenue  generated from FAX
and e-mail services.  Communications  revenue continued to grow in total dollars
and management believes this area offers opportunities for future growth.

     The  Company  sells  advertising  interspersed  among the pages of news and
information,  similar to a newspaper or magazine. The advantage of an electronic
advertisement  over typical  print media is the ability to change or replace the
advertising  message  quickly and as  frequently as market  conditions  dictate.
Advertising  revenue  maintained  the same  percentage  of total  revenue due to
subscriber  and  subscription  revenue  growth  as well as the  addition  of new
services with available advertising space.

     Service   initiation  fees  are  one-time  charges  for  new  subscriptions
depending on the service and the information distribution  technology.  DTN also
charges an initiation fee for those  subscribers  who convert to another service
(i.e. from a monochrome FM to a Ku color service).


                                       13
                                    - 747 -
<PAGE>

<TABLE>
<CAPTION>
INDUSTRY SERVED AT A GLANCE
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY/SERVICE                                                                   TRANSMISSION/RECEIVER                    PRICE
--------------------------------------------------------------------------------   --------------------------------------   -----

<S>                                                                                <C>                                      <C>
Industry/Service                                                                   
The Agricultural Industry                                                                               www.dtn.com/ag/
DTN AgDaily(R)/  DTN  FarmDayta(R)  provides  agricultural  market  information,   FM-Side Band/Page Based Monochrome           $31
delayed  commodity  futures and options  quotes,  local cash grain and livestock   Ku-Band Satellite/Page Based Monochrome      $37
prices,  regional  and world  weather  updates and a variety of daily  analysis,   Ku-Band Satellite/ACE Color System       $46-$54
commentary and news affecting grain and livestock prices.

DTN AgDayta  (www.agdayta.com)  provides an Internet solution combining the best   Internet/Subscribers' PC                     $25
of DTN AgDaily and DTN FarmDayta for up-to-date  agricultural weather,  markets,
news and commentary, quotes, local cash grain and livestock prices.

DTN Pro SeriesSM/ DTN FarmDayta  Elite Plus(R)  provides  services with advanced   Ku-Band Satellite/Ace Color System       $60-$84
information  sources for ag  producers,  agribusinesses  and  commodity  traders
requiring extensive information to be customized for their specific needs.

DTNstant(R)  provides  real-time  futures  and  options  quotes,   comprehensive   Ku-Band Satellite/Ace Color System       $180 (2)
analytics and headline  commodity  news from Bridge and Future World News.  This
service also includes all the information found on DTN AgDaily.

DTNironSM provides an equipment locator and inventory management service for the   Ku-Band Satellite/Ace Color System           $102
farm  implement  dealer.  It is  designed to allow  dealers to work  together in
locating, buying and selling used farm equipment with other dealers/subscribers.

DTN PROduce(R)  provides  comprehensive  weather,  DTN's price discovery network   Ku-Band Satellite/Ace Color System       $65-$94
(DTNdexSM),  transportation  information  and  news for the  growers,  shippers,   Internet/Subscribers' PC                     $63
packers, brokers, retailers and institutions linked to the produce industry.

DTN  Cotton  Network  provides  an  electronic  marketing  system for the cotton   Ku-Band Satellite/
industry. The service allows gins, brokers, buyers, and warehouses to share data    Ace Color System               $.50/bale listing
allowing fast and accurate marketing and accounting of cotton offered and sold.

The Weather Industry                                                                                              www.dtnweather.com
DTN Weather Services
DTN Weather Center(R)/DTN Online
(www.dtn.com/dtnonline/security/loginscreen.cfm)    provides   a   comprehensive   Ku-Band Satellite/ACE Color System           $76
weather  information  system  to meet  the  weather  information  needs  of many   Internet/Subscribers' PC                     $25
industries.  Subscribers  to DTN  Weather  Center  rely on  accurate  and easily
accessible weather information as a critical ingredient in operating, operations
planning, and staffing decisions.

DTN Aviation CenterSM provides  comprehensive  aviation weather specifically for   Ku-Band Satellite/ACE Color System     $118-$152
pilots,  airports  and Fixed  Base  Operators  (FBO's).  This  service  supplies   Internet/Subscribers' PC                     $45
airports, pilots and FBO's with comprehensive flight planning and operations.

DTN  Broadcast  Weather  provides  comprehensive  local,  regional  and national   Ku-Band Satellite/ACE Color System          $101
weather  forecasts  plus  national  and  international  news  for the  broadcast
industry. The Weather Industry-continued
</TABLE>
                                       14
                                    - 748 -
<PAGE>
<TABLE>
<CAPTION>

INDUSTRY/SERVICE                                                                   TRANSMISSION/RECEIVER                    PRICE
--------------------------------------------------------------------------------   --------------------------------------   -----

<S>                                                                                <C>                                      <C>

The Weather Industry-continued
           
DTN  Contractor  DaytaSM  provides  construction  businesses  with  industry and   Ku-Band Satellite to ACE Color System     $86-$99
association news, construction and bid specifications along with all the weather   Internet/Subscribers' PC                      $35
information affecting the construction company.

DTN  Forestry  CenterSM  provides  specialty  weather  services  targeted at the   Ku-Band Satellite to ACE Color System         $91
District Forest Management offices in the continental United States and Canada.


DTN  Marine  CenterSM  provides  specialty  weather  information  for the marine Ku-Band Satellite to ACE Color System     $91-$106
industries, including coastal sea condition forecasts, marine buoy data for wind DIRECTV                                   $91-$106
and weather, temperature conditions and sea surface temperature maps.

DTN Transportation  Weather provides  time-sensitive and often critical,  local, Ku-Band Satellite to ACE Color System     $86-$98
regional  and  national  weather  forecasts  for  transportation  professionals.
Subscribers have a choice of receiving immediate notification through a pager or
via DTNonline, DTN Weather Center's Internet service.

DTN Travel CenterSM provides weather,  news,  markets and sports  information to Ku-Band Satellite to ACE Color System         $88
motel and hotel  customers.  This  service is targeted at motels and hotels with
50+  rooms and  includes  road  condition  forecasts  and  special  notices  for
travelers.

DTN Turf ManagerSM  provides  weather  information to individuals and businesses Ku-Band Satellite to ACE Color System         $82
involved in  turf-related  operations  such as outdoor sports  facilities,  golf
courses, lawn maintenance, landscaping and sod farms. The service provides news,
weather and specialty information designed for turf management.

DTN Weather Safety Center provides  valuable weather  information,  warnings and Ku-Band Satellite to ACE Color System     $86-$98 
alerts to emergency  management  professionals and anyone who is responsible for
protecting  lives and property from the hazards of severe weather.  This service
couples  with  the  DTN  Weather  Alert  Paging  System  to  provide   immediate
notification of severe weather to alpha pagers.

DTN Kavouras Weather  Services--Meteorological  Equipment TritonTM Doppler Radar Customizable                                - (3)
Series is a complete  line of  advanced,  fully  coherent  Klystron or TWT-based
Doppler weather radars,  representing the most powerful,  the most accurate, the
most  versatile and the most  cost-effective  Doppler radar  performance  in the
world. Users include broadcast television,  aviation,  universities,  government
and military.

TritonTM RT is a  real-time  3-D and 2-D  weather  and news  graphics  animation Customizable                                - (3)
system  focused on, but not limited to, the broadcast  television  market.  This
product uses weather data to create an informative and exciting weather show.

MetWorkTM  FileServer  is a robust and dynamic  network  solution for  real-time Customizable                                - (3)
dissemination of meteorological information based on the versatile and efficient
NT format,  supporting  standard  Internet  communications  protocol and various
network configurations.
</TABLE>

                                       15
                                    - 749 -
<PAGE>
<TABLE>
<CAPTION>
INDUSTRY/SERVICE                                                                   TRANSMISSION/RECEIVER                    PRICE
--------------------------------------------------------------------------------   --------------------------------------   -----


The Weather Industry-continued                                                                                   www.dtnweather.com
DTN Kavouras Weather Services--Meteorological Services

<S>                                                                              <C>                                         <C>
Storm ProTM is a workstation  that  integrates  real-time  Doppler weather radar Customizable                                - (3)
with a  geographic  information  data system to create an accurate  display with
broadcast-quality appearance. The display can be individualized for a unique and
defining look important in the television market.

StormSentryTM  is  around-the-clock  storm  tracking  software  that  identifies Customizable                                - (3)
dangerous weather cells, analyzes their characteristics,  their locations, their
speeds, their directions, their estimated times of arrival...all automatically.

StormWatch(R) is customizable  software that monitors either a weather wire or a Customizable                                - (3)
DTN Kavouras  MetWork  Fileserver  to generate  color-coded  maps and/or a crawl
message for important watch, warning or advisory weather situations.  StormWatch
also allows a television  station to edit and prioritize  information  for their
viewing areas.

SchoolWatchTM  is customizable  software for the Triton RT that helps television Customizable                                - (3)
stations  easily update,  prioritize  and display  late-start and school closing
information.  This software can also be configured  to update  information  on a
station's Web site.

Data and Customizable  Forecasting  Services  provides a broad range of standard Customizable                                - (3)
data for a wide variety of markets.  In addition,  DTN Kavouras  staff  provides
24-hour,  365 days a year coverage for tailor-made  forecasts to meet customers'
special needs.

The Financial Services Industry                                                                                www.dtn.com/finserv/
DTN.IQ   (www.dtniq.com)   provides   cutting-edge   Internet   technology   for Internet to Subscribers' PC                $89(2)
tick-by-tick  quotes,  full-text  news,  intraday and historical  charts,  price
watches and alerts and more with a cost-effective  and efficient delivery method
for individual and professional investors.

DTN  Real-Time(R)  provides  real-time  quotes  on over  225,000  stocks,  stock Ku-Band Satellite or cable
options,  commodities,  and indexes,  plus news,  economic  data,  and financial  to Subscribers' PC                   $98-$118(2)
markets information.  This service delivers the information via a new generation
of DTN  proprietary  hardware  into a  subscriber's  PC where it is captured and
displayed through the use of DTN customer software or third-party software.

DTN  SPECTRUM(R)  provides  delayed  quotes,  business  news,  economic data and Ku-Band Satellite to ACE Color System         $68
financial  market  information.  This service is an enhanced version of DTN Wall
Street that includes custom programming.

DTN  SPECTRUM(R)RT  provides the same  information  as DTN SPECTRUM with futures Ku-Band Satellite to ACE Color System     $118(2)
provided in real-time.                                                           Cable TV-VBI to ACE Color System          $118(2)

DTN Wall Street(R)  provides delayed financial quotes plus in-depth economic and Ku-Band Satellite to Page Based Monochrome    $44
business news, financial information.  The Financial Services Industry-continued Cable TV-VBI to Page Based Monochrome         $44
</TABLE>

                                       16
                                    - 750 -
<PAGE>

<TABLE>
<CAPTION>


INDUSTRY/SERVICE                                                                   TRANSMISSION/RECEIVER                    PRICE
--------------------------------------------------------------------------------   --------------------------------------   -----


<S>                                                                              <C>                                           <C>
DTN    FirstRate(R)    provides    wholesale    mortgage    rates    and    U.S. Ku-Band Satellite to Page Based Monochrome    $98
Agency/Mortgaged-Backed Securities prices in an easy-to-use standard format.     Cable TV-VBI to Page Based Monochrome         $98
                                                                                 Ku-Band Satellite to ACE Color System        $129
                                                                                 Cable TV-VBI to ACE Color System             $129

DTN  FirstRate+(R)  provides the same  information  as DTN  FirstRate  with U.S. Cable TV-VBI to ACE Color System          $179(4)
Treasury futures, all other futures and futures options provided in real-time.

National Datamax provides  software and data services to financial  planners and
independent  brokers for a comprehensive  financial picture pinpointing the best
investment options for their customers.

The Energy Industry                                                                                                  www.dtnergy.com
DTNergy(R) - Refined Fuels provides  terminal  prices,  alerts,  electronic fund Ku-Band Satellite to Page Based Monochrome    $40
transfer  notifications and other communication services from Petroleum Refiners Ku-Band Satellite to ACE Color System         $80
to their customers (also DTN Subscribers).

DTNergy(R)  - Natural  Gas and  Electricity  provides  instant or delayed  NYMEX Ku-Band Satellite to ACE Color System    $40-$180
energy options and futures quotes, weather, news and industry information.

Prophet X  (www.fimi.com)  provides access to DTNenergy's  real-time market data Internet to Subscribers' PC                  $218
using Financial Information Management Inc.'s (FIMI) client-service  software on
the Internet.

EnergyView  (www.energyview.com)  provides  real-time data for the international Internet to Subscribers
energy  markets on the Internet.  This service was the result of a joint venture
with DTN and GlobalView Software.

Other Services & Joint Ventures                                                                                   www.dtn.com/auto/
DTNautoSM  provides a communication  and information  service for the automobile Ku-Band Satellite/ACE Color System       $84-$169
industry including wholesale and retail values on new and used vehicles,  a used
car  inventory   locating   service  and  direct   communication   services  for
manufacturers and automobile auctions.

DAT  Services  provides an  information  communication  system for the  trucking Ku-Band Satellite/ACE Color Sytem          $90(4)
industry that provides load and truck matching on a database of 80,000  listings
updated daily.

TracElectric  provides an equipment  locator service for the electric  equipment Ku-Band Satellite/Page Based Monochrome   $100(5)
industry with over 100 pages of new, remanufactured, surplus and used electrical
equipment listings.

DTN Missing Children  Information CenterSM provides instant transmission of data Ku-Band Satellite/ACE Color System        -(6)(7)
regarding children in danger to local, regional, national and Canadian outlets.


<FN>

1  Prices are based on a monthly  subscription  price.  DTN offers discounts for
   annual prepayments. Prices are subject to change.

2  Plus Exchange Fees.

3  Customized  configurations  to meet a wide  variety  of  customer  needs  are
   offered at competitive prices.

4  DTN receives this fee from DAT Services.

5  DTN shares revenues with TracElectric.

6  Currently provided on all ACE Color Systems.

7  Sponsorships of kiosk programs are offered at $7,500 for two years per kiosk.

</FN>
</TABLE>
                                       17
                                    - 751 -
<PAGE>

THE AGRICULTURAL INDUSTRY
-------------------------------------------------------------------------------
GRAPH IN TABULAR FORM:

<TABLE>
<CAPTION>
                                   1994       1995      1996       1997     1998
                                   ----       ----      ----       ----     ----
<S>                                 <C>       <C>        <C>       <C>      <C> 
DTN Agricultural Services Revenue
          ($ millions)              33.7      44         69.7     87.6      88.3
  
</TABLE>

DTN Agricultural Services
      The DTN  Agricultural  Division  consists  of  five  major  services:  DTN
AgServices, DTNstant, DTN PROduce, DTNiron, and DTN Cotton Network.

      New  subscriptions  are primarily sold by the Agricultural  Division's own
dedicated sales force. These individual sales  professionals began working under
the direct control of the Ag Division in August 1998. The ag sales force is made
up of district sales  representatives,  in-house sales staff,  and  independent,
commission-only sales  representatives.  By dissolving the former national sales
group into a smaller,  more focused staff,  the division is able to provide more
knowledgeable   and  service  oriented  sales   professionals  for  current  and
prospective customers. DTN AgServices,  DTNstant and DTNiron each have their own
individual group of sales professionals, selling their basic products. For these
three services, the prospective customer base is essentially the same, and these
sales  professionals are encouraged to sell any of the products  associated with
Ag when the  opportunity  presents  itself.  DTN PROduce  deals with a different
prospect than the normal  livestock and grain farmer,  and therefore DTN PROduce
sales  professionals  sell  primarily  to  produce  oriented  prospects.  The Ag
Division  provides  its  sales  force  with  leads  that  are  obtained  through
telemarketing,  direct mail, print media advertising,  customer  referrals,  and
Internet advertising.

      The main  competition  to these  services  is the  combination  of printed
advisory services,  radio,  television,  telephone,  other satellite information
services,  Internet  services,  and the  changing  of old  information-gathering
habits.

      There are over 200 premium  (optional)  services available to agricultural
subscribers to enhance the primary product subscriptions. These premium services
consist of advisory, informational and educational products as well as newswire,
association  and additional  free services.  DTN subscribers can customize their
DTN unit to meet  specific  needs by  choosing  from a broad  mix of these "a la
carte"  services.  DTN is continually  developing  new premium  services to meet
customer  demands by listening  closely to the  marketplace and to the customer.
Premium  services are marketed  through a combination of individual free trials,
system-wide  trials,  on-screen  advertising,  direct  mail,  invoice  stuffers,
equipment stuffers, and telemarketing. Premium Services' prices range from $6 to
$1,200 per quarter. The average subscription price is $60 per quarter. Effective
marketing campaigns helped to increase premium service sales in 1998.

      Communication services (DTN InfoMail) plays an important role in providing
a cost effective means to reach a large number of targeted  customers  daily. At
the touch of a button,  subscribers  have instant  access to messages 24 hours a
day. DTN  InfoMail  customers  receive  information  tailored to their  specific
needs.  The  service  provides  information  for  elevators,  seed  sales  reps,
agronomists,  chemical  sales reps and technical  advisors,  commodity  brokers,
processing  plants,  feedlots  and  anyone  with a need  to  communicate  to DTN
subscribers. Over 75 new InfoMail providers began messaging in 1998.

      Advertising  on DTN Ag  Services  plays  a major  role  in the  division's
revenue. The Advanced  Communication  Engine (ACE) satellite receiver,  with its
animation and inter-active ability, provides an excellent avenue for advertising
sales.  With the  development  of the ag  Internet  service,  (www.agdayta.com),
advertising  will have a new avenue in which to grow.  In 1998,  the Ag Division
sold over $3.2  million in  advertising  space to  numerous  ag  industries,  ag
chemical and seed companies, and equipment and finance businesses.

DTN Ag  Services  Review  
      Approximately 80% of DTN Ag Services' subscribers are farmers or livestock
producers   with  the  balance   consisting   primarily   of  grain   elevators,
agribusinesses and financial  institutions.  Subscribers to DTN Ag Services farm
nearly one third of the nations  total  cropland and market more that 50% of the
nation's cattle and hogs.

      FarmDayta was the primary  competition for DTN AgDaily until May 1996 when
DTN acquired Broadcast Partners.  The addition of FarmDayta gives DTN AgServices
a fully  integrated  agricultural  product line with price entry points across a
wide  spectrum,  expanding  the  marketing  horizons  for all  DTN  agricultural
services. DTN maintains the DTN FarmDayta facilities in Des Moines, Iowa.

DTN AgDaily 
      DTN  AgDaily is an  agricultural  market  information,  quote and  weather
service. Subscribers receive delayed commodity futures and options quotes, local
cash grain and livestock  prices,  selected  regional and world weather updates,
and a variety  of daily  analysis,  commentary  and news that  affect  grain and
livestock  prices.  DTN AgDaily color  graphics  allows for an advanced  weather
segment  with  national  and  regional  radar maps  (updated  every 15 minutes),

                                       18
                                    - 752 -
<PAGE>

infrared  satellite cloud cover maps,  precipitation,  temperature,  jet stream,
surface  wind and snow cover  maps,  and much more.  The  subscriber  can custom
design high resolution charts and/or select from a library that holds over 1,000
charts.  The system is capable of custom programming the futures quotes pages to
display only the quotes desired.  The service also includes information segments
for specific crop and livestock enterprises as well as general,  business, sport
and entertainment  news.  AgDaily offers crop liability  insurance and livestock
profitability  calculators  through  use of the  inter-activity  feature,  which
allows subscribers to search a comprehensive database.

DTN Pro Series
     The DTN Pro/Premier  services feature a more advanced AgDaily product.  The
Pro Series enhanced functionality includes a high interest window to view future
or  options  quotes on any page as well as  keyword  search  that  automatically
searches the news story database for articles affecting the user's operation. It
also allows  subscribers  to  customize a segment  with up to five of the user's
favorite pages, and a personal library serving as a customized  archive segment.
There are seven DTN Pro  products,  all of which  include the  complete  AgDaily
service plus additional specific information:  Weather Pro, News Pro, Chart Pro,
Intraday Pro, Stock Pro, Premier and Premier Plus.

o    DTN Weather Pro provides 32 programmable  pages for creating unique weather
     information.  It allows  subscribers  to choose  from over 70 weather  maps
     including detailed regional,  state and zone forecasts,  and lets them zoom
     in on a particular spot on the map. These maps can also be put into motion.

o    DTN News Pro  provides the AP Online  service (a service of the  Associated
     Press),  an audio  summary  of the day's  agricultural  news as well as the
     general news of the day.

o    DTN Chart  Pro  includes  40 pages  for  programmable  charts  which  allow
     subscribers  to create an  extensive  "chart  book" for  analyzing  trends,
     patterns, and cycles.

o    DTN   Intraday   Pro  offers  the   ability   to  chart   market   sessions
     minute-by-minute  during the trading day. This allows subscribers to choose
     time intervals for charting to keep them abreast of the markets.

o    DTN Stock Pro provides  access to prices for over 50,000  issues of stocks,
     bonds and funds.  The service  includes stock quotes using either the quick
     quote feature or the programmable quotes pages. Additional features include
     a personal  library  for storing  news and  information  and high  interest
     windows  allowing  subscribers  to  constantly  monitor up to six  futures,
     options, stock or bond quotes.

o    DTN Premier combines Weather Pro, News Pro, Chart Pro and Intraday Pro into
     a comprehensive ag marketing and information package.

o    DTN Premier Plus includes all Pro products  (Weather  Pro, News Pro,  Chart
     Pro,  Intraday  Pro, and Stock Pro) into one complete  package for farmers,
     ranchers or agribusinesses  needing all the market information available in
     one convenient location.

DTN FarmDayta 
     DTN FarmDayta II is an agricultural market  information,  quote and weather
service  delivering  delayed  commodity  futures and options quotes,  local cash
grain and livestock prices,  selected regional and world weather updates,  and a
variety of daily analysis,  commentary and news that affects grain and livestock
prices.

o    DTNFarmDayta  Elite HD includes all the DTN  FarmDayta  II  features,  plus
     options  quotes,  charting,  weather maps and a receiver with a hard drive,
     which is  critical to  maintaining  storage of  information  during a power
     outage.

o    DTN FarmDayta  Elite Plus includes all of the  information  provided on the
     DTN FarmDayta  Elite HD, plus more advanced news (Reuters  Headline  News),
     quotes,  weather  (including motion and zoom capabilities) and programmable
     charts.  The Elite  Plus  product  is  similar  in  content  to the DTN Pro
     services.  DTN  FarmDayta  Elite Plus is  considered  the "top of the line"
     product in the FarmDayta line.
                                       
                                       19
                                    - 753 -
<PAGE>

DTN AgDayta 
     DTN  AgDayta  (www.agdayta.com)  is  the  company's  agricultural  Internet
service.  AgDayta  combines  DTN  FarmDayta  Elite Plus and DTN Premier  Plus to
produce the most content rich product offered by DTN Ag Services. DTN AgDayta is
designed for the  producer  preferring  to use his/her own personal  computer to
receive  information,  or for the  individual  that is not able to  utilize  the
traditional  satellite-based  system supplied by DTN. The information on AgDayta
includes animated weather maps, satellite and summary maps, short and long range
forecast maps,  news commentary and analysis,  plus unlimited  access to futures
and option quotes from all the major  exchanges.  Also  available on AgDayta are
commodities for energy, finance, currency, metals and other exchanges as well as
instant access to daily,  weekly and monthly commodity charts. The customization
capabilities  allow for the  organization of information that is most often used
for business decisions.

DTN AgBasic 
     DTN AgBasic was introduced in 1998 and is the most economical  agricultural
color satellite  system offered by DTN. The service came about through  requests
from prospective customers for a more condensed version of the AgDaily/FarmDayta
products. AgBasic was developed as a "start up" color service for the first time
DTN customer. The service includes select quotes for 20 futures and two options,
the national radar map, local weather,  state news, USDA Flash, USDA Pre-Report,
state  grains  and  livestock  bids,  FarmDayta  grains,   livestock  and  other
commentaries.

1998 DTN Ag Services Highlights
     The past year  brought  many  changes  and growth  opportunities  to DTN Ag
Services.  A major change was the  realignment  of the national sales force into
smaller,  more focused  groups.  Ag Services  introduced  two new products,  DTN
AgDayta,  the improved ag Internet  service and AgBasic,  a product designed for
the price conscious producer.

     DTN AgDayta replaces  FarmDayta OnLine as the company's  Internet option to
the satellite  delivery system.  AgDayta's  improvements  include a new look and
feel and combines the best of DTN Premier Plus and FarmDayta Elite Plus. AgDayta
offers more  choices in allowing  the user to  customize  his site with  weather
packages  and ag  commentary.  To date,  AgDayta has 2,500  subscribers,  a 150%
increase over last year's total.

     The AgBasic  product has brought in new sales as well as an effective means
of retaining current customers with financial difficulties. Offering a condensed
version of AgDaily and FarmDayta II packages,  AgBasic allows us to reach a new,
more  price  conscious  producer  who can  then  be  easily  upgraded  to a more
comprehensive system.

     In 1998,  Ag Services  also  announced  the addition of Futures  World News
(FWN) to its premium services package.  FWN is an extensive  commodity news wire
allowing a subscriber  to follow  up-to-the-minute  news stories  affecting  the
commodity market. This product was formerly available only on DTNstant.

     In  addition,  DTN  teamed up with  Stewart  Peterson  to  provide  Stewart
Peterson's  Marketing Tudor, free of charge, to all new customers.  This program
guides the farmer through the  intricacies of trading and following the markets.
While helping customers become more actively involved in marketing,  we are also
able to increase the value of DTN.

     In early summer 1998, in response to rapidly falling commodity prices,  DTN
began posting the Loan  Deficiency  Payment (LDP).  LDP is a "safety net" put in
place by the federal  government to protect farmers should commodity prices fall
below pre-set levels.  The LDP is the amount a farmer could get for his product,
from the government,  on any given day, which covers the difference  between the
price given on his crop,  used as collateral  for obtaining a 9 month  operating
loan,  and the price at which he could  currently  sell.  Each  commodity  has a
different LDP, which changes every day and varies, from county to county. Access
to this critical information has been the difference,  for some farmers, between
success and selling the farm.

     In an economy of falling  prices and farm  consolidations,  DTN Ag Services
recognizes that to remain  competitive,  we need to continue to look for ways to
expand into new markets,  and we must be  increasingly  aggressive in generating

                                       20
                                    - 754 -
<PAGE>

more revenue from current customers. In this vein, we have moved headlong into a
program of upgrading current customers from our basic entry-level service to the
more sophisticated  higher-end  services.  This endeavor has proven tremendously
successful.

     The future of DTN Ag Services looks even more exciting and rewarding.  With
more new niche market products,  more premium service  options,  and our upgrade
program,  the  potential  for  continued  growth is strong for DTN Ag  Services.
Coming in 1999 is another service option for customers,  DTN Ag for Windows. The
same  information-packed  product our customers  already enjoy will be available
through  DIRECTV.  With  DIRECTV  technology,  our  customers  will  receive the
information they want, the way they want to receive it. We are excited about the
potential of this new addition and look forward to a successful 1999.

DTNstant
     DTNstant is a leader in providing  satellite  delivery of real-time futures
and options  quotes from the major  commodity  exchanges and headline  commodity
news from multiple sources such as the Associated Press, Reuters,  Futures World
News and  Bridge.  The  service  also  provides  market-leading  cash  grain and
livestock  information,  in-depth charting capabilities plus all the information
available on the DTN AgDaily color service.

     In addition, the service provides information for the energy, metals, softs
(ie:  orange  juice,  coffee,  cocoa),  transportation  and  lumber  industries.
DTNstant uses compatible  software to allow the "pass thru" of data and graphics
into a computer's  local area network  (LAN).  With this  capability,  a DTN ACE
receiver can feed  information to multiple  users/traders on the LAN. This "pass
thru" software opens new markets by utilizing information  distribution within a
customer's LAN, enhancing analytical capabilities.

     Other valuable features are  user-programmable  formulas for data analysis,
high  interest  windows  to  include  news  stories,   and  increased   keyboard
functionality.

     DTNstant  operates  in a very  competitive  market with many  providers  of
instant commodity quotes. The primary subscribers are commercial grain companies
and elevators,  feedlots,  commodity brokers and commodity speculators. No other
service  in the  industry  offers  a more  comprehensive  news  and  information
service.  Due to the  nature of this  industry,  the  Company  provides  on-site
service and installation by professional service technicians.


     In February 1997, DTN acquired 500 subscribers  (mainly grain elevators and
brokers) from Market Quoters and Northern Data Services.  These  subscribers are
located in Minnesota,  the Dakotas and Iowa. In March of 1997 DTNstant  acquired
2,400 subscribers from Market Communications Group LLC (MCG).

     The MCG  acquisition  made it  possible to  redistribute  Reuters  news,  a
renowned  leader,  to  the  DTNstant  subscribers.   The  service  now  provides
unparalleled  information  and strategic  news for commodity  traders  including
access to additional international information, news packages for softs (coffee,
sugar, cocoa and orange juice), metals and energy.

1998 DTNstant Highlights
     DTNstant  experienced  a dynamic  1998 with most of the  subscriber  growth
occurring via LAN (Local Area Network) subscribers.  The individual  subscribers
(nodes) access DTN data through a 3rd party software provider.  They receive all
of DTNstant's  data combined with the technical  capabilities  that the software
and the computer's desktop allow.

     Due to the location of many new DTNstant subscribers,  the product has also
been  made  available  via  leased  landline  or the  Internet.  Both  of  these
information delivery methods are popular with the growing metropolitan  customer
base.

DTNiron
     DTNiron is a cost-effective  communication resource for the farm implement,
construction,  truck and trailer dealers which provides an equipment locator and
advertising service for dealers at the wholesale and retail levels.

     A detailed implement listing remains on the DTNiron system for a minimum of
30 days,  renewable at the dealer's request.  Subscribers receive industry news,
financial information,  economic indicators and information from the DTN AgDaily
service.

                                       21
                                    - 755 -
<PAGE>

     In 1997, DTNiron added retail equipment listings to its newly developed web
site  on  the  Internet  (www.dtniron.com).  This  allows  subscribers  to  gain
additional  exposure for their listings at no additional charge.  Internet users
can easily  locate  equipment  for sale by using a  drill-down  database  search
engine  directing  them to  DTNiron's  complete  web  listing.  Dealers can also
receive e-mail from  potential  buyers or, if they are not e-mail  enabled,  DTN
will call or fax the message to the dealer.

1998 DTNiron Highlights
     Agrisurfer  (www.agrisurf.com),  an Internet Search Engine for agricultural
websites repeatedly reported DTNiron's Website  (www.dtniron.com)  as one of the
top ten agricultural  websites in 1998.  Daily traffic at DTNiron's  website has
more than tripled in the past year.

DTN Cotton Network
     DTN Cotton  Network is an electronic  communications  system for the cotton
industry  designed  to  operate on a user's  personal  computer  using  software
developed  specifically for cotton  accounting and marketing.  Based in Lubbock,
Texas,  with an office in Memphis,  Tennessee,  the Network  serves its customer
base in the mid-South and Southeast.

     Users  dial  into a DTN data  center  via modem to  upload  bale  ownership
information  and to  list  cotton  for  broadcast  to  prospective  buyers.  The
information  is broadcast via DTN Ku-band  satellite and passed through a serial
port into the personal computers located at both buyer and seller locations.

1998 DTN Cotton Network Highlights
     In March of 1998,  DTN purchased the assets of Cotton Data Systems (CDS) in
Memphis,  Tennessee,  adding cotton gin and warehouse accounting software to its
current  marketing  network  product.   This  acquisition  added  250  gins  and
warehouses to its customer  list.  In addition to gin and warehouse  cotton bale
accounting  systems,  the DTN Cotton Network sells marketing  software developed
for the needs of cotton  merchants.  The software is sold and supported from the
Memphis operations.

     DTN also  purchased  the  cotton gin  customers  of  Challenger  Systems in
Tennessee,  adding more than 20 cotton gins to the gin bale accounting  customer
base in west Tennessee.

DTN PROduce 
     DTN PROduce is an  authority  in providing  the produce  industry  with the
timeliest  information  available  through use of satellite  technology  and the
Internet  (www.dtn.com/ag/produce).  Weather, market conditions,  transportation
information, and news are the four main components with the greatest impact on a
subscriber's  daily  operation.  DTN PROduce has become the industry's  accepted
source for receiving this information.

     Price Link was introduced in 1997 allowing  subscribers to send and receive
real-time  pricing  information  for  a  fraction  of  the  time  and  money  of
conventional  faxing  methods.  The service allows  suppliers to advertise their
products  or announce  available  inventories  to buyers.  Prices can be quickly
changed, added or downloaded from the DTN service to a personal computer.

DTN
     PROduce  continues to network  itself with the major players in the produce
industry  by  providing  the  necessary  tools  to save  time,  make  money  and
communicate  pricing and other information at a fraction of the time and cost of
other existing systems.

1998 DTN PROduce Highlights
     DTN PROduce  introduced  several  improvements  to the Price Link  service,
which  included   updating  the  methods  for  sending  and  receiving   pricing
information. The service also continues to expand and upgrade its information on
the  Internet  (www.dtn.com/ag/produce)  with  50%  of  its  customer  base  now
accessing  produce  information  using  this  form of  information  distribution
technology.

                                       22
                                    - 756 -
<PAGE>


THE WEATHER INDUSTRY
-------------------------------------------------------------------------------
GRAPH IN TABULAR FORM:

<TABLE>
<CAPTION>
                                   1994       1995      1996       1997     1998
                                   ----       ----      ----       ----     ----
<S>                                 <C>       <C>        <C>       <C>      <C> 
DTN Weather Services Revenue        0.0       1.0        5.6       10.7     25.8
          ($ millions)             
  
</TABLE>

DTN Weather Services
     DTN Weather Services consists of three major components, DTN Weather Center
Services,  Kavouras, Inc. and Weather Services Corporation (WSC). Kavouras, Inc.
was  acquired by DTN on July 1, 1998 and is now doing  business as DTN  Kavouras
Weather  Services.  DTN acquired WSC on December 11, 1998. The addition of these
two  companies  truly  makes  DTN a leader  in the  weather  industry  providing
critical weather  information and meteorological  equipment to small businesses,
military, federal government,  broadcast television,  major utilities,  Internet
portals and everyone in between.

     DTN Weather  Services'  future  plans are to  concentrate  on the  untapped
middle  markets where  customers  number in the tens of thousands.  The Internet
also  provides  many  additional  opportunities  for growth such as  advertising
supported sites, monthly subscription sites, "pay-per-view" sites, etc.

     DTN Weather  Services  employs a dedicated  weather  sales force made up of
nearly 100 sales  professionals for its sales and marketing efforts.  This sales
force is unique to DTN in the  weather  industry  and is a major  reason for the
success of the division.

     Weather  information  is always  in high  demand  for many  small and large
businesses  as  well  as   individuals   planning  their  vacation  and  outdoor
activities. DTN Weather Services has a handful of competition from several large
private  weather  companies.  Television  and the  Internet  also  provide  some
competition  on a smaller scale,  but lack the timeliness and local  information
the DTN service  provides.  DTN Weather  Services  constantly looks for more and
better  ways to  provide  this  critical  information  to its  customers  in the
quickest, most dependable and cost effective way.

DTN Weather Center
     DTN Weather Center is a comprehensive  weather  information system designed
to meet the weather information needs of many industries.  Markets  specifically
targeted by DTN Weather  Center are golf  courses,  turf  management,  emergency
management,   state  transportation   departments,   public  works  departments,
construction, broadcast and aviation. DTN Weather Center introduced new products
in  1998  designed  especially  for the  broadcast,  transportation  and  safety
industries.

     DTN  Weather  Center  provides  more  than 100  full-color  maps and  other
in-depth  weather  information,  from local forecasts and regional radar maps to
national infrared satellite images. The service provides short-range  (immediate
to 48-hour) forecasts, long-range (30-90 day) outlooks and 10-day city forecasts
for more than 550 major cities across the United States. A personal programmable
segment  allows users to customize  maps and the archive  feature  easily stores
maps for future reference.

     DTN Weather Center provides the important weather  information and planning
tools to make businesses safer, more profitable and easier to manage.

DTN Aviation Center
     DTN Aviation Center is a comprehensive  aviation weather package  specially
designed for pilots, airports and Fixed Based Operators (FBO's),  supplying them
with  the  extensive  flight-plan  information  found on many  premier  "online"
systems.

     This package includes U.S. and regional  depiction maps,  24-hour low-level
significant weather prognosis, U.S. region winds and temperatures aloft and also
METAR (the aviation acronym for airport observations) and TAF (Terminal Aerodome
Forecast)  information.  Subscribers  use  DTN  Aviation  Center  during  flight
services to visualize  current  weather  conditions  while creating their flight
plans. This service also aids in determining alternate route destinations.

     Subscribers   choose   from  the  Level  I   service,   designed   for  the
local/regional  flyers up to 18,000 feet, or the Level II service,  designed for
pilots and airports  flying  nationally up to 45,000 feet.  The Level II service
also provides European flight information.

                                       23
                                    - 757 -
<PAGE>

DTN Broadcast Weather
     DTN Broadcast  Weather is a weather and news  information  service designed
for the broadcast  industry.  Along with the comprehensive  local,  regional and
national weather forecasts and information, subscribers receive National Oceanic
and Atmospheric Administration Warnings & Alerts (NOAA).

     Learfield  World & National  News  Summary  provides  hourly  summaries  of
international  and national news. The segment  contains 20 pages,  formatted for
about two to three  minutes  of "rip and  read".  Announcers  can  organize  the
material, print it out or read it right off the DTN screen.

DTN Contractor Weather
     DTN  Contractor  Weather is  designed  for the  construction  industry  and
includes  construction-related  news and information,  which gives subscribers a
competitive  advantage.  This  service  provides  valuable  weather  information
necessary for important day-to-day business decisions.

     Job site weather  management  options  include the DTN Weather Alert Paging
System, which provides immediate  notification of severe weather directly to the
user's alpha pager, and DTNonline  (Weather  Center's  Internet  service).  NOAA
Weather  Wire and Severe  Weather Maps are  included in DTN  Contractor  Weather
Level II, along with the subscriber's  choice of the Weather Alert Paging System
or DTNonline.

     The service is a practical tool in improving employee safety,  saving labor
and material costs, and providing  effective  scheduling and staffing management
for the construction industry.

DTN Forestry Center 
     DTN  Forestry   Center  provides   critical  forest  fire   information  to
subscribers.  Previously,  district  forest  service  offices  relied on a modem
network  assembled  in the late  1960's for crucial  information  on forest fire
locations and fire weather forecasts. With DTN Forestry Center, forecast service
district  managers  quickly  access fire  weather  text  bulletins  along with a
comprehensive set of weather maps.

     Bulletins  provided  for the forest  service  markets  are  Forest  Weather
Forecasts, Red Flag Warnings, Fire Danger Indexes, Fire Weather Observations and
Fire Weather Notices. A special chapter of fire weather maps provides additional
information such as Haines Fire Index,  Current and Forecast Relative  Humidity,
Current and Forecast Wind Speed and Direction,  upper air analysis from 5,000 to
10,000 feet,  and moisture index  information  from both the Crop Moisture Index
and Palmer Drought Index.

DTN Marine Center 
     DTN Marine Center provides  satellite-delivered weather information for all
areas of the marine  industry.  The service provides  information  necessary for
cost-effective,  efficient decision making regarding towing,  shipping,  salvage
and recreation.  It includes Lake and Marine Text Bulletins,  Buoy Reports, Lake
and Marine Maps and Tide Tables, as well as general weather  information and sea
conditions.

     New to the  product  in 1998 was the  addition  of DTN  OnBoard,  a service
allowing the user to receive DTN Marine  Center  through a DIRECTV dish on their
PC while at anchor or underway.  Sea Surface  Temperatures are also available as
an optional service.

DTN Transportation Weather
     DTN  Transportation  Weather is designed  for anyone  responsible  for road
maintenance or whose business depends on road conditions.  Comprehensive  local,
regional  and  national  weather  forecasts  and  information  are  available to
transportation professionals, allowing them to make informed decisions regarding
the weather.

                                       24
                                    - 758 -
<PAGE>

     Subscribers  have the  choice of the DTN  Weather  Alert  Paging  System or
DTNonline  (DTN Weather  Center's  Internet  service).  The Weather Alert Paging
system provides immediate  notification of severe weather directly to the user's
alpha pager. DTNonline enables the subscriber to make management decisions based
on weather at home or away from the office with a PC.

     NOAA  Weather  Wire and  Severe  Weather  Maps,  Travel  Cast Maps and Road
Conditions,  and EarthSAT Winter Weather  Information are important  features of
this product.

DTN Travel Center 
     DTN Travel Center is an  interactive  hotel guest service  designed for the
hospitality  and travel  industries.  The service targets hotels and motels with
50+ rooms and includes NEXRAD  Real-Time Radar Maps,  travel  forecasts and road
conditions,  detailed  city and  national  forecasts,  national  and world news,
sports and sports  scores.  In  addition,  the  service  provides  business  and
financial news and market quotes and indexes.

     DTN Travel Center  provides a  comprehensive  weather and news  information
package for both the business and vacation traveler.

DTN Turf Manager 
     DTN Turf Manager is available to  businesses  and  individuals  involved in
turf-related operations such as golf courses, lawn maintenance,  landscaping and
sod farms. The service provides the weather and chemical  information needed for
effective  turf  management,  making  the  safest,  most  cost-effective  use of
chemicals, labor and other resources.

     Material  Safety Data Sheets (MSDS) are available with Turf Manager,  along
with the C&P Press Turf Product Index, an information  database of more than 275
turf  pesticides.  Plant  Protection  Chemical  Product Labels were added to the
service in 1998. This important  segment  provides full information on chemicals
used in turf care and management.

     ThorGuard,  the  only  lightning  prediction  system  available,  warns  of
lightning  strikes  before they happen and is available as an optional  service.
Evapotranspiration Tables provide regional  evapotranspiration rates to plan for
watering and chemical application.

     Golf  information,  such as ESPN Sports  Ticker,  the National  Golf Course
Directory, GCSAA News and USGA News, is provided with DTN Turf Manager.

DTN Weather Safety Center 
     DTN Weather Safety Center  provides  weather  information for anyone who is
responsible  for  protecting  lives  and  property  from the  hazards  of severe
weather.  NOAA Weather  Wire,  the most  comprehensive  warning and alert system
available  today, is available with the service,  along with radar and satellite
images, local, regional and national outlooks.

     DTN  Weather   Safety  Center  is  invaluable   for  emergency   management
professionals.  Coupled with the DTN Weather  Alert Paging  System,  subscribers
receive immediate notification of severe weather directly to their alpha pagers.
Weather watches,  warnings and storm movement,  along with local weather updates
twice  daily for an  8-county  area of the user's  choice,  are  included in the
service.

1998 DTN Weather Services Highlights 
     DTN Weather Center increased its subscriber base in 1998 by more than 5,000
subscribers,  bringing the total  subscriber  count to over  18,000.  Government
agencies (emergency management and state transportation departments),  aviation,
golf and turf management, and construction-related businesses continue to be the
leading industries for DTN Weather Center.

     DTN Weather Safety Center and DTN Transportation Weather were introduced in
1998 and  immediately  became top  selling  services  for  Weather  Center.  DTN
Broadcast  Weather was also  introduced and is rapidly gaining a presence in the
broadcast industry.

                                       25
                                    - 759 -
<PAGE>

     DTN Weather Center is continuing to make its presence known as the industry
leader in  providing  timely,  accurate  weather  information  to a  variety  of
industries  and is gaining a strong  foothold in the  emergency  management  and
Department of Transportation (DOT) segments.  In 1998, the Minnesota DOT awarded
DTN  Aviation  Center  contracts  for more than 100 units for use in Fixed Based
Operations  (FBO's)  across  the  state.  The  State  of  Georgia,   working  in
conjunction  with a grant  from the  Federal  Emergency  Management  Association
(FEMA) purchased DTN Weather Center units for nearly 80 counties in Georgia.

     1998 also saw the  development  of  alternative  delivery  methods  for DTN
Weather Center services.  DIRECTV offers  subscribers the opportunity to receive
DTN  Weather  Center  information  through  their  PC's.  For  larger  companies
requiring multiple employee access, an Intranet system is also available.

     DTN Kavouras Weather Services is the result of the acquisition of Kavouras,
Inc. in July 1998. DTN Kavouras  Weather  Services is a total weather  solutions
resource,  providing  a full  spectrum of  advanced  meteorological  information
products and services  for  weather-dependent  applications  in  industries  and
governments  worldwide.  The  Minneapolis-based  subsidiary  of DTN produces the
world's  most  powerful  Doppler  radars,  real-time  PC  weather  workstations,
comprehensive  meteorological  training,  and a  massive  international  weather
database.  DTN Kavouras and its 140 employees offer an expertise level unmatched
in the industry.

     WSC was  acquired  by DTN in  December  of 1998  and is one of the  largest
sources  for   meteorological   consulting  and  worldwide   commercial  weather
information.  The strategic  acquisition  of WSC provides name awareness for DTN
Weather  Services  through  valuable   contracts  with  high  profile  customers
including  America Online Inc.  (NYSE:AOL),  the world's largest online service,
USA   Today   and   numerous   utilities,   broadcasters,   agribusinesses   and
municipalities.   Weather   Services   Corporation   is  based   in   Lexington,
Massachusetts.

     DTN  believes the  acquisition  of WSC is an  excellent  complement  to the
Kavouras  acquisition  as the two  businesses  serve  different  segments of the
weather  industry  yet  share  many  of the  same  customers  making  weather  a
one-stop-shop experience.

DTN Kavouras Weather Service 
Meteorological Equipment  
Triton Doppler Radar Series 
     Triton Doppler Radar Series is a complete line of advanced,  fully coherent
Klystron or TWT-based  Doppler weather radars,  representing  the most powerful,
the most accurate,  the most versatile and the most cost-effective Doppler radar
performance  in  the  world.  Users  include  broadcast  television,   aviation,
universities, government and military.

Triton RT
     Triton RT is a real-time  3-D and 2-D weather and news  graphics  animation
system  focused on, but not limited to, the broadcast  television  market.  This
product uses weather data to create an informative and exciting weather show.

MetWork FileServer  
     MetWork  FileServer is a robust and dynamic network  solution for real-time
dissemination of meteorological information based on the versatile and efficient
NT format,  supporting  standard  Internet  communications  protocol and various
network configurations.

Meteorological Services 
Storm Pro 
     Storm Pro is a workstation that integrates  real-time Doppler weather radar
with a  geographic  information  data system to create an accurate  display with
broadcast-quality appearance. The display can be individualized for a unique and
defining look important in the television market.

StormSentry 
     StormSentry is  around-the-clock  storm tracking  software that  identifies
dangerous weather cells, analyzes their characteristics,  their locations, their
speeds, their directions, their estimated times of arrival...all automatically.

StormWatch  
     StormWatch is customizable  software that monitors either a weather wire or
a DTN Kavouras  MetWork  Fileserver to generate  color-coded maps and/or a crawl
message for important watch, warning or advisory weather situations.

                                       26
                                    - 760 -
<PAGE>

     StormWatch  also  allows  a  television  station  to  edit  and  prioritize
information for their viewing areas.

SchoolWatch  
     SchoolWatch  is  customizable   software  for  the  Triton  RT  that  helps
television stations easily update,  prioritize and display late-start and school
closing information.  This software can also be configured to update information
on a station's web site.

     Data  and  Customizable  Forecasting  Services  provides  a broad  range of
standard  data for a wide variety of markets.  In addition,  DTN Kavouras  staff
provides  24-hour,  365 days a year coverage for  tailor-made  forecasts to meet
customers' special needs.

DTN Kavouras Weather Services Highlights 
     In  July,  DTN  acquired  Kavouras,  Inc.,  and in  late  1998,  reached  a
definitive  agreement  with  Weather  Services  Corporation.  A new force in the
meteorological  services  industry was created - DTN Kavouras Weather  Services.
Each team offered a unique specialty, and together formed a full-service weather
company with the  experience,  products and solutions to serve a diverse  client
base - from small-town  farmers to big-city  broadcasters - even  governments at
home and across the globe.

     The year brought the introduction of a new 3-D, free-form, fully functional
weather graphics system, the Triton RT. Its real-time  performance and stunning,
multi-plane,  animated  weather  and  news  graphics  have  caught  the  eye  of
broadcasters  around the world.  The system is currently  employed at television
stations in the United States,  Canada,  South America and Asia.  With the focus
and energy of DTN Kavouras  employees,  1999 will bring much advancement to this
young, innovative system.

     It was also an exciting year for the company's  Triton Doppler Radar (TDR).
The radar,  which  offers a  revolutionary  design and precise  performance,  is
sailing   the   seas   as   part   of   Boeing   SeaLaunch,    a   multinational
satellite-launching  group.  While  the TDR is "made to order" to meet a clients
needs for range and sensitivity, a "sea-worthy" model was a first. Modifications
were made to account  for the  rolling  waves,  as well as the ship's  speed and
direction.  The SeaLaunch TDR joins standard and special transportable models in
the  United  States,  Europe,  the  Middle  East  and Asia  (including  a system
currently being installed at the Haikou Airport on Hainan Island).

     There were also advancements to existing products. Advancements include new
software and hardware  features for established  systems,  new data products and
custom forecasting  services as well as an outstanding level of customer service
during a year of satellite communications difficulties.

                                       27
                                    - 761 -

<PAGE>

THE FINANCIAL SERVICES INDUSTRY
-------------------------------------------------------------------------------
GRAPH IN TABULAR FORM:

<TABLE>
<CAPTION>
                                   1994       1995      1996       1997     1998
                                   ----       ----      ----       ----     ----
<S>                                 <C>       <C>        <C>       <C>      <C> 
DTN Financial Services Revenue      5.1       6.1        8.6       10.3     13.4
          ($ millions)              
  
</TABLE>

DTN Financial Services
     DTN Financial  Services offers five primary  information  services,  DTN.IQ
(www.dtniq.com),  DTN RealuTime, DTN SPECTRUM, DTN Wall Street and DTN FirstRate
as well as a suite  of  business  applications  for the  financial  professional
through National Datamax, Inc., a wholly owned subsidiary.

     These services offer a complete line of fully  integrated  information  for
financial  professionals and individual investors.  As a full-service  provider,
DTN  Financial   Services   brings  together  a  broad  selection  of  financial
information  to  accurately  cover the  markets,  real-time  or delayed  quotes,
real-time business newswires, and an array of back-office applications including
client management systems and trading capabilities. DTN Financial Services' main
objective is to provide  comprehensive,  in-depth  financial  information  at an
affordable cost to its subscribers. This objective is critical due to the highly
competitive nature of the industry.

     DTN Financial  Services  integrates  information  from a variety of sources
such as Bridge, Liberty Brokerage and Market News Service,  ZionsBank,  UPI, New
York Times, PR Newswire, Business Wire, Futures World News, Dow Jones, AP Online
and others. In addition, a la carte, optional services offer subscribers an even
greater  variety of financial data including  stock selection and timing advice,
earnings  estimates,  fundamental  stock market data,  U.S.  Treasury quotes and
other financial market-related services. This combination allows each service to
maintain its competitive advantage in the market.


     Subscribers include individual  investors,  independent brokers,  financial
advisors and financial  institutions.  With competition coming from sources such
as commodity  news  services,  diversified  media  companies  and smaller  niche
providers,  DTN  Financial  Services  continues to  differentiate  itself in the
market by offering services that are broader in scope, yet remain  strategically
priced.

     DTN Financial Services revenue grew 29% in 1998, continuing its bullish 27%
compounded revenue growth for the past five years.

DTN.IQ 
     In May 1998,  DTN  Financial  Services  acquired a technology  license from
SmartServ  Online  (SSOL) along with their  existing  Internet  customers.  This
license  granted DTN exclusive  rights to market a real-time  Internet-delivered
quote and news service previously developed by SmartServ Online.  Renamed DTN.IQ
(www.dtniq.com),   it  was   released  in  June  1998,   with  new  pricing  and
functionality.

     DTN.IQ has begun to fulfill its initial  promise of satisfying the needs of
investors  and traders who prefer to use the Internet as a market data  delivery
channel.  By year-end,  DTN.IQ had begun to generate  positive cash flow and had
become the fastest-growing service released by DTN Financial Services.

     In addition to providing streaming real-time quotes and news, DTN.IQ offers
functionality  not  found in other  DTN  services.  Primary  among  these is the
ability to retrieve a chart on any  security at any time with up to two years of
daily  history or five days of tick  history.  In  addition,  DTN.IQ  takes full
advantage  of  32-bit  architecture,  complete  windowing  capability,  and  the
flexibility of Internet delivery.

DTN Real*Time 
     DTN REAL*TIME  delivers  real-time stock and stock option quotes as well as
real-time futures quotes,  fixed income  government  securities  quotes,  market
statistics and indicators,  news, commentary and other time-sensitive  financial
market information.  The service is delivered at a rate of 18,800 characters per
second,  roughly three times faster than a computer  modem  operating at 56 kbs.

                                       28
                                    - 762 -
<PAGE>

     DTN   REAL*TIME  is  two  to  four  times  faster  than  other   dedicated,
competitive, real-time quote services.

     As an adjunct service with DTN REAL*TIME,  NASDAQ Level II quotes were made
available in the fourth  quarter of 1998,  an important  step in DTN's effort to
gain  market  share  among  institutional  customers.   Level  II  quotes  offer
institutional money managers and active day-traders more detailed information on
the bid and asked prices offered by NASDAQ market makers.

     DTN REAL*TIME was the first DTN service delivered  directly to a PC without
displaying  information on a proprietary system or stand-alone unit. This allows
users maximum flexibility in displaying and manipulating the data.

     As part of the service, subscribers are offered free use of DTN's Chameleon
software to display market data, news and other financial information. Chameleon
also provides market condition alarms, news alerts and archiving,  charting, and
portfolio  monitoring.  There are several  other  popular  third-party  software
programs available for formatting, manipulating, analyzing and displaying market
data and news on a single PC or networked PC's.

DTN SPECTRUM
     DTN SPECTRUM is an enhanced  version of DTN Wall Street  utilizing  the ACE
receiver  technology.  The service provides  advanced quote selection and custom
programming along with alarms, news search and charting  capabilities  appealing
to a broad market of individual investors and investment professions.

     An extension  of DTN SPECTRUM is the DTN SPECTRUM RT service.  DTN SPECTRUM
RT provides  real-time futures and commodity quotes along with  exchange-delayed
stock quotes, news and other information.

DTN Wall Street  
     DTN Wall Street provides  exchange-delayed  quotes on stocks, bonds, mutual
and money market funds, futures,  interest rates, currencies and real-time index
quotes.  This service also provides  in-depth  economic,  financial and business
news  and   other   time-sensitive   financial   market   information   such  as
company-specific  news and earnings.  The service  allows  subscribers to custom
program the system to track their selection of financial quotes.

     The majority of subscribers  to DTN Wall Street are  individual  investors,
independent brokers, financial advisors and financial institutions.

DTN FirstRate  
     DTN FirstRate is a service for the mortgage  industry  providing  wholesale
mortgage  rates in an  easy-to-use  standard  format and intraday  interest rate
information  indicating the direction of mortgage loan rates.  This service also
provides  subscribers  with  snapshots  of  real-time  rates from Fannie Mae and
Freddie Mac plus other news, commentary and analysis for mortgage lenders.

     DTN FirstRate+ is an enhanced color version of DTN FirstRate.  This service
provides  additional  features which are well received by subscribers.  Features
include keyword search, quick quote, alarms and zoom capabilities for weather.

National Datamax 
     In June 1998, DTN Financial Services acquired National Datamax, Inc. (NDM),
a provider of software and data services to financial  planners and  independent
broker-dealers.  Within the financial services industry,  NDM enjoys strong name
recognition  and was  one of the  first  firms  to  offer  its  unique  business
solutions.

     NDM solves two distinct problems faced by brokers. By consolidating  client
account  information  from a variety  of  sources,  NDM  assists  the  broker in
presenting a comprehensive  financial picture to his/her clients,  no matter how
many securities or fund families are involved.

     Brokers also need analysis tools to help them pinpoint the best  investment
options  for  their  clients.   NDM  offers   fundamental   data  combined  with
sophisticated  scanning  routines  that help select  appropriate  mutual  funds,
variable annuities and stocks based on client-defined risk/reward parameters.

                                       29
                                    - 763 -
<PAGE>

     NDM  represents  a key  element in DTN's  strategy  to become an  important
player  in  the  institutional  marketplace  as  well  as  add  value  to  basic
information delivery.

1998 DTN Financial Services Highlights 
     DTN Financial  Services enjoyed  continued success in its efforts to market
and sell real-time  market data to both individual  investors and  institutions.
The  increased  presence  of  advertising-supported  web sites  providing  free,
delayed  market data has sharply  reduced the  opportunity  to sell new DTN Wall
Street and DTN  SPECTRUM  subscriptions.  That same  development,  however,  has
allowed DTN  Financial  Services to focus on  promoting  its more  sophisticated
real-time services, where margins are higher.

     As the availability of reliable Internet access has increased,  so have the
opportunities  for  Internet-delivered   market  data  services.  DTN  Financial
Services  added  Internet  delivery  to its suite of  service  options  with the
release of DTN.IQ in June 1998. As the service was enhanced throughout the year,
DTN.IQ began to play an  ever-more-important  role as a superior  service priced
significantly lower than its competition.

     Aside from its general popularity among investors, Internet delivery offers
several advantages. Internet delivery:

1)   eliminates  the  need  for  customers  to set up a  small  satellite  dish,
     sometimes difficult in urban areas.

2)   eliminates DTN's hardware cost associated with the dish and receiver.

3)   offers  marketing   opportunities   with  other  online  financial  service
     providers, like discount brokerage firms.

     In keeping with the strategy of increasing market share among institutional
customers, the acquisition of National Datamax, Inc. (NDM) brought new products,
a large  existing  customer  base and a strong  team of  professionals  into the
Financial Services division.  Among small to medium-sized  independent  brokers,
few companies enjoy a stronger reputation than NDM.

     DTN Financial  Services  continued its  significant  investment in sales to
institutional  clients by  creating  its own outside  sales  force and  assuming
managerial  responsibility  for that group. With the increase in the breadth and
complexity of DTN's financial products, there is hardly a financial professional
who is not a strong prospect for at least one of these services.  However,  this
same  breadth  and  depth  requires  a  dedicated  sales   professional  who  is
knowledgeable in all facets of the industry.  This group of professionals was in
place by the end of the fourth quarter of 1998.

                                       30
                                    - 764 -
<PAGE>

THE ENERGY INDUSTRY
-------------------------------------------------------------------------------
GRAPH IN TABULAR FORM:

<TABLE>
<CAPTION>
                                   1994       1995      1996       1997     1998
                                   ----       ----      ----       ----     ----
<S>                                 <C>       <C>        <C>       <C>      <C> 
DTN Energy Services Revenue
          ($ millions)              7.2       10.0       12.2      14.3     16.1
  
</TABLE>


DTN Energy Services
     Energy related services include DTNergy for the refined fuels,  natural gas
industries and electric industries.

DTNergy Service Review 
     DTNergy provides  pricing  information and  communication  services for the
refined fuels industry. This service consists of several pages of delayed energy
futures and options quotes plus selected news and financial information.

     DTNergy is designed to connect  refiners  (producers  of refined  fuels) to
wholesalers  (distributors  of refined  fuels).  The refiner  sends refined fuel
prices to  wholesalers  authorized to receive this  information.  The refiner is
also   capable  of  sending   terminal   alerts,   electronic   funds   transfer
notifications, invoices, and other communications to the wholesaler. The DTNergy
system  carries  more  than two  million  messages  a month  for this  industry.
Subscribers  can also  select  from a variety  of  optional  services  providing
additional prices or news related to the petroleum industry.

     The strength of the DTNergy Refined Fuel service is the ability to deliver,
within seconds,  accurate refiner terminal prices and other vital communications
to the  wholesalers.  This service is more  reliable,  timely and less expensive
than the competition, which utilize telephone delivered printer-only systems and
FAX services.

     DTNergy generates revenue from two primary sources,  the wholesaler and the
refiner.  Wholesalers  currently pay a monthly  subscription  fee of $40 for the
monochrome Ku-band satellite service.  Refiners pay fees based on the number and
length of communications sent to wholesalers.

     Refiners use DTNergy  communications  to link to their wholesalers with the
implementation  in 1997 of EDI  (Electronic  Data  Interchange)  fuel  invoices.
EDI/VAN  (Value  Added  Network)  services  help  automate  customers'  business
processes by converting  refiner text invoices into an industry standard format.
Once these  invoices are in a standard  format,  the invoice data is transferred
into a customer's accounting system from the ACE unit.

     DTNergy  also  provides  an  information  service  for the  natural gas and
electric industries. Subscribers receive instant or delayed NYMEX energy futures
and options quotes, a comprehensive  weather package and industry  specific news
and market  information.  This service targets energy  producers and generators,
transporters, marketers, utilities and larger energy consumers.

1998 DTNergy Highlights 
     Two   Internet-based   services  were   introduced   in  1998.   Prophet  X
(www.fimi.com)  was introduced in June 1998.  This service allows the ability to
access DTNergy's  real-time market data using Financial  Information  Management
Inc.'s (FIMI) client-service software, Prophet X.

     In November 1998 a joint venture  between DTN and GlobalView  Software Inc.
prompted  the   formation  of   GlobalData,   which  is  aimed  at  serving  the
international  energy  markets.  This  partnership  allows  DTNergy  to  provide
real-time  data for the  international  markets with  GlobalView  Software  Inc.
providing   the   graphical   user   interface   for  the  service.   EnergyView
(www.energyview.com)  is the Internet product creation of GlobalData,  which was
introduced in December 1998.

                                       31
                                    - 765 -
<PAGE>

THE AUTO INDUSTRY
-------------------------------------------------------------------------------
GRAPH IN TABULAR FORM:

<TABLE>
<CAPTION>
                                   1994       1995      1996       1997     1998
                                   ----       ----      ----       ----     ----
<S>                                 <C>       <C>        <C>       <C>      <C> 
DTN Auto Services Revenue
          ($ millions)              0.0       .7         1.4       1.9      2.0
  
</TABLE>

Other Industries and Services
DTNauto Service Review
     DTNauto is a  communication  and  information  service  for the  automobile
industry.  This service offers  automobile  dealers  precision  information  for
valuing  trade-ins and locating used car inventory.  DTNauto  provides a host of
convenient  features for the industry such as the ability for automobile auction
companies and manufacturers to communicate directly with the dealers.

     DTNauto  provides  information  on more  than  125  pre-auction  automobile
listings,  results of past auctions, new and used car industry news, weather and
other news. The service allows  subscribers to perform  searches of upcoming and
past auction listings for specific automobile information.

     DTNauto  offers a variety of optional  services  providing  information  on
credit reporting (CREDCO), vehicle histories (CARFAX), warranty information (The
Warranty Guide) and residual value of leased vehicles (Lease Guide).  The CARFAX
and CREDCO optional services  extensively utilize the internal modem to send and
receive information.  These services create a comprehensive  information service
placing the "subscriber in the driver's seat".


1998 DTNauto Highlights 
     In 1998, DTNauto  incorporated  Chrome Data Corporation's PC Carbook(R) new
car data and SMART ValuesTM used car pricing as part of its standard service. PC
Carbook provides the automotive industry with specifications,  prices,  options,
trim packages,  discounts and rebates for all new domestic and import  vehicles.
SMART  Values  consists  of used car  pricing  data which is revised and updated
monthly.  DTN has  developed  an  application  which  draws  directly  from  the
information published by Chrome Data that enables DTNauto subscribers to produce
a used car window  sticker at a cost  several  times below the current  industry
standard.

     Improvements to our vehicle wholesale pricing  information gave dealers and
fleet industry analysts increased  flexibility and manipulation of the NADA/NAAA
AuctionNet(R) wholesale vehicle-pricing data.


DTN JOINT VENTURE SERVICES
-------------------------------------------------------------------------------
GRAPH IN TABULAR FORM:

<TABLE>
<CAPTION>
                                   1994       1995      1996       1997     1998
                                   ----       ----      ----       ----     ----
<S>                                 <C>       <C>        <C>       <C>      <C> 
DTN Joint Venture Services Revenue
          ($ millions)              0.1       0.3        0.9       1.7      2.6
  
</TABLE>


DTN Joint Venture Services 
     DTN joined forces with several companies to market their services using DTN
technology. These services are DAT Transportation Terminal, TracElectric and DTN
Missing Children Information Center (MCIC).

DAT 
     The  DAT  (Dial-A-Truck)   Transportation  Terminal  service,   located  in
Beaverton, OR, is an information communication system for the trucking industry.
The service  provides load and truck matching  performed on a database of 80,000
listings updated daily.

     DAT allows  subscribers  to input their  listings into the DTN receiver and
send this  information  to a database  using the  internal  modem.  The  service
provides  subscribers with the ability to perform  extensive  searches to locate
loads and trucks and to set alarms alerting users of a match.

     The service also provides regional radar weather maps of major highways and
interstate systems,  transportation news, diesel fuel prices and other financial
information related to the trucking industry.

     DAT targets all freight brokers and carriers  throughout the United States,
Canada and Mexico.

Trac Electric  
     TracElectric is an equipment  locator service for the electrical  equipment
industry. This service provides over 100 pages of new,  remanufactured,  surplus
and used electrical equipment listings.  The service connects buyers and sellers
throughout the United States and Canada.

Missing Children Information Center  
     DTN  Missing   Children   Information   Center  (MCIC)   provides   instant
transmission of data regarding children in danger to local,  regional,  national
and Canadian  outlets.  In an effort to assist parents,  police and the National
Center for Missing and Exploited  Children  (NCMEC) in locating missing children
and the criminals involved,  photos and information regarding these children are
posted as a public service on all DTN color systems.

     As a result of the close working  relationship  with NCMEC a national kiosk
program has been  developed.  Plans are  underway to identify  sponsors  for the
kiosk  units to be placed in  high-pedestrian  traffic  areas  such as  shopping
malls, airports, grocery stores, theaters, government buildings, etc.

                                       32
                                    - 766 -
<PAGE>

Selected Historical Consolidated Financial Data

<TABLE>
<CAPTION>

PIE GRAPHS IN TABULAR FORM:

                                         1998             1997            1996
                                         ----             ----            ----

Revenues
<S>                                       <C>              <C>             <C>
  DTN Ag Services                         59%              69%             71%
  DTN Weather                             17%               8%              6%
  DTN Financial Services                   9%               8%              9%
  DTN Energy Services                     11%              11%             12%
  Other Services                           4%               4%              2%


Subscribers At Year End
  DTN Ag Services                         71%              76%             80%
  DTN Weather Services                    11%               8%              5%
  DTN Financial Services                  10%               8%              8%
  DTN Energy Services                      5%               5%              5%
  Other Services                           3%               3%              2%

</TABLE>


<TABLE>
<CAPTION>

  
In thousands, except per share data       1998             1997           1996             1995         1994
--------------------------------------------------------------------------------------------------------------
Operating Data (For the Year):
<S>                                     <C>              <C>             <C>              <C>          <C>     
  Total revenues                        $148,986         $126,374        $ 98,384         $ 62,288     $ 46,110
  Operating income                      $  4,163(1)      $ 12,383        $  6,921         $  4,343     $    695
  Net income (loss)                     $ (3,743)(2)     $  2,236        $   (958)        $   (283)    $( 1,603)
  Basic income (loss) per share         $   (.33)        $    .20        $   (.09)        $   (.03)    $   (.16)
  Diluted income (loss) per share       $   (.33)        $    .19        $   (.09)        $   (.03)    $   (.16)
  Basic shares outstanding                11,359           11,101          10,658            9,909        9,760
  Diluted shares outstanding              11,359           12,083          10,658            9,909        9,760
  Dividends paid(3)                         -                -              -                 -            -
  Dividends paid per share(3)               -                -              -                 -            -
Balance Sheet Data (At Period End):
  Working capital (deficit)             $(17,447)        $(21,520)       $(14,748)        $(10,472)    $(10,237)
  Total assets                          $197,185         $162,431        $177,730         $ 92,672     $ 71,459
  Long-term debt and
    subordinated notes                  $100,620         $ 72,891        $ 97,748         $ 47,021     $ 33,983
  Shareholders' equity                  $ 32,150         $ 32,196        $ 28,290         $ 12,877     $ 12,707



<FN>

1  Includes $5.8 million  non-recurring  satellite  costs related to the loss of
   control of Galaxy IV satellite by PanAmSat,  the Company's  primary satellite
   provider.

2  Includes $5.8 million ($3.7 million after tax) non-recurring  satellite costs
   related to the loss of control of the Galaxy IV Satellite  by  PanAmSat,  the
   Company's  primary  satellite  provider.  Also  includes a $1.7 million ($1.1
   million after tax) debt extinguishment charge for the early retirement of the
   Company's $15,000,000 11.25% Senior Subordinated Notes Due 2004.

3  DTN has not paid any dividends in the last five years and  currently  intends
   to retain earnings for use in its business.
</FN>
</TABLE>
                                       33
                                    - 767 -
<PAGE>


                      Management's Discussion and Analysis

FINANCIAL CONDITION
General Overview
      The equipment used by  subscribers  is a large capital  investment for the
Company. The cost of subscriber equipment, net of depreciation, accounts for 46%
of the  Company's  total  assets.  The  Company  financed  the  majority  of the
investment in subscriber  equipment with  long-term  debt. In 1997 and 1998, the
cash  provided  by  operating  activities  exceeded  the cost of new  subscriber
equipment and was used for acquisitions or to service long-term debt.

      The Company made  significant  investments  during 1996,  1997 and 1998 to
acquire  subscribers and businesses that fit the Company's  business model.  The
net intangible  assets  (primarily  goodwill) from  acquisitions  are 33% of the
Company's  total assets.  The  acquisitions  of  subscribers  and businesses are
expected to enhance the long-term operating  performance and financial condition
of the  Company.  The  investment  in  acquisitions  has required the Company to
increase long-term debt.

      The Company's  overall financing  strategy has been simple,  use long-term
debt financing  versus  equity,  whenever  possible,  to prevent the dilution of
shareholder  value. The Company's  management  plans to continually  review this
strategy to support the growth of the Company.

Cash Flows From Operating Activities
      Net cash  provided  by  operating  activities  for 1998 was $42.4  million
compared to $47.5  million for 1997.  The decrease of $5.1 million was primarily
due to the $1.7 million decrease in operating cash flow (operating income before
depreciation and amortization  expense),  generally  referred to as EBITDA,  and
$3.2 million from the change in assets and liabilities.  The decrease was offset
by the $.6 million reduction in interest expense primarily due to lower rates on
debt outstanding.

      Excluding the $5.8 million  non-recurring  satellite costs (see discussion
in Results of Operations below) that decreased operating cash flow for 1998, net
cash provided by operating  activities would have been $48.2 million compared to
$47.5 million for 1997.

Cash Flows From Investing Activities
      Net cash used in investing  activities for 1998 was $66.8 million compared
to $30.2  million for 1997.  The  increase of $36.6  million is due to the $31.9
million increase in acquisitions, the $5.4 increase for purchases of information
distribution  software and equipment and a decrease of $.8 million for purchases
of subscriber equipment.

      The Company's growth strategy includes  acquisitions that fit the business
model and/or competitive strategies.  The Company closed on several acquisitions
during    1998    (See    Footnote    2   to    the    Consolidated    Financial
Statements-Acquisitions).   The  Company  paid  $37.6  million  cash  for  these
acquisitions compared to $5.7 million cash during 1997. The acquisitions in 1998
were primarily financed using the revolving credit line of the Company.

      The  majority  of the  investment  in  equipment  used by  subscribers  is
generally a direct result of the growth in the Company's  subscriber  base.  The
Company's  marketing  efforts to obtain new  subscribers  includes  investing in
subscriber  equipment for trial and  complimentary  subscriptions.  In addition,
approximately 3,500 monochrome system (FM and Ku) and DTN FarmDayta  subscribers
upgraded  service   requiring  the  color  Ku-band  system  with  84%  of  these
conversions  involving DTN AgDaily  subscribers.  The remaining 16% involved DTN
Financial  Services and DTNergy  subscribers.  The  conversion of  approximately
1,000  subscribers  from DTN AgDaily on the color  Ku-band  system to other more
advanced Ku-band services such as DTN Pro Series, DTNstant, DTNiron, DTN PROduce
and DTN Weather Center resulted in upgraded equipment.

      DTN  increased the  inventory of color  receivers and  components to build
color receivers during 1998. At December 31, 1998 the Company had  approximately
$19 million of this  inventory  compared to $7 million in 1997.  The build up of
inventory in 1998 occurred due to advance commitments on equipment purchases and
the unexpected  increase in cancellations  due to the Galaxy IV satellite outage
discussed below. The Company adjusted purchasing and production schedules in the
second half of 1998 to reduce the  inventory  related to sales and  cancellation
activity.  The reduced production of color systems should  significantly  reduce
capital expenditures on subscriber equipment for 1999.

      The Company had approximately  21,900  monochrome  subscribers at December
31, 1998. The Company has made limited  purchases of monochrome  equipment since
1991  and  monochrome  depreciation  related  to  monochrome  equipment  will be
approximately  $.7 million in 1999 and $.1 million in 2000. The Company utilizes
monochrome  receiver  equipment  coming in from conversions for new DTN AgDaily,
DTN Wall Street and DTNergy  subscribers.  The demand is limited for  monochrome
services,  however, the Company continues to research new markets for monochrome
system services.  At this time, the Company's  management believes the prospects
are more favorable for color services.

      As it relates to the Company's investing activities, the Company had $17.4
million and $21.5 million of negative  working  capital at December 31, 1998 and
1997, respectively. The increase in working capital is primarily due to the $2.8
million  increase in accounts  receivable,  the $1.4 million increase in prepaid
expenses  and the $3.6 million of  inventory  primarily  related to the Kavouras
acquisition.   The  increase  in  accounts   receivable  was  primarily  due  to
acquisitions,  to an increase in revenue per subscriber per month,  and a larger
mix of  customers  invoicing on an annual basis  compared to  quarterly,  as was
previously the standard. The increase in prepaid expenses was also primarily due
to acquisitions.

      The increase in accounts receivable, prepaid expenses and inventory offset
the $3.6 million  increase in accrued  expenses and the $1.2 million decrease in
accounts  payable.  The  increase  in  accrued  expenses  was  primarily  due to

                                       34
                                     - 768 -
<PAGE>

acquisitions  and the decrease in accounts  payable was primarily due to reduced
capital spending on subscriber equipment.

Cash Flow From Financing Activities
      In 1998,  net cash  provided by financing  activities of $23.5 million was
primarily the result of an increase in total debt  outstanding of $27.5 million.
The increase in debt  outstanding  was  primarily due to an increase of $51.0 in
the revolving  credit line to fund  acquisitions and capital  expenditures.  The
Company made $24.8 million of principal  payments on term notes and $5.2 million
of payments on debt acquired through acquisitions. The Company also financed the
prepayment of $15.0 million  11.25% Senior  Subordinated  Notes due 2004 and the
$1.1 million prepayment cost with $16.0 million of term notes and revolver.

      In 1997,  net cash  used by  financing  activities  of $17.2  million  was
primarily the result of a decrease in total debt  outstanding  of $18.2 million.
The decrease in debt outstanding was primarily due to $22.2 million of principal
payments  during 1997. The Company was able to pay down debt due to the increase
in  cash  provided  by  operating  activities  and  using  subscriber  equipment
inventory for new subscribers during the first half of 1997.

Factors That May Affect Future Results
      Acquisitions - The Company's  strategy  includes  continued growth through
acquisitions of complimentary  services,  technologies or businesses,  which may
result in the diversion of management's attention from the day-to-day operations
of the Company's business. Other risks include, but are not limited to, possible
difficulties  in  the   integration  of  operations,   products  and  personnel,
difficulty in applying internal  controls to acquired  businesses and particular
problems, liabilities or contingencies related to the businesses being acquired.
If efforts to  integrate  past or future  acquisitions  fail,  there  could be a
material  adverse  effect on the  Company's  business,  financial  condition and
results  of  operations.  The  Company  plans to  pursue  opportunities  that it
believes fit its business strategy.

      Competition - The Company  operates in a highly  competitive  environment,
competing with information and communication services utilizing various types of
electronic media including satellite delivery, TV Cable delivery,  the Internet,
electronic  bulletin  boards,   television,   radio,   cellular,  and  telephone
communications.  In addition to the various electronic  publishers,  the Company
competes with print media and "old  information  gathering  habits." Many of the
Company's actual and potential  competitors have substantially greater resources
than the Company.

      Indebtedness - The Company anticipates that internally generated cash flow
and its bank  credit  lines will be  sufficient  to fund  operating  activities,
capital  expenditures and service  interest and principal  payments on long-term
debt.

      Inflation - The Company believes that  inflationary  trends have a limited
effect on the  business.  However,  since a large  percentage  of the  Company's
subscribers and revenues are related to the agricultural industries, the general
state of the agricultural  economy may impact the Company's business  operations
and financial condition.

      Technology  - The  business  of the  Company is subject to the  continuous
changes in  information  distribution  technology  affecting how  information is
distributed  to the  Company's  customers.  Currently,  the primary  information
distribution  technology the Company utilizes for the delivery of information is
satellite.  Other technologies used are the Internet, FM side band channels, VBI
(vertical  blanking  interval  through a cable TV  signal),  leased  land lines,
DIRECTV,  E-mail and Fax. The Company is not aware of any other  technology that
may  replace  the  current  electronic  delivery  systems  and  equipment  at  a
competitive price. New developments in electronic  hardware  capabilities and in
data distribution  technologies  could cause the Company's  delivery systems and
equipment  to  become  obsolete,  economically  inefficient  or less  attractive
compared  to  available  alternatives.  The  improvement  and  enhancement  (and
subsequent lower cost) of delivery  technologies  such as the Internet,  DIRECTV
and cable are providing  the Company with  alternatives  to its current  primary
delivery method, which is satellite.

      Year 2000 (Y2K) - The  Company  is  actively  engaged  in a  comprehensive
review of its computer  systems to identify and remediate the systems that could
be affected by the Year 2000 Issue.  The  Company is  addressing  the  following
critical areas related to the Company's  state of readiness,  cost of addressing
Year 2000 issues, risks of Year 2000 issues, and contingency plans:

      State of Readiness - The Company has identified the following  major areas
of the Company  dependent on computer software and hardware that may be affected
by the Y2K issues.

      *   Service   delivery   -   The   Company   transmits   information   and
          communications  services to subscribers  via satellite,  Internet,  FM
          side band channels,  VBI, leased land lines, DIRECTV,  E-mail and Fax.
          The Company has been engaged in  identifying,  remediating and testing
          any system that could result in an interruption of the delivery of the
          Company's services to subscribers.

      *   Customer   Service  -  The  Company   provides   customer  service  to
          subscribers using telephone systems,  using administrative  systems to
          ship equipment  and/or modify the services that  subscribers  receive.
          The Company has been engaged in  identifying,  remediating and testing
          any system that could result in an  interruption  of customer  service
          provided to subscribers.

      *   Cash flow - The Company  maintains  administrative  systems that track
          services provided to subscribers,  invoice  subscribers and apply cash
          payments  remitted for services  received by subscribers.  The Company
          has been engaged in  identifying,  remediating  and testing any system
          that could result in an interruption of cash flow from subscribers.

      *   Physical environment - The Company maintains facilities for employees,
          operating computer data centers and distributing subscriber equipment.
          The Company has been engaged in  identifying,  remediating and testing
          the  possibility  of any  environmental  control,  such as heating and
          cooling systems, inhibiting the use of the Company's facilities.

                                       35
                                    - 769 -
<PAGE>

      The  Company  has made  progress  in its  efforts to address the Year 2000
issue and ensure systems and data will be functional  beyond 1999. The following
phases, which to some extent are being conducted  concurrently,  are on schedule
to be completed by the listed completion dates.

      *   Inventory - The  Company  has  conducted  an  inventory  of all custom
          developed  software  and third party  vendor  supplied  software  used
          internally by the Company. The Company has also conducted an inventory
          of all third party data feeds that are  transmitted to the Company for
          rebroadcast.  The  Company  has also  conducted  an  inventory  of all
          hardware   related   to  the   transmission   of  data  and   internal
          administrative  operations. The Company had completed this phase as of
          December 31, 1998.

      *   Assess  Business Impact - The Company has reviewed the business impact
          of  specific  systems  if  they  were to fail  due to  incorrect  date
          processing past 2000. The Company has identified these systems related
          to  internal  administrative  systems,  third  party  data  feeds  and
          hardware as critical or non-critical  to normal  business  operations.
          The Company had completed this phase as of December 31, 1998.

      *   Remediation  and Testing - The  Company is  remediating  software  and
          hardware  systems  and  conducting  detailed  Y2K  testing  to produce
          standardized  'evidence' of Y2K  compliance.  The Company's  estimated
          completion date is September 30, 1999.

      *   Manage Subsequent  Changes - All system  modifications made subsequent
          to Y2K testing  that are date related  will be  regression  tested and
          documented.  The Company's  estimated  completion date is December 31,
          1999.

      Cost of  Addressing  Year  2000  Issues - The  Company  has used  existing
internal  resources to perform all work on the phases  discussed  above  through
December  31, 1998.  The  estimated  cost of using  internal  resources  through
December  31,  1998 is $.5  million.  The Company  plans to complete  all system
modifications and testing required to resolve Y2K issues using existing internal
resources  and does not expect the cost of making  the  necessary  changes to be
significant.  The remaining estimated cost of using internal resources to effect
Y2K compliance is less than $.5 million.

      Risks of Year 2000 Issues and  Contingency  Plan - The Company expects its
Year 2000 conversion project to be completed on a timely basis, however, failure
to do so or  failure on the part of third  parties  with whom the  Company  does
business could materially impact operations and financial  results.  The Company
believes  the worst case  scenario  would be the  failure  of the  communication
systems providing information and communications to the Company's customers.  If
any of the satellites  used by the Company were to fail, it is possible that the
Company could shift all of its satellite  subscribers to other satellites or its
Internet based products. The Company is working with various third party vendors
to verify Year 2000 compliance, and if necessary,  securing alternate sources of
service or products if compliance is not obtained. In the event that one or more
data providers fail, it is possible the Company could integrate information from
another data provider into its data feed.

      The Company is currently  developing  contingency  plans for those systems
identified as critical to normal business operations.  The contingency plan will
include   focusing  on  early  detection,   planned   reactions  and  subsequent
remediation of unforeseen issues. The Company's estimated completion of a formal
contingency  plan is  September  30,  1999.  The Company  believes  there are no
foolproof contingency plans that cover every possible failure.

      Based  upon  currently  available  information,  management  believes  the
Company will meet its compliance  goals and does not anticipate that the cost of
Y2K compliance will have a material impact on the Company's financial condition,
results of operations or liquidity.  The achievement of these goals is dependent
upon many factors,  some outside of the Company's control. In the event that the
Company's  internal  systems or  internal  systems of critical  vendors  fail to
achieve Y2K  compliance,  the  Company's  business and its results of operations
could be adversely impacted.

Market Risk Sensitive Instruments and Positions
      The risk inherent in the Company's  market risk sensitive  instruments and
positions is the potential  loss arising from adverse  changes in interest rates
as discussed below.

      Interest  Rates - The  Company's  earnings  are  affected  by  changes  in
interest  rates due to the impact those changes have on its  variable-rate  debt
instruments.  The Company has three  components that make up its total bank loan
debt: 1) Fixed Term Notes of $49,822,540  or 41% of the total,  2) Variable Term
Notes  of  $16,926,000  or 14% of the  total  and 3)  Revolving  Credit  Line of
$55,500,000  or 45% of the  total.  Assuming a  hypothetical  10% change in 1998
interest rates,  below is an analysis of what the impact would have been on 1998
interest expense:
<TABLE>
<CAPTION>

                                            1998
<S>                                      <C>  
Fixed Term Notes                         $   -
Variable Term Notes                       153,400
Revolving Credit Line (a)                 178,500
                                         --------
Total                                    $331,900
</TABLE>

(a)The  Company's  Revolving  Credit  Agreement  includes the ability to fix the
   revolving  credit  line based on the  Revolving  Credit Rate in effect at the
   beginning of the month (see Note 5). The ability to look back to the interest
   rates at the  beginning of the month,  reduces the market risk of an increase
   in First National Bank of Omaha's "National Base Rate".

      Market risk for fixed-rate term debt is estimated as the potential  change
in fair value from a  hypothetical  change in  interest  rates.  The Company has
$49,822,540  of fixed term debt as of December 31, 1998 with an  estimated  fair
value of  $50,395,940  or an increase  $573,400.  The fair value was  calculated
using  existing  terms of the debt and  interest  rates  present  valued  at the
Company's current available term debt rate (See note 5).

                                       36
                                    - 770 -
<PAGE>

Accounting Pronouncements
      In June 1998,  the  Financial  Accounting  Standards  Board (FASB)  issued
Statement  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities"  which will be effective for fiscal years  beginning  after June 15,
1999. The Company will adopt this Statement  effective  January 1, 2000. At this
time, the Company  believes the impact of adopting this Statement  should not be
significant to the results of operations or financial position.

RESULTS OF OPERATIONS

GRAPH IN TABULAR FORM:
<TABLE>
<CAPTION>
     
                        1994        1995          1996        1997        1998
                        ----        ----          ----        ----        ----
<S>                     <C>         <C>           <C>         <C>         <C>  
Revenues                46.1        62.3          98.4        126.4       149.0

Operating Cash Flow     15.8        23.2          40.4         54.7        53.0
(in millions of dollars)                                                   58.8*   


*Pro-Forma results before $58.8 million non-recurring satellite costs.
</TABLE>

General Overview
      The  financial  dynamics  of DTN's  business  operations  are  similar  to
businesses that sell monthly  subscriptions such as electronic  publications and
communications  and cable TV  companies.  The  financial  dynamics  are  similar
because DTN makes an initial  investment of variable  marketing  costs to obtain
new subscribers  (generally a one year  subscription  agreement) and the Company
makes a  capital  expenditure  to  provide  the  subscriber  with the  necessary
equipment  to  receive  the  Company's   satellite  based   services.   Internet
subscribers utilize their own personal computer.

      In addition,  DTN has a level of fixed costs,  such as FM and Ku satellite
leases,   certain  news  and  weather,   quotes,   information   providers   and
administrative  expenses,  not  directly  affected by the number of  subscribers
receiving the Company's services.

Non-recurring Satellite Costs (Galaxy IV)
      On May 20, 1998,  nearly all of the  Company's  159,000  subscribers  were
unable to receive  their data due to loss of control of the Galaxy IV  satellite
by  PanAmSat.  This  satellite  was used by the Company to  transmit  service to
nearly all its  subscribers.  By May 21, 1998,  solutions were available for all
subscribers, however, the impacts on DTN operations were significant.

      The loss of control of Galaxy IV by PanAmSat had a  significant  impact on
the  Company's  operations.  The Company  switched  all  satellite  customers to
Telestar 5, which is a more powerful  satellite and has a larger  footprint or a
larger  coverage of  geographical  area.  This  satellite  includes  coverage of
Mexico,  Hawaii and Alaska.  Although this allows future  opportunities for DTN,
the cost to DTN was  significant.  The costs related to the failure of Galaxy IV
include  telecommunications,   overtime  labor,  satellite  costs  and  customer
communications and these unusual,  non-recurring  satellite costs were estimated
to be $5.8  million and recorded in May of 1998.  These costs are the  Company's
estimate  to  convert  subscribers  to the new  satellite  and  handle the large
customer  service call volume,  duplicate  satellite  charges and other  service
costs related to this change.

      Although the Company  believes the  estimate was  reasonable  based on all
available  information,  the impact of customer  retention is more  difficult to
quantify and actual costs may vary from the estimate.  The Company's  management
believes  the  impact  from  this  problem  will not  significantly  impact  the
longer-term growth prospects of the Company. The Galaxy IV failure had an impact
on  subscription  sales  related to the months of May,  June and July due to the
Company utilizing the sales force to adjust subscriber satellite dishes.

Operating Cash Flow
      The Company's  operating cash flow (operating  income before  depreciation
and amortization  expense),  known in the industry as EBITDA, is a key indicator
monitored  by DTN  management.  Growth in  operating  cash flow  results  from a
growing base of  subscribers,  as well as,  increased  revenues  per  subscriber
covering the Company's fixed expenses.

      Operating cash flow for 1998  decreased 3.1% to $53.0 million  compared to
$54.7 million for 1997.  Excluding  the  non-recurring  satellite  costs of $5.8
million related to the Galaxy IV satellite outage,  operating cash flow for 1998
would have increased 7.5% to $58.8 million compared to $54.7 million for 1997.

      Operating cash flow as a percent of revenue  (operating  cash flow margin)
for 1998 was  35.6%  compared  to 43.3% for 1997.  Excluding  the  non-recurring
satellite  costs of $5.8  million  related  to the Galaxy IV  satellite  outage,
operating  cash flow margin for 1998 would have been 39.5% compared to 43.3% for
1997.

      Kavouras  equipment  sales have lower operating cash flow margins and will
decrease the Company's  total  operating  cash flow margin.  A further  analysis
shows  that,   excluding  the  Kavouras   acquisition   operating   results  and
non-recurring  satellite  costs,  operating cash flow margin for 1998 would have
been 41.5% compared to 43.3% for 1997.

      The  following  graph  details  the  trend  in  operating  cash  flow as a
percentage of revenue to illustrate operating leverage.

GRAPH IN TABULAR FORM:

Operating Cash Flow
Percent of Revenue
<TABLE>
<CAPTION>
                      1994       1995        1996         1997       1998
                      ----       ----        ----         ----       ----

<S>                    <C>        <C>         <C>          <C>        <C>
Operating Cash Flow    34         37          41           43         36
(percent of revenue)                                                  40*


*Pro-Forma results before $5.8 million non-recurring satellite cots.
</TABLE>
                                       37
                                    - 771 -
<PAGE>

Net Development Costs
      Operating cash flow is affected by the Company's  research and development
activities.   DTN  accumulates  research  and  development  activities  as  "Net
Development  Costs".  The Company defines "Net  Development  Costs" as 1) market
research  activities,  2)  hardware  and  software  engineering,   research  and
development,  and 3) the  negative  operating  cash  flow  (prior  to  corporate
allocations plus interest) of new services. The Company includes new services in
the "Net  Development  Costs"  classification  until the service shows  positive
operating  cash flow prior to  corporate  allocations  plus  interest for a full
quarter.  The service  becomes a core service  after  reaching this level in the
developmental process.

      During 1996, DTN expanded it developmental activities with net development
costs  growing from $3.7 million in 1995 to $5.3 million in 1996.  The Company's
increased  efficiencies  on a per subscriber per month basis and the acquisition
of subscribers from Broadcast  Partners  contributed to an increase in operating
cash  flow  margin  from  37.2% in 1995 to 41.0% in 1996.  Operating  cash  flow
margin,  excluding the acquisition of Broadcast  Partners,  was 37% in 1996. The
expansion of developmental  activities was offset by increased efficiencies on a
per  subscriber  per month  basis.  Core  services  operating  cash flow  margin
improved to 47.4% in 1996  compared to 44.4% in 1995.  Core  services  operating
cash flow margin,  excluding Broadcast Partners operating results,  was 43.4% in
1996 compared to 44.4% in 1995.

      During 1997, the Company's  developmental  activities were relatively flat
at $5.2 million  compared to $5.3 million in 1996.  The  efficiencies  gained in
1996  carried  over into 1997 and  contributed  to  operating  cash flow  margin
growing from 41.0% in 1996 to 43.3% in 1997.  Core services  operating cash flow
margin  improved  to 48.5% in 1997  compared  to  47.4% in 1996.  Core  services
operating cash flow margin,  excluding Broadcast Partners operating results, was
45.0% in 1997 compared to 43.4% in 1996.

      During 1998,  the  Company's  developmental  activities  increased to $6.5
million  compared  to $5.2  million  for  1997,  with  the  Kavouras  operations
contributing $1.3 million.  Operating cash flow margin in 1998 declined to 35.6%
compared to 43.3% in 1997.  This decline was  primarily  due to the $5.8 million
non-recurring  satellite  costs and the Kavouras  operations as discussed in the
Operating Cash Flow segment above. Core services  operating cash flow margin for
1998 decreased to 40.8% compared to 48.5% for 1997. Excluding Kavouras operating
results and  non-recurring  satellite costs,  core services  operating cash flow
margin for 1998 would have been 47.2% compared to 48.5% for 1997.

1998 COMPARED TO 1997
      The 1998 operating results were affected by the weak agriculture  economy,
the satellite  outage and the strategic  acquisitions  completed by the Company.
The operating results for 1998 include six months of the operations of Kavouras,
Inc. (Kavouras),  acquired in July 1998. The Kavouras operations are included in
the  Weather  Services  division  of  the  Company.  Operating  income  declined
primarily  due to the $5.8  million  non-recurring  satellite  costs and  higher
amortization expense related to acquisitions.

<TABLE>
<CAPTION>
                                                                       Percent
In Thousands                        1998             1997               Change
-------------------------------------------------------------------------------
<S>                                <C>            <C>                   <C>              
Subscribers                           159.3          158.8                -            
Revenues                           $148,986       $126,374               18 %
Operating cash flow                  53,014         54,699               (3)%
Operating income                      4,163         12,383              (66)%
Net income (loss)                    (3,743)         2,236                -


</TABLE>

Revenues
      Total revenue increased 18% for 1998 compared to 1997. Recurring operating
revenues, consisting of subscriptions,  additional services,  communications and
advertising,  increased to $73.80 per  subscriber per month for 1998 compared to
$66.29 for 1997.

      Subscriptions  - Subscription  revenue for 1998 grew 18% to $119.5 million
compared  to  $101.2  million  for  1997.  The  increase  was  primarily  due to
acquisitions completed in 1998, increases in total subscribers,  and the ability
to move subscribers to higher priced services. The increase in total subscribers
in 1998 was primarily  due to  acquisition  activities.  The Company added 3,300
subscribers  from  acquisitions  and  incurred  a  loss  of  2,800  subscribers,
excluding the acquired subscribers, due to lower retention. The Company believes
the lower retention is due to lower commodity prices in the Agriculture industry
and the Galaxy IV satellite outage.  The Kavouras  acquisition  contributed $4.5
million of subscription  revenue on a consolidated basis to the Weather Services
division of the Company.  This revenue  accounted  for 24% of the $18.3  million
increase in the Company's subscription revenues.

      The Company continues to add new subscribers at higher subscription rates.
Subscription revenue per subscriber, per month for all new subscription sales in
1998 was $77  compared to $68 for 1997.  The  increase in  subscribers  from new
subscription sales and acquisitions resulted in total subscription revenues on a
per subscriber per month basis to increase for 1998 to $62.63 compared to $55.10
for 1997.

      At December 31, 1998, 91% of total  subscribers were receiving service via
Ku-band  satellite  transmission  compared to 90% in 1997.  The price of Ku-band
satellite  delivered services ranged from $37 for monochrome DTN AgDaily to $180
for the color  DTNstant  service  during  1998.  The price of Ku-band  satellite
delivered  services ranged from $37 for monochrome DTN AgDaily to $170 for color
DTNstant  service  during 1997.  The price of the  monochrome  FM delivered  DTN
AgDaily (the only FM service) was $31 in 1998 and $29 in 1997.

      The subscribers  converting to higher priced services  includes those that
switched from the  monochrome FM or Ku-band  satellite DTN AgDaily priced at $54

                                       38
                                    - 772 -
<PAGE>

in 1998 and $52 in 1997.  Subscribers  continued to convert  from color  Ku-band
satellite DTN AgDaily service to color Ku-band  satellite DTN Pro Series ranging
in price from $67 in 1998 and $63 in 1997 for one Pro Series service,  to $81 in
1998 and $79 in 1997 for all four Pro Series  services  (DTN  Premier).  The DTN
Premier and Stock Pro, DTN Premier  Plus,  was priced at $84 a month in 1998 and
$82 a month in 1997.

      Equipment  Sales - The  Company's  July 1, 1998  acquisition  of Kavouras,
Inc., in Minneapolis,  added a new market niche for the Company, the manufacture
and sale of various  meteorological  equipment and radar  systems.  The Kavouras
acquisition added $4.8 million of  meteorological  equipment and radar sales for
1998. This accounted for the majority of the Company's equipment sales for 1998.

      Additional  Services - The  Company  increased  the number of  information
services  through  "a la carte"  optional  services  (230 in 1998  versus 200 in
1997). The growth in services,  subscribers and marketing  efforts resulted in a
5% increase in  additional  service  revenues.  The revenue  increased  on a per
subscriber per month basis to $3.70 in 1998 compared to $3.65 in 1997.

      Communication   Services  -  The  growth  in  communications  revenue  was
primarily in the Energy Services division. The DTNergy service transmits refiner
prices  and  communications  to  wholesaler/subscribers.  The  number of refiner
communications  increased and produced a revenue growth of 7% in 1998 over 1997.
The revenue increased on a company wide per subscriber per month basis to $5.65,
up from $5.47 in 1997.

      Advertising  -  Advertising  revenue  fell 9% to $3.5  million  for  1998,
compared to $3.8 million for 1997.  Advertising had a record year in 1997 fueled
by strong advertising  related to new product  introductions by companies in the
agriculture  industry.  The  Agricultural  Services  division  accounts  for the
majority  of  advertising  revenues,  therefore,  the  recent  downturn  in  the
agriculture economy has negatively impacted the 1998 advertising revenues of the
Company.  Advertising  revenue on a per  subscriber per month basis for 1998 was
$1.81 compared to $2.07 for 1997.

      Service  Initiation Fees - Service initiation fees, the Company's up-front
one-time charges to new subscribers  ranged from $95 to $530 in 1998 and $150 to
$495 in 1997 depending on the service and information  distribution  technology.
Initiation  fees for  subscribers  that  convert  to  another  service or change
delivery  technology (such as FM to Ku) ranged from $50 to $100 depending on the
service in 1998 and 1997.  Service  initiation fees revenue for 1998 fell 29% to
$3.3 million  compared to $4.6  million for 1997.  This decline is due to slower
sales in the  Agricultural  Services  division,  the  direct  result of the weak
agricultural economy, and the inability of the Company's sales force to focus on
new sales while assisting  subscribers for three months related to the satellite
outage.

Expenses
      Total operating expenses for 1998 increased 27% to $144.8 million compared
to  $114.0  million  for  1997.  Excluding  the $5.8  million  of  non-recurring
satellite  costs  related to Galaxy IV, total  expenses for 1998  increased  22%
compared  to  1997.  The  increase  in  total  operating   expenses,   excluding
non-recurring  satellite  costs,  was primarily  due to the Company's  growth in
subscribers,  initiatives to expand distribution  programs, the $11.2 million of
operating expenses from the Kavouras operations (including $4.1 million of costs
of equipment sales) and the amortization expense from other acquisitions.  Total
operating  expenses  (excluding sales  commissions,  cost of equipment sales and
non-recurring  satellite costs) increased on a per subscriber per month basis to
$64.85 for 1998 compared to $56.69 for 1997.

      Selling,  General & Administrative - Selling,  general and  administrative
expenses  on a per  subscriber  per  month  basis for 1998  increased  to $39.25
compared  to  $33.65  for 1997.  These  costs  increased  in 1998 as a result of
expenses associated with acquisitions and the initiatives to expand distribution
programs. Selling, general and administrative expenses in 1998 grew 21% compared
to 1997 and as a percentage of revenue increased to 50% compared to 49% in 1997.
Selling,  general and administrative  expenses,  excluding selling,  general and
administrative related to the Kavouras operations,  grew 13% in 1998 compared to
1997.

      Cost of  Equipment  Sales - Cost of  equipment  sales for  1998,  was $4.2
million.  These  expenses  were  primarily  the  direct  result of the  Kavouras
acquisition  which brought a new market niche for the Company,  the  manufacture
and sale of various meteorological equipment and radar systems.

      Sales Commissions - Sales commissions are generated from new subscriptions
sales force and cash flows  related to the DTNergy  service.  Sales  commissions
increased  12% during 1998  compared to 1997.  This increase is due to incentive
programs to the national sales force and sales management related to initiatives
to expand distribution programs. Sales commissions,  excluding sales commissions
related to the Kavouras operations, grew 7% in 1998 compared to 1997.

      Depreciation and Amortization - Depreciation and amortization  expense for
1998  increased 15% to $48.9 million  compared to $42.3 million for 1997.  These
increases  are  primarily  due to the increase in  subscriber  equipment for the
added subscribers,  increase in subscriber  equipment inventory and amortization
related to the intangible assets (primarily  goodwill) from  acquisitions.  As a
percentage of total revenues, depreciation and amortization expense for 1998 and
1997 remained  level at 33%.  Depreciation  and  amortization  expense for 1998,
excluding depreciation and amortization related to the Kavouras operations, grew
11% in 1998 compared to 1997.

Operating Income
      Operating income (EBIT) for 1998 decreased 66% to $4.2 million compared to
$12.4 million for 1997. Excluding the $5.8 million non-recurring satellite costs
related to Galaxy IV,  operating  income for 1998 was $10.0 million  compared to
$12.4  million  for 1997.  These  decreases  in  operating  income  for 1998 are
primarily  related to lower  operating  income from acquired  operations  due to

                                       39
                                     - 773 -
<PAGE>

lower   operating  cash  flow  margins  and  increased   amortization   expense.
Amortization  expense related to acquisitions was $8.4 million for 1998 compared
to $5.9 million for 1997.

Interest Expense
      Interest  expense for 1998  decreased 7% to $8.4 million  compared to $9.1
million for 1997. In the first quarter of 1998 the Company refinanced its 11.25%
Senior  Subordinated  Notes down to 7.5%  Senior  Term notes  which had a direct
impact on interest  expense in 1998  compared to 1997.  As a percentage of total
revenue, interest expense for 1998 decreased to 6% compared to 7% for 1997.

Other Income, Net
      During 1998, the Company received a federal income tax refund from amended
returns for prior years and as a result,  recorded one time  interest  income of
$181,000 from those refunds.

Income Tax Provision (Benefit)
      The Company's  federal and state  effective tax rate was 34% for both 1998
and 1997.

Income (Loss) Before Extraordinary Item
      The loss before  extraordinary  item for 1998 was $2.7 million or $.24 per
share on a diluted  basis  compared to income of $2.2  million or $.19 per share
for  1997.  Excluding  the  nonrecurring  satellite  costs,  the  income  before
extraordinary  item for 1998 would have been $1.0 million or $.09 per share on a
diluted basis.

Extraordinary Item, Net of Tax
      During the first quarter of 1998, the Company  refinanced the  $15,000,000
11.25%  Senior  Subordinated  Notes due 2004 with 7.5% Senior  Term  Notes.  The
Company  incurred a one-time charge to earnings of $1.1 million,  net of tax, or
$.09 per share on a diluted basis.  This one-time charge was for the pre-payment
penalties  and  write-offs  for debt  issuance  and  discount  costs  not  fully
amortized related to the subordinated notes.

Net Income (Loss)
      The net loss for 1998 was  $3.7  million  or $.33 per  share on a  diluted
basis  compared  to net  income  of $2.2  million  or $.19 per  share  for 1997.
Excluding the non-recurring satellite costs and the extraordinary item discussed
above, the net income for 1998 would have been $1.0 million or $.09 per share on
a diluted basis.

1997 COMPARED TO 1996
      The growth in  subscribers,  revenues and operating  cash flow during 1997
highlighted  another very good year for the Company.  The operating  results for
1997 include  twelve months of the  Broadcast  Partners  operations  compared to
approximately  eight  months in 1996.  The  Broadcast  Partners  operations  are
included in the Agricultural Services division of the Company.  Operating income
improvement  combined  with lower  interest  expense as a percentage  of revenue
resulted in positive earnings for the year.


<TABLE>
<CAPTION>


                                                                        Percent
In Thousands                    1997                 1996                Change
-------------------------------------------------------------------------------
<S>                              <C>                 <C>                    <C>
Subscribers                      158.8               145.9                  9%
Revenues                      $126,374             $98,384                 28%
Operating cash flow             54,699              40,377                 35%
Operating income                12,383               6,921                 79%
Net income (loss)                2,236                (958)                -

</TABLE>


Revenues
      Total  revenue  increased  28% in 1997  compared to 1996 and all operating
revenue categories made good contributions to this increase. Recurring operating
revenues consisting of subscriptions,  additional  services,  communications and
advertising  increased to $66.29 per  subscriber  per month in 1997  compared to
$60.92 in 1996.

Subscriptions:
      A 9%  growth in total  subscribers,  the mix of  higher  priced  services,
inflationary  price increases and acquisitions led to 35% growth in subscription
revenue.  Subscription  revenue  related to the  Broadcast  Partners  operations
accounted for 35% of the  $27,990,639  total revenue  growth in 1997 compared to
1996. At December 31, 1997, 90% of total  subscribers were receiving service via
Ku-band satellite transmission compared to 88% in 1996. All acquired subscribers
were receiving service via Ku-band satellite transmission.  Subscription revenue
on a per subscriber per month basis  increased to $55.10,  compared to $49.24 in
1996.

      The price of Ku-band  satellite  delivered  services  ranged  from $37 for
monochrome DTN AgDaily to $170 for the color  DTNstant  service during 1997. The
price of Ku-band satellite delivered services ranged from $35 for monochrome DTN
AgDaily  to $160 for  color  DTNstant  service  during  1996.  The  price of the
monochrome FM delivered DTN AgDaily (the only FM service)was $29 in 1997 and $27
in 1996.

      The subscribers  converting to higher priced services  includes those that
switched from the  monochrome FM or Ku-band  satellite DTN AgDaily priced at $52
in 1997 and $50 in 1996 ($46 prior to June 1, 1996).  Subscribers  continued  to
convert  from the color  Ku-band  satellite  DTN  AgDaily  service  to the color
Ku-band  satellite  DTN Pro Series  which ranged in price from $63 ($59 prior to
June 1, 1996),  for one Pro Series service,  to $79 ($74 prior to June 1, 1996),
for all four Pro Series  services (DTN Premier),  in both 1997 and 1996. The DTN
Premier and Stock Pro, DTN Premier  Plus,  was priced at $82 a month in 1997 and
$82 a month in 1996 ($78 prior to June 1, 1996).

Additional Services:
      The Company  increased the number of  information  services  through "a la
carte"  optional  services  (200 in 1997  versus  180 in  1996).  The  growth in
services  combined  with  growth of total  subscribers  and the  acquisition  of
Broadcast  Partners  resulted in a 16% increase in additional  service revenues.
Additional  services  revenue  related  to  the  Broadcast  Partners  operations
accounted for 38% of the $901,955  growth in 1997 compared to 1996.  The revenue
decreased on a per subscriber per month basis to $3.65 in 1997 compared to $3.80
in 1996.

                                       40
                                     - 774 -
<PAGE>

Communications Services:
      The growth in communications revenue was primarily in the DTNergy service.
The  DTNergy   service   transmits   refiner   prices  and   communications   to
wholesaler/subscribers.  The  number of  refiner  communications  increased  and
produced a revenue growth of 14% over 1996.  The revenue  decreased on a company
wide per  subscriber  per month  basis to $5.47,  down from $5.78 in 1996.  This
decrease  is due to  spreading  communications  revenue  over a  larger  base of
subscribers,  with the largest increase coming from the acquisition of Broadcast
Partners in 1996.

Advertising:
      Advertising  revenue grew 19% to $3,809,748 in 1997 compared to $3,198,321
in 1996.  This  growth was due to an  increase  in the  acceptance  of the color
system as an electronic  medium,  the acquisition of Broadcast Partners and less
discounting   due  to  the  increased   subscriber   base  associated  with  the
acquisition.  Advertising  revenue related to the Broadcast Partners  operations
accounted for 81% of the $611,427  growth in 1997 compared to 1996.  Advertising
revenue  remained flat on a company wide per subscriber per month basis at $2.07
in 1997, compared to $2.10 in 1996.

Service Initiation Fees:
      Service  initiation fees, the Company's  up-front  one-time charges to new
subscribers  ranged from $150 to $495 in 1997 and 1996  depending on the service
and information  distribution  technology.  Initiation fees for subscribers that
convert to  another  service or change  delivery  technology  (such as FM to Ku)
ranged from $50 to $100  depending  on the  service in 1996 and 1997.  The total
fees  collected  decreased 17% in 1997 to  $4,625,487  compared to $5,560,049 in
1996.  The  increased  sales  volume in 1997  compared to 1996 was offset by the
recognition of deferred revenues during 1996 for initiation fees received in the
prior year.  Service  initiation  fees are recognized in income since these fees
are less than the marketing and setup costs related to a new subscriber.

Expenses
      Total  operating  expenses  increased 25% in 1997 over 1996. This increase
was due to a 26% increase in selling,  general and  administrative  costs,  a 9%
increase  in  sales   commissions  and  a  26%  increase  in  depreciation   and
amortization. These expenses (excluding the sales commission costs) increased on
a per subscriber per month basis to $56.69 in 1997 compared to $54.07 in 1996.

Selling, General and Administrative:
      Selling, general and administrative expenses on a per subscriber per month
basis increased to $33.65,  up from $32.12 in 1996. These costs were up modestly
due to efficiency  gains from spreading  costs over a larger base of subscribers
obtained from increased  sales from expanding the sales force and  acquisitions.
Selling,  general  and  administrative  expenses  as  a  percentage  of  revenue
decreased from 50% in 1996 to 49% in 1997.  Selling,  general and administrative
expenses  growth,  excluding the selling,  general and  administrative  expenses
related to Broadcast Partners, was 20% in 1997 compared to 1996.

Sales Commissions:
      Sales  commissions  are generated  from new  subscriptions  sales and cash
flows related to the DTNergy service. Sales commissions increased 9% during 1997
compared to 1996. This increase is due to higher subscriptions sales,  incentive
programs  to the  national  sales  force  and  sales  management  related  to an
expanding  sales  force and higher  cash  flows in  DTNergy.  Sales  commissions
growth,  excluding sales commissions related to Broadcast  Partners,  was 10% in
1997 compared to 1996.

Depreciation and Amortization Expense:
      Depreciation  and  amortization  expense  increased  primarily  due to the
purchase of $21,137,267 of new equipment used by subscribers and the acquisition
of Broadcast  Partners.  On May 3, 1996,  the Company  acquired and  capitalized
approximately  $38.2  million  of  equipment  and $34.8  million  of  intangible
assets(goodwill) related to the acquisition.  The Company began using a six year
life for depreciating  subscriber equipment in July of 1992 compared to an eight
year life  prior to the  change.  The  Company  is  depreciating  the  equipment
acquired in the acquisition of Broadcast Partners using the straight-line method
over five years and is amortizing the  intangible  assets  (goodwill)  using the
straight-line method over three to eight years beginning in May of 1996.

Operating Income
      Operating income increased 79% to $12,383,403,  up from $6,920,791 in 1996
as a result of the growth in revenues and expenses  discussed  above.  Operating
cash flow grew 35% to $54,698,708, up from $40,377,428 in 1996.

Interest Expense
      Interest  expense  increased 8% in 1997 compared to 1996. This increase is
related to the increase in total long-term debt outstanding to finance equipment
used by subscribers and acquisitions.  The Company borrowed  $48,490,000 in 1996
to acquire Broadcast  Partners.  The Company decreased the revolving credit line
borrowing  from  $38,500,000  at December 31, 1996 to $4,500,000 at December 31,
1997.  This  decrease  was  primarily  the  result  of  the  Company  converting
$38,000,000  of revolving  debt to term debt at the end of the first  quarter of
1997.

Income Tax Provision (Benefit)
      The  Company's  federal and state  effective  tax rate was 34% and 32% for
1997 and 1996, respectively.

Net Income (Loss)
      The net  income  for 1997 was $2.2  million or $.19 per share on a diluted
basis compared to a net loss of $1.0 million or $.09 per share for 1996.

                                       41
                                    - 775 -
<PAGE>


              Management's Responsibility for Financial Statements
-------------------------------------------------------------------------------
To Our Stockholders:

      The management of Data Transmission Network Corporation is responsible for
the  preparation,  integrity  and  objectivity  of  the  accompanying  financial
statements  and related  notes.  To meet these  responsibilities,  we maintain a
system of internal  controls  to provide  reasonable  assurance  that assets are
safeguarded and transactions are properly authorized and recorded.

      The financial  statements  have been prepared in conformity with generally
accepted accounting  principles and include amounts based upon our estimates and
judgments, as required. The financial statements have been audited by Deloitte &
Touche LLP who have expressed their opinion,  presented  below,  with respect to
the fairness of the  statements.  Their audit included a review of the system of
internal  control  and  tests of  transactions  to the  extent  they  considered
necessary to render their opinion.

      The  Audit  Committee  of the Board of  Directors  is  composed  solely of
outside  directors.  The Audit Committee meets periodically with our independent
auditors and management to review  accounting,  auditing,  internal  control and
financial reporting matters.




/s/ Roger R. Brodersen                     /s/Brian L. Larson
Chairman of the Board                      Vice President 
Chief Executive Officer                    Chief Financial Officer and Secretary




                          Independent Auditor's Report
-------------------------------------------------------------------------------
Board of Directors and Stockholders
Data Transmission Network Corporation

      We have  audited  the  accompanying  consolidated  balance  sheets of Data
Transmission  Network  Corporation and  subsidiaries as of December 31, 1998 and
1997,  and the related  consolidated  statements  of  operations,  stockholders'
equity and cash flows for each of the three years in the period  ended  December
31, 1998.  These financial  statements are the  responsibility  of the Company'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 consolidated  financial statements present fairly, in
all material  respects,  the  financial  position of Data  Transmission  Network
Corporation  and  subsidiaries as of December 31, 1998 and 1997, and the results
of their  operations  and their  cash  flows for each of the three  years in the
period ended December 31, 1998, in conformity with generally accepted accounting
principles.




/s/Deloitte & Touche LLP
Deloitte & Touche LLP
Omaha, Nebraska
February 12, 1999

                                       42
                                    - 776 -
<PAGE>
<TABLE>
<CAPTION>

                           Consolidated Balance Sheets
                        As of December 31, 1998 and 1997

                                                         1998                       1997
--------------------------------------------------------------------------------------------
Assets
Current Assets
<S>                                                   <C>                       <C>         
 Cash                                                 $   -                     $    837,170
 Accounts receivable, net of allowance for 
  doubtful accounts of $1,300,000 and $810,000          10,475,426                 7,629,296
 Inventory                                               3,575,580                      -  
 Prepaid expenses                                        2,219,778                   825,577
 Deferred commission expense                             2,695,475                 3,302,972
                                                      --------------------------------------
   Total Current Assets                                 18,966,259                12,595,015
Property and Equipment
 Equipment Used By Subscribers                         244,613,085               224,620,148
 Equipment, Building and Leasehold Improvements         38,788,491                23,155,237
                                                      --------------------------------------
   Total Property and Equipment                        283,401,576               247,775,385
 Less: Accumulated Depreciation                        174,164,486               135,265,090
                                                      --------------------------------------
   Net Property and Equipment                          109,237,090               112,510,295
Intangible Assets From Acquisitions,                    82,266,913                44,493,486
 Less: Accumulated Amortization                         18,121,533                 9,728,684
                                                      --------------------------------------
   Net Intangible Assets                                64,145,380                34,764,802
Other Assets                                             4,836,353                 2,560,786
                                                      --------------------------------------
                                                      $197,185,082              $162,430,898
--------------------------------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current Liabilities
 Accounts payable                                     $  5,820,579              $  6,985,053
 Accrued expenses                                        8,963,856                 5,319,506
 Current portion of long-term debt                      21,628,542                21,810,833
                                                      --------------------------------------
  Total Current Liabilities                             36,412,977                34,115,392
Long-Term Debt                                         100,619,998                58,248,540
Subordinated Long-Term Notes, net of unamortized
 discount of $357,170                                     -                       14,642,830
Equipment Deposits                                         653,753                   484,017
Unearned Revenue                                        27,348,468                22,743,946
Shareholders' Equity
 Common stock, par value $.001, authorized 
  20,000,000 shares, issued 11,516,392 and 11,148,052       11,516                    11,148
 Paid-in capital                                        35,022,787                31,326,683
 Retained earnings (deficit)                            (2,884,417)                  858,342
                                                      --------------------------------------
  Total Shareholders' Equity                            32,149,886                32,196,173
                                                      --------------------------------------
                                                      $197,185,082              $162,430,898


The accompanying notes are an integral part of these financial statements.

</TABLE>
                                       43
                                    - 777 -
<PAGE>

<TABLE>
<CAPTION>
                      Consolidated Statements of Operations
                  Years ended December 31, 1998, 1997 and 1996


                                                              1998               1997                1996
---------------------------------------------------------------------------------------------------------------
Revenues
<S>                                                         <C>                 <C>                <C>        
 Subscriptions                                              $119,543,225        $101,194,290       $75,019,826
 Equipment sales                                               4,871,481                -                 -
 Additional services                                           7,059,007           6,694,754         5,792,799
 Communication services                                       10,787,952          10,050,073         8,812,718
 Advertising                                                   3,455,194           3,809,748         3,198,321
 Service initiation fees                                       3,269,487           4,625,487         5,560,049
                                                             148,986,346         126,374,352        98,383,713
Expenses
 Selling, general and administrative                          74,919,319          61,790,861        48,944,027
 Cost of equipment sales                                       4,192,737                -                 -
 Sales commissions                                            11,060,492           9,884,783         9,062,258
 Depreciation and amortization                                48,850,622          42,315,305        33,456,637
 Non-recurring satellite costs                                 5,800,000                -                 -
                                                             144,823,170         113,990,949        91,462,922
Operating Income                                               4,163,176          12,383,403         6,920,791
 Interest expense                                              8,449,668           9,098,231         8,432,270
 Other income, net                                               217,929             121,909           107,173

Income (Loss) Before Income Taxes and Extraordinary Item      (4,068,563)          3,407,081        (1,404,306)
 Income tax provision (benefit)                               (1,402,684)          1,171,000          (446,000)
Income (Loss) Before Extraordinary Item                       (2,665,879)          2,236,081          (958,306)
Extraordinary Item, Net of tax                                 1,076,880                -                 -
Net Income (Loss)                                            $(3,742,759)       $  2,236,081       $  (958,306)
---------------------------------------------------------------------------------------------------------------
Basic Income (Loss) Per Share
 Income (loss) before Extraordinary Item                     $     (0.24)       $       0.20       $     (0.09)
 Extraordinary Item, net of tax                                    (0.09)               -                  -
---------------------------------------------------------------------------------------------------------------
 Net Income (loss)                                           $     (0.33)       $       0.20       $     (0.09)
---------------------------------------------------------------------------------------------------------------
Diluted Income (Loss) Per Share
 Income (loss) before Extraordinary Item                     $     (0.24)       $       0.19       $     (0.09)
 Extraordinary Item, net of tax                                    (0.09)               -                  -
---------------------------------------------------------------------------------------------------------------
 Net Income (loss)                                           $     (0.33)       $       0.19       $     (0.09)
---------------------------------------------------------------------------------------------------------------
Basic Shares Outstanding                                      11,358,934          11,100,684        10,657,893
Diluted Shares Outstanding                                    11,358,934          12,082,556        10,657,893

</TABLE>
                                       44
                                     - 778 -
<PAGE>


                 Consolidated Statement of ShareHolders' Equity
                  Years ended December 31, 1996, 1997 and 1998

<TABLE>
<CAPTION>

                                                                                   Retained                      Total
                                      Common         Common      Paid-in           Earnings       Treasury    Shareholders'
                                      Shares          Stock      Capital           (Deficit)        Stock        Equity
-----------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>         <C>             <C>            <C>             <C>             
Balance, January 1, 1996             3,375,409       $  3,375    $ 14,422,689    $  (497,687)   $ (1,051,412)   $12,876,965
Treasury stock issued on exercise
  of employee stock options                              -               -             51,391        709,239        760,630
Tax benefit related to exercise
  of employee stock options                              -            634,000            -              -           634,000
Issuance of common stock on
  acquisitions                         316,000            316      14,976,684            -              -        14,977,000
Three-for-one stock split            7,382,816          7,383          (7,383)           -              -              -
Net loss                                                 -               -           (958,306)          -          (958,306)
                                    ------------------------------------------------------------------------------------------
Balance, December 31, 1996          11,074,224       $ 11,074    $ 30,025,990    $ (1,404,602)      (342,173)   $28,290,289
Treasury stock issued on exercise
  of employee stock options                              -               -             26,863        342,173        369,036
Issuance of common stock on
  exercise of employee stock options    73,828             74         625,693            -              -           625,767
Tax benefit related to exercise
  of employee stock options                              -            675,000            -              -           675,000
Net income                                               -               -          2,236,081           -         2,236,081
                                    ------------------------------------------------------------------------------------------   
Balance, December 31, 1997          11,148,052       $ 11,148    $ 31,326,683    $    858,342    $      -       $32,196,173
Issuance of common stock on
  exercise of employee stock options   368,340            368       2,677,308            -              -         2,677,676
Tax benefit related to exercise
  of employee stock options                              -            688,796            -              -           688,796
Issuance of warrants on
  an acquisition                                         -            330,000            -              -           330,000
Net loss                                                 -               -         (3,742,759)          -        (3,742,759)
                                    ------------------------------------------------------------------------------------------
Balance, December 31, 1998          11,516,392       $ 11,516    $ 35,022,787    $ (2,884,417)          -       $32,149,886


</TABLE>
The accompanying notes are an integral part of these financial statements.

                                       45
                                     - 779 -
<PAGE>

<TABLE>
<CAPTION>

                      Consolidated Statements of Cash Flows

                  Years ended December 31, 1998, 1997 and 1996


                                                            1998                 1997               1996
--------------------------------------------------------------------------------------------------------------
Cash Flows From Operating Activities
<S>                                                    <C>                   <C>                <C>         
   Net income (loss)                                   $  (3,742,759)        $  2,236,081       $  (958,306)
 Adjustments to reconcile net income (loss) to
   net cash provided by operating activities:
   Depreciation and amortization                          48,850,622           42,315,305        33,456,637
   Amortization of debt issue costs and discount              38,437              147,880           139,694
   Extraordinary loss on early extinguishment of debt      1,682,880                 -           
   Deferred income taxes                                  (1,254,753)           1,056,000          (480,000)
 Change in assets and liabilities:
   Accounts receivable                                    (1,721,398)          (1,278,437)          (63,634)
   Inventory                                               1,144,102                 -                 -            
   Prepaid expenses                                         (851,447)            (180,068)          (21,839)
   Deferred commission expense                               614,502             (400,469)         (310,792)
   Deferred debt issuance costs                                 -                    -             (112,078)
   Accounts payable                                       (3,151,545)             518,361        (1,947,116)
   Accrued expenses                                       (2,091,048)          (1,113,749)         (149,687)
   Equipment deposits                                       (542,752)             (51,175)          (26,578)
   Unearned revenue                                        3,441,028            4,293,666         4,251,166
                                                        ----------------------------------------------------
 Net Cash Provided By Operating Activities                42,415,869           47,543,395        33,777,467
Cash Flows From Investing Activities
 Capital expenditures:
   Equipment used by subscribers                         (20,341,583)         (21,137,267)      (37,424,684)
   Equipment, building and leasehold improvements         (8,803,636)          (3,367,535)       (3,120,125)
 Acquisitions                                            (37,621,363)          (5,687,196)      (65,745,794)
                                                        ----------------------------------------------------
 Net Cash Used By Investing Activities                   (66,766,582)         (30,191,998)     (106,290,603)
Cash Flows From Financing Activities
 Proceeds:
   Revolving credit line                                  51,000,000            4,000,000        17,250,000
   Term notes                                             16,000,000                 -           48,490,000
   Exercise of stock options                               2,677,676              994,803           760,630
   Issuance of common stock                                     -                    -           14,977,000
 Payments:
   Term notes                                            (24,810,833)         (22,217,083)       (9,036,459)
   Debt acquired through acquisitions                     (5,228,300)                -                 -
   Subordinated notes and prepayments costs              (16,125,000)                -                 -
                                                       ------------------------------------------------------
 Net Cash Provided (Used) By Financing Activities         23,513,543          (17,222,280)       72,441,171
                                                       ------------------------------------------------------
Net Increase (Decrease) in Cash                             (837,170)             129,117           (71,965)
Cash at Beginning of Period                                  837,170              708,053           780,018
                                                       ------------------------------------------------------
Cash at End of Period                                   $       -            $    837,170       $   708,053


The accompanying notes are an integral part of these financial statements.


</TABLE>
                                       46
                                    - 780 -
<PAGE>


                   Notes to Consolidated Financial Statements
-------------------------------------------------------------------------------


1. Summary of Significant Accounting Policies
-------------------------------------------------------------------------------
Principles of Consolidation
      The  consolidated  financial  statements  include  the  accounts  of  Data
Transmission  Network Corporation and its wholly owned subsidiaries (the Company
or DTN).  All  significant  intercompany  accounts  and  transactions  have been
eliminated in consolidation.

Revenue Recognition
      The Company provides its subscribers with equipment to receive information
and communications service. DTN charges a recurring subscription fee and in most
instances a one-time service  initiation fee. The  subscriptions  are contracted
for an initial period of one year and are generally billed quarterly in advance.
Payments  received  in  advance  for  subscriptions,   additional  services  and
advertising  are  deferred  and  recognized  as the services are provided to the
subscribers.  Equipment  Sales are  recognized  when the  equipment  is shipped.
Service  initiation fees are recognized in income since these fees are less than
the  marketing  and  setup  costs  related  to a new  subscriber.  Communication
services are generally  billed monthly in arrears based on the number and length
of the messages delivered to subscribers.

Inventory
      Inventories are stated at the lower of cost or market with cost determined
on a first in, first out basis.

Deferred Commission Expense
      Commissions  and  bonuses  which  are  paid  at the  time  of the  initial
subscription  to  sales  representatives,  to  company  representatives,  or  to
subscribers for successful  customer  referrals,  are deferred and expensed over
the initial twelve-month subscription period.

Equipment Used By Subscribers
      Equipment  used by  subscribers  to receive the  Company's  electronically
transmitted  information  and  communication  services  is  stated  at cost less
accumulated  depreciation.  Depreciation is calculated  using the  straight-line
method over a useful  life of three to eight years for assets  placed in service
prior to July 1,  1992,  and  three to six years for  assets  placed in  service
subsequent to July 1, 1992.

Equipment, Building and Leasehold Improvements
      Equipment,  building and  leasehold  improvements  are stated at cost less
accumulated  depreciation.  Depreciation is calculated  using the  straight-line
method over the estimated  useful lives of the  respective  classes of assets as
follows:


Equipment                  2-7 years
Building                    40 years
Leasehold improvements    5-10 years


Intangible Assets
      Intangible assets are stated at cost less accumulated amortization.  These
costs are amortized using the straight-line  method over three to ten years. The
carrying value of fixed and intangible  assets is  periodically  assessed by the
Company by  reviewing  the  recoverability  of the assets over the  amortization
period  based on the  projected  undiscounted  future  cash flows of the related
business  unit.  Cash  flow  projections  are  based  on  trends  of  historical
performance   and   management's   estimate   of  future   performance,   giving
consideration to existing and anticipated competition and economic conditions.

Income Taxes
      Income taxes are computed in accordance  with the  provisions of Statement
of Financial  Accounting Standard 109, "Accounting for Income Taxes" (SFAS 109).
The  objective of the  statement is to recognize  the amount of taxes payable or
refundable  in the current year and to recognize  deferred tax  liabilities  and
assets for the future tax  consequences  of events that have been  recognized in
the financial statements or tax returns.

Earnings (Loss) Per Share
      Basic  earnings  per  share  data  are  based  on  the  weighted   average
outstanding common shares during the period. Diluted earnings per share data are
based on the weighted  average  outstanding  common shares and the effect of all
dilutive potential common shares, including stock options and warrants.

Statement of Cash Flows
      For purposes of the  statement of cash flows,  the Company  considers  all
highly liquid  investments  purchased with a maturity of three months or less to
be cash  equivalents.  During the years ended December 31, 1998,  1997 and 1996,
the Company made interest  payments of $8,367,000,  $8,983,000,  and $8,555,000,
respectively. Capital expenditures for subscriber equipment included in accounts
payable at year end totalled $342,000, $1,105,000 and $1,394,000 at December 31,
1998, 1997 and 1996,  respectively.  The Company paid $136,000 of federal income
taxes in 1998 and no federal  income taxes during 1997 or 1996.  At December 31,
1996, $931,700 of the purchase price for acquired  subscribers was due in future
periods and was included in accounts payable.

Research and Development
      Expenditures  for research and  development are charged to expense as they
are incurred and  approximated  $4,423,000,  $3,059,000  and  $2,263,000 for the
years ended December 31, 1998, 1997, and 1996.

Stock-Based Compensation
      The Company accounts for its stock-based compensation under the provisions
of  Accounting  Principles  Board  Opinion 25,  Accounting  for Stock  Issued to
Employees (APB 25).

Use of Estimates
      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 these estimates.

                                       47
                                    - 781 -
<PAGE>

Fair Value of Financial Instruments
      Because of their maturities and/or interest rates, the Company's financial
instruments  generally have a fair value  approximating  their  carrying  value.
These  instruments  include  accounts  receivable,  revolving  credit  and  term
borrowings, subordinated debt, commercial paper, and trade payables. The Company
has  $49,822,540  of fixed term debt as of December  31, 1998 with an  estimated
fair value of $50,395,940.

Accounting Pronouncements
      In June 1998,  the  Financial  Accounting  Standards  Board (FASB)  issued
Statement  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities"  which will be effective for fiscal years  beginning  after June 15,
1999. The Company will adopt this Statement  effective  January 1, 2000. At this
time, the Company  believes the impact of adopting this Statement  should not be
significant to the results of operations or financial position.

Non-recurring Satellite Costs (Galaxy IV)
      On May 20, 1998,  nearly all of the  Company's  159,000  subscribers  were
unable to receive  their data due to loss of control of the Galaxy IV  satellite
by  PanAmSat.  This  satellite  was used by the Company to  transmit  service to
nearly all its subscribers.

      The costs related to the failure of Galaxy IV include  telecommunications,
overtime labor,  satellite costs and customer  communications and these unusual,
non-recurring  satellite costs were estimated to be $5.8 million and recorded in
May of 1998.

2.       Acquisitions
-------------------------------------------------------------------------------
Broadcast Partners
      In May of 1996,  the  Company  acquired  substantially  all the  assets of
Broadcast Partners, an electronic information and communication services company
providing  similar  services as DTN AgDaily in the  agricultural  industry.  The
Company  paid $63.5  million  cash and assumed  certain  "non-interest"  bearing
liabilities  of  approximately   $9.8  million.   The  Company  received  39,000
agricultural subscribers in this acquisition.

      The $63.5 million cash paid for the  Broadcast  Partners  acquisition  was
financed  with a  combination  of $15 million of privately  placed  common stock
equity  (948,000  shares) and $48.5 million of six year term notes (see note 5).
The Company acquired and capitalized  approximately  $38.2 million of equipment.
The Company is depreciating this equipment using the  straight-line  method over
five years. The Company capitalized approximately $34.8 million as an intangible
asset (primarily  goodwill) and is amortizing this cost using the  straight-line
method over three to eight years.

Market Quoters, Northern Data and Market Communications Group LLC
      During the first quarter of 1997,  the Company  acquired  2,900  real-time
commodity  subscribers through two separate  acquisitions.  Approximately 500 of
the subscribers were acquired from Market Quoters and Northern Data Services for
$750,000  cash.  The  remaining  2,400  subscribers  were  acquired  from Market
Communications Group, LLC (MCG), a joint venture between Reuters America,  Inc.,
and Farmland  Industries,  Inc. The Company paid $3.6 million cash for the 2,400
subscribers,  certain  assets and assumed  certain  liabilities.  In total,  the
Company capitalized approximately $4.5 million as an intangible asset (primarily
goodwill) and is amortizing this cost using the straight-line  method over three
to eight years. The MCG acquisition  included the preferred rights to distribute
relevant Reuters  real-time news and information to the commodities,  energy and
metals markets.

The Network, Inc.
      In July of 1997, the Company acquired the assets of The Network,  Inc., an
electronic cotton trading network service.  The Company agreed to pay $1,000,000
cash over five years.  The Company has the option to terminate  the agreement at
any time and cease all payments and return the assets to the owner.  The Company
paid  $200,000  cash in 1997 and 1998 and will pay $200,000  cash on each of the
next three anniversary  dates. The Company is capitalizing the $200,000 payments
when made as an intangible asset  (primarily  goodwill) and amortizing this cost
using  the  straight-line  method  over 12  months.  To  date  the  Company  has
capitalized  a total of  $500,000.  In effect,  if all  payments  are made,  the
Company is amortizing the $1,000,000 purchase price over five years.

Arkansas Farm Bureau ACRES Service
      In October of 1997,  the Company agreed to acquire the  approximately  700
subscribers  on the ACRES  platform  from the Arkansas  Farm Bureau  (AFB).  The
Company agreed to pay approximately $600 for each subscriber that converted to a
DTN service.  The Company has converted  628  subscribers  to a DTN service.  In
addition,  the Company will pay the AFB a $6 monthly  residual for the lesser of
the life of the  subscriber or ten years for those  subscribers  converting to a
DTN service.  The Company  capitalized  $376,800 as an  intangible  asset and is
amortizing this cost using the straight-line method over eight years.

Market Information of Colorado, Inc.
      In February of 1998,  DTN acquired  100  subscribers  receiving  real-time
commodities and futures  information from Market  Information of Colorado,  Inc.
(MIC) for $135,000 cash. The Company capitalized $133,205 as an intangible asset
and is amortizing this cost using the straight-line method over eight years.

CDS Group, Inc.
      In March of 1998, DTN acquired CDS Group, Inc. (CDS) for $250,000 cash and
the  assumption  of  certain  liabilities.  CDS is engaged  in the  business  of
marketing  software for tracking  bales of cotton for  businesses  in the cotton
industry.  This acquisition complements the acquisition of The Network, Inc., an
electronic cotton trading network (discussed above). The Company has capitalized

                                       48
                                     - 782 -
<PAGE>

$325,300 as an intangible asset (goodwill) and is amortizing this cost using the
straight-line method over five years.

SmartServ Online, Inc.
      In April of 1998, DTN signed an agreement to acquire  exclusive  rights to
market the Internet based financial services  information  products of SmartServ
Online,  Inc.  their internet  information  distribution  technology,  and their
subscribers for $850,000 cash plus $1,055,000 for minimum payments for the first
twelve  months of the  contract.  These  services  include:  SmartServ  Pro, now
DTN.IQ, a real-time, tick-by-tick stock quote and news service, and TradeNet and
BrokerNet,  real-time trading and account information services for the brokerage
industry. This agreement transfers the 850 subscribers currently using SmartServ
Online to DTN. All new  subscribers  to these services will be DTN customers and
DTN will pay SmartServ  Online,  Inc. an ongoing royalty based on revenues.  The
first  year  minimum  payments  in excess of the  calculated  payments  has been
capitalized  as  part  of  the  purchase  price.  The  Company  has  capitalized
$1,905,000  as an  intangible  asset  and is  amortizing  this  cost  using  the
straight-line method over five years.

National Datamax, Inc.
      In June of 1998,  DTN signed an  agreement  to acquire 100% of the capital
stock  outstanding of National Datamax,  a software  development and information
services firm specializing in integrated  systems for the financial  information
services industry.  DTN has agreed to pay $3,000,000 cash, assume the assets and
liabilities of National Datamax,  Inc., plus pay any earn-out based upon revenue
growth from quarter ending December 31, 1997,  through quarter ending  September
30, 1999.  National Datamax is a wholly owned subsidiary of DTN and operates out
of California.  The Company has  capitalized  $3,242,930 as an intangible  asset
(primarily  goodwill) and is amortizing this cost using the straight-line method
over three to five years.

Kavouras, Inc.
      In July of 1998,  DTN signed an  agreement  to acquire 100% of the capital
stock  outstanding  in Kavouras,  Inc.  Kavouras is engaged in the  development,
design,  manufacture,  marketing  and service of  meteorological  equipment  and
provides  meteorological  data  services  to  government,  aviation,  commercial
broadcast and other industries,  including DTN. The Company agreed to assume the
assets and  liabilities  of  Kavouras,  Inc. and pay  $22,650,000  cash of which
$20,650,000 was paid at closing.  The remaining $2,000,000 cash will be paid out
in equal  $400,000  payments  over the next five  anniversary  dates of closing.
Kavouras is a wholly owned subsidiary of DTN and operates out of Minnesota under
the name DTN Kavouras Weather Services. The Company has capitalized  $18,208,749
as an intangible  asset  (primarily  goodwill) and is amortizing this cost using
the straight-line method over five to ten years.

      In a  related  transaction,  in April of 1998,  Kavouras  signed a License
Agreement with Earthwatch  Communication,  Inc. for the exclusive rights to use,
market license and sell the Licensed  Products of a U.S. Patent which provides a
"Method  for  Creating  a 3D  Image  of  Terrain  and  Associated  Weather."  In
conjunction with the acquisition  agreement,  an Assignment Agreement was signed
on March 30,  1998,  between  Kavouras and the Company to assign this License to
DTN Market Communications Group, Inc., a wholly owned subsidiary of the Company.
As a result of this assignment, the Company paid $3,000,000 cash for the License
Agreement with Earthwatch Communication,  Inc., which is being capitalized as an
intangible asset and amortized using the straight-line method over ten years.

Paragon Software, Inc.
      In  October  of 1998,  the  Company  acquired  100% of the  capital  stock
outstanding in Paragon Software, Inc. (PSI), subject to a re-purchase by a third
party.  PSI  provides  financial  information  services to  subscribers  via the
Internet. The Company agreed to pay $5.7 million to acquire the stock and assume
the  assets  and  liabilities  of  the  company.  The  Company  has  capitalized
$6,474,910 as an intangible  asset  (primarily  goodwill) and is amortizing this
cost using the straight-line method over three to five years.

      The  acquisition  of  PSI  was  part  of an  overall  plan  to  acquire  a
controlling  interest  in  two  other  companies.   Without  those  acquisitions
occurring  prior to December  31,  1998, a third party has the right to purchase
PSI from the Company at the Company's  initial cost. The  acquisitions  were not
completed  by  December  31,  1998 (due to  circumstances  beyond the  Company's
control) and the third party has indicated their intentions to purchase Paragon.
If the third party does not obtain the  financing  and purchase  Paragon by June
30, 1999, Paragon will remain an asset of DTN.

Weather Services Corporation
      In  December  of 1998,  the Company  acquired  100% of the  capital  stock
outstanding in Weather Services  Corporation (WSC). WSC provides  meteorological
consulting and worldwide commercial weather information to internet,  newspaper,
utilities,  broadcasters,  agribusinesses and municipalities. The Company agreed
to pay $3,807,700 cash to acquire the stock and assume certain  liabilities plus
a warrant to purchase 20,000 shares of DTN's common stock at $34.00. The Company
has capitalized  $3,806,533 as an intangible  asset (goodwill) and is amortizing
this cost using the  straight-line  method over ten years. The fair value of the
warrant is included in shareholder's equity.

Pro Forma Financial Information
      All of the acquisitions  have been accounted for using the purchase method
of accounting.  With the exception of National Datamax,  Kavouras,  PSI and WSC,

                                       49
                                    - 783 -
<PAGE>

the acquisitions in 1997 and 1998 were primarily acquisitions of subscribers and
not entire businesses.  The following unaudited pro forma financial  information
reflects the  consolidated  results of  operations of the Company for the fiscal
years ended December 31, 1998 and 1997 as though the Kavouras,  National Datamax
and WSC acquisitions, had occurred at the beginning of the period presented. The
remaining  1998  acquisitions  were deemed not material in nature to the overall
operating  statements  of the  Company,  thus are  excluded  from the pro  forma
information  disclosure.  The  acquisition  of PSI is excluded from the proforma
information  as a result  of the  repurchase  agreement  discussed  above.  This
proforma  information has been prepared for  comparative  purposes only and does
not necessarily  represent actual operating  results that may be achieved in the
future or that would have  occurred  had the  acquisition  been  consummated  on
January 1, 1997.

<TABLE>
<CAPTION>

Pro Forma December 31,                  1998                          1997
-------------------------------------------------------------------------------
<S>                                 <C>                           <C>         
Revenues                            $161,544,338                  $150,665,102
Income (loss) before
  extraordinary item                $ (5,684,895)                 $ (1,293,803)
Income (loss) per share before
  extraordinary item
  Basic                             $      (0.50)                 $      (0.12)
  Diluted                           $      (0.50)                 $      (0.12)

</TABLE>



3.       Inventories
-------------------------------------------------------------------------------
      Inventories  are primarily  related to the equipment  sales as a result of
the acquisition of Kavouras. The major classes of inventory are as follows:


<TABLE>
<CAPTION>

December 31                  1998
-------------------------------------------------------------------------------
<S>                     <C>          
Raw Materials           $   2,684,857
Work-in-Process               728,415
Finished Goods                162,308
                        $   3,575,580

</TABLE>

4.       Equipment, Building and Leasehold Improvements
-------------------------------------------------------------------------------
      Equipment,  building and leasehold  improvements  are stated at cost.  The
respective costs of the classes of assets are as follows:

<TABLE>
<CAPTION>

December 31,                 1998                        1997
-------------------------------------------------------------------------------
<S>                      <C>                         <C>         
Equipment                $ 33,198,540                $ 21,338,869
Building                    2,460,486                        -
Land                          220,269                        -
Leasehold improvements      2,909,196                   1,816,368
-------------------------------------------------------------------------------
  Total                  $ 38,788,491                $ 23,155,237

</TABLE>


5.       Long Term Debt And Loan Agreements
-------------------------------------------------------------------------------
      The Company has a revolving credit agreement,  as amended, with a group of
banks (the "Revolving Credit Agreement").  The Revolving Credit Agreement, which
expires June 30, 2000 unless extended,  provides for a total commitment of up to
$80,800,000 in new borrowings. As of December 31, 1998, $55,500,000 of the total
commitment had been borrowed,  with the remaining  $25,300,000  available to the
Company subject to certain restrictions as discussed below.



<TABLE>
<CAPTION>

December 31,                           1998                        1997
-------------------------------------------------------------------------------
Revolving Credit Agreement
<S>                               <C>                          <C>         
  Revolving credit line           $  55,500,000                 $  4,500,000
  Term notes                         34,421,875                   35,151,040
Term Credit Agreement
  Term notes                      $  32,326,665                 $ 40,408,333
-------------------------------------------------------------------------------
Total Loan Agreements               122,248,540                   80,059,373
-------------------------------------------------------------------------------
Less current portion                 21,628,542                   21,810,833
-------------------------------------------------------------------------------
Total Long-Term Debt              $ 100,619,998                 $ 58,248,540


</TABLE>


      Additional  borrowings  under the Revolving Credit Agreement are available
to the Company,  as long as at the time of the advance,  no default  exists with
any of the  Company  loan  agreements  and  the  ratio  of the  Company's  total
borrowings  to  operating  cash flow  ("the  Leverage  Ratio")  does not  exceed
thirty-six.  As of December 31, 1998 based on current  operating  cash flow, the
Company  would be able to borrow  all of the  remaining  $25,300,000  commitment
available.

      In addition to the restrictions  mentioned above with respect to advances,
total debt  outstanding is limited to forty-eight  times monthly  operating cash
flow. The Company is required to maintain total stockholders' equity of at least
$23,500,000  plus fifty  percent  (50%) of net income (but not losses) at fiscal
year end through June 30, 2000. The minimum  stockholders' equity required to be
maintained is  $24,618,040  as of December 31, 1998.  The Company is required to
maintain  a ratio of  quarterly  operating  cash flow to  interest  expense  (as
defined) of at least 2.25 to 1. The Company is permitted  to pay cash  dividends
in any one year, which are, in the aggregate, less than 25% of the Company's net
operating profit after taxes in the previous four quarters.

      Interest on the outstanding borrowings (prior to when the borrowings might
be converted to term loans, as discussed below) is at a variable rate, depending
on the ratio of the  Company's  total  borrowings  to  operating  cash flow (the
"Leverage  Ratio").  The  following  table  outlines the "Leverage  Ratio",  the
applicable Margin, Unused Commitment Fees and Fixed Note Margin discussed below.


<TABLE>
<CAPTION>

                                                     Unused              Fixed
                                                   Commitment             Note
Leverage Ratio                      Margin             Fee               Margin
-------------------------------------------------------------------------------
<S>                                <C>               <C>                <C>  
more than 42                        .250%             .375%              2.25%
more than 36 and less than 42       .500%             .250%              2.25%
more than 30 and less than 36       .750%             .250%              2.00%
more than 24 and less than 30      1.000%             .250%              2.00%
more than 18 and less than 24      1.250%             .125%              1.75%
less than 18                       1.375%             .125%              1.75%


</TABLE>

      The Revolving Credit Rate is the First National Bank of Omaha's  "National
Base Rate", minus the applicable Margin. The base rate is adjusted monthly, with

                                       50
                                    - 784 -
<PAGE>

the  interest  rate  margin (as  defined on page 57)  changed  quarterly.  As of
December 31, 1998, the Revolving Credit Rate is 6.75%.

      The  Company has the option to convert the  outstanding  revolving  credit
borrowings to term loans at any time,  payable in  forty-eight  fixed  principal
installments,  plus  interest.  Interest on the  converted  term loans is at the
Company's  option,  a variable  interest rate of 1/4% over the Revolving  Credit
Rate or at a fixed rate of 3/8% over the Revolving  Credit Rate in effect on the
date of the notice (as defined) or the  applicable  Fixed Note Margin  (based on
the  "Leverage  Ratio")  over  the  average  of the 3 and 5 year U. S.  treasury
securities,  as quoted in the prior month "Federal Reserve Statistical Release",
whichever is greater.  Through a refinancing of Senior Subordinated Notes, as of
March 17, 1998, the Company  converted  $16,000,000 of revolving  credit to term
notes  accruing  interest at the rate of 7.50% (see  footnote 6). As of December
31, 1998, $55,500,000 of the total borrowings outstanding had not been converted
to  term  loans.  As of  December  31,  1998,  $34,421,875  of term  loans  were
outstanding with monthly  installments due up through 2002 having interest rates
ranging from 7.50% to 9.25%.

      The Company pays a commitment  fee of 1/8 - 3/8% on the unused  portion of
the total  revolving  credit  commitment  based on the "Leverage  Ratio".  As of
December 31, 1998 the  commitment  fee was 1/4% on all unused  revolving  credit
commitment.  In the event the total  borrowings  exceed 36 times  Operating Cash
Flow,  any term  note  accruing  interest  at less than  7.5% is  included  in a
"Trigger Event".  The Company is obligated to pay the holders of such term notes
a fee of 0.375% of the  outstanding  balance of the notes upon the occurrence of
the Trigger Event and like amounts on the six month  anniversary  and the twelve
month  anniversary of the Trigger Event. The Company has a Term Credit Agreement
with a group of banks providing for an aggregate principal amount of $48,490,000
to be repaid in 72 fixed principal installments which began January 31, 1997.

      As of  December  31,1998,  the  principal  balance  was  $32,326,665  with
$16,926,000  accruing  at a  variable  interest  rate of the NY prime  rate less
one-half of one  percent,  or 7.25% and the  remaining  $15,400,665  accruing at
fixed interest rates ranging from 8.25% to 8.36%.

<TABLE>
<CAPTION>


                 Minimum Principal Maturities of Long-Term Debt*
-------------------------------------------------------------------------------
Year Ending December 31,

           <S>                         <C>         
           1999                         $ 21,628,542
           2000                           21,581,667
           2001                           14,456,667
           2002                            9,081,664
-------------------------------------------------------------------------------
Total                                   $ 66,748,540
      
<FN>

*Excluding revolving credit line.

</FN>
</TABLE>


      The  revolving  credit lines are  classified  as long-term  debt since the
Company has the ability and the intent to maintain these  obligations for longer
than one year.

      Substantially  all of the Company's assets are pledged as collateral under
the Company's long-term debt and loan agreements.

6.       Subordinated Long-Term Notes
--------------------------------------------------------------------------------
      On March 17, 1998, the Company  refinanced its Senior  Subordinated  Notes
with 7.50% term notes with fixed principal  payments plus interest.  The Company
recorded an extraordinary loss for the pre-payment penalty of $1,125,000 or 7.5%
of the principal balance of $15,000,000 to retire the Subordinated  Notes early.
In addition,  $557,880 of debt issuance and discount costs related to the senior
subordinated  notes were also  recorded  as an  extraordinary  loss in the first
quarter of 1998.



7.       Income Taxes
-------------------------------------------------------------------------------
      Components of the income tax (benefit) provision are as follows:
<TABLE>
<CAPTION>

                       1998                 1997                 1996
-------------------------------------------------------------------------------
<S>               <C>                    <C>                  <C>       
Current           $   156,000            $  115,000           $   34,000
Deferred           (1,558,684)            1,056,000             (480,000)
-------------------------------------------------------------------------------
                  $(1,402,684)           $1,171,000           $ (446,000)


</TABLE>

      The income tax (benefit) provision differs from the (benefit) provision at
federal statutory rates for the following reasons:

<TABLE>
<CAPTION>

                        1998                 1997                  1996
-------------------------------------------------------------------------------
<S>                 <C>                  <C>                   <C>       
Federal             $(1,383,313)         $1,158,000            $(477,000)
State Taxes             (81,371)             68,000              (28,000)
Other                    62,000             (55,000)              59,000
-------------------------------------------------------------------------------
                    $(1,402,684)         $1,171,000            $(446,000)


</TABLE>

      Included in the extraordinary  item, net of tax, is a federal deferred tax
benefit of $606,000.  The  components of deferred tax  liability  (asset) are as
follows:

<TABLE>
<CAPTION>

                                            1998                     1997
-------------------------------------------------------------------------------
<S>                                   <C>                       <C>          
Depreciation                          $ (4,910,000)             $ (6,573,000)
Net operating loss carryforwards         8,630,000                 8,101,000
Intangible assets                         (828,000)                     -
AMT Credits                                860,000                   235,000
Accruals and other                       1,019,000                  (417,000)
-------------------------------------------------------------------------------
Net Deferred Asset                    $  4,771,000              $  1,346,000


</TABLE>

      The Company had  approximately  $23,971,000  of unused net operating  loss
(NOL)  carryforwards at December 31, 1998. The NOL carryforwards  will expire in
the years 2002 to 2018.  In addition,  the Company  reflected in Other Assets at
December 31, 1997 approximately  $911,000 relating to pending IRS refund claims.
This refund was collected in 1998.

                                       51
                                    - 785 -
<PAGE>


8.       Capital Stock
-------------------------------------------------------------------------------
      The Company's  articles of incorporation  provide for the authorization of
1,000,000  shares of $.50 par value per share  preferred  stock.  The  preferred
stock,  none of which has been issued,  presently  has no voting rights or other
features,  although the articles of  incorporation  contain  provisions to adopt
various features or privileges at the discretion of the Board of Directors.

      In  September  1992,  the  Company's  Board of  Directors  authorized  the
repurchase of up to 350,000  shares of the Company's  outstanding  common stock.
The purchases are to be made from time to time in the open market or in arranged
transactions at such price or prices as company officers may deem advisable. The
Company has purchased 150,000 shares of outstanding common stock since September
1992.  The  common  stock  repurchased  may be used to  provide  shares  for the
Company's existing stock options and warrants outstanding.

      In June 1994,  pursuant  to the sale of  subordinated  debt,  the  Company
issued a warrant to purchase  75,000  shares of the  Company's  common  stock at
$7.39 per share on or before June 30, 2004.  At December 31, 1998 the warrant to
purchase 75,000 shares had not been exercised.

      As part of the May 1996  acquisition  of Broadcast  Partners,  the Company
sold 948,000 (split  adjusted) shares through a private  placement  transaction.
During the second  quarter of 1996,  the  Company  effectuated  a  three-for-one
common stock split,  payable  June 28, 1996 to  stockholders  of record June 14,
1996. The stated par value of each share was not changed from $0.001. A total of
$7,383 was reclassified from the Company's additional paid in capital account to
the Company's common stock account.

      In August of 1997,  the  Company  adopted a  shareholder  rights plan with
respect  to its  Common  Stock,  under  which  the  Board  declared  a  dividend
distribution of one preferred  shares purchase right to holders of each share of
Common Stock.  The rights are not  exercisable  until ten days after a person or
group announces the acquisition of 11% or more of the Company's  voting stock or
announces a tender  offer for 11% or more of the  Company's  outstanding  common
stock.  Each right entitles the holder to purchase  common stock at one half the
stock's market value. The rights are redeemable at the Company's option for $.01
per  Right  at any time on or prior to  public  announcement  that a person  has
acquired 11% or more of the Company's voting stock. The rights are automatically
attached to and trade with each share of Common Stock.

      In  December  of  1998,  pursuant  to the  purchase  of  Weather  Services
Corporation,  the  Company  issued a warrant to  purchase  20,000  shares of the
Company's  common stock at $34.00 per share on or before  December 11, 2005.  At
December 31, 1998 the warrant to purchase 20,000 shares had not been exercised.

9.       Benefit Plan
-------------------------------------------------------------------------------
      The Company has a defined  contribution  plan under provisions of Internal
Revenue Code Section 401(k). All employees with at least one year of service may
participate in the plan. The Company  matches the employee's  contribution up to
4% of  the  employee's  compensation,  and  may  make  additional  discretionary
contributions.  During 1998, 1997 and 1996, the Company contributed  $1,029,000,
$848,000 and $671,000, respectively, to the plan as matching contributions.

10.      Leases
-------------------------------------------------------------------------------
      The Company leases the right to subsidiary channel  authorizations from FM
radio  stations and  satellite  network  transmission  capacity to broadcast the
Company's information service to its subscribers. These leases are accounted for
as operating  leases and are for varying periods of one to ten years and contain
annual renewal options for periods of up to five years.

      The Company also has various operating leases for office space,  warehouse
facilities and equipment.  These leases expire on various dates through 2005 and
generally  provide for renewal  options at the end of the lease.  The Company is
generally obligated to pay the cost of property taxes, insurance,  utilities and
maintenance on the leases.

      Future minimum lease payments under all non-cancelable operating leases at
December 31, 1998 are as follows:

<TABLE>
<CAPTION>


Year Ending December 31
-------------------------------------------------------------------------------

<C>                                        <C>               
1999                                       $ 5,546,000
2000                                         4,597,000
2001                                         3,677,000
2002                                         2,517,000
2003                                         2,177,000
2004 and after                               2,575,000
-------------------------------------------------------------------------------
Total future minimum lease payments        $21,089,000
</TABLE>




      Total rent expense on all operating leases was $5,920,000,  $4,842,000 and
$3,459,000 for the years ended December 31, 1998, 1997 and 1996, respectively.

11.      Stock-Based Compensation
--------------------------------------------------------------------------------
      The Company has employee and  director  stock option plans with  aggregate
limits of  2,800,000  shares for the  employee  plan and 210,000  shares for the
non-employee  director plan. The exercise price of the stock options is equal to
the market value of the Company's common stock on the date of grant. The options
are  exercisable  for a period  of up to ten  years  from the date of grant  and
generally vest equally over a period of three years.

                                       52
                                    - 786 -
<PAGE>

      At December  31, 1998,  shares of the  Company's  authorized  but unissued
common stock were reserved for issuance as follows:

<TABLE>
<CAPTION>



                                    Shares
--------------------------------------------
<S>                                 <C>    
Employee stock option plan          691,226
Non-employee director plan           83,003
--------------------------------------------
Total                               774,229


</TABLE>



      The Company  accounts  for its  stock-based  compensation  plans under the
provisions of APB 25. Accordingly,  no compensation cost has been recognized for
its fixed stock option plans.

      The effects on 1998, 1997 and 1996 net income (loss) and income (loss) per
share of accounting for stock-based  compensation based on the fair value method
at the grant dates consistent with the method of FASB Statement 123,  Accounting
for  Stock-Based  Compensation,  are shown in the pro forma  information  to the
right:

<TABLE>
<CAPTION>

Pro Forma                          1998                1997            1996
-------------------------------------------------------------------------------
Net Income (Loss)
<S>                           <C>                  <C>             <C>         
  As Reported                 $ (3,742,759)        $  2,236,081    $  (958,306)
  Proforma                    $ (5,427,339)        $    920,827    $(2,452,206)
Diluted Income (Loss)
per share
  As Reported                 $      (0.33)        $       0.19    $     (0.09)
  Proforma                    $      (0.48)        $       0.08    $     (0.23)
-------------------------------------------------------------------------------
Fair Value Per Share          $      15.70         $      11.56    $      8.22


</TABLE>


      The fair value for options  granted  under the above  mentioned  plans was
estimated at the date of grant using the Black-Scholes option-pricing model with
the following assumptions:
<TABLE>
<CAPTION>


                                      1998            1997         1996
-------------------------------------------------------------------------------
<S>                                  <C>             <C>          <C>  
Risk-free interest rate               5.5 %           5.5 %        5.4 %
Dividend yield                        0.0 %           0.0 %        0.0 %
Expected volatility                  53.0 %          51.0 %       56.0 %
Expected life (years)                 4.95            5.60         4.75


</TABLE>


The following table  summarizes the stock options as of December 31, 1998, 1997,
1996:


<TABLE>
<CAPTION>

                                                  1998                         1997                           1996
---------------------------------------------------------------------------------------------------------------------------------
                                                  Weighted-Average               Weighted-Average               Weighted-Average
                                          Shares   Exercise Price        Shares    Exercise Price      Shares     Exercise Price
---------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>         <C>               <C>           <C>             <C>          <C>      
Outstanding at beginning of year         1,546,432   $ 10.55           1,520,810     $   9.04        1,276,959    $    5.79
--------------------------------------------------------------------------------------------------------------------------------- 
Granted                                    253,458   $ 29.87             207,350     $  21.60          538,800    $   15.64
Exercised                                 (368,992)  $  7.25            (119,644)    $   8.33         (134,878)   $    5.64
Cancelled                                  (46,521)  $ 22.59             (62,084)    $  14.23         (160,071)   $    7.93
---------------------------------------------------------------------------------------------------------------------------------
Outstanding at end of year               1,384,377   $ 14.57           1,546,432     $  10.55        1,520,810    $    9.04
---------------------------------------------------------------------------------------------------------------------------------
Exercisable at end of year                 895,230   $  9.48             968,834     $   7.25          741,409    $    5.67


</TABLE>


The following table summarizes the stock options  outstanding as of December 31,
1998:

<TABLE>
<CAPTION>


                                                     Options Outstanding                                Options Exercisable
---------------------------------------------------------------------------------------------------------------------------------
                                     Shares             Weighted-Average     Weighted-Average      Shares      Weighted-Average
                                   Outstanding           Remaining Life       Exercise Price     Exercisable    Exercise Price
---------------------------------------------------------------------------------------------------------------------------------
<C>                                 <C>                 <C>                   <C>                  <C>          <C>    
$ 0.00 -  $ 5.50                    451,853             3.7 years             $ 4.67               451,853      $  4.67
$ 5.75 -  $14.42                    125,092             5.1 years             $ 8.71               125,042      $  8.71
$15.50 -  $15.50                    388,645             7.0 years             $15.50               246,995      $ 15.50
$15.67 -  $41.75                    418,787             8.6 years             $26.14                71,340      $ 20.52
---------------------------------------------------------------------------------------------------------------------------------
$ 0.00 -  $41.75                   1,384,377            6.3 years             $14.57               895,230      $  9.48

</TABLE>

12.       Earnings Per Share
-------------------------------------------------------------------------------

      The following table shows the amounts used in computing earnings per share
and the effect on the weighted  average  number of shares of dilutive  potential
common stock. The dilutive  potential common shares outstanding were 878,837 and
855,640 for 1998 and 1996,  respectively,  and were not  included  in  computing
diluted earnings per share because their effects were antidilutive.
<TABLE>
<CAPTION>


                                                  1998                            1997                              1996
-----------------------------------------------------------------------------------------------------------------------------------
                                                      Per-Share                           Per-Share                        Per-Share
                                 Income      Shares     Amount     Income      Shares      Amount    Income       Shares    Amount
------------------------------------------------------------------------------------------------------------------------------------
Basic EPS
<S>                          <C>           <C>         <C>        <C>         <C>           <C>      <C>          <C>        <C>    
  Net Income (Loss)          $ (3,742,759) 11,358,934  $ (0.33)   $2,236,081  11,100,684    $0.20    $ (958,306)  10,657,893 $(0.09)
Effect of Dilutive 
  Securities
  Stock Options and Warrants         -           -          -           -        981,872      -            -            -        - 
-----------------------------------------------------------------------------------------------------------------------------------
Diluted EPS                  $ (3,742,759) 11,358,934  $ (0.33)   $2,236,081  12,082,556    $0.19    $ (958,306)  10,657,893 $(0.09)



</TABLE>

                                       53
                                    - 787 -
<PAGE>



13.      Industry Segment Data
-------------------------------------------------------------------------------
      The Company operates in four principal  industry  segments - Agricultural,
Weather,   Financial   and   Energy.   All   segments   provide   comprehensive,
time-sensitive  information  and  communication  services  for their  respective
industries.

      The  Agricultural  segment  (DTN Ag  Services)  provides  information  and
services,  including:agricultural  market  information,  delayed  and real  time
futures and options quotes and  comprehensive  news and weather for a variety of
agribusiness industries;  equipment locator and inventory management service for
the farm implement dealer; weather, pricing, news and transportation information
for the produce  industry;  and an  electronic  marketing  system for the cotton
industry.

      The  Weather  segment  (DTN  Weather  Services)  provides a  comprehensive
weather  information  system  to meet  the  weather  information  needs  of many
industries  including:  aviation,  broadcast,  construction,  forestry,  marine,
transportation,  turf-related  operations,  emergency  management  and any other
business relying on weather information to help carry out its operations.

      The Financial  segment (DTN  Financial  Services)  provides  comprehensive
information and services  including;  real-time quotes,  news, charts and alerts
for professional  investors delivered via proprietary  hardware,  PC or over the
internet;  delayed  quotes,  business news and economic data for the  individual
investor;  wholesale  mortgage rates and prices for the mortgage  industry;  and
software and data services to financial planners and independent brokers.

      The Energy segment (DTN Energy Services) provides pricing  information and
communications  services  including,  delayed  futures and  options  quotes plus
selected financial information for the refined fuels industry,  thus linking the
refiners  with their  customers  and  real-time  or delayed  options and futures
quotes, weather, news and information for the gas and electricity industries.

      The Other segment  (Other  Services) is general  corporate  activities not
attributable  to a specific  industry  segment and other  industry  services not
material in nature and eliminations of inter-segment activity.

      Management  primarily  evaluates  performance  of each  segment  based  on
operating cash flow (operating  income before  depreciation  and  amortization),
EBITDA.   The  Company  does  not  allocate   income  taxes  and  infrequent  or
extraordinary items to the individual industry segments.  Inter-segment revenues
have  been  recorded  at  amounts  approximating  market.  The  following  table
summarizes  additional  information  regarding the Company's individual industry
segments:

<TABLE>
<CAPTION>

                                 1998                 1997           1996
--------------------------------------------------------------------------------
External revenues
<S>                           <C>               <C>              <C>         
  DTN Ag Services             $ 88,313,568      $ 87,574,829     $ 69,718,299
  DTN Weather Services          25,760,861        10,665,701        5,597,926
  DTN Financial Services        13,350,361        10,316,370        8,586,836
  DTN Energy Services           16,108,597        14,344,714       12,169,273
  Other Services                 5,452,959         3,472,738        2,311,379
-------------------------------------------------------------------------------
Total                         $148,986,346      $126,374,352     $ 98,383,713
-------------------------------------------------------------------------------

Inter-segment revenues
  DTN Ag Services             $       -         $       -        $       -
  DTN Weather Services           1,038,231              -                -
  DTN Financial Services            24,611              -                -
  DTN Energy Services                 -                 -                -
  Other Services                      -                 -                -
-------------------------------------------------------------------------------
                                 1,062,842              -                -
  Inter-segment
    Elimination                 (1,062,842)             -                -
-------------------------------------------------------------------------------
Total                         $       -         $       -        $       -
-------------------------------------------------------------------------------
Operating Income
  DTN Ag Services             $ 16,797,670      $ 18,773,860     $ 11,169,290
  DTN Weather Services          (2,649,423)       (2,174,723)      (1,685,060)
  DTN Financial Services        (3,559,403)       (2,701,058)      (2,471,838)
  DTN Energy Services            6,282,467         5,720,451        4,201,884
  Other Services               (12,708,135)       (7,235,127)      (4,293,485)
-------------------------------------------------------------------------------
Total (a)                     $  4,163,176      $ 12,383,403     $  6,920,791
-------------------------------------------------------------------------------
Depreciation
and Amortization
  DTN Ag Services             $ 33,176,299      $ 31,989,604     $ 26,013,461
  DTN Weather Services           6,839,166         3,575,805        1,588,449
  DTN Financial Services         4,226,327         3,196,835        2,730,428
  DTN Energy Services            2,003,109         2,124,352        1,918,895
  Other Services                 2,605,721         1,428,709        1,205,404
-------------------------------------------------------------------------------
Total                         $ 48,850,622      $ 42,315,305     $ 33,456,637
-------------------------------------------------------------------------------
Interest Expense
  DTN Ag Services             $  5,813,030      $  7,554,514     $  7,073,451
  DTN Weather Services           1,812,353           694,197          404,252
  DTN Financial Services           454,981           442,381          462,724
  DTN Energy Services              158,535           184,024          258,870
  Other Services                   210,769           223,115          232,973
-------------------------------------------------------------------------------
Total                         $  8,449,668      $  9,098,231     $  8,432,270
-------------------------------------------------------------------------------
Operating
Cash Flow (EBITDA)
  DTN Ag Services             $ 49,973,969      $ 50,763,464     $ 37,182,751
  DTN Weather Services           4,189,743         1,401,082          (96,611)
  DTN Financial Services           666,924           495,777          258,590
  DTN Energy Services            8,285,576         7,844,803        6,120,779
  Other Services (a)           (10,102,414)       (5,806,418)      (3,088,081)
-------------------------------------------------------------------------------
Total                         $ 53,013,798      $ 54,698,708     $ 40,377,428
</TABLE>

                                       54
                                    - 788 -
<PAGE>


14.  Subsequent Events
-------------------------------------------------------------------------------


SmartServ Online, Inc. Letter of Intent:
      On January 26, 1999, the Company and SmartServ Online,  Inc., (SSOL) based
in Stamford,  CT,  (OTC-BB:SSOL)  signed a Letter of Intent  whereby the Company
will merge with SmartServ Online,  Inc.  Shareholders of SmartServ Online,  Inc.
will receive  stock of the Company.  The Letter of Intent has been signed by the
holders of a majority of the stock of SSOL on a fully diluted basis.

      Under the terms of the proposed  transaction,  the holders of  outstanding
stock of SSOL  would  receive  shares  of the  Company  Common  Stock  having an
aggregate  market  value  equal  to the  lesser  of  $14,850,000  or the  amount
determined  by  multiplying  $3.20 by the number of shares of SSOL Common  Stock
held by SSOL  Stockholders  on an as if converted and fully diluted  basis.  The
market  value of a share of the  Company's  Common  Stock  for  purposes  of the
proposed  transaction  would be based upon the average of its closing  prices on
the  Nasdaq  Stock  Market on each of the 10  trading  days  ending on the third
trading day prior to the date of the closing of the  proposed  transaction,  but
would not be lower than $28.35 or higher than $34.65.

      The  Company  will  file a  federal  registration  statement  prior to the
Closing  covering  all  of the  Company's  Common  Shares  issued  to  the  SSOL
Stockholders in the proposed transaction.  The registration,  if effective, will
permit the SSOL Stockholders to sell the Company's Common Shares into the public
market. The transaction is subject to the execution of a definitive agreement, a
fairness  opinion and approval of a majority of the  outstanding  stock of SSOL.
The parties anticipate the proposed transaction to close in June 1999.

1998 Revolving Credit Agreements:
      On January 29,  1999,  the Company  closed on the First  Amendment to 1998
Revolving  Credit  Agreement.  This  agreement  increased the  revolving  credit
facility to $122,900,000 from the previous limit of $80,800,000.  This amendment
extended  the term of the  revolving  credit  facility to June 30, 2001 from the
previous  term of June 30, 2000. At January 29, 1999,  $57,000,000  of the total
commitment had been borrowed,  with the remaining  $65,900,000  available to the
Company subject to certain restrictions.

                                       55
                                    - 789 -

<PAGE>

<TABLE>
<CAPTION>


                           Quarterly Data (Unuadited)

                     Years ended December 31, 1998 and 1997


Quarter                             First            Second             Third            Fourth            Total
-----------------------------------------------------------------------------------------------------------------------------
Fiscal 1998
<S>                                  <C>                 <C>                <C>             <C>               <C>          
Revenues                             $ 34,425,147        $ 34,797,482       $ 39,733,540    $ 40,030,177      $ 148,986,346
Operating Income                     $  3,701,311        $ (3,030,844)      $  2,124,238    $  1,368,471      $   4,163,176
Income (Loss)
  Before Extraordinary Item          $  1,087,406        $ (3,076,542)(4)   $      9,987    $   (686,730)     $  (2,665,879)
Net Income (Loss)                    $     10,526(3)     $ (3,076,542)(4)   $      9,987    $   (686,730)     $  (3,742,759)
Basic Income (Loss) Per Share2
  Income (loss)
    before extraordinary item        $       0.10        $      (0.27)      $       -(5)    $      (0.06)     $       (0.24)
  Net Income (loss)                  $       -(5)        $      (0.27)      $       -(5)    $      (0.06)     $       (0.33)
Diluted Income (Loss) Per Share(2)
  Income (loss)
    before extraordinary item        $       0.10        $      (0.27)      $       -(5)    $      (0.06)     $       (0.24)
  Net Income (loss)                  $       -(5)        $      (0.27)      $       -(5)    $      (0.06)$            (0.33)
Operating Cash Flow1                 $ 14,784,727        $  8,581,338       $ 15,028,263    $ 14,619,470      $  53,013,798
Total Subscribers                         160,400             160,100            158,400         159,300            159,300
-----------------------------------------------------------------------------------------------------------------------------
Fiscal 1997
Revenues                             $ 29,466,873        $ 31,391,287       $ 32,216,238    $ 33,299,954      $ 126,374,352
Operating Income                     $  2,929,234        $  3,049,577       $  3,114,077    $  3,290,515      $  12,383,403
Net Income                           $    361,619        $    485,561       $    571,800    $    817,101      $   2,236,081

Basic Income Per Share(2)            $       0.03        $       0.04       $       0.05    $       0.07      $        0.20
Diluted Income Per Share(2)          $       0.03        $       0.04       $       0.05    $       0.07      $        0.19

Operating Cash Flow1                 $ 13,141,205        $ 13,508,667       $ 13,770,835    $ 14,278,001      $  54,698,708
Total Subscribers                         151,800             153,700            155,700         158,800            158,800




<FN>

1  Operating income before depreciation and amortization expense.
2  Net  income  per  share  for each of the four  quarters  may not agree to net
   income per share for the year due to rounding.
3  Includes  an  Extraordinary  Item,  net of tax of  $1,076,880  for the  early
   extinguishment of $15,000,000 11.25% Senior  Subordinated Notes due December,
   2004.
4  Includes  $5,800,000 on a pre-tax basis and  $3,716,000 on an after tax basis
   for non-recurring satellite costs related to Galaxy IV outage.
5  Less than one cent per share.

</FN>
</TABLE>


 <TABLE>
<CAPTION>
                              Trading Information
-----------------------------------------------------------------------------
                           Market Price 1998                Market Price 1997
                           -----------------                -----------------

Quarter Ended            High     Low     Last            High     Low     Last
<S>                     <C>      <C>      <C>            <C>      <C>     <C>
March 31                38 1/2   26 1/4   34 1/2         28 3/4   21 1/4  26 1/4
June 30                 46       34 3/4   40             33 1/4   22 3/4  31 3/4
September 30            40 1/2   24       30             32 1/2   27 1/4  29 1/2
December 31             35       22 1/4   28 7/8         32 5/8   25 3/4  28

</TABLE>



      The Company's  common stock trades on The Nasdaq  National  Market tier of
the Nasdaq Stock Market under the symbol: DTLN. On December 31, 1998, there were
approximately 500 stockholders of record, not including beneficial holders whose
shares are held in names other than their own.

                                       56
                                    - 790 -
<PAGE>


                               Board Of Directors
-------------------------------------------------------------------------------
                     Data Transmission Network Corporation
Roger R. Brodersen
Chairman of the Board
Chief Executive Officer
Data Transmission Network Corp.

Scott A. Fleck
Vice President
Director of Engineering
Data Transmission Network Corp.

Richard R. Jaros
Director
Level 3 Communications, Inc.
CalEnergy Company, Inc.
RCN Corporation and
Commonwealth Telephone

Peter H. Kamin
President
Peak Management, Inc.

David K. Karnes
President
Chief Executive Officer
The Fairmont Group Inc.
Of Counsel, Kutak Rock law firm

J. Michael Parks
President
Chief Executive Officer
Alliance Data Systems

Jay E. Ricks
Chairman of the Board
Douglas Communications Corp.

Greg T. Sloma
President
Chief Operating Officer
Data Transmission Network Corp.

Roger W. Wallace
Senior Vice President
Data Transmission Network Corp.



                               Corporate Officers
-------------------------------------------------------------------------------
                     Data Transmission Network Corporation
Roger R. Brodersen
Chairman of the Board
Chief Executive Officer

Greg T. Sloma
President
Chief Operating Officer

Brian L. Larson
Vice President
Chief Financial Officer and
Secretary

James J. Marquiss
Senior Vice President
Director of Business Research and Product Development

Roger W. Wallace
Senior Vice President
President, Ag Services Division

Charles R. Wood
Senior Vice President
President, Financial Services Division

William R. Davison
Vice President
President, Ag Services

Scott A. Fleck
Vice President
Director of Engineering

H. Wade German
Vice President
Business Research

Daniel A. Petersen
Corporate Controller and
Treasurer

Joseph A. Urzendowski
Vice President, Operations



                                       57
                                    - 791 -
<PAGE>


                              INVESTOR INFORMATION
-------------------------------------------------------------------------------
Corporate Headquarters
Data Transmission Network Corporation
9110 West Dodge Road, Suite 200
Omaha, NE 68114
(402) 390-2328
www.dtn.com

Independent Auditors
Deloitte & Touche LLP

Stock Transfer Agent
First National Bank of Omaha
Attn: Corporate Trust Services
One First National Center
Omaha, Nebraska 68102

Annual Shareholders Meeting
The annual shareholders meeting will be held on:
Wednesday, April 28, 1999 at 10:00 A.M.,
at the Holiday Inn-Northwest, 655 North 108th Avenue, Omaha, Nebraska.

Form 10-K
A copy of the  company's  form  10-K  filed  with the  securities  and  exchange
commission is available without charge upon written request to:

Secretary
Data Transmission Network Corporation
9110 West Dodge Road, Suite 200
Omaha, Nebraska 68114

Dividends
The  Company has never paid any  dividends  and has no present  intention  of so
doing.  Payment of cash  dividends in the future,  if any, will be determined by
the Board of Directors in light of the Company's  earnings,  financial condition
and other relevant considerations.




                                      58
                                    - 792 -