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 primarily distributes  information via small dish Ku-band satellite
and the  Internet.  Other  distribution  systems  include  FM  radio  side  band
channels,  TV cable,  direct  leased line  circuits,  wireless  pagers,  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  offering  services on the  Internet  and is  currently
pursuing  e-commerce  initiatives in the  agricultural,  weather,  financial and
energy  industries.  The Internet has become a significant part of the Company's
growth 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 10-13 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.


                                      -292-
<PAGE>
2       Financial Highlights

3       Five Years in Review

4       To Our Shareholders

8       Our Business

10      Our Services

14      Agricultural Services

18      Weather Services

24      Financial Services

28      Energy Services

30      Other Services

32      Selected Historical Consolidated Financial Data

33      Management's Discussion and Analysis

43      Management's Responsibility for Financial Statements and Independent
        Auditor's Report

44      Consolidated Financial Statements

48      Notes to Consolidated Financial Statements

57      Quarterly Data and Trading Information

58      Board of Directors and Corporate Officers

                                       1
                                     -293-
<PAGE>



Financial Highlights
<TABLE>
<CAPTION>                                                                              Percent
                                                       1999             1998            Change
Operating Results (year ended)
<S>                                               <C>                <C>                  <C>
 Revenues                                         $ 166,508,602      $ 148,986,346        12 %
 Operating cash flow1                                57,883,986         53,013,798         9 %
 Cash provided by operating activities2              51,173,936         42,415,869        21 %
 Net loss3                                           (3,706,691)        (3,742,759)        1 %
 Diluted loss per share3                          $        (.32)     $        (.33)        3 %
Balance Sheet Data (at year end)
 Total assets                                     $ 184,003,178      $ 197,185,082        (7)%
 Long-term debt (including current portion)         103,119,999        122,248,540       (16)%
 Shareholders' equity                                37,496,920         32,149,886        17 %
 Book value per share                             $        3.13      $        2.79        12 %
Other Operating Data (year ended)
 Total subscribers                                      166,900            159,300         5 %
 Annualized subscriber retention rate                    81.3 %             80.6 %         1 %
 Net development costs4                           $   7,274,692      $   6,533,965        11 %
 Operating cash flow from core services5          $  65,111,052      $  59,434,670        10 %
 Property and Equipment capital expenditures      $  23,199,839      $  29,145,219       (20)%
 Free cash flow6                                  $  25,863,671      $  15,418,911        68 %
 Debt leverage ratio7                                       1.8                2.3       (22)%
As a Percent of Revenue (year ended)
 Operating cash flow1                                    34.8 %             35.6 %
 Cash provided by operating activities2                  30.7 %             28.5 %
 Operating cash flow from core services5                 39.4 %             40.8 %
 Free cash flow6                                         15.5 %             10.3 %
 Depreciation and amortization                           32.3 %             32.8 %
 Interest expense                                         5.3 %              5.7 %

</TABLE>
[FN]

1    Operating   cash  flow   (EBITDA)   defined  as  operating   income  before
     depreciation   and   amortization   expense.   Excluding  the  $.7  million
     non-recurring  severance  costs and $4.1  million loss on the sale of radar
     operations in 1999 and the $5.8 million  non-recurring  satellite  costs in
     1998,  operating cash flow for 1999 would have been $62.7 million  compared
     to $58.8  million  for the same  period of 1998.  As a percent of  revenue,
     operating  cash flow  would  have  been  37.7% and 39.5% for 1999 and 1998,
     respectively.

2    Excluding the $.7 million  non-recurring  severance  costs and $4.1 million
     loss  on the  sale  of  radar  operations  in 1999  and  the  $5.8  million
     non-recurring   satellite   costs  in  1998,  cash  provided  by  operating
     activities  would have been $56.0 million in 1999 compared to $48.2 million
     for the same  period of 1998.  As a percent of  revenue,  cash  provided by
     operating  activities  would  have been  33.6% and 32.4% for 1999 and 1998,
     respectively.

3    Excluding the non-recurring costs of $.7 million related to severance costs
     ($.5  million  net of  tax)  and the  $4.1  million  loss on sale of  radar
     operations  ($2.6  million  net of tax) in 1999  and the  $5.8  million  of
     satellite  costs ($3.7 million net of tax) and before the $1.7 million debt
     extinguishment  costs ($1.1  million net of tax) in 1998,  the net loss for
     the 1999  would  have been $.6  million  or ($.05)  per share on a dilutive
     basis compared to net income of $1.0 million or $.09 per share on a diluted
     basis for the same period of 1998.

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

5    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  $.7  million
     non-recurring  severance  costs and $4.1  million  on loss of sale of radar
     operations in 1999 and $5.8 million non-recurring  satellite costs in 1998,
     operating  cash flow from core  services  would have been $70.0 million for
     1999 compared to $65.2 million for the same period in 1998. As a percent of
     revenue,  operating  cash flow from core services would have been 42.4% and
     44.7% for 1999 and 1998, respectively.

6    Free cash flow defined as operating  cash flow  (EBITDA)  less property and
     equipment  capital  expenditures  and interest  expense.  Excluding the $.7
     million  non-recurring  severance  costs and $4.1  million  loss on sale of
     radar operations in 1999 and the $5.8 million non-recurring satellite costs
     in 1998,  free cash flow would have been $30.7 million for 1999 compared to
     the $21.2  million  for the same  period of 1998.  As a percent of revenue,
     free  cash  flow  would  have  been  18.4%  and  14.2%  for 1999 and  1998,
     respectively.

7    Debt leverage  ratio defined as total  long-term  debt  (including  current
     portion) divided by last twelve months  operating cash flow.  Excluding the
     $.7 million non-recurring  severance costs and $4.1 million loss on sale of
     radar operations in 1999 and the $5.8 million non-recurring satellite costs
     in 1998,  the debt leverage  ratio would have been 1.7 and 2.1 for 1999 and
     1998, respectively.
</FN>
                                       2
                                     -294-
<PAGE>

Five Years in Review


                              FIVE YEARS IN REVIEW
--------------------------------------------------------------------------------
GRAPHS IN TABULAR FORM:

                          1995      1996      1997      1998      1999
                          ----      ----      ----      ----      ----

  Revenues
($ millions)              62.3      98.4      126.4     149.0     166.5


                          1995      1996      1997      1998      1999
                          ----      ----      ----      ----      ----
Operating Cash Flow
    ($ millions)          23.2      40.4      54.7      58.8*     62.7*
                                                        53.0      57.9



                          1995      1996      1997      1998      1999
                          ----      ----      ----      ----      ----
Operating Cash Flow
(percent of revenue)       37%       41%       43%       40%*      38%*
                                                         36%       35%*


                          1995      1996      1997      1998      1999
                          ----      ----      ----      ----      ----
Net Development Costs
    ($ millions)           3.7       5.3       5.2       6.5       7.3


                          1995      1996      1997      1998      1999
                          ----      ----      ----      ----      ----
Subscribers At Year End
      (thousands)         95.9      145.9     158.8     159.3     166.9


                          1995      1996      1997      1998      1999
                          ----      ----      ----      ----      ----
Subscriber Retention Rate
       (percent)          91.0      89.3      88.1      80.6      81.3


                          1995      1996      1997      1998      1999
                          ----      ----      ----      ----      ----
Annual Revenue
Per Subscriber
($ based on average
 subscribers)             700       775       830       937       1,021



                          1995      1996      1997      1998      1999
                          ----      ----      ----      ----      ----
Annual Operating Cash
Flow Per Subscriber
($ based on average
 subscribers)             260       318       359       370*      384*
                                                        333       355


*Pro-forma results before $5.8 million non-recurring satellite costs in 1998 and
$.7 million non-recurring severance costs and $4.1 million loss on sale of radar
operations in 1999.

                                       3
                                     -295-
<PAGE>

(Picture of the Executive Team)

     DTN  Corporate  Executive  Team (l-r):  Greg T. Sloma,  President and Chief
Operating  Officer;  Brian L. Larson,  Senior Vice  President,  Chief  Financial
Officer and Secretary; Joseph A. Urzendowski, Vice President of Operations

     "There have never been more exciting  opportunities  for our four divisions
to capture revenue in e-commerce and other growth areas." - Greg T. Sloma

To Our Shareholders

     As you may have read or heard, on March 3, 2000, the Company entered into a
definitive agreement with Veronis,  Suhler & Associates  Communications Partners
III,  L.P.  (VS&A III)  whereby  VS&A III will make a tender offer to all of the
Company's  shareholders  at a price of $29.00  per share.  The  Tender  offer is
subject to the tender of at least 90% of the Company's  outstanding shares as of
March 1, 2000.  If less than 90% of the  outstanding  shares are  tendered,  the
Company  will merge with an  affiliate  of VS&A III at the same per share price.
Holders of over 50.1 percent of the Company's  outstanding shares have agreed to
accept  the  tender  offer  and  vote to  approve  the  merger.  Closing  of the
transaction  is  subject  to  government  and  shareholder  approvals  and other
customary  conditions,  and is  expected to occur  during the second  quarter of
2000.  With that said, I will now discuss what the Company  accomplished  during
1999,  both  financially  and   operationally,   while  the  "Shareholder  Value
Enhancement" process was proceeding.

     In keeping  with my previous  three  quarterly  reports in 1999,  I plan to
discuss  subscribers  and  revenues,  operating  cash flow  (EBITDA),  operating
income,  other  income and  expenses,  net  income,  free cash flow and our debt
leverage ratio. In addition, I will review our operations including new services
we offered  in 1999 and  acquisitions.  The last  topic  will be the  process on
enhancing shareholder value.

SUBSCRIBERS AND REVENUES
Total  subscribers  increased  5% to 166,900 at December  31,  1999  compared to
159,300 at December 31, 1998.

Total Internet subscribers were 19,000 at December 31, 1999 compared to 4,700 at
December 31, 1998.

Total  revenues  for 1999  increased  12% to $166.5  million  compared to $149.0
million for 1998.

Total  subscription  revenues per subscriber per month for 1999 was $68 compared
to $62 for 1998.

Subscription revenue per subscriber per month for all new subscription sales for
1999 was $74.

                                       4
                                     -296-
<PAGE>

OPERATING CASH FLOW
Operating cash flow (EBITDA) for 1999 increased 9% to $57.9 million compared
to $53.0 million for 1998.

Excluding  non-recurring  costs  and  the  loss on  sale  of  radar  operations,
operating cash flow for 1999 would have  increased 7% to $62.7 million  compared
to $58.8 million for the same period of 1998.

Operating cash flow margin (EBITDA  margin) for 1999 was 35% compared to 36% for
1998.

Excluding  non-recurring  costs  and  the  loss on  sale  of  radar  operations,
operating  cash flow  margins  for 1999 would have been 38%  compared to 40% for
1998.

Excluding non-recurring costs, the loss on sale of radar operations and Kavouras
operating results, operating cash flow margins for 1999 and 1998 would have been
43%.

OPERATING INCOME
Operating income (EBIT) for 1999 and 1998 was $4.2 million.

Excluding non-recurring costs and the sale of radar operations, operating income
for 1999 would have been $9.0 million compared to $10.0 million for 1998.

Operating income excluding non-recurring costs, the sale of radar operations and
amortization  expense from acquisitions  increased 18% to $21.7 million for 1999
compared to $18.4 million for 1998.

NET INCOME

The net loss for 1999 was ($3.7) million or ($.32) per share on a diluted basis,
compared to a net loss of ($3.7)  million or ($.33) per share on a diluted basis
for 1998.

Excluding the non-recurring costs related to severance and the satellite outage,
the loss on the sale of radar  operations  and the one-time debt  extinguishment
charge,  the net loss for 1999 would have been ($.6) million or ($.05) per share
on a diluted basis compared to net income of $1.0 million or $.09 per share on a
diluted basis for 1998.

FREE CASH FLOW

Free cash flow  (defined as operating  cash flow  (EBITDA) less property and
equipment  capital  expenditures and interest expense) for 1999 increased 68% to
$25.9  million  compared to $15.4  million for 1998.

Property  and  equipment  capital  expenditures  for 1999 were down 20% to $23.2
million compared to $29.1 million for 1998.

Included in 1999 and 1998 were $8.6 million and $3.1 million,  respectively,  of
one-time  expenditures  for  satellite  equipment  and new product  initiatives.
Excluding  non-recurring  costs,  the  sale on  radar  operations  and  one-time
property and equipment capital expenditures,  free cash flow for 1999 would have
increased 62% to $39.3 million compared to $24.3 for 1998.

DEBT LEVERAGE RATIO
The  Company's  debt  leverage  ratio is  defined  as total  long-term  debt
(including  current  portion)  divided by the last twelve months  operating cash
flow  (EBITDA).

The  Company's  debt  leverage  ratio was 1.8 for the twelve  month period ended
December 31, 1999 compared to 2.3 for the twelve month period ended December 31,
1998.

OPERATIONS REVIEW
     During 1999, we focused our energies and  resources on our core  businesses
of Agriculture,  Weather, Financial Services and Energy. The agriculture economy
remained  weak due to low  commodities  and  livestock  prices.  We continued to
integrate the Kavouras  weather  business  into our business and began  offering
services for the middle markets and the Internet.  Our Energy business continued
to grow through  increased  communication  (messaging)  revenues.  The Financial
Services  business  focused on  providing  Internet  services to the  individual
investor  markets and began offering  subscribers  the ability to trade equities
using our services.

     We continued  to focus on growing  revenues,  operating  cash flow and free
cash flow. Our efforts produced  positive results as the summaries  demonstrate.
Subscription,  additional  services and communications  revenues all set records
and this growth  produced  excellent  operating cash flow and free cash flow (as
defined by the Company). Our total revenues were up 12% for the year and we made
substantial  progress with our Internet  services.  Total revenues from Internet
subscribers  for 1999 grew 500% to $8.3  million  compared  to $1.4  million for
1998.

     Operating cash flow continued to grow and led to impressive  growth in Free
Cash Flow.  We have defined free cash flow as Operating  Cash Flow (EBITDA) less
property and equipment capital expenditures and interest expense. Free cash flow
grew 68% to $25.9 million in 1999, compared to $15.4 for 1998. More importantly,
free cash flow, excluding  non-recurring costs, the sale of radar operations and
one-time  property and equipment  capital  expenditures  was an impressive $39.3
million  for  the  current  year.   Operating   cash  flow  margins,   excluding
non-recurring  costs, the sale of radar  operations and our Kavouras  operations
continued to be very strong at 43%. On a final note, our core services operating
cash flow margins, excluding Kavouras operating results, non-recurring costs and
the loss on sale of radar  operations,  remained strong at 48% for both 1999 and
1998. This demonstrates that we have grown our businesses efficiently.

     Operating income and net income, excluding non-recurring costs and the sale
of radar  operations  were  down due to  higher  amortization  from  acquisition
activities. However, cash earnings (operating income before amortization expense
related to  acquisitions)  excluding  non-recurring  costs and the sale of radar
operations,  increased  18% for  1999  over  1998.  Our  balance  sheet  remains

                                       5
                                     -297-
<PAGE>

conservative  with a debt leverage ratio of 1.8. This ratio indicates  operating
cash flow could repay our bank debt in less than 2 years.

     We introduced  several new services and a strategic  alliance  during 1999.
The following is a brief description of these services and the alliance.

DTN Tradelink - An Internet based service for the produce,  floral, meat and
other  fresh  related  grocery  products.  This  service is an  electronic  data
interchange  (EDI) system that will link buyers and suppliers in these  markets.
This product will be released in stages to the markets.

StormSentry  PC - A new  weather  information  service  designed to provide
real-time,  single-site  NEXRAD  access on a PC. This product is the ultimate in
storm tracking technology and software that identifies  dangerous weather cells,
analyzes characteristics,  locations, speeds, directions, and estimated times of
arrival.

DTN Pro Shop - A weather  information service designed to provide instant access
to weather,  golf and sports  information in golf course pro shops. This service
contains weather  information  needed to operate a golf course in the safest and
most profitable way.

WX.COM  (www.WX.com) - WX.COM  provides  viewers with a dynamic and  interactive
experience including the ability to easily overlay full-motion weather maps with
state and county lines,  highways and other familiar  landmarks to track weather
patterns.  WX.COM is an Internet service featuring TV quality,  3-D graphics and
weather  information  including  interactive  weather,  radar,  storm  tracking,
current conditions, weather warnings and much more.

Preferred   Interactive  -  An  alliance  was  formed  with  DTN  and  Preferred
Interactive Inc. to provide one of the fastest, most efficient and comprehensive
Internet  stock  trading  and  information  services  available  for  individual
investors and active traders.  DTN.IQ  customers  (www.DTNIQ.com)  receive fully
integrated access to Preferred Trade, a real-time low-cost, windows-based online
trade order entry and execution system for investors and traders.

Cyber  Corp - An  alliance  was  formed  with  DTN and  Cyber  Corp  to  deliver
electronic trading using CyberXchange. CyberXchange searches all possible market
makers and all major electronic  communications  networks (ECNs), scanning their
bids and asks,  before forwarding the order to the trader with the best price at
that  moment.  CyBerCorp's  trade  execution  technology  offers  direct  access
connections to six ECNs, an unprecedented number.

DTN FinWin - A free page of market news,  quotes and other financial content
for  web  sites  (www.finwin.com).   DTN  will  generate  revenue  from  selling
advertising  space on these  pages.

     Our  management  team is focused on making  acquisitions  that fit into our
operating strategies. The following is a list of our accomplishments for 1999.

Waterman Associates - In January, DTN acquired Waterman  Associates,  a business
engaged in creating,  assembling,  marketing and distributing information in the
natural gas and electric energy  industries.  This information is made available
to DTN  subscribers  as part of the DTN Natural Gas and Electric  services.  DTN
acquired Waterman Associates for $350,000 cash.

Paragon  Software,  Inc. - In March,  DTN completed the  acquisition  of Paragon
Software,   Inc.  (PSI)  for  $3,800,000  cash.  PSI  has  approximately   4,000
subscribers  receiving  real-time  streaming  (continuously  updating) quotes to
investors.  PSI provides  Internet  subscribers  with an affordable and flexible
real-time  quotes system that  includes such features as scrolling  ticker tape,
historical and intra-day charts and portfolio analysis under the name InterQuote
(www.interquote.com).

SmartServ Online, Inc. - In January, we announced a Letter of Intent whereby DTN
would merge with SmartServ Online, Inc. (SSOL).

     As you may recall in April  1998,  DTN  received  the  exclusive  rights to
market the Internet based financial services  information  products of SmartServ
Online and the Internet  information  distribution  technology.  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.  Through this alliance, DTN received the following: i) a
proven  Internet  real-time  quote and news service  providing  convenience  and
advanced  features  for the user;  (ii) an  electronic  trading and  back-office
system designed for the small and mid-sized  brokerage  firm;  (iii) access to a
talented  development  team to support  and enhance  the new  products  and (iv)
SmartServ Online subscribers.

     After further  review by both  companies,  we decided to extend our current
arrangement with SSOL instead of purchasing the company. Under the new terms DTN
paid $5,458,000 to SSOL for an exclusive perpetual, worldwide license, to ensure
a strong,  long-term  business  alliance.  SSOL provides online  programming for

                                       6
                                     -298-
<PAGE>

future  enhancements  to products  and  services  as well as server  support for
Internet  products.   DTN  provides  marketing,   sales,  customer  service  and
administration  support.  Both DTN and SSOL  believe the new  exclusive  license
agreement best serves the long-term  goals of the  companies.  The new agreement
solidifies  the business  relationship,  started in April 1998,  which  launched
DTN.IQ (www.DTNIQ.com), our very successful real-time streaming quotes, news and
information service.

FlightBrief  - In  November,  DTN  acquired  the  assets of  FlightBrief  Online
Service,  Inc.,  an Internet  weather  service for the aviation  industry.  This
purchase  included  two  web  sites,   www.weatherconcepts.com   which  provides
real-time  weather  graphics  to  aviation,  marine,  farming  and  construction
subscribers  and  www.flightbrief.com  which  provides  real-time  graphics  and
interactive  flight planning,  weather  briefings,  airport  databases and other
resources for aviation subscribers. The target market is 600,000 aircraft owners
and pilots in the United States. We paid approximately $370,000 for the services
and 3,300 subscribers.

     In addition to making  strategic  acquisitions  and acquiring the SmartServ
license we also made an investment in a new company. In December, DTN and Photon
Research  Associates,  Inc. (PRA) formed the joint venture  company,  EarthScan
Network, Inc. (EarthScan).  EarthScan delivers the most sophisticated  satellite
images    available   to   farmers   and   suppliers    through   the   Internet
(www.EarthScan.com). DTN committed to a $3.0 million investment in EarthScan.

     During  December  we  divested  ourselves  of the radar  operations  of our
Kavouras, Inc. subsidiary. In 1998 we acquired Kavouras, Inc. which included the
manufacture  and sale of weather radar  equipment.  In December of 1999, we sold
these radar operations to Radtec Engineering, Inc. of Colorado for $1.3 million.
We recorded a loss of $4.1 million for the sale of assets,  severance  and other
operation  closing costs. The sale of these operations  allows the Kavouras team
to focus on providing the industry with the most  advanced  weather  display and
data services available.

     We  continue  to  explore  growth   opportunities  and  look  for  possible
acquisition  targets.  We are pursuing  e-commerce and other  initiatives in our
four main  businesses.  These  initiatives come in all shapes and sizes. We will
pursue vigorously those opportunities with the best "fit" and future potential.

    At this time, I would like to thank DTN  employees  and their  families for
their commitment and hard work during 1999. In addition, a thank you is in order
to  customers,  shareholders,  financiers  and  suppliers  for  their  continued
support.

                                            Very sincerely yours,



                                            Greg T. Sloma
                                            President and COO


The Company  continually  identifies leading edge technologies to best serve its
diverse group of customers.

(Photograph)

From left to right:  James L.  Marquiss,  Senior Vice  President and Director of
Business  Research and Product  Development;  Scott A. Fleck, Vice President and
Director of Engineering;  Raymond E. Johnson,  Director of Broadcast Operations;
Kurt Sowers, Broadcast Operations Manager.

                                       7
                                     -299-
<PAGE>

Our Business

Business Review

     Data Transmission  Network  Corporation (DTN, the Company) began operations
in April 1984 and continues to provide comprehensive, time-sensitive information
and communication  services primarily for the agricultural,  weather,  financial
and energy industries.  DTN grew to 166,900 subscribers  throughout the U.S. and
Canada at the end of 1999. 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  including  the  Internet  and  satellite
delivery,  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  engineering  and  software
advancements  for  developing  and  improving  distribution  in an exciting  and
growing  industry.  In 1999,  DTN made great  strides in the area of  e-commerce
which will also be discussed in detail in this report.

Information Distribution Technologies

     DTN supports several  information  distribution  technologies  allowing the
distribution,  reception and display of  information.  The primary  technologies
used are small dish Ku-band satellite (Ku) and the Internet.  Other technologies
used are Cable TV (VBI),  e-mail,  FAX, direct leased line circuits and wireless
technology.

     The Company  provides the equipment  necessary for  subscribers  to receive
certain services using Ku, FM 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.  DTN
Internet  subscribers  use their own  personal or business  computers to receive
information  and  e-commerce  services.  In 1992,  the  Company  introduced  the
Advanced Communications Engine (ACE) receiver, a color graphics receiver system.
This  system  expanded  the  Company's   ability  to  provide   information  and
communication services using satellite technology.

     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.

     DTN began  offering  services  via the  Internet  in 1995 and now  provides
Internet services for the four main divisions - agriculture,  weather, financial
and energy.  In 1998,  the Company  expanded its Internet  initiatives  into the
e-commerce  arena,  adding online  trading  capabilities  to real-time  Internet
financial service products. In 1999, the Company began new initiatives within

Timeline of History of DTN Services & Distribution Technology Advancements

<TABLE>
<CAPTION>
History of DTN Services         Year            Distribution of Technology Advancements         Year

<S>                             <C>             <C>                                             <C>
Agricultural Services Began     1984            FM Radio Side Band                              1984
DTN Goes Public (NASDAQ:DTLN)   1987            Ku-Band Satellite                               1989
Financial Services Began        1989            ACE Color Receiver Fax                          1992
Energy Services Began           1991            Cable TV (VBI)                                  1994
Weather Services Began          1995            Internet Services Began                         1995
                                                Direct Leased Lines Wireless                    1998
                                                E-Commerce Services                             1998
                                                Online Stock Trading                            1999
                                                Free Interactive Web Sites                      1999

</TABLE>

                                       8
                                     -300-
<PAGE>

the cash grain and  livestock  commodities  and futures  business as well as for
perishable products such as meat, produce and floral. The Company also announced
its interactive, advertising based weather site (WX.COM) in 1999. These and more
will be discussed later in this report.

     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.

     The  following  is a summary of  subscribers  by  information  distribution
technology at December 31, 1999.



Information Distribution Technologies         Subscribers

Ku-Band Satellite                               142,600
Internet                                         19,000
Leased Lines                                      1,600
VBI                                                 800
FM Radio Side Band                                2,900
                                                -------
Total                                           166,900


     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 35,000 pages of information to subscribers daily.

Service and Equipment Revenue

     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:

                                                       1999     1998     1997

Subscriptions                                           80 %     80 %     80 %
Equipment Sales                                          4 %      3 %      -
Additional Services                                      5 %      5 %      5 %
Communication Services                                   8 %      7 %      8 %
Advertising                                              2 %      3 %      3 %
Service initiation fees                                  1 %      2 %      4 %


[FN]

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

(2)  A unit of DTN  Kavouras  Weather  Services  generated  equipment  sales  of
     weather  systems,  workstations  and weather  radar  systems as well as the
     manufacturing  of small  and  large  Doppler  radar  systems.  The  Company
     announced the sale of their radar business to Radtec  Engineering,  Inc. in
     December 1999.

(3)  Additional  services are offered to  subscribers  on an "a la carte" basis,
     similar to premium channels on cable TV. A third party provides information
     for these services with DTN receiving a share of the  subscription  revenue
     paid by the subscriber.  Additional  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.

(4)  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.

(5)  Advertising  space is sold and  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 was down slightly due primarily to
     the weak ag  economy.  This  was  somewhat  offset  due to  subscriber  and
     subscription  revenue  growth as well as the addition of new services  with
     available advertising space.

(6)  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).
</FN>
                                       9
                                      -301-
<PAGE>


Our Services

The Agriculture Industry

DTN  AgDaily(r)/DTN   FarmDayta(r)  provides  agricultural  market  information,
delayed  commodity  futures and options  quotes,  local cash grain and livestock
prices, regional and weather updates and a variety of daily analysis, commentary
and news affecting grain and livestock prices.

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

DTN Ag1.com (www.ag1.com) offers a unique, Internet-based, personalized business
plan  that  incorporates  discounted  inputs,  financing,   marketing,  personal
insurance,  tax and estate planning and crop revenue insurance services into one
program, "Your One Resource".

DTN Pro  SeriesSM/DTN  FarmDayta Elite Plus(r)  provides  services with advanced
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
analytics and  real-time  commodity  news from Bridge,  Reuters and Future World
News as well as  proprietary  cash market  information  for the ag sector.  This
service also includes all the information found on DTN Ag Daily.

DTN Fresh,  an  expansion  of the DTN PROduce  service,  provides  comprehensive
weather, pricing, news and transportation  information as well as e-commerce and
electronic data interchange (EDI) solutions for those involved in the buying and
selling of perishable commodities. It includes two business units, DTN Tradelink
and DTN Fresh Information Services.

DTN  Cotton  Network  provides  an  electronic  marketing  system for the cotton
industry. The service allows gins, brokers, buyers, and warehouses to share data
allowing fast and accurate marketing and accounting of cotton offered and sold.

DTNironSM provides an equipment locator and inventory management service for the
farm  implement  dealer.  It is  designed to allow  dealers to work  together in
locating, buying and selling used farm equipment with other dealers/subscribers.

Agricultural Joint Venture EarthScan  Network,  Inc.  (www.earthscan.com)  is an
agricultural  remote  sensing  tool that  delivers  year-round  farm  management
solutions.  By providing  crop  monitoring  and site  measurement  capabilities,
EarthScan is an  inexpensive  entry into  precision  agriculture  that  requires
nothing more than a personal computer and Internet access.

                                       10
                                     -302-
<PAGE>

The Weather Industry

DTN  Weather  Center  www.WX.com  is  DTN's  free  interactive  weather  website
providing TV quality,  3-D weather  graphics  including  international  weather,
radar, storm tracking, current conditions, weather warnings and more.

DTN Weather Center(r)/DTN Online Weather Center provides a comprehensive weather
information  system to meet the weather  information  needs of many  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  and  flight
planning information  specifically for pilots, airports and Fixed Base Operators
(FBO's).

FlightBrief Online (www.flightbrief.com) provides real-time weather graphics and
interactive  flight planning,  weather  briefings,  airport  databases and other
resources for aviation subscribers via the Internet.

DTN  Broadcast  Weather  provides  comprehensive  local,  regional  and national
weather  forecasts  plus  national  and  international  news  for the  broadcast
industry.

DTN  Contractor  WeatherSM  is an easy to use  stand-alone  system  providing  a
complete  package of current weather,  forecasts and construction  related news.
Information  is accessed by using a mouse or keypad to select  pages viewed on a
super VGA color monitor.

DTN Transportation  Weather provides  time-sensitive and often critical,  local,
regional  and  national  weather  forecasts  for  transportation  professionals.
Subscribers  also  receive  information  through a pager or via  DTNonline,  DTN
Weather Center's Internet service.

DTN Turf ManagerSM  provides  weather  information to individuals and businesses
involved in  turf-related  operations  such as outdoor sports  facilities,  golf
courses,  lawn  maintenance,  landscaping  and sod farms.  The service  provides
chemical, weather and specialty information designed for turf management.

DTN Pro Shop provides  instant access to weather,  golf and sports  information.
The service contains all the weather information needed to operate a golf course
in the safest and most profitable way.

DTN Weather Safety Center provides  valuable weather  information,  warnings and
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.

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

Other  Specialty  Weather  Services are  provided  for the marine,  forestry and
travel industries which includes additional weather reports and maps targeted to
these industries.

DTN Kavouras Weather Services TritonTM 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.

MetWorkTM  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.

Storm ProTM 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.

StormWatch(r) 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.  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
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 and  24-hour,  365 days a year  coverage for
tailor-made forecasts to meet customers' special needs.

                                       11
                                     -303-
<PAGE>

The Financial Service Industry

DTN Financial Services

DTN.IQ and Interquote  (www.DTNIQ.com and  www.interquote.com)  use cutting edge
Internet  technology  to deliver two distinct  services for online stock trading
with  tick-by-tick  quotes,  full-text  news,  intraday and  historical  charts,
portfolio manager, alerts and more, for individual and professional investors.

DTN FinWin  (www.finwin.com)  is a customizable window of financial quotes, news
and  charts  for web  sites.  FinWin is free for sites  that  generate a minimum
amount  of  traffic  or for a  monthly  subscription  without  advertising.

DTN Real-Time(r)  provides  real-time quotes on more than 260,000 stocks,  stock
options,  commodities,  and indexes, plus news, earnings, and economic data. The
Service  provides  Nasdaq Level II,  intraday and historical  charts,  portfolio
tracking  and  more  using  third-party  software  or DTN's  free  Windows-based
application.

DTN SPECTRUM(r)  provides delayed quotes,  plus business news, economic data and
financial  information  with  charting  capabilities.  Data  is  available  on a
stand-alone  system  with  user-programmable  pages or via PC using  third party
software.

DTN SPECTRUM(r)  R-T provides the same  information as DTN SPECTRUM with futures
updated in real-time.

DTN    FirstRate(r)    provides    wholesale    mortgage    rates    and    U.S.
Agency/Mortgaged-Backed  Securities  prices as well as delayed quotes on stocks,
futures and futures options, plus market commentary,  business news and economic
reports.

DTN  FirstRate+(r)  provides the same information as DTN First Rate and includes
coverage of the U.S. Treasury market, live  Mortgage-Backed  Securities pricing,
FNMA and FHLMC cash pricing, mortgage industry analysis, plus real-time Treasury
quotes, futures and futures options.

National Datamax Services
RepCenter (www.repcenter.com) offers Broker/Dealers a secure Internet site where
their representatives can access news, quotes,  charts, home office information,
business forms, commission reports and client prospect files.

ProSource  provides  portfolio,  contact and  business  management  software for
financial  planners,  including  downloads of client  information and the Mutual
Fund Manager and Variable Annuity Manager with monthly updates.

ProSource  Premier  includes  the features  found in ProSource  plus tracks most
types of investments and generates  presentation-quality  portfolio reports.  It
also creates business reports and is customizable for business networks.

Mutual Fund Manager  software allows  user-defined  analysis on more than 10,000
equity,  bond and money  market  mutual  funds,  with  performance  data updated
monthly or quarterly in seventy data fields for each fund.

Variable Annuity Manager provides  searchable  performance data for analysis and
comparison on more than 4,000  variable  annuities,  variable life  sub-accounts
updated monthly or quarterly.

Stock & Industry  Manager  provides an analysis program with fundamental data on
6,000  stocks and 99  industries.  Data is updated  monthly or  quarterly at the
customer's choice.

                                       12
                                     -304-
<PAGE>

The Energy Industry

DTNergy(r) - Refined Fuels provides  terminal  prices,  alerts,  electronic fund
transfer  notifications and other communication services from Petroleum Refiners
to their customers (also DTN Subscribers).

DTNergy(r)  - Natural Gas and  Electricity  provides  instant or delayed  energy
options  and  futures  quotes from all energy  affiliated  exchanges  along with
weather, news and industry specific information.

ProphetX (www.fimi.com) provides access to DTNergy's real-time market data using
Financial Information  Management Inc.'s (FIMI)  client-service  software on the
Internet.

EnergyView  (www.energyview.com)  provides  access to DTNergy's  real-time  data
using  GlobalView's  client-service  software  on  the  Internet.  This  service
provides energy news and industry specific content for the International Markets
(Petroleum Argus, ISIS LOR, APPI, International Weather, etc.).

Other Services

DTNautoSM  provides a communication  and information  service for the automobile
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.

DTN InfoLink provides real-time news, weather,  sports and market information to
the grocery and transportation  industries delivered to public-use kiosks. These
kiosks  allow  interactive  coupon  redemption,  unique  promotions  and product
offerings and the  opportunity to integrate  customer  loyalty and frequent user
programs.

DAT  Services  provides an  information  communication  system for the  trucking
industry that provides load and truck matching on a database of 100,000 listings
updated daily.

TracElectric  provides an equipment  locator service for the electric  equipment
industry with over 100 pages of new, remanufactured, surplus and used electrical
equipment listings.

DTN Missing Children  Information CenterSM provides instant transmission of data
regarding children in danger to local, regional, national and Canadian outlets.

                                       13
                                     -305-
<PAGE>

Agricultural Services Revenues
in million of dollars


1995            1996            1997            1998            1999
----            ----            ----            ----            ----

44.0            69.7            87.6            88.3            85.1

                                       14
                                     -306-
<PAGE>

The DTN Agricultural Division consists of five major services:  DTN Ag Services,
DTNstant,  DTN Fresh (an  expansion  of DTN  PROduce),  DTNiron  and DTN  Cotton
Network.  DTN  Ag  Services,   DTNstant  and  DTNiron  serve  DTN's  traditional
agricultural  marketplace,   consisting  of  grain  and  livestock  farmers  and
agribusinesses with interests in the commodity  distribution chain. DTN Fresh is
in the fresh produce and perishable vertical market with initiatives in meat and
floral. DTN Cotton Network serves cotton gins, warehouses and merchants. Because
of the diversity of these  markets,  the ag sales force has been  specialized to
best serve prospects and customers in each area.

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

     The Internet has altered  access to  information  for ag  producers.  DTN's
focus on additional of proprietary content and analysis from a dedicated team of
ag journalists  continues to set DTN apart from "free" services.  Entry into the
e-commerce  arena,  which will be discussed in detail later in this report,  has
opened new doors of opportunity for the company's ag division.

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

     There are over 200 premium services  available to agricultural  subscribers
to enhance their subscription. These services consist of advisory, informational
and  educational  products  as well as  newswire,  association  and free  add-on
services.  Premium  services  compliment  core  services  and add  value  to the
subscribers  who use them.  They are  marketed  to current  subscribers  through
telemarketing,  system wide and individual free trials, direct mail, billing and
equipment inserts as well as on screen advertising. Prices range from $2 to $400
per month.

     Communication services play an important role in providing a cost effective
means to reach a large number of targeted customers daily. DTN InfoMail provides
information for elevators, seed sales reps, agronomists, chemical sales reps and
technical advisors,  commodity brokers,  processing plants,  auction sale barns,
feedlots and anyone with a need to communicate to DTN  subscribers.  Over 40 new
InfoMail providers began messaging in 1999.

     Advertising  on DTN Ag  Services  is another  revenue-generator  for the ag
division. The "always on" interactivity, animation and scheduling flexibility of
the DTN systems are very appealing to  agri-businesses  such as seed  companies,
equipment dealers,  and ag chemical and finance businesses.  Advertising revenue
in 1999 topped $2.8 million.

E-Commerce Initiatives

     DTN's Ag Division is poised to leverage its  critical  mass of ag customers
by providing  easy and  affordable  access to Internet  services  with  numerous
e-commerce initiatives.

     The DTN Cotton  Network is involved in the  electronic  trade of cotton for
over two  years  and is a  combination  of  DTN's  proprietary  network  and the
Internet.

     DTN Fresh introduced DTN Tradelink,  which is involved with electronic data
interchange  (EDI)  in the  produce  and  perishables  industry.  DTN  Tradelink
software is used for price discovery and trading.

     In the fourth  quarter of 1999, an alliance with Ag1.com  created a program
to provide inputs, financing, marketing advice and insurance for producers. This
program has been well received in its early stages.

     DTNstant  expanded its  capabilities  to include cash grain trading between
its customers. The Tradelink software allows  producer-to-elevator grain trading
and will be sold along with InfoMail services.

     In addition, DTN Ag Services has negotiated an agreement with two brokerage
firms   to   allow    electronic    commodity    futures   order   entry.    The
elevator-to-elevator   transactions   as   well   as  the   producer-to-elevator
transactions can be executed using DTN ACE receivers or the Internet.

     In December 1999, DTN and Photon Research  Associates,  Inc. (PRA) formed a
joint-venture  company,   EarthScan  Network,  Inc.  Earthscan  Network  is  the
culmination  of a three  year  relationship  bringing  the  latest in  satellite
imaging and Internet technology to give the agricultural industry  unprecedented
capability to manage risk and maximize return.

DTN AgDayta

     DTN   Ag   Services'   leading   edge   Internet   service,   DTN   AgDayta
(www.agdayta.com), incorporates editorial content specifically for AgDayta along
with proprietary  content  developed for satellite  services.  Internet delivery
allows additional  functionality and supports  interactivity.  A newly developed
charting  package can be  downloaded  to the user's  personal  computer,  giving
impressive  charting  abilities  for both  futures  and  equities.  An  enhanced
Kavouras weather package offers real-time weather updates.  The result is DTN Ag
Services' most content rich agricultural service.

     DTN AgDayta serves as the foundation of Ag Services' e-commerce initiatives
on the Internet.  Ag1.com has been integrated with AgDayta to provide  producers
with inputs,  financing,  marketing plans,  and crop insurance.  Online cash and
futures  trading will be available on the AgDayta site. DTN AgDayta will provide
the customer with easy access to virtually  every tool needed  throughout the ag
production and marketing cycle.

DTN AgDaily/FarmDayta Satellite Services

     DTN  AgDaily is the  Company's  flagship  service.  Managed on an  Advanced
Communications  Engine (ACE)  satellite  receiver,  subscribers  receive delayed
commodity futures and options quotes, charts, local cash grain and livestock

                                       15
                                     -307-
<PAGE>

prices,  selected national,  regional and world weather updates and a variety of
daily analysis,  commentary and news affecting grain and livestock  prices.

     DTN Pro Series is an  advanced  version of DTN  AgDaily.  Functionality  is
enhanced with a high interest  window to view futures  quotes and options on any
page, keyword search,  customization of up to five pages of selected information
and a personal library serving as an archive segment. Packages of weather, news,
charts,  intraday commodity charting or stocks can be added to the core service.
DTN  Commodity  Pro,  Premier  and  Premier  Plus  combine  two or more of these
packages for a more extensive, customized service.

     DTN  FarmDayta II offers  similar  information  using the unique  FarmDayta
receiver for its delivery method.

     FarmDayta  One service was  introduced  to fill a special  customer  niche.
Content was  developed  to provide a lower price  point for the  first-time  DTN
customer.  This is the most economical color satellite option available from DTN
Ag Services.

     FarmDayta  Elite and Elite Plus  include all the DTN  FarmDayta II features
and content with added news, quotes, weather information and functionality.

1999 DTN Ag Services Highlights

     1999 was a year of  e-commerce  initiatives,  continuing  focus on customer
retention and exploration of new technologies.  The alliance with Ag1.com offers
Ag  Services'  customers  a  broad  range  of  value-added   services  including
financing,  marketing advice,  inputs,  crop insurance,  personal  insurance and
financial  planning.  DTN AgDayta will allow  Ag1.com to deliver  marketing  and
financial  products  along  with a  complete  ag  information  package  via  the
Internet.  This is the first step in  integrating  the AgDayta site into all the
DTN Ag Services e-commerce initiatives.

     DTN began testing a new Internet  delivery  method to provide  select small
rural  communities  the high speed Internet access  currently  available in most
urban areas.  Most rural  customers  are  interested  in the Internet but lack a
local Internet service provider and high speed phone lines.

     In 1999, DTN Ag Services formalized a new Customer Care program to identify
accounts in crisis and proactively  investigate and correct customer issues. The
result has been an increase in customer satisfaction and retention.

     DTN Ag Services  continues to be the leader in the  distribution  of market
news, analysis and weather for farmers. Through advancements on the Internet and
with e-commerce initiatives, DTN will provide customers with a one-stop-shop for
all of their business.

DTNstant

     DTNstant is a leader in providing 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
(i.e.,  orange juice,  coffee,  cocoa),  transportation  and lumber  industries.
DTNstant uses compatible  software to allow the "pass thru" of data and graphics
into an individual's  personal computer or a company'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 has opened many new markets
by  utilizing  information  distribution  within  a  customer's  LAN,  enhancing
analytical capabilities and the manipulation of DTN data in a "PC" environment.

     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
product  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.

1999 DTNstant Highlights

     DTNstant experienced a dynamic 1999 with over half of the subscriber growth
occurring via LAN (Local Area Network) subscribers.  The individual  subscribers
access DTN data  through  third party  software  providers.  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 is now
available  via  leased  landline  or the  Internet.  Both of  these  information
delivery methods are growing at a rapid pace.

     Over the last half of 1999, DTNstant actively pursued and developed several
e-commerce ventures that will be announced throughout 2000.

     DTN Fresh (an  expansion of DTN PROduce) DTN Fresh  provides  comprehensive
weather, pricing, news and transportation information, as well as e-commerce and
electronic data interchange (EDI) solutions for those involved in the buying and
selling of perishable commodities.

     DTN Fresh has two business units. DTN Tradelink provides e-commerce and EDI
solutions  for  buyers  and  sellers  of  perishable   commodities.   DTN  Fresh
Information  Services  provides an  authoritative  source of  weather,  pricing,
market  information,  news and  transportation  information  for produce,  meat,
floral and other perishable product industries.

1999 DTN Fresh Highlights

     DTN  Tradelink  staff  worked with  leaders in the industry and the Uniform
Code  Council to develop  and adopt EDI trading  standards  making it easier and
more  cost  effective  to add  trading  partners.  The  first  fully  integrated
procurement  system for the  perishable  system was  introduced in October 1999.
Contractual    arrangements    have   been   made   with   most   of   the   top
wholesalers/retailers to implement Tradelink in the coming year.

     DTN Fresh Information  Services  continues to expand its web-based business
with customers on virtually  every continent and continues to be recognized as a
leader in delivering  time-sensitive  information to the  perishable  industries
including produce, meat and floral.

                                       16
                                     -308-
<PAGE>

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.  DTN Cotton Network
sells gin and warehouse bale accounting/management  software and cotton merchant
software designed specifically for these specialized businesses. The combination
of the accounting and marketing  software and the  electronic  marketing  system
provides the cotton  industry with an  integrated  system for moving cotton from
farm to shipper.

     DTN Cotton Network serves the Western  Cotton Belt,  which includes  Texas,
Oklahoma, New Mexico, Arizona and California from its office in Lubbock,  Texas.
The network serves its Eastern Cotton Belt customers in Louisiana,  Mississippi,
Arkansas,  Tennessee,  Alabama, Georgia, Florida, South Carolina, North Carolina
and Virginia from its Memphis, Tennessee office.

     Sellers  connect to the Cotton  Network  via the  Internet  to upload  bale
ownership information,  down-load cotton bale data and list cotton for broadcast
to prospective  buyers.  Buyers may either receive the broadcast via Internet or
DTN Ku-band satellite,  where the broadcast is passed through a serial port into
personal computers at the buyer locations.

1999 DTN Cotton Network Highlights

     1999  marks the first  year that DTN  Cotton  Network  added  international
customers.  DTN Cotton Network sold warehouse software to four cotton warehouses
in the Ivory Coast of Africa. DTN Cotton Network currently has 75 gins using the
electronic marketing system, a 50% increase in customers over 1998, and 50 buyer
customers. The Cotton Network added 50 new customers, including gins, warehouses
and  merchants,  to its  management  software  packages  bringing the management
software  customer base to over 300. The total  customer count is over 400. This
represents  40% of  cotton  gins and  warehouses  having  access  to DTN  Cotton
Network.

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.

     A  retail  equipment  listing  is  available  on  the  service's  web  site
(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.

1999 DTNiron Highlights

     DTNiron added an  Internet-based  service in 1999  (www.DTNiron.com)  which
contains  the basic  elements  of the  satellite  system  for less than half the
price.  All equipment listed for sale as well as equipment wanted are merged and
transmitted on both the satellite and Internet  platforms.  The wholesale system
is  available  to  DTNiron   subscribers   whereas  the  retail  information  on
DTNiron.com remains free of charge to the public.

EarthScan Network, Inc.
     EarthScan Network, Inc. (www.earthscan.com) is a newly formed joint-venture
company developed  through a partnership  between DTN and San Diego based Photon
Research  Associates,  Inc. (PRA). This partnership  combines PRA's expertise in
the  acquisition,  archiving,  enhancement  and  distribution of remotely sensed
images with DTN, the leader in  distribution  of information to agriculture  and
agribusinesses.

     EarthScan  delivers the most  sophisticated  satellite  images available to
farmers and their  suppliers at an  affordable  cost through the  Internet.  The
remote sensing  service enables the customer to identify and respond faster than
before to problems caused by insects, weather or nutrient deficiencies.  It also
provides  real-time  measurement  and  analytical  capabilities  throughout  the
growing season.

     In addition to agriculture,  EarthScan Network sees new markets  developing
in the future in real estate, community planning,  mining, fishing, forestry and
transportation industries.

(Photograph)
Roger R.  Wallace,  Senior Vice  President  and President of the Ag Division and
William R. Davison,  Vice President and President Ag Services  continue to guide
the ag division and create vision in an ever changing ag environment.

                                       17
                                     -309-
<PAGE>

Weather Services

Weather Services Revenues
in million of dollars


1995            1996            1997            1998            1999
----            ----            ----            ----            ----

1.0             5.6             10.7            25.8            38.5


                                       18
                                     -310-
<PAGE>

DTN Weather  Services  consists of three major  components,  DTN Weather  Center
Services, Kavouras, Inc. and Weather Services Corporation (WSC). The combination
of these three DTN  companies  creates a leading  provider  of critical  weather
information and meteorological equipment to small businesses,  military, federal
government,  broadcast television, major utilities,  Internet portals and anyone
whose business is impacted by weather conditions.

     DTN Weather  Services'  future  plans  includes  expanding  its presence in
markets  that rely on DTN  services  for weather  information  by  offering  new
transmission methods, including PC-based products and the Internet. The Internet
provides many  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  conditions impact the profitability and safety of many industries,
and DTN Weather  Services is dedicated to becoming the sole solution for weather
information needs.  Competition includes several large private weather companies
and on a smaller scale,  television and the Internet.  The competition lacks the
timeliness and current local weather information that DTN services provide.  DTN
Weather  Services  constantly  looks for new and  better  ways to  provide  this
critical information to its customers in the quickest,  most dependable and cost
effective way.

www.WX.com

     WX.com (www.WX.com), a free interactive weather web site, made its debut in
May of 1999.  WX.com features TV quality,  3-D graphics and weather  information
including  international  weather,  radar, storm tracking,  current  conditions,
weather warnings,  and more. WX.com  differentiates from other Internet services
in that it provides viewers with a dynamic and interactive  experience including
the ability to easily  overlay  full-motion  weather  maps with state and county
lines,  highways and other  familiar  landmarks to track weather  patterns.  The
technologically  advanced Triton(tm) RT, which was developed by Kavouras Weather
Services in  Minneapolis  as the  world's  first  fully  functional  2-D and 3-D
weather  graphics  system,  powers  WX.com.  This  system  provides  WX.com with
state-of-the-art   weather   that   is  both   entertaining   to   viewers   and
meteorologically accurate.

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 1999 designed especially for the aviation and golf 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.  A  new  premium  service
available to Aviation subscribers during 1999 was Flyte Trax, a worldwide flight
tracking system.

     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.

DTN  FlightBrief  Online
     In November  1999,  DTN  purchased  FlightBrief  Online  Service,  Inc. The
purchase  included  two  web  sites,   www.weatherconcepts.com   which  provides
real-time  weather  graphics  to  aviation,  marine,  farming  and  construction
subscribers,  and www.flightbrief.com  which provides real-time weather graphics
and interactive flight planning,  weather briefing,  airport databases and other
resources for aviation subscribers.

     In addition to the web sites, DTN received approximately 3,300 subscribers.
This  purchase  allows DTN to target the more than 600,000  aircraft  owners and
pilots  in the  United  States.  These  sites  also  offer the  opportunity  for
advertisers to reach these niche markets.

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).

                                       19
                                     -311-
<PAGE>

     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 directly from the DTN screen.

DTNonline

     DTNonline  was added to the DTN Weather  Center  family of services  during
1999.   It   provides   the  same   maps,   forecasts   and   warnings   as  the
satellite-delivered  DTN services,  along with NOAA Warnings and Alerts, via the
Internet.  DTNonline allows subscribers to monitor important weather information
at the  office,  on the job site or at home.  Although  subscribers  prefer  the
reliability,  speed and reception of the satellite service, DTNonline allows the
redundancy  of having a satellite  system  along with an Internet  back up. This
allows  for  continuous  access in the event of rain fade at dish  locations  or
Internet delays due to phone line outages, etc.

DTN  Contractor  Weather
     DTN  Contractor  Weather is  designed  for the  construction  industry  and
includes   construction-related   news  and   information.   The  service  gives
subscribers a competitive  advantage by providing  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 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. Sea Surface Temperatures are also available as an optional service.

DTN Transportation Weather

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

     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.

                                       20
                                     -312-
<PAGE>

     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.

     Thor  Guard,  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 Pro Shop

     DTN Pro Shop was added to the line of Weather  Center  products in 1999. It
contains the weather information golf course  professionals need, along with the
golf and sports information their customers enjoy.  Regional radar maps, current
weather conditions and city forecasts are included in the weather segment.  Golf
and  sports  information  includes  an  interactive   handicap  calculator,   an
easy-to-use  search  and sort  database  of golf  courses  in the  U.S.,  a golf
products  section and a golf news and sports  segment  that  provides the latest
updates on the major tours and up-to-the-minute coverage of all major sports.

DTN Weather Safety Center

     DTN  Weather  Safety  Center   provides   weather   information  for  those
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. Safety Center subscribers receive a free DTNonline connection for
remote or  emergency  access to weather  information  in  addition  to their DTN
satellite  system.  This enhanced  option assures  continuous  access to weather
information regardless of conditions that could cause reception problems.

StormSentry PC

     A new  product  to DTN  Weather  Center  in 1999 is DTN  StormSentry  PC, a
weather  information  service designed to provide real-time,  single-site NEXRAD
access on a PC. DTN  StormSentry is the ultimate in storm  tracking  technology.
Subscribers  can access the storm tracking  system at an affordable  cost, in an
easy-to-use format. The ease of navigation and the multiple "windows" capability
allows subscribers to simultaneously monitor critical weather conditions, severe
weather,  satellite maps and lightning  conditions.  Users can zoom to the exact
location, as small as a one county area, for in-depth viewing of storm cells.

     StormSentry  takes the  guesswork  out of severe  weather  forecasting  and
allows subscribers to be proactive in responding to severe weather.

1999 DTN Weather Services Highlights

     DTN Weather Center  increased its subscriber base in 1999 to  approximately
20,000  subscribers.   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.

     WX.com,  DTN Pro Shop,  DTNonline and DTN StormSentry PC were introduced in
1999. WX.com, a free, advertising-based service, introduced DTN's expert weather
information to the Internet.  DTN  StormSentry  PC has encouraged  growth in new
markets such as utilities, railroads and manufacturing companies.

     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 continues to gain a strong  foothold in the emergency  management
and Department of Transportation (DOT) segments.

DTN Kavouras Weather Services

     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

                                       21
                                     -313-
<PAGE>

worldwide. The Minneapolis-based subsidiary of DTN produces 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.

     Weather Services Corporation (WSC), based in Lexington,  Massachusetts,  is
one  of  the  largest  sources  for  meteorological   consulting  and  worldwide
commercial  weather  information.  WSC provides  name  awareness for DTN Weather
Services through valuable contracts with high profile customers  including Metro
Networks, TVA (Tennessee Valley Authority) and numerous utilities, broadcasters,
agribusinesses and municipalities.

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.

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.

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.  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 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.

Kavouras MetVision

     New  in  1999,  the  Kavouras  MetVision  service  represents  the  highest
resolution  weather  forecast  data  in  the  broadcast   television   industry.
MetVision,  based on a proprietary  numerical weather prediction model developed
by the  Harris  Corporation,  produces  forecasts  of the  future  state  of the
atmosphere in four dimensions. The Kavouras Triton RT workstation transforms the
MetVision data into visualizations of the forecast  information for analysis and
spectacular  on-air displays.  MetVision helps a meteorologist  prepare a better
weather  forecast  and also helps to  graphically  explain  the  forecast to the
average TV viewer. MetVision is an optional Kavouras data product.

Kavouras/RT-SET WxStudio

     Also new in 1999 is  Kavouras/RT-SET  WxStudio  which combines the Kavouras
TritonRT weather  workstation with RT-SET's  cost-effective,  entry level IbisTM
Virtual  Studio  System.  WxStudio  represents  the  integration  of  these  two
complementing  technologies  and offers the broadcast  television the ability to
make one purchase to deliver virtual studio effects with news,  weather,  sports
and  entertainment  programming from the same integrated  system. In addition to
free-form 3D weather  graphics,  the WxStudio  Virtual Studio System supports an
unlimited number of cameras,  foreground and background images and obstructions,
and instant switching between backgrounds.

1999 DTN Kavouras Weather Services Highlights

     In July 1998,  DTN acquired  Kavouras,  Inc.,  and in late 1998,  reached a
definitive  agreement with Weather  Services  Corporation  creating DTN Kavouras
Weather  Services.  In 1999,  DTN  Kavouras  Weather  Services  entered into new
partnerships  creating  two new  services,  MetVision  and  WxStudio.  These new
services,  in  addition to the  current  products  and  services,  offer  unique
specialties to form  content-rich  weather  services,  products and solutions to
serve a diverse client base,  from small-town  farmers to big-city  broadcasters
and governments across the globe.

                                       22
                                     -314-
<PAGE>



DTN's  Broadcast   Center   provides  the   "heartbeat"  to  deliver   critical,
time-sensitive data 24 hours a day, 7 days a week.

                                       23
                                     -315-
<PAGE>


Financial Services

Financial Services Revenues
in million of dollars


1995            1996            1997            1998            1999
----            ----            ----            ----            ----

6.1             8.6             10.3            13.4            19.4

                                       24
                                     -316-
<PAGE>


DTN  Financial  Services'  core  business  continues  to  focus on  serving  the
exploding number of individual  investors as well as members of the professional
financial industry.  This is accomplished by offering an array of time-sensitive
yet  affordable  information  services,  plus a suite of  business  applications
designed for the  financial  professional.  This strategy is critical due to the
highly competitive nature of the industry.

     DTN  Financial  Services  brings  together a broad  selection  of financial
information and has capitalized on the explosive  growth in online  investing by
offering well-conceived and attractively priced Internet services. DTN Financial
Services  continues to integrate  information  from a variety of sources such as
Bridge,  Liberty  Brokerage  and Market News  Service,  UPI, New York Times,  PR
Newswire,  Business Wire,  Futures World News, Dow Jones,  Associated  Press and
others. In the past year, the services began to transition from information only
to services with information and transactional capabilities.

     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.  These  combinations  allow each service to maintain a
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
industry by offering new services at competitive prices.

Individual  Investors
     With the growing number of online  investors  estimated to reach 15 million
by the end of 2000, DTN Financial Services has strategically  positioned its two
leading,  streaming  Internet-delivered  services,  DTN.IQ  and  InterQuote,  to
continue to capture market share among this group.  Aiding this endeavor was the
incorporation of direct access to online trading into both of these services.

DTN.IQ

     Since  its  inception  in May 1998,  DTN.IQ  (www.DTNIQ.com)  has  steadily
outperformed company expectations, and operating results for fiscal 1999 confirm
this trend. A  contributing  factor to the increase in sales during 1999 was the
June integration of direct online trading capabilities.  Through our established
relationships  with several  online  brokerage  firms,  DTN.IQ  subscribers  can
execute  trading  decisions  directly  from  their  quote  screens  in  seconds.
Utilizing  non-browser-based  software,  traders  can place  orders and  receive
return confirmations of their transactions in real-time.

     A vital consequence of trading  integration is the ability of DTN Financial
Services to generate revenue from customers'  trading activity.  Transactions by
both DTN.IQ and InterQuote  customers  became a source of new revenue during the
fourth quarter of 1999.

     In addition, the streaming real-time quotes, news and charting capabilities
provided by DTN.IQ offers  functionality  critical to  individual  investors and
traders using the Internet.

InterQuote

     In May 1999, DTN Financial  Services  completed the  acquisition of Paragon
Software, Inc. in Milwaukee,  Wisconsin.  Paragon's flagship product, InterQuote
(www.interquote.com),  delivers  real-time or delayed  market data to individual
investors  via the Internet and was one of the first such services ever offered.
With  the  acquisition  of  Paragon,   DTN  Financial  Services  obtained  3,800
subscribers  and the  ability  to round out its  offerings  for both  casual and
extremely active investors.

     InterQuote's unique front-end application appeals to investors needing cost
effective,  a la carte features. An affordable yet robust basic service includes
streaming quotes on stocks, futures and options, intraday and historical charts,
pager quotes and alerts, and an extensive array of fundamental data. Subscribers
may further enhance the service by adding premium  services such as Nasdaq Level
II pricing,  Dow Jones Business News, AP Online News and custom market  scanning
tools. Additional premium services are planned for inclusion in 2000.

Other Financial Services

     Other  financial  information  services  available  to the  individual  and
professional investor are DTN Real-Time,  DTN SPECTRUM and DTN Wall Street. Each
of these services may be delivered by customer  preference via satellite,  cable
television's VBI (vertical blanking interval) or designated phone line.

                                       25
                                     -317-
<PAGE>


(Photograph)
DTN  Financial  Services  employees  analyze  and edit  data  daily  to  provide
up-to-the-minute news and financial information.


                                       26
                                     -318-
<PAGE>

     These services provide  real-time or delayed stock and stock option quotes,
news and commentary as well as other  time-sensitive  financial market data. All
of the  services  include  information  integrated  from a  variety  of  sources
including  DTN's  commodity  ticker plant,  Bridge,  Standard & Poor's,  Liberty
Brokerage and over 40 newswires  including Dow Jones and AP.  Optional  services
from some of the world's leading investment service providers are also available
and may be delivered on most platforms.

Financial   Professionals

     For financial professionals, the focus in 1999 turned to Internet-delivered
services.  In September 1999, National Datamax,  Inc., a wholly owned subsidiary
of DTN, introduced an extranet service for Broker/Dealers.

Rep Center

     The  web-based  service,  RepCenter  (www.repcenter.com),  is customized to
resemble the Broker/Dealer's  public web site and gives  representatives  secure
access to commission  reports,  sales  letters,  business  forms and home office
announcements from anywhere.  The service also provides a portal page of quotes,
news and charts.  RepCenter increases National Datamax's presence with financial
professionals  and makes it easy for them to launch National  Datamax's  contact
management, fund analysis or portfolio management software from RepCenter's main
page or purchase products online.

     National  Datamax  also  introduced  upgrades  to all  of  its  fundamental
products and expanded the data delivery capabilities for the Mutual Fund, Stock,
Industry and Variable Annuity analysis programs.

     With the addition of RepCenter, National Datamax has expanded its offerings
for  financial   professionals  by  providing  a  complete   business   solution
encompassing  prospecting,  client management,  asset management,  reporting and
business management.

Enterprises

     Financial  Window  Network  (FinWin),  a new service  introduced in October
1999,  dramatically  broadened the market for DTN Financial  Services to include
any enterprise desiring to enrich their web site with popular financial content.

Financial Window Network or FinWin

     Leveraging  existing content and technology,  in October 1999 DTN Financial
Services launched FinWin  (www.finwin.com),  a financial portal site that may be
customized for public or private web sites.  FinWin builds traffic  instantly to
site by the addition of market quotes,  news,  interactive  charts, list of most
actives, major indices and custom watchlists and portfolios. FinWin may be added
to a site for free (DTN retains  advertising  space) or by monthly  subscription
without advertising.

     With FinWin, DTN Financial Services gains from two solid operating factors,
the opportunity to extend product sales beyond the traditional  financial market
and the  creation  of a viable  advertising-based  revenue  stream.  A survey of
current customers attests to this first phenomenon. FinWin customers come from a
wide  range of  industries  including  Internet  service  providers,  local  and
regional news  organizations,  search engines,  web development and metropolitan
community sites, in addition to conventional financial services businesses.

     The  establishment  of an  advertising-based  service enables DTN Financial
Services to fully compete in this  prevailing  Internet  business  model,  while
FinWin  customers   receive  the  full  advantage  of  edited  content  from  an
established financial expert.

     Despite a year end release,  FinWin  established  a strong sales record for
the final quarter of 1999 and is beginning to contribute to operating cash flow.

1999 Highlights

     With the  close of  1999,  DTN  Financial  Services  finds  that 49% of its
subscribers elect Internet-delivered services. This is up from 12% as of January
1, 1999.  Major  initiatives  during the year allowed DTN Financial  Services to
create  additional  revenue  streams  from  transactions  and  advertising-based
business models to supplement its core subscription-based revenue. This strategy
will continue to receive significant investment in the coming year.

     In  addition,  paramount  to the success of current  and future  individual
investor  sales was the  completion of a fully  redundant  operations  plant for
delivering the DTN.IQ service.  By year's end, all DTN.IQ subscribers  benefited
from fully redundant Internet  connections,  servers and datafeeds to ensure the
highest standard of reliability in the industry.

     Overall,  revenue for the  Financial  Services  division  grew 45% in 1999,
continuing a stellar pattern of 34% compounded  revenue growth for the past five
years.



                                       27
                                     -319-
<PAGE>

Energy Services

Energy Services Revenues
in million of dollars


1995            1996            1997            1998            1999
----            ----            ----            ----            ----

10.0            12.2            14.3            16.1            18.7

                                       28
                                     -320-
<PAGE>

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

     DTNergy enjoys a strong  position within the energy  marketplace.  Although
there are technologies  available to petroleum  suppliers that would allow these
suppliers  to  communicate  directly  with  their  petroleum  wholesalers,   the
suppliers  have  been  unsuccessful  in  implementing  technologies  such as the
Internet  to  displace  DTNergy.   The  main  reason  for  DTNergy's   continued
proliferation  within the petroleum industry is that most petroleum  wholesalers
purchase petroleum products from more than one supplier data, create standardize
data formats for  electronic  processing of supplier  data and provide  one-stop
customer service for petroleum  wholesalers has added value that no one supplier
can offer on there own.

1999 DTNergy Highlights

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

     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.  In the
fourth  quarter of 1999,  GlobalView  expanded the service to include  real-time
data and analytical trading software to the international marketplace.

     These two Internet  initiatives,  ProphetX and  EnergyView,  showed  steady
growth and increased market awareness in 1999.

     In  addition,  DTNergy  developed a new  service,  Petroleum  Posted  Price
Reports,  which will be available to petroleum  refiners and  wholesalers in the
first  quarter  of  2000.   This  service  will  provide   access  to  petroleum
rack-pricing  data for  benchmarking  fuel contracts and  competitive  analysis.
Currently,   there  is  only  one  dominant  player  in  the  market   providing
rack-pricing  data to both  refiners  and  wholesalers,  Oil  Price  Information
Service (OPIS).

                                       29
                                     -321-
<PAGE>
Other Services

Other Services Revenues
in million of dollars


1995            1996            1997            1998            1999
----            ----            ----            ----            ----

1.0             2.3             3.5             4.6             4.8

DTNauto

     DTNauto is an  information  and  communication  service  for  professionals
involved in the automotive, finance and insurance industries. The service offers
precision,  time  sensitive  information  for analyzing new and used  automotive
vehicle values.

     In 1999,  DTNauto began  development of its web site  (www.DTNauto.com)  to
provide automotive and related industries with time sensitive  wholesale pricing
and market analysis,  portability and enhanced  functionality  via the Internet.
Subscriptions  to  DTNauto.com  will be  available in the first half of 2000 and
will be competitively priced.

DTN Joint Venture Services

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

DTN InfoLink DTN

     InfoLink provides real-time news, weather, sports and market information to
the grocery and transportation industries.  With the addition of the latest card
reader  terminals  and  printing  technologies,  unique  promotions  and product
offerings can be delivered to public use kiosks.  These kiosks allow interactive
coupon  redemption,  printing  of  recipes,  and the  opportunity  to  integrate
customer loyalty and frequent user programs.

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 100,000
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.

TracElectric

     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 Program

     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.  Sponsors for the kiosk program are being identified
and kiosks are being placed in shopping  malls,  airports,  schools,  hospitals,
government buildings and other high-pedestrian traffic areas.

                                       30
                                     -322-
<PAGE>

Employees in DTN's  Broadcast  Center control room constantly  monitor  critical
applications to ensure continual service to 167,000 subscribers.


                                       31
                                     -323-
<PAGE>

Selected Historical Consolidated Financial Data

1999 Revenues
DTN Ag Services                 51%
DTN Weather Services            23%
DTN Financial Services          12%
DTN Energy Services             11%
Other Services                  3%

1998 Revenues
DTN Ag Services                 59%
DTN Weather Services            17%
DTN Financial Services          9%
DTN Energy Services             11%
Other Services                  4%

1997 Revenues
DTN Ag Services                 69%
DTN Weather Services            8%
DTN Financial Services          8%
DTN Energy Services             5%
Other Services                  3%

1999 Subscribers at Year End
DTN Ag Services                 65%
DTN Weather Services            14%
DTN Financial Services          13%
DTN Energy Services             5%
Other Services                  3%

1998 Subscribers at Year End
DTN Ag Services                 71%
DTN Weather Services            11%
DTN Financial Services          10%
DTN Energy Services             5%
Other Services                  3%

1997 Subscribers at Year End
DTN Ag Services                 76%
DTN Weather Services            8%
DTN Financial Services          8%
DTN Energy Services             5%
Other Services                  3%

<TABLE>
<CAPTION>

In thousands, except per share data             1999            1998            1997            1996            1995
------------------------------------------------------------------------------------------------------------------------
Operating Data (For the Year):
<S>                                          <C>             <C>              <C>             <C>             <C>
 Total Revenues                              $  166,509      $  148,986       $  126,374      $   98,384      $  62,288
 Operating income                            $    4,156 1    $    4,163 3     $   12,383      $    6,921      $   4,343
 Net income (loss)                           $   (3,707)2    $   (3,743)4     $    2,236      $     (958)     $    (283)
 Basic income (loss) per share               $     (.32)     $     (.33)      $      .20      $     (.09)     $    (.03)
 Diluted income (loss) per share             $     (.32)     $     (.33)      $      .19      $     (.09)     $    (.03)
 Basic shares outstanding                        11,734          11,359           11,101          10,658          9,909
 Diluted shares outstanding                      11,734          11,359           12,083          10,658          9,909
 Dividends paid5                                   --              --               --              --             --
 Dividends paid per share5                         --              --               --              --
Balance Sheet Data (At Period End):
 Working capital (deficit)                   $  (19,642)     $  (17,447)      $  (21,520)     $  (14,748)     $ (10,472)
 Total assets                                $  184,003      $  197,185       $  162,431      $  177,730      $  92,672
 Long-term debt and subordinated notes       $   79,038      $  100,620       $   72,891      $   97,748      $  47,021
 Shareholders' equity                        $   37,497      $   32,150       $   32,196      $   28,290      $  12,877

</TABLE>
[FN]

1    Includes $.7 million non-recurring severance costs related primarily to the
     resignation of the Company's  Chairman and CEO and $4.1 million  related to
     the loss on sale of radar operations.

2    Includes $.7 million  related to severance  costs ($.5 million net of tax),
     $4.1 million related to loss on sale of radar business ($2.6 million net of
     tax) and $.2 million related to equity in loss of affiliate (.1 million net
     of tax).

3    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.

4    Includes $5.8 million related to satellite costs ($3.7 million net of tax),
     $1.7 million  extraordinary item related to debt extinguishment  charge for
     the  early   retirement   of  the  Company's   $15,000,000   11.25%  Senior
     Subordinated Notes due 2004 ($1.1 million net of tax).

5    DTN has not paid any dividends in the last five years and currently intends
     to retain earnings for use in its business.

</FN>
                                       32
                                     -324-
<PAGE>
Management's Discussion and Analysis

     The  following  discussion  of  the  financial  condition  and  results  of
operations  of the  Company  should  be read in  conjunction  with the  Selected
Financial Data and the  Consolidated  Financial  Statements and Notes thereto in
this annual report.

     From time to time, information provided by the Company,  statements made by
its employees or  information  included in its filings with the  Securities  and
Exchange Commission  (including this Annual Report to Shareholders and documents
incorporated  by  reference)  may contain  statements  which are not  historical
facts, so-called "forward-looking statements".  These forward-looking statements
are made  pursuant  to the safe  harbor  provisions  of the  Private  Securities
Litigation  Reform Act of 1995.  The Company's  actual future results may differ
significantly   from   those   stated   in   any   forward-looking   statements.
Forward-looking   statements   involve  a  number  of  risk  and  uncertainties,
including,  but not limited to,  product  demand,  pricing,  market  acceptance,
inflation,  risks in product and technology  development,  product  competition,
acquisitions,  key  personnel,  and other risk  factors  detailed in this Annual
Report to  Shareholders  and in the  Company's  other  Securities  and  Exchange
Commission filings.

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,  accounted for
39% and 46% of the  Company's  total  assets  at  December  31,  1999 and  1998,
respectively.  The Company financed the majority of the investment in subscriber
equipment  with  long-term  debt. In 1999,  1998 and 1997,  the cash provided by
operating  activities exceeded the cost of new subscriber equipment and was used
for acquisitions and to service long-term debt.

     The Company made  significant  investments  during  1999,  1998 and 1997 to
acquire  subscribers and businesses that fit the Company's  business model.  The
net intangible assets (primarily  goodwill) from acquisitions was 34% and 33% of
the  Company's  total  assets at December 31, 1999 and 1998,  respectively.  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  required  the Company to increase  long-term  debt during 1998 and
1997.

     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 continued growth of the Company.

Cash Flows From Operating Activities

     Net cash  provided  by  operating  activities  for 1999 was  $51.2  million
compared to $42.4  million for 1998.  The increase of $8.8 million was primarily
due to the $4.9 million increase in operating cash flow (operating income before
depreciation  and  amortization  expense),   generally  referred  to  as  EBITDA
(earnings before interest, taxes, depreciations and amortization expenses) and a
$5.8 million  decrease in net operating  assets offset by increases in cash paid
for interest and income taxes.

     The Company had $19.6 million and $17.4 million of negative working capital
at December 31, 1999 and 1998, respectively.  The decrease in working capital is
primarily  due to the  following  1) the $2.1  million  decrease  in  inventory,
primarily  related to the sale of the radar  operations  of the  Kavouras,  Inc.
subsidiary (see footnote 2 - Sale of Radar Operations),  2) the increase of $1.0
million in accounts  payable and 3) the $2.5 million increase in current portion
of long-term  debt related to the  EarthScan  Network,  Inc.  (see  footnote 7 -
Investment  In  Affiliate).  These  decreases  were  offset by the  increase  in
Investment in  Securities  of $3.7 million  related to the warrants in SmartServ
Online, Inc. (see footnote 5 - Investments In Securities)

CASH FLOWS FROM INVESTING ACTIVITIES

     Net cash used in investing  activities for 1999 was $35.2 million  compared
to $66.8 million for 1998. The decrease of $31.6 million is due to the following
1) the $27.2 million decrease in acquisitions,  2) the $5.9 million decrease for
purchases of property and  equipment,  3) the net effect of $1.0 million for the
sale of radar operations and 4) the cash Investment in Affiliate of $.5 million.

Subscriber Equipment

     Historically,   the  majority  of  the  investment  in  equipment  used  by
subscribers  has been a direct result of the growth in the Company's  subscriber
base.  The  Company's  marketing  efforts  to obtain  new  subscribers  requires
investing in subscriber equipment for trial and complimentary subscriptions.

                                       33
                                     -325-
<PAGE>

     In 1999,  purchases of subscriber  equipment were primarily to maintain the
current base of satellite  subscribers and upgrade  existing  equipment,  mainly
hard drives.  These upgrades are primarily  related to subscribers  upgrading to
more advanced  higher  priced  services.  Included  were one-time  non-recurring
capital  expenditures of $5.0 million for satellite  equipment to enhance signal
reception to subscribers.

     During  1999,  approximately  6,000  monochrome  system (FM and Ku) and DTN
FarmDayta  subscribers  upgraded service to the color Ku-band system with 97% of
these conversions  involving DTN AgDaily subscribers.  The remaining 3% involved
DTN Financial Services and DTNergy subscribers.  The conversion of approximately
1,800  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 also resulted in upgraded equipment.

     DTN  decreased the  inventory of color  receivers  and  components to build
color receivers during 1999. At December 31, 1999 the Company had  approximately
$12 million of this  inventory  compared to $19 million in 1998. 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.

Other Property and Equipment

     The majority of the  investment in other property and equipment is computer
equipment,   software,   communications   equipment,   furniture  and  leasehold
improvements. The increase in other property and equipment of $.6 million is due
to the following,  1) the increase of $1.0 million in computer equipment,  2) an
increase  of $.9  million in  software  costs,  3) a decrease  of $.8 million in
leasehold improvements and, 4) a decrease of $.5 million in furniture,  fixtures
and other purchases.

     The  increase in  computer  equipment  is due to the growth of  operations,
including having the Kavouras  operations for 12 months, and providing redundant
facilities  for service  delivery.  The increase in software costs is due to new
projects related to new product initiatives.  These costs are primarily one-time
in  nature  and  were  $3.6   million  and  $3.1  million  for  1999  and  1998,
respectively.  The  reduction in  furniture,  fixtures and other  purchases  and
leasehold   improvements  is  due  to  expansion  at  the  Company's   corporate
headquarters in 1998.


Acquisitions

     The Company paid $10.5 million cash in 1999 for  acquisitions and a license
agreement  compared to $37.6 million cash during 1998. The  acquisitions in 1999
were primarily financed using internally generated cash from operations.

     The  Company's  growth  strategy  includes  developing  services  for niche
markets  plus  acquisitions  that  fit the  business  model  and/or  competitive
strategies.  The Company closed on several acquisitions during 1999. The Company
closed on two  acquisitions  during the first  quarter,  amended  the  SmartServ
Online  (SSOL)  licensing  agreement  in the  second  quarter  and closed on one
acquisition during the fourth quarter. Included in the first quarter of 1999 was
the  acquisition of Paragon  Software,  Inc., an Internet  company that supplies
real-time    streaming    quotes    under   the    product    name    InterQuote
(www.interquote.com).  In May 1999,  the Company  completed  an amendment to its
existing  license  agreement  with  SSOL  and  its  services,  primarily  DTN.IQ
(www.DTNIQ.com), to create a long-term business relationship with SSOL including
an  exclusive,  perpetual,  worldwide  license.  The  Notes to the  Consolidated
Financial  Statements  have more detail on all  acquisitions  and the  completed
license agreement (See footnote 4 - Acquisitions).

Investment in Affiliate

     In December of 1999, the Company and Photon Research Associates, Inc. (PRA)
formed a joint venture company,  EarthScan Network, Inc. (EarthScan).  EarthScan
will deliver the most  sophisticated  satellite  images available to farmers and
their suppliers through the Internet (www.EarthScan.com).

     DTN and PRA each have  approximately  a 47% ownership of EarthScan and have
50% voting rights.  DTN contributed $3.0 million to EarthScan,  $.5 million cash
and a $2.5 million note. The note will be paid as the venture requires funds for
operating and investing activities.

CASH FLOW FROM FINANCING ACTIVITIES

     In 1999,  net cash used by financing  activities  of $16.0  million was the
result of a decrease in term debt  outstanding  of $21.6  million  offset by the
proceeds from the exercise of stock options of $5.6 million.

     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
million  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 the $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.

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,

                                       34
                                     -326-
<PAGE>

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, results
of operations and cash flows. 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,  the Internet, TV Cable delivery,
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 short term and long term
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 two primary information
distribution  technologies  the Company utilizes for the delivery of information
are  satellite  and  Internet.  Other  technologies  used  are the FM side  band
channels,  VBI (vertical  blanking  interval through a cable TV signal),  leased
land  lines,  wireless,  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  like the
Internet,  are providing the Company with  alternatives to its largest  delivery
method, which is satellite.

     Year 2000  (Y2K) - The  Company  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 assessed its state of readiness in the areas of
service delivery, customer service, cash flow and physical environment. This was
accomplished in four phases 1) inventory,  2) assessment of business impact,  3)
remediation  and 4) testing and management of subsequent  changes.  These phases
were all completed by December 31, 1999.

     The Company used  existing  internal  resources to complete all work on the
four phases,  and the cost of using internal resources through December 31, 1999
was $1.2  million.  The  Company  expects  that the cost of making any  on-going
changes will not be significant and will be less than $.2 million.

     The Company  continues to maintain a formal  contingency plan that would be
employed  in the event of any Y2K  failures.  Subsequent  to January 1, 2000 and
through  this report date of February 9, 2000,  the Company has not  experienced
any material Y2K failures.

     Accounting   Pronouncements  -  In  June  1998,  the  Financial  Accounting
Standards Board issued Statement No. 133. "Accounting for Derivative Instruments
and Hedging  Activities"  (SFAS 133), that would have been effective  January 1,
2000. In June 1999, the Financial  Accounting  Standards Board issued  Statement
No. 137, "Accounting for Derivatives Instruments and Hedging Activities-Deferral
of the Effective Date of FASB  Statement No 133",  postponing the effective date
for  implementing  SFAS 133 to fiscal years  beginning  after June 15, 2000. The
Company will adopt this Statement  effective  January 1, 2001. At this time, the
Company believes the impact of adopting this Statement should not be significant
to the results of operations or financial position.

     In December  1999,  the  Securities  and Exchange  Commission  issued Staff
Accounting  Bulletin  (SAB) No. 101 related to revenue  recognition in financial
statements. This SAB will affect the Company's recognition of service initiative
fees to require  these fees to be deferred and  recognized  over the term of the
service  arrangement or the expected period of performance.  The Company has not
completed the process of evaluating the impact of adopting this SAB. The Company
anticipates  adopting  the SAB in the first  quarter  of 2000 with a  cumulative
effect  adjustment as a change in accounting  principles in accordance  with APB
Opinion No. 20, Accounting Changes.

SUBSEQUENT EVENT

     On March 3, 2000,  the Company  entered  into a definitive  agreement  with
Veronis, Suhler & Associates  Communications Partners III, LP (VS&A III) whereby
VS&A III will  make a tender  offer to all of the  Company's  shareholders  at a

                                       35
                                     -327-
<PAGE>

price of $29.00 per share. The tender offer is subject to the tender of at least
90% of the  outstanding  shares  as of March 1,  2000.  If less  than 90% of the
outstanding  shares are  tendered,  the Company  will merge with an affiliate of
VS&A III at the same per share price.  Closing of the  transaction is subject to
government and  shareholder  approvals and other  customary  conditions,  and is
expected to occur during the second quarter of 2000.

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
and equity prices, 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 loan debt:
1) Fixed Term  Notes,  2)  Variable  Term Notes and 3)  Revolving  Credit  Line.
Assuming  a  hypothetical  10%  change  in 1999 and  1998  interest  rates,  the
following  is an  analysis  of what the impact  would have been on 1999 and 1998
interest expense:

                             Debt Balance           Percent            Interest
--------------------------------------------------------------------------------

Fixed Term Notes             $  32,425,500            31%            $        -
Variable Term Notes             15,194,499            15%               113,400
Revolving Credit Line (a)       55,500,000            54%               412,900
Total                        $ 103,119,999           100%            $  526,300

                                                     1998
                             Debt Balance           Percent            Interest

Fixed Term Notes             $  49,822,540            41%            $        -
Variable Term Notes             16,926,000            14%               153,400
Revolving Credit Line (a)       55,500,000            45%               178,500
Total                        $ 122,248,540           100%            $  331,900



(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 9). 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 had
$32,425,500  and  $49,822,540 of fixed term debt with an estimated fair value of
$32,452,043  and  $50,395,940  or an  increase  of $26,543  and  $537,400  as of
December 31, 1999 and 1998,  respectively.  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 9).

     Warrants - The Company has an  investment  in security,  due to warrants in
SmarServ Online (SSOL), in which the value is related to the market price of the
stock. The implication of a change in value, due to market price changes, is not
reflected  in the  Company's  net income  (loss) but does  affect  comprehensive
income (loss) and Shareholders'  Equity. The market price of SSOL as of December
31, 1999 was $19.72 and as of the report  date of  February 9, 2000,  the market
price was $133.

RESULTS OF OPERATIONS

Revenues and Operating Cash Flow
in millions of dollars

<TABLE>
<CAPTION>

                        1995            1996            1997            1998            1999
                        ----            ----            ----            ----            ----
<S>                     <C>             <C>             <C>             <C>             <C>
Revenues                62.3            98.4            126.4           149.0           166.5
Operating Cash Flow     23.2            40.4            54.7            58.8*           62.7*
                                                                        53.0            57.9
</TABLE>

*Pro-Forma results before non-recurring satellite costs of $5.8 million for 1998
and  non-recurring  severance  costs  of $.7  million  and loss on sale of radar
operations of $4.1 million for 1999.

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,  including  satellite leases,
certain news, weather,  quotes and information  providers along with general and
administrative  expenses,  not  directly  affected by the number of  subscribers
receiving the Company's services.

SALE OF RADAR OPERATIONS

     In December of 1999, the Company sold the radar operations of its Kavouras,
Inc. subsidiary.  The assets were sold for $1.3 million and the Company recorded
a pre-tax loss of $4.1 million,  which was included in operating  expenses.  The
breakdown of these expenses were as follows: 1) $3.2 million related to the sale
of the inventory,  fixed assets, and intangibles,  2) an accrual of $1.2 million
for  costs  related  to the  severance  of  approximately  30  radar  operations
employees not retained by Kavouras (of which,  $.3 million was paid in 1999) and
3) the accrual of $.9  million  for other  operation  closing  costs.  The radar
operations recorded negative direct operating cash flow (not including allocated
Kavouras  administration  expenses)  for 1999 and 1998 of $1.3  million  and $.8
million on revenues of $1.5 million and $2.5 million respectively.

NON-RECURRING COSTS
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.

                                       36
                                     -328-
<PAGE>

     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 $5.8  million and  recorded in May of 1998.
These costs  included  costs 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 charge was  reasonable,  the impact and
cost of customer  retention  is more  difficult to quantify and actual costs may
have varied. The Company's management believes the impact from this problem will
not significantly impact the longer-term growth prospects of the Company.

Severance Costs

     During the first quarter of 1999, the Company incurred  non-recurring costs
of $.7 million for severance  payments  primarily  related to the resignation of
the  Company's  Chairman  and CEO.  The former  Chairman  and CEO received a $.5
million cash severance payment, as approved by the Board of Directors,  upon his
resignation in March of 1999.


OPERATING CASH FLOW (EBITDA)

     The Company's operating cash flow (operating income before depreciation and
amortization  expense),  known  in  the  industry  as  EBITDA  (earnings  before
interest,  taxes,  depreciation and amortization  expenses),  is a key indicator
monitored by DTN management.

     EBITDA should not be considered in isolation  from, or as a substitute for,
operating income, net income or cash flows from operating activities computed in
accordance with generally accepted accounting  principles.  While not a required
disclosure under generally accepted  accounting  principles,  EBITDA is a widely
used  measure of a company's  performance  in its  industry.  EBITDA  assists in
comparing  performance on a consistent  basis without regard to depreciation and
amortization,  which may vary  significantly  depending  on  accounting  methods
(particularly  when  acquisitions  may be  involved).  Management of the Company
believes  that EBITDA is a  meaningful  measure  given the  widespread  industry
acceptance as a basis for financial analysis.  Further, certain covenants of the
Company's debt  agreements are based upon EBITDA,  as defined above.  Due to the
variety of methods  that may be used by  companies  and  analysts  to  calculate
EBITDA,  the EBITDA  measures  presented  herein may not be  comparable  to that
presented by other companies.

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

Operating Cash Flow
percent of revenue

1995            1996            1997            1998            1999
----            ----            ----            ----            ----

37              41              43              40*             38*
                                                36              35
     *Pro-Forma results before non-recurring satellite costs of $5.8 million for
1998 and non-recurring  severance costs of $.7 million and loss on sale of radar
operations of $4.1 million for 1999.

     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 1999 increased 9% to $57.9 million compared to
$53.0 million for 1998. Excluding  non-recurring  severance costs of $.7 million
and  loss  on  sale  of  radar  operations  of  $4.1  million  in  1999  and the
non-recurring  satellite costs of $5.8 million in 1998,  operating cash flow for
1999 would have been $62.7 million compared to $58.8 million for 1998.

     Operating  cash flow as a percent of revenue  (operating  cash flow margin)
for 1999 was  34.8%  compared  to 35.6% for 1998.  Excluding  the  non-recurring
costs, and loss on sale of radar operations, operating cash flow margin for 1999
would have been 37.7% compared to 39.5% for 1998.

     Kavouras  equipment  sales have lower  operating cash flow margins and have
decreased the Company's  total  operating cash flow margin.  A further  analysis
shows that,  excluding the Kavouras operating results,  non-recurring costs, and
loss on sale of radar operations, operating cash flow margin for 1999 would have
been 43.2% compared to 42.5% for 1998.

FREE CASH FLOW

     Free cash flow is defined as operating cash flow (EBITDA) less property and
equipment capital expenditures and interest,  and is a measurement used by DTN's
management  team to monitor the Company's  source of funds available to grow the
business.  Free cash flow for 1999  increased 68% to $25.9  million  compared to
$15.4 million for 1998.

     Property and equipment capital expenditures for 1999 were down 20% to $23.2
million compared to $29.1 million for 1998.  Included in 1999 and 1998 were $8.6
million and $3.1 million,  respectively of one-time  expenditures  primarily for
satellite  equipment,  the DTN for  Windows  (DIRECTV)  project,  and  other new
product initiatives.

     Excluding the non-recurring costs, and one-time capital expenditures,  free
cash flow for 1999 would have  increased 62% to $39.3 million  compared to $24.3
million for 1998.

                                       37
                                     -329-
<PAGE>

DEBT LEVERAGE RATIO

     The  Company's  debt  leverage  ratio is  defined as total  long-term  debt
(including  current  portion)  divided by last twelve months operating cash flow
(EBITDA). The debt leverage ratio was 1.8 for the period ended December 31, 1999
compared to 2.3 for the period ended December 31, 1998.

     The debt leverage  ratio at December 31, 1999 is based on $103.1 million of
total long-term debt  (including  current  portion)  divided by $57.9 million of
last twelve  months  operating  cash flow  (EBITDA)  for the twelve month period
ending December 31, 1999. This ratio  demonstrates the Company's  ability to pay
off total  long-term debt  (including  current  portion) in 1.8 years.  The debt
leverage ratio at December 31, 1998 is based on $122.2 million of long-term debt
(including  current  portion)  divided by $53.0  million of last  twelve  months
operating  cash flow  (EBITDA) for the twelve month period  ending  December 31,
1998.

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  1998,  the  Company's  developmental  activities  increased to $6.5
million  compared  to $5.2  million  for  1997,  with  the  Kavouras  operations
(acquired in July 1998) 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 48.1% compared to 48.5% for
1997.

     During 1999, the Company's development activities increased to $7.3 million
compared to $6.5  million for 1998,  with the Kavouras  operations  contributing
$2.5 million.  Operating cash flow margin decreased to 34.8% in 1999 compared to
35.6% in 1998.  Core  services  operating  cash flow  margin  for 1999 was 39.4%
compared to 40.7% for 1998. Excluding Kavouras operating results,  non-recurring
costs, and loss on sale of radar operations,  core services  operating cash flow
margin for 1999 would have been 48.5% compared to 48.1% for 1998.

1999 COMPARED TO 1998

     The 1999 operating  results were affected by a continued  weak  agriculture
economy, the sale of the radar business and strategic  acquisitions completed by
the  Company.  The  operating  results  for 1999  include  twelve  months of the
operations of Kavouras,  Inc.  (Kavouras),  acquired in July 1998.  The Kavouras
operations,  including the Weather Services  Corporation (WSC)  operations,  are
included in the Weather Services division of the Company.
                                                                    PERCENT
In Thousands                     1999             1998              CHANGE
-------------------------------------------------------------------------------

Subscribers                      166.9             159.3               5 %
Revenues                      $166,509          $148,986              12 %
Operating cash flow             57,884            53,014               9 %
Operating income                 4,157             4,163               -
Net loss                      $ (3,707)         $ (3,743)              1 %



REVENUES

     Total revenue increased 12% for 1999 compared to 1998.  Recurring operating
revenues, consisting of subscriptions,  additional services,  communications and
advertising,  increased to $80 per subscriber per month for 1999 compared to $74
for 1998.

     The Company  attributes  the revenue  increases  for 1999  compared to 1998
primarily to revenue  generated by the increase in  subscribers,  an increase in
average  subscription  rates and acquisitions.  At a segment level, three of the
Company's  main  segments  (Weather  Services,  Financial  Services  and  Energy
Services)  showed solid  revenue  growth for 1999  compared with the prior year.
This  growth  was  primarily  driven  by  an  increasing   subscriber  base  and
acquisitions, as well as, upgrading the existing customers to more sophisticated
and higher priced services. The Ag Services segment showed a decrease in revenue
for 1999  compared  with the prior year,  due to the  continued  weakness in the
agricultural  economy.  The increase in total Company revenues resulted in total
revenues per subscriber per month increasing to $85 for 1999 compared to $77 for
1998.

     Subscriptions  -  Subscription  revenue for 1999 grew 12% to $134.0 million
compared  to  $119.5  million  for  1998.  The  increase  was  primarily  due to
acquisitions completed in 1999 and 1998, increases in total subscribers, and the
ability to move  subscribers  to higher priced  services.  The increase in total
subscribers  in 1999 was primarily due to  acquisition  activities.  The Company
added 7,500 subscribers from acquisitions.  The Weather,  Financial Services and
Energy  divisions  all  increased  subscribers  on  a  net  basis.   Agriculture
subscribers  declined but the retention  rate improved in 1999 compared to 1998.
The Kavouras operations (including WSC operations)  contributed $13.2 million of
subscription  revenue to the Weather  Services  division of the Company for 1999
and $5.1 million for 1998 on a consolidated  basis.  This revenue  accounted for
56% of the $14.4  million  increase in the Company's  subscription  revenues for
1999 and 28% of the $18.3 million increase for 1998.

                                       38
                                     -330-
<PAGE>

     The increase in subscribers  from new  subscription  sales and acquisitions
for 1999 resulted in total  subscription  revenues on a per subscriber per month
basis  of $68  compared  to $62  for  1998.  The  Company  continues  to add new
subscribers at higher subscription rates.  Subscription  revenue per subscriber,
per month for all new subscription sales in 1999 was $74.

     Equipment Sales - The Company's July 1, 1998 acquisition of Kavouras, Inc.,
added a new market niche for the Company,  the  manufacture  and sale of various
meteorological  equipment and radar systems. The Kavouras acquisition added $6.1
and $4.8 million of meteorological  equipment and radar sales for 1999 and 1998,
respectively.  This accounted for the majority of the Company's  equipment sales
for 1999 and 1998.

     In December 1999, the Company sold the radar  operations of Kavouras,  Inc.
The  Kavouras  radar  revenues  were $1.5  million for 1999 and $2.5 million for
1998. The revenues from  meteorological  equipment grew to $4.6 million compared
to $2.3  million for 1998  primarily  due to the  introduction  of the Triton RT
system.

     Additional Services - The Company offers a variety of "a la carte" optional
services.  Additional services revenues grew 13% for 1999 compared to 1998. This
increase is  primarily  due to the growth in the  Financial  Services and Energy
segments related to new products and acquisitions.

     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  (messages)  increased and helped produce a total company revenue
growth of 15% for 1999 over 1998.

     Advertising  -  Advertising  revenue  fell 9% to  $3.1  million  for  1999,
compared to $3.5 million for 1998. The Agricultural  Services  division accounts
for the majority of advertising revenues, therefore, the agriculture economy has
negatively impacted the 1999 and 1998 advertising revenues of the Company.

     Service Initiation Fees - Service initiation fees revenue for 1999 fell 30%
to $2.3  million  compared  to $3.3  million  for 1998.  This  decline is due to
discounting in the Agricultural Services division, the direct result of the weak
agricultural economy.

EXPENSES

     Total operating  expenses for 1999 increased 12% to $162.4 million compared
to $144.8 million for 1998.  Excluding the non-recurring  severance costs of $.7
and $4.1 million  loss on sale of radar  operations  for 1999 and  non-recurring
satellite costs of $5.8 million for 1998, total expenses for 1999 and 1998 would
have been $157.5 million and $139.0 million, respectively. The increase in total
operating expenses,  excluding  non-recurring costs, was primarily due to having
the  Kavouras  operations  (including  WSC  operations)  for 12  months  in 1999
compared to 6 months in 1998 and the  amortization  expense  from  acquisitions.
Total operating expenses (excluding sales commissions,  cost of equipment sales,
non-recurring  costs and loss on sale of radar  operations)  increased  on a per
subscriber per month basis to $71 for 1999 compared to $65 for 1998.

     Selling,  General and Administrative - Selling,  general and administrative
expenses on a per  subscriber per month basis for 1999 increased to $44 compared
to $39  for  1998.  These  costs  increased  in  1999 as a  result  of  expenses
associated with acquisitions.  Selling,  general and administrative  expenses in
1999 grew 15% compared to 1998 and as a percentage  of revenue  increased to 52%
in 1999 compared to 50% in 1998. Selling,  general and administrative  expenses,
excluding selling, general and administrative related to the Kavouras operations
(including WSC operations), remained flat in 1999 compared to 1998.

     Cost of Equipment  Sales - Cost of  equipment  sales for 1999 and 1998 were
$5.2 million and $4.2 million,  respectively.  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.  The Kavouras radar  operation was sold in December of 1999. Cost
of equipment  sales  related to the radar  operations  were $1.8 million in 1999
compared to $2.5 million in 1998.

     Sales  Commissions - Sales  commissions are generated from new subscription
sales and cash flows related to the DTNergy service. Sales commissions increased
13% during  1999  compared  to 1998.  This  increase  is  primarily  a result of
Kavouras  operations  (including WSC operations) and an increase in DTNergy cash
flows in which  sales  commissions  in the  energy  division  are  based.  Sales
commissions,  excluding sales  commissions  related to the Kavouras  operations,
grew 9% in 1999 compared to 1998.

     Depreciation and  Amortization - Depreciation and amortization  expense for
1999  increased  10% to $53.7 million  compared to $48.9 million for 1998.  This
increase  is  primarily  due to the  increase  in  amortization  related  to the
intangible assets  (primarily  goodwill) from  acquisitions.  As a percentage of
total revenues,  depreciation and amortization expense for 1999 was 32% compared
to 33% in 1998.  Depreciation  and  amortization  expense  for  1999,  excluding
depreciation and  amortization  related to the Kavouras  operations,  grew 4% in
1999 compared to 1998.

     Loss on Sale of Radar Operations - The loss on the sale of radar operations
was $4.1 million for 1999.  This loss was due to the sale of the Kavouras  radar
operations in December of 1999. The loss included the sale of assets,  severance
and other operation closing costs.

OPERATING INCOME
     Operating  income (EBIT) was $4.2 million for 1999 and 1998,  respectively.
Excluding  non-recurring severance costs of $.7 million and $4.1 million loss on
sale of radar  operations  in 1999  and  non-recurring  satellite  costs of $5.8
million  for 1998,  operating  income  for 1999  would  have  been $9.0  million
compared to $10.0 million for 1998.  Operating  income  excluding  non-recurring

                                       39
                                     -331-
<PAGE>

costs and loss on sale of radar  operations,  and before  amortization  expenses
related to  acquisitions  increased  18% to $21.7  million for 1999  compared to
$18.4 million for 1998.

INTEREST EXPENSE
     Interest  expense for 1999  increased 4% to $8.8  million  compared to $8.4
million  for  1998.  This  increase  is  primarily  due to higher  average  debt
outstanding.  As a  percentage  of  total  revenue,  interest  expense  for 1999
decreased to 5% compared to 6% for 1998.

EQUITY IN LOSS OF AFFILIATE
     The equity loss of  affiliate  for 1999 was $.2  million.  This loss is the
result of the joint venture formed by the Company and Photon  Research,  Inc. in
December  of 1999.  The losses are a result of  certain  operating  costs at the
start of the joint venture.

OTHER INCOME (EXPENSE)
     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 BENEFIT
     The Company's  federal and state effective tax benefit rate was 23% and 34%
for 1999 and 1998,  respectively.  The change is primarily due to non-deductible
goodwill from acquisitions.

LOSS BEFORE EXTRAORDINARY ITEM
     The loss before  extraordinary  item for 1999 was $3.7  million or $.32 per
share on a diluted  basis  compared to a loss of $2.7  million or $.24 per share
for 1998. Excluding the non-recurring severance and satellite costs and the loss
on the sale of radar  operations,  the loss before  extraordinary  item for 1999
would have been $.6  million or $.05 per share on a diluted  basis  compared  to
income of $1.0 million or $.09 per share on a diluted basis for 1998.

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 1999 was $3.7 million or $.32 per share on a diluted basis
compared to a net loss of $3.7 million or $.33 per share for 1998. Excluding the
non-recurring  severance  and  satellite  costs,  loss  on  the  sale  of  radar
operations and the  extraordinary  item discussed  above,  the net loss for 1999
would have been $.6 million or $.05 per share on a diluted basis compared to net
income of $1.0 million or $.09 per share on a diluted basis for 1998.

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.


                                                                      PERCENT
In Thousands                     1998              1997                CHANGE
------------------------------------------------------------------------------

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                   -


REVENUES

     Total revenue increased 18% for 1998 compared to 1997.  Recurring operating
revenues, consisting of subscriptions,  additional services,  communications and
advertising,  increased to $74 per subscriber per month for 1998 compared to $66
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 $63 compared to $55 for
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

                                       40
                                     -332-
<PAGE>

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.

     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.

     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.

     Service Initiation Fees - 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
$65 for 1998 compared to $57 for 1997.

     Selling,  General and Administrative - Selling,  general and administrative
expenses on a per  subscriber per month basis for 1998 increased to $39 compared
to $34  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 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
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.

                                       41
                                     -333-
<PAGE>

OTHER INCOME (EXPENSE)
     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  non-recurring  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.

                                       42
                                     -334-
<PAGE>
(Photograph)
DTN's accounting  functions span several  divisions and geographical  locations,
all under the  watchful  eye of Daniel A.  Petersen,  Corporate  Controller  and
Treasurer, and his team.

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/ Greg T. Sloma                        /s/ Brian L. Larson
----------------------                   -------------------------
Greg T. Sloma                            Brian L. Larson
President                                Senior Vice President
Chief Operating 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, 1999 and
1998,  and the related  consolidated  statements  of  operations,  shareholders'
equity and cash flows for each of the three years in the period  ended  December
31, 1999.  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, 1999 and 1998, and the results
of its  operations  and its cash flows for each of the three years in the period
ended  December 31, 1999,  in  conformity  with  generally  accepted  accounting
principles.


/s/ Deloitte & Touche LLP
--------------------------
Deloitte & Touche LLP
Omaha, Nebraska
February 9, 2000
(March 3, 2000 as to note 18)

                                       43
                                     -335-
<PAGE>


Consolidated Balance Sheets
As of December 31, 1999 and 1998
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                   1999                1998
--------------------------------------------------------------------------------------------------------------------------------
Assets
Current Assets
<S>                                                                                           <C>                  <C>
 Cash                                                                                         $       -            $       -
 Accounts receivable, net of allowance for doubtful accounts of $1,800,000 and $1,300,000       10,073,472           10,475,426
 Note Receivable                                                                                   412,142                 -
 Investment in securities                                                                        3,675,000                 -
 Inventory                                                                                       1,480,922            3,575,580
 Prepaid expenses                                                                                1,961,613            2,219,778
 Deferred commission expense                                                                     2,844,195            2,695,475
                                                                                              ------------         ------------
   Total Current Assets                                                                         20,447,344           18,966,259
Investment in affiliate                                                                          2,788,024                 -
Property and Equipment
 Equipment Used By Subscribers                                                                 258,211,698          244,613,085
 Other Property and Equipment                                                                   47,082,196           38,788,491
                                                                                              ------------         ------------
   Total Property and Equipment                                                                305,293,894          283,401,576
 Less: Accumulated Depreciation                                                                214,172,557          174,164,486
                                                                                              ------------         ------------
   Net Property and Equipment                                                                   91,121,337          109,237,090
Intangible Assets From Acquisitions                                                             92,564,678           82,266,913
 Less: Accumulated Amortization                                                                 30,661,366           18,121,533
                                                                                              ------------         ------------
   Net Intangible Assets                                                                        61,903,312           64,145,380
Other Assets                                                                                     7,743,161            4,836,353
                                                                                              ------------         ------------
Total Assets                                                                                  $184,003,178         $197,185,082
--------------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current Liabilities

 Accounts payable                                                                             $  6,822,995         $  5,820,579
 Accrued expenses                                                                                9,184,969            8,963,856
 Current portion of long-term debt                                                              24,081,667           21,628,542
                                                                                              ------------         ------------
   Total Current Liabilities                                                                    40,089,631           36,412,977
Revolving Debt                                                                                  55,500,000           55,500,000
Long-Term Debt                                                                                  23,538,332           45,119,998
Equipment Deposits                                                                                 383,009              653,753
Unearned Revenue                                                                                26,995,286           27,348,468
Commitments and Contingencies
Shareholders' Equity
 Common stock, par value $.001, authorized 20,000,000 shares, issued 11,985,319
 and 11,516,392                                                                                     11,985               11,516
 Paid-in capital                                                                                41,724,043           35,022,787
 Accumulated deficit                                                                            (6,591,108)          (2,884,417)
 Accumulated other comprehensive income                                                          2,352,000                 -
                                                                                              ------------         ------------
Total Shareholders' Equity                                                                      37,496,920           32,149,886
                                                                                              ------------         ------------
Total Liabilities and Shareholders' Equity                                                    $184,003,178         $197,185,082


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


</TABLE>
                                       44
                                     -336-
<PAGE>




Consolidated Statements of Operations
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                       1999                    1998                    1997
------------------------------------------------------------------------------------------------------------------------------------
Revenues
<S>                                                                <C>                    <C>                    <C>
 Subscriptions                                                     $  133,991,755         $  119,543,225         $  101,194,290
 Equipment sales                                                        6,727,485              4,871,481                   -
 Additional services                                                    7,976,731              7,059,007              6,694,754
 Communication services                                                12,381,509             10,787,952             10,050,073
 Advertising                                                            3,129,052              3,455,194              3,809,748
 Service initiation fees                                                2,302,070              3,269,487              4,625,487
                                                                   --------------         --------------         --------------
                                                                      166,508,602            148,986,346            126,374,352
Expenses                                                           --------------         --------------         --------------

 Selling, general and administrative                                   86,086,879             74,919,319             61,790,861
 Cost of equipment sales                                                5,205,275              4,192,737                   -
 Sales commissions                                                     12,475,315             11,060,492              9,884,783
 Depreciation and amortization                                         53,727,233             48,850,622             42,315,305
 Loss on sale of radar operations                                       4,121,319                   -                      -
 Non-recurring costs                                                      735,828              5,800,000                   -
                                                                   --------------         --------------         --------------
                                                                      162,351,849            144,823,170            113,990,949
                                                                   --------------         --------------         --------------
Operating Income                                                        4,156,753              4,163,176             12,383,403
 Interest expense                                                      (8,820,476)            (8,449,668)            (9,098,231)
 Equity in loss of affiliate                                             (211,976)                  -                      -
 Other income, net                                                         70,539                217,929                121,909
                                                                   --------------         --------------         --------------
Income (Loss) Before Income Taxes and Extraordinary Item               (4,805,160)            (4,068,563)             3,407,081
 Income tax (benefit) provision                                        (1,098,469)            (1,402,684)             1,171,000
                                                                   --------------         --------------         --------------
Income (Loss) Before Extraordinary Item                                (3,706,691)            (2,665,879)             2,236,081
Extraordinary Item, Net of tax                                               -                 1,076,880                   -
                                                                   --------------         --------------         --------------
Net Income (Loss)                                                  $   (3,706,691)        $   (3,742,759)        $    2,236,081
------------------------------------------------------------------------------------------------------------------------------------
Basic Income (Loss) Per Share
 Income (loss) before Extraordinary Item                           $        (0.32)        $        (0.24)        $         0.20
 Extraordinary Item, net of tax                                              -                     (0.09)                  -
------------------------------------------------------------------------------------------------------------------------------------
 Net Income (loss)                                                 $        (0.32)        $        (0.33)        $         0.20
------------------------------------------------------------------------------------------------------------------------------------
Diluted Income (Loss) Per Share
 Income (loss) before Extraordinary Item                           $        (0.32)        $        (0.24)        $         0.19
 Extraordinary Item, net of tax                                              -                     (0.09)                  -
------------------------------------------------------------------------------------------------------------------------------------
 Net Income (loss)                                                 $        (0.32)        $        (0.33)        $         0.19
------------------------------------------------------------------------------------------------------------------------------------
Basic Shares Outstanding                                               11,734,190             11,358,934             11,100,684
Diluted Shares Outstanding                                             11,734,190             11,358,934             12,082,556


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

</TABLE>
                                       45
                                     -337-
<PAGE>



Consolidated Statement of Shareholders' Equity
Years ended December 31, 1997, 1998 and 1999
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    Accumulated
                                                                     Retained                         Other               Total
                              Common       Common      Paid-in       Earnings       Treasury       Comprehensive       Shareholders'
                              Shares        Stock      Capital       (Deficit)        Stock           Income              Equity
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>           <C>         <C>           <C>            <C>              <C>                <C>
Balance, January 1, 1997    11,074,224    $ 11,074    $ 30,025,990  $ (1,404,602)  $(342,173)       $      -           $ 28,290,289
Net income                                    -               -        2,236,081        -                  -              2,236,081

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
                            ----------    --------    ------------   -----------   ---------        -----------        ------------
Balance, December 31, 1997  11,148,052    $ 11,148    $ 31,326,683   $   858,342   $    -           $      -           $ 32,196,173
Net loss                                      -               -       (3,742,759)       -                  -             (3,742,759)
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                          -            330,000          -           -                  -                330,000
                            ----------    --------    ------------   -----------   ---------        -----------        ------------
Balance, December 31, 1998  11,516,392    $ 11,516    $ 35,022,787   $(2,884,417)  $    -           $      -           $ 32,149,886
Net loss                                      -               -       (3,706,691)       -                  -             (3,706,691)

Net unrealized investment
 gain                                         -               -             -           -             2,352,000           2,352,000
 Total comprehensive loss                                                                                                (1,354,691)
Issuance of common stock on
 exercise of employee stock
 option                        468,927         469       5,648,256          -           -                  -              5,648,725
Tax benefit related to
 exercise of employee stock
 options                                      -          1,053,000          -           -                  -              1,053,000
                            ----------    --------    ------------   -----------   ---------        -----------        ------------
Balance, December 31, 1999  11,985,319    $ 11,985    $ 41,724,043   $(6,591,108)  $    -           $ 2,352,000        $ 37,496,920

</TABLE>

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

                                       46
                                     -338-

<PAGE>




Consolidated Statements of Cash Flows
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                       1999                    1998                      1997
------------------------------------------------------------------------------------------------------------------------------------

Cash Flows From Operating Activities

<S>                                                                  <C>                     <C>                    <C>
 Net income (loss)                                                   $  (3,706,691)          $  (3,742,759)         $  2,236,081
 Adjustments to reconcile net income (loss) to
  net cash provided by operating activities:
  Depreciation and amortization                                         53,727,233              48,850,622            42,315,305
  Amortization of debt issue costs and discount                             76,642                  38,437               147,880
  Extraordinary loss on early extinguishment of debt                          -                  1,682,880                  -
  Equity in loss of affiliate                                              211,976                    -                     -
  Noncash loss on sale of radar operations                                 630,366                    -                     -
  Deferred income taxes                                                 (2,421,469)             (1,254,753)            1,056,000
 Change in assets and liabilities:
  Accounts receivable                                                      403,404              (1,721,398)           (1,278,437)
  Inventory                                                              2,094,658               1,144,102                  -
  Prepaid expenses                                                         224,565                (851,447)             (180,068)
  Deferred commission expense                                             (148,720)                614,502              (400,469)
  Other assets                                                            (150,950)                   -                     -
  Accounts payable                                                       1,000,360              (3,151,545)              518,361
  Accrued expenses                                                         (98,512)             (2,091,048)           (1,113,749)
  Equipment deposits                                                      (270,744)               (542,752)              (51,175)
  Unearned revenue                                                        (398,182)              3,441,028             4,293,666
                                                                     -------------           -------------          ------------
 Net Cash Provided By Operating Activities                              51,173,936              42,415,869            47,543,395

Cash Flows From Investing Activities
 Capital expenditures:
  Equipment used by subscribers                                        (13,816,323)            (20,341,583)          (21,137,267)
  Other Property and Equipment                                          (9,383,516)             (8,803,636)           (3,367,535)
 Acquisitions                                                          (10,467,165)            (37,621,363)           (5,687,196)
 Proceeds from sale of radar operations                                     64,000                    -                     -
 Note receivable from sale of radar operations                          (1,091,116)                   -                     -
 Investment in affiliate                                                  (500,000)                   -                     -
                                                                     -------------           -------------          ------------
 Net Cash Used By Investing Activities                                 (35,194,120)            (66,766,582)          (30,191,998)

Cash Flows From Financing Activities
 Proceeds:
  Revolving credit line                                                       -                 51,000,000             4,000,000
  Term notes                                                                  -                 16,000,000                  -
  Exercise of stock options                                              5,648,725               2,677,676               994,803
 Payments:
  Term notes                                                           (21,628,541)            (24,810,833)          (22,217,083)
  Debt acquired through acquisitions                                          -                 (5,228,300)                 -
  Subordinated notes and prepayments costs                                    -                (16,125,000)                 -
                                                                     -------------           -------------          ------------
 Net Cash (Used) Provided By Financing Activities                      (15,979,816)             23,513,543           (17,222,280)
                                                                     -------------           -------------          ------------
Net Increase (Decrease) in Cash                                               -                   (837,170)              129,117
Cash at Beginning of Period                                                   -                    837,170               708,053
                                                                     -------------           -------------          ------------
Cash at End of Period                                                $        -              $        -             $    837,170
------------------------------------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information
 Noncash financing activities:
  Note due to affiliate - exchange for equity interest               $   2,500,000           $        -             $       -

</TABLE>

The accompanying notes are an integral part of these financial statements.
                                       47
                                     -339-
<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 or access through the
Internet  to receive  information  and  communications  services.  DTN charges a
recurring  subscription fee and in many 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.

Other Property and Equipment

     Other   property  and  equipment  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:


Computer Equipment                                   3-5 years
Software                                             2-3 years
Furniture, Fixtures and Other                        3-7 years
Leasehold improvements                               5-10 years
Building                                              40 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

     Deferred  income taxes are provided for the temporary  differences  between
the  financial  reporting  basis and the tax basis of the  Company's  assets and
liabilities  using  enacted  tax  rates in  effect  for the  year in  which  the
differences are expected to reverse.

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 an original maturity of three months or
less to be cash equivalents.  During the years ended December 31, 1999, 1998 and
1997,  the  Company  made  interest  payments  of  $8,886,000,   $8,367,000  and
$8,983,000, respectively. Capital expenditures for subscriber equipment included
in accounts  payable  totalled  $342,000 and $1,105,000 at December 31, 1998 and
1997, respectively.  The Company paid $934,000 and $136,000 federal income taxes
in 1999 and 1998, respectively and no federal income taxes during 1997.

Research and Development

     Expenditures  for research and  development  are charged to expense as they
are incurred and  approximated  $5,777,000,  $4,423,000,  and $3,059,000 for the
years ended December 31, 1999,  1998, and 1997.

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.

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,   investment  in  securities,

                                       48
                                     -340-
<PAGE>

revolving credit and term borrowings,  subordinated debt,  commercial paper, and
trade  payables.  The Company had $32,425,500 and $49,822,540 of fixed term debt
as of December 31, 1999 and 1998 with an estimated fair value of $32,452,043 and
$50,395,940.  The Company has an investment  in security with an estimated  fair
value of $3,675,000 as of December 31, 1999.

Comprehensive Income

     Unrealized gains and losses on the Company's available-for-sale  securities
are  included  in  other  comprehensive  income  and  separately  included  as a
component of shareholders' equity, net of related deferred taxes.

Accounting  Pronouncements

     In June 1998, the Financial Accounting Standards Board issued Statement No.
133. "Accounting for Derivative  Instruments and Hedging Activities" (SFAS 133),
that would have been  effective  January 1, 2000.  In June 1999,  the  Financial
Accounting Standards Board issued Statement No. 137, "Accounting for Derivatives
Instruments  and  Hedging  Activities-Deferral  of the  Effective  Date  of FASB
Statement No 133",  postponing the effective date for  implementing  SFAS 133 to
fiscal  years  beginning  after  June 15,  2000.  The  Company  will  adopt this
Statement  effective  January 1, 2001.  At this time,  the Company  believes the
impact of adopting this  Statement  should not be  significant to the results of
operations or financial position.

     In December  1999,  the  Securities  and Exchange  Commission  issued Staff
Accounting  Bulletin  (SAB) No. 101 related to revenue  recognition in financial
statements. This SAB will affect the Company's recognition of service initiation
fees to require  these fees to be deferred and  recognized  over the term of the
service  arrangement or the expected period of performance.  The Company has not
completed the process of evaluating the impact of adopting this SAB. The Company
anticipates  adopting  the SAB in the first  quarter  of 2000 with a  cumulative
effect  adjustment as a change in accounting  principles in accordance  with APB
Opinion No. 20, Accounting Changes.

Reclassifications

     Certain reclassifications have been made to 1998 amounts to conform to 1999
presentations.

2. Sale of Radar Operation

     In December of 1999, the Company sold the radar operations of its Kavouras,
Inc. subsidiary.  The assets were sold for $1.3 million and the Company recorded
a pre-tax loss of $4.1 million,  which was included in operating  expenses.  The
breakdown of these expenses were as follows: 1) $3.2 million related to the sale
of the inventory,  fixed assets and  intangibles,  2) an accrual of $1.2 million
for  costs  related  to the  severance  of  approximately  30  radar  operations
employees not retained by Kavouras (of which,  $.3 million was paid in 1999) and
3) the accrual of $.9  million for other  operations  closing  costs.  The radar
operations recorded negative direct operating cash flow (not including allocated
Kavouras  administration  expenses)  for 1999 and 1998 of $1.3  million  and $.8
million on revenues of $1.5 million and $2.5 million, respectively.

3. Non-recurring Costs

Severance Costs

     During the first quarter of 1999, the Company incurred  non-recurring costs
of $735,828  for  severance  payments  to  employees,  primarily  related to the
resignation of the Company's Chairman and CEO.

Satellite Costs

     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 $5.8 million and recorded in May of 1998.

4. Acquisitions

     The Company has completed  the  acquisitions  described  below and all have
been  accounted  for as a purchase.  Accordingly,  the  purchase  price has been
allocated to the  identifiable net assets acquired based upon estimates of their
fair market  values at the  acquisition  dates and the excess of purchase  price
over the estimated  fair value of total net assets  acquired which was allocated
to goodwill. The consolidated financial statements include the operating results
from the date of acquisition.

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, 1998 and 1999, and will pay $200,000 cash on each of

                                       49
                                     -341-
<PAGE>

the next two  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  $700,000.  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  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  $337,600
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.  (SSOL)  based  in  Stamford,  CT  (OTC-BB:SSOL),  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 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.  The first year  minimum
payments in excess of the  calculated  payments has been  capitalized as part of
the purchase price.

     In January of 1999,  the Company and SSOL signed a Letter of Intent whereby
the  Company  would  merge with  SmartServ  Online,  Inc.  and  shareholders  of
SmartServ Online, Inc. would receive stock of the Company.  The Letter of Intent
had been  signed by the  holders of a  majority  of the stock of SSOL on a fully
diluted basis.

     In May of 1999,  the Company and SSOL agreed to forgo the  proposed  merger
and amend certain terms and provisions of the original  License  Agreement dated
April of 1998. Under the new terms,  DTN agreed to pay additional  consideration
of $5,458,000 to SSOL in return for an exclusive,  perpetual, worldwide license,
to insure a  long-term  business  alliance.  In addition  the  Company  received
warrants to  purchase  300,000  shares of the Common  Stock of  SmartServ  at an
exercise  price of $8.60 per  share.  The  Company  capitalized  the  additional
consideration  as an intangible  asset  (goodwill) and is amortizing the amount,
including  the remaining  unamortized  amount of the  $1,905,000 or  $1,524,000,
using the  straight-line  method  over ten years,  dating  back to the  original
agreement date of April 1, 1998.

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  $3,543,295 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 to
Steve Kavouras as a non-compete.  Kavouras, Inc. 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,

                                       50
                                     -342-
<PAGE>

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 March of 1999, the Company acquired Asset Growth  Corporation  (AGC) and
the option to purchase  Paragon  Software,  Inc. (PSI).  AGC, a holding company,
held an option to purchase PSI. In order to acquire PSI, DTN purchased  both AGC
and PSI. The Company agreed to pay $9,500,000 cash. Approximately $5,300,000 was
paid in October 1998 and the remainder  was paid in March 1999.  The Company has
capitalized  $10,408,510  as an  intangible  asset  (primarily  goodwill) and is
amortizing this cost using the straight-line method over three to five years.

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.

Waterman Associates

     In January of 1999, DTN acquired Waterman Associates, a business engaged in
creating, assembling,  marketing and distributing information in the natural gas
and  electric  energy  industries.  This  information  is made  available to DTN
subscribers as part of the DTN Natural Gas and Electric  services.  DTN acquired
Waterman  Associates for $350,000 cash. The Company has capitalized  $397,000 as
an  intangible   asset   (goodwill)  and  is  amortizing  this  cost  using  the
straight-line method over five years.

FlightBrief Online Service, Inc.

     In October 1999,  DTN acquired the assets of  FlightBrief  Online  Service,
Inc., an Internet weather service for the aviation  industry.  DTN agreed to pay
$108 per converted customer, up to $367,500. At closing, $92,000 was paid to the
seller and $262,500 was paid into an escrow account to be settled 100 days after
the closing  date based on the number of  converted  customers.  The Company has
capitalized  $354,500 as an intangible  asset  (goodwill) and is amortizing this
cost using the straight-line method over five years.

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,
the  acquisitions  in 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 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.   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, 1998.  Proforma  information for 1999
would not have been  significantly  different  from the  historical  results  of
operations.


Pro Forma December 31,                                  1998
--------------------------------------------------------------------------------

Revenues                                            $161,544,338
Loss before extraordinary item                      $ (5,684,895)
Loss per share before extraordinary item
         Basic                                      $      (0.50)
         Diluted                                    $      (0.50)


5. Investments In Securities

     As part of the SmartServ Online, Inc. amended license agreement,  dated May
of 1999, the Company received  warrants to purchase 300,000 shares of the Common
Stock of  SmartServ  at an exercise  price of $8.60 per share.  At December  31,
1999, the Common Stock of SmartServ was trading at $19.72.  The Company recorded
the  estimated  fair  value  of  the  warrants  as a  current  investment  in an
available-for-sale  security of $3,675,000 and also recorded other comprehensive
income for the  unrealized  gain of  $2,352,000,  net of  $1,323,000 in deferred
income  taxes.  Other  comprehensive  income has no impact to the  Company's net
loss, but is included as part of shareholders' equity.

6.  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:


December 31                       1999                     1998
--------------------------------------------------------------------------------

Raw Materials                   $   914,339              $ 2,684,857
Work-in-Process                      39,818                  728,415
Finished Goods                      526,765                  162,308
                                $ 1,480,922              $ 3,575,580


                                       51
                                     -343-
<PAGE>

7. Investment in Affiliate

     In December of 1999, the Company and Photon Research Associates, Inc. (PRA)
formed a joint venture company,  EarthScan Network,  Inc. (EarthScan) to provide
remote sensing images of cropland and other tools for the agricultural industry.
DTN owns approximately 47% of the EarthScan stock and has a 50% voting interest.
The Company  accounts for EarthScan  under the equity method because the Company
has the  ability  to  exercise  significant  influence  over its  operating  and
financial  policies.  The equity in loss of EarthScan  was $211,976 for the year
ended December 31, 1999.

8. Other Property and Equipment

     Other property and equipment are stated at cost.  The  respective  costs of
the classes of assets are as follows:



December 31,                                    1999                  1998
--------------------------------------------------------------------------------

Computer Equipment                          $  21,968,903        $  17,520,801
Software                                       10,509,485            7,149,835
Furniture, Fixtures and Other                   8,885,232            8,527,904
Leasehold improvements                          3,016,340            2,909,196
Building                                        2,481,967            2,460,486
Land                                              220,269              220,269
--------------------------------------------------------------------------------
  Total                                     $  47,082,196        $  38,788,491

9. 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, 2001 unless extended,  provides for a total commitment of up to
$122,900,000  in new  borrowings.  As of December 31, 1999,  $55,500,000  of the
total commitment had been borrowed,  with the remaining $67,400,000 available to
the Company subject to certain restrictions as discussed below.


December 31,                               1999                      1998
--------------------------------------------------------------------------------
Revolving Credit Agreement

    Revolving credit line               $ 55,500,000              $ 55,500,000
    Term notes                            20,875,000                34,421,875
Term Credit Agreement
    Term notes                            24,244,999                32,326,665
Note Due to Affiliate                      2,500,000                      -
--------------------------------------------------------------------------------
Total Loan Agreements                    103,119,999               122,248,540
--------------------------------------------------------------------------------
Less current portion                      24,081,667                21,628,542
--------------------------------------------------------------------------------
Total Long-Term Debt                    $ 79,038,332              $100,619,998


     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, 1999 based on current  operating  cash flow,  the Company  would be
able to borrow $25,600,000 of the remaining $67,400,000 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, 2001. The minimum  stockholders' equity required to be
maintained is  $24,618,040  as of December 31, 1999.  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>
greater than 42                           .250%            .375%             2.25%
greater than 36 and less than =42         .500%            .250%             2.25%
greater than 30 and less than =36         .750%            .250%             2.00%
greater than 24 and less than =30        1.000%            .250%             2.00%
greater 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
the  interest  rate margin  changed  quarterly.  As of December  31,  1999,  the
Revolving Credit Rate is 7.25%.

     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, 1999 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 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

                                       52
                                     -344-
<PAGE>

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 10). As of December
31, 1999, $55,500,000 of the total borrowings outstanding had not been converted
to  term  loans.  As of  December  31,  1999,  $20,875,000  of term  loans  were
outstanding with monthly  installments due up through 2002 having interest rates
ranging  from 7.50% to 7.865%.

     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 31,1999, the principal
balance was $24,244,999 with $12,694,499 accruing at a variable interest rate of
the NY prime  rate less  one-half  of one  percent,  or 8.00% and the  remaining
$11,550,500 accruing at a fixed interest rate of 7.75%.

     In December of 1999, the Company and Photon Research Associates, Inc. (PRA)
formed a joint venture company, EarthScan Network, Inc. (EarthScan).  As part of
this new company,  DTN  contributed  $3,000,000  to  EarthScan,  which  included
$500,000  cash and a $2,500,000  note.  This note  agreement  calls for periodic
payments  to  EarthScan  upon ten days  written  demand.  Interest on the unpaid
balance is at a variable rate equal to DTN's revolving  credit rate currently in
effect, minus two percent.  This note is classified as current long-term debt as
the Company expects to payoff the note during the next twelve months.


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

2000                                         $ 24,081,667
2001                                           14,456,667
2002                                            9,081,665
--------------------------------------------------------------------------------
Total                                        $ 47,619,999
* Excluding revolving credit line.



     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.


10.  Extraordinary item

     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.  The  extraordinary  loss was  reduced  by a tax  benefit  of
$606,000.

11.  Income  Taxes  Components  of the income  tax  (benefit)  provision  are as
follows:

                           1999                1998                  1997
--------------------------------------------------------------------------------

Current                 $  1,323,000        $   156,000            $   115,000
Deferred                  (2,421,469)        (1,558,684)             1,056,000
--------------------------------------------------------------------------------
                        $ (1,098,469)       $(1,402,684)           $ 1,171,000


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

                           1999                1998                  1997
--------------------------------------------------------------------------------
Federal                 $(1,634,469)        $(1,383,313)           $ 1,158,000
State Taxes                 (96,000)            (81,371)                68,000
Other                       632,000              62,000                (55,000)
--------------------------------------------------------------------------------
                        $(1,098,469)        $(1,402,684)           $ 1,171,000


     The  components  of deferred  tax  liability  (asset) are as follows and is
included in other assets on the balance sheet.


                                               1999                  1998
--------------------------------------------------------------------------------
Deferred Tax Assets


  Net operating loss carryforwards            $ 5,415,000          $ 8,630,000
  AMT and R&D credits                           2,022,000              860,000
  Allowance for doubtful accounts                 648,000              468,000
  Accruals and other                            1,388,000              771,000
  Total deferred tax assets                     9,473,000           10,729,000

Deferred Tax Liabilities

  Unrealized gain on investment securities    $(1,323,000)         $      -
  Depreciation                                   (991,000)          (4,910,000)
  Intangible assets                              (163,000)            (828,000)
  Other                                           (74,000)            (220,000)
  Total deferred tax liabilities               (2,551,000)          (5,958,000)

Net Deferred Tax Assets                       $ 6,922,000          $ 4,771,000


     The Company had  approximately  $15,042,000  of unused net  operating  loss
(NOL)  carryforwards at December 31, 1999. The NOL carryforwards  will expire in
the years 2010 to 2018.

12. 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

                                       53
                                     -345-
<PAGE>

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.  During 1999,  the warrant to purchase  these
75,000 shares was exercised.

     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 March of 1999, the Board of Directors amended the plan for the rights to
expire on March 24, 1999, therefore the rights became unexercisable.

     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, 1999 the warrant to purchase 20,000 shares had not been exercised.

13. Benefit Plans

     The Company have defined  contribution  plans under  provisions of Internal
Revenue Code Section 401(k). All employees with at least one year of service may
participate in the plans. The Company matches the employee's  contribution up to
4% of  the  employee's  compensation,  and  may  make  additional  discretionary
contributions.  During 1999, 1998 and 1997, the Company contributed  $1,313,000,
$1,029,000 and $848,000, respectively, to the plans as matching contributions.

14. 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 2010 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, 1999 are as follows:

Year Ending December 31

--------------------------------------------------------------------------------

2000                                                 $ 5,700,752
2001                                                   4,961,261
2002                                                   3,457,704
2003                                                   2,495,318
2004                                                   2,052,491
2005 and after                                        12,375,609
--------------------------------------------------------------------------------
Total future minimum lease payments                  $31,043,135


     Total rent expense on all operating  leases was $6,610,000,  $5,920,000 and
$4,842,000 for the years ended December 31, 1999, 1998 and 1997, respectively.

15. Stock-Based Compensation

     The Company has employee and non-employee  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 one to five years.

     At December  31,  1999,  shares of the  Company's  authorized  but unissued
common stock were reserved for issuance as follows:


                                                                     Shares
--------------------------------------------------------------------------------

Employee stock option plans                                         219,287
Non-employee director plan                                           65,503
--------------------------------------------------------------------------------
Total                                                               284,790


     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 1999,  1998 and 1997 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 below:

<TABLE>
<CAPTION>
Pro Forma                             1999                1998                  1997
-------------------------------------------------------------------------------------------
Net Income (Loss)
<S>                                 <C>                 <C>                  <C>
    As Reported                     $ (3,706,691)       $ (3,742,759)        $ 2,236,081
    Proforma                        $ (6,746,353)       $ (5,427,339)        $   920,827

Diluted Income (Loss) per share
    As Reported                     $      (0.32)       $      (0.33)        $      0.19
    Proforma                        $      (0.57)       $      (0.48)        $      0.08
-------------------------------------------------------------------------------------------
Fair Value Per Share                $      12.84        $      15.70         $     11.56

</TABLE>
                                       54
                                     -346-
<PAGE>

     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:

                                           1999           1998            1997
--------------------------------------------------------------------------------

Risk-free interest rate                    6.5 %          5.5 %           5.5 %
Dividend yield                             0.0 %          0.0 %           0.0 %
Expected volatility                       52.0 %         53.0 %          51.0 %
Expected life (years)                     5.36           4.95            5.60





The following  table summarizes the stock options as of December 31, 1999, 1998,
1997:
<TABLE>
<CAPTION>
                                              1999                               1998                               1997
                                     --------------------------       --------------------------        ----------------------------
                                               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    1,384,377   $      14.53         1,546,432   $     10.55           1,520,810    $    9.04
Granted                               633,135   $      23.58           253,458   $     29.87             207,350    $   21.60
Exercised                            (393,927)  $      12.94          (368,992)  $      7.25            (119,644)   $    8.33
Cancelled                            (118,696)  $      28.73           (46,521)  $     22.59             (62,084)   $   14.23
                                    ------------------------------------------------------------------------------------------------
Outstanding at end of year          1,504,889   $      17.67         1,384,377   $     14.57           1,546,432    $   10.55
                                    ------------------------------------------------------------------------------------------------
Exercisable at end of year            763,755   $      11.52           895,230   $      9.48             968,834    $    7.25

The following table summarizes the stock options  outstanding as of December 31,
1999:
</TABLE>


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                            Options Outstanding                            Options Exercisable
                          -----------------------------------------------------     --------------------------------
                             Shares       Weighted-Average     Weighted-Average       Shares        Weighted-Average
                          Outstanding      Remaining Life       Exercise Price      Exercisable      Exercise Price
--------------------------------------------------------------------------------------------------------------------
<S>     <C>                 <C>              <C>                 <C>                  <C>               <C>
$ 0.00 -$15.50              588,278          3.8 years           $    7.66            588,278           $   7.66
$15.67 -$27.50              588,855          8.3 years           $   21.33            159,456           $  22.88
$28.00 -$41.75              327,756          9.0 years           $   29.07             16,021           $  39.91
--------------------------------------------------------------------------------------------------------------------
$ 0.00 -$41.75            1,504,889          6.7 years           $   17.67            763,755           $  11.52
</TABLE>


16.      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 552,018 and
878,837 for 1999 and 1998,  respectively,  and were not  included  in  computing
diluted earnings per share because their effects were antidilutive.

<TABLE>
<CAPTION>
                                               1999                                1998                           1997
                               -----------------------------------  ---------------------------------  -----------------------------
                                                         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)            $(3,706,691)  11,734,190  $(0.32)    $(3,742,759) 11,358,934  $(0.33)  $2,236,081  11,100,684   $0.20
Effect of Dilutive Securities
  Stock Options and Warrants          -            -          -            -           -          -         -        981,872       -
------------------------------------------------------------------------------------------------------------------------------------
Diluted EPS                    $(3,706,691)  11,734,190  $(0.32)    $(3,742,759) 11,358,934  $(0.33)  $2,236,081  12,082,556   $0.19

</TABLE>

                                       55
                                     -347-
<PAGE>

17.      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>
                                    1999                1998                 1997
----------------------------------------------------------------------------------------
External revenues

<S>                            <C>                   <C>                  <C>
   DTN Ag Services             $ 85,050,566          $ 88,313,568         $ 87,574,829
   DTN Weather Services          38,509,656            25,760,861           10,665,701
   DTN Financial Services        19,364,093            13,350,361           10,316,370
   DTN Energy Services           18,741,278            16,108,597           14,344,714
   Other Services                 4,843,009             5,452,959            3,472,738
----------------------------------------------------------------------------------------
Total                          $166,508,602          $148,986,346         $126,374,352
----------------------------------------------------------------------------------------
Inter-segment revenues
   DTN Ag Services             $       -             $       -            $       -
   DTN Weather Services           2,361,003             1,038,231                 -
   DTN Financial Services            41,603                24,611                 -
   DTN Energy Services                 -                     -                    -
   Other Services                      -                     -                    -
----------------------------------------------------------------------------------------
                                  2,402,606             1,062,842                 -
   Inter-segment Elimination     (2,402,606)           (1,062,842)                -
----------------------------------------------------------------------------------------
Total                          $       -             $       -            $       -
----------------------------------------------------------------------------------------
Operating Income
   DTN Ag Services             $ 13,869,768          $ 16,797,670         $ 18,773,860
   DTN Weather Services          (4,756,251)           (2,649,423)          (2,174,723)
   DTN Financial Services        (5,237,561)           (3,559,403)          (2,701,058)
   DTN Energy Services            7,006,227             6,282,467            5,720,451
   Other Services                (6,725,430)1         (12,708,135)2         (7,235,127)
----------------------------------------------------------------------------------------
Total                          $  4,156,753          $  4,163,176         $ 12,383,403
----------------------------------------------------------------------------------------
Depreciation and Amortization
   DTN Ag Services             $ 32,475,285          $ 33,176,299         $ 31,989,604
   DTN Weather Services          10,313,620             6,839,166            3,575,805
   DTN Financial Services         6,639,959             4,226,327            3,196,835
   DTN Energy Services            1,509,260             2,003,109            2,124,352
   Other Services                 2,789,109             2,605,721            1,428,709
----------------------------------------------------------------------------------------
Total                          $ 53,727,233          $ 48,850,622         $ 42,315,305
----------------------------------------------------------------------------------------
Interest Expense
   DTN Ag Services             $  3,369,757          $  5,813,030         $  7,554,514
   DTN Weather Services           3,550,777             1,812,353              694,197
   DTN Financial Services         1,108,229               454,981              442,381
   DTN Energy Services              165,098               158,535              184,024
   Other Services                   626,615               210,769              223,115
----------------------------------------------------------------------------------------
Total                          $  8,820,476          $  8,449,668         $  9,098,231
----------------------------------------------------------------------------------------
Operating Cash Flow (EBITDA)
   DTN Ag Services             $ 46,345,053          $ 49,973,969         $ 50,763,464
   DTN Weather Services           5,557,369             4,189,743            1,401,082
   DTN Financial Services         1,402,398               666,924              495,777
   DTN Energy Services            8,515,487             8,285,576            7,844,803
   Other Services                (3,936,321)1         (10,102,414)2         (5,806,418)
----------------------------------------------------------------------------------------
Total                          $ 57,883,986          $ 53,013,798         $ 54,698,708
----------------------------------------------------------------------------------------

</TABLE>
[FN]

1    Includes $.7 million for non-recurring  severance costs and $4.1 million on
     loss of sale of radar operations.
2    Includes  $5.8 million for  non-recurring  satellite  costs  related to the
     Galaxy IV outage.

</FN>

18.      Subsequent Event

     On March 3, 2000,  the Company  entered  into a definitive  agreement  with
Veronis,  Suhler &  Associates  Communications  Partners  III,  L.P.  (VS&A III)
whereby VS&A III will make a tender offer to all of the  Company's  shareholders
at a price of $29.00 per share.  The tender offer is subject to the tender of at
least 90% of the outstanding shares as of March 1, 2000. If less than 90% of the
outstanding  shares are  tendered,  the Company  will merge with an affiliate of
VS&A III at the same per share price.  Closing of the  transaction is subject to
government and  shareholder  approvals and other  customary  conditions,  and is
expected to occur during the second quarter of 2000.

                                       56
                                     -348-
<PAGE>

Quarterly Financial Data (Unaudited)
Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Quarter                                         First            Second            Third             Fourth              Total
------------------------------------------------------------------------------------------------------------------------------------
Fiscal 1999
<S>                                         <C>               <C>               <C>               <C>               <C>
Revenues                                    $ 41,684,017      $ 41,152,494      $ 41,509,078      $ 42,163,013      $ 166,508,602
Operating Income (Loss)                     $  1,277,603 4    $  2,281,912      $  2,212,134      $ (1,614,896) 5   $   4,156,753
Net Loss                                    $   (769,458)4    $   (202,532)     $   (193,139)     $ (2,541,562) 6   $  (3,706,691)

Basic Loss Per Share                        $       (.07)     $       (.02)     $       (.02)     $      (0.21)     $       (0.32)
Diluted Loss Per Share                      $       (.07)     $       (.02)     $       (.02)     $      (0.21)     $       (0.32)

Operating Cash Flow1                        $ 14,577,356 4    $ 15,722,212      $ 15,672,486      $ 11,911,932 5    $  57,883,986
Free Cash Flow2                             $  6,156,145 4    $  7,982,155      $  5,960,391      $  5,764,980 5    $  25,863,671
Total Subscribers                                163,900           165,100           165,400           166,900            166,900
------------------------------------------------------------------------------------------------------------------------------------
Fiscal 1998
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)     $      9,987      $   (686,730)     $  (2,665,879)
Net Income (Loss)                           $     10,526 7    $ (3,076,542) 8   $      9,987      $   (686,730)     $  (3,742,759)

Basic Income (Loss) Per Share3
  Income (Loss) before extraordinary item   $       0.10      $      (0.27)     $       -    9    $      (0.06)     $       (0.24)
  Net Income (Loss)                         $       -    9    $      (0.27)     $       -    9    $      (0.06)     $       (0.33)
Diluted Income (Loss) Per Share3
  Income (Loss) before extraordinary item   $       0.10      $      (0.27)     $       -    9    $      (0.06)     $       (0.24)
  Net Income (Loss)                         $       -    9    $      (0.27)     $       -    9    $      (0.06)     $       (0.33)

Operating Cash Flow1                        $ 14,784,727      $ 8,581,3387      $ 15,028,263      $ 14,619,470      $  53,013,798
Free Cash Flow2                             $  6,686,972      $ (2,755,689)     $  4,731,786      $  6,755,842      $  15,418,911
Total Subscribers                                160,400           160,100           158,400           159,300            159,300

</TABLE>

[FN]

1    Operating income before depreciation and amortization expense.
2    Operating cash flow less property and equipment  capital  expenditures  and
     interest.
3    Net  income  per share for each of the four  quarters  may not agree to net
     income per share for the year due to rounding.
4    Includes $735,828 on a pre-tax basis and $470,930 on an after tax basis for
     non-recurring severance costs.
5    Includes  $4,121,319  on  a  pre-tax  basis  for  loss  on  Sale  of  Radar
     Operations.
6    Includes  $4,121,319  and $211,976 on a pre-tax  basis and  $2,637,644  and
     $135,665  on an after  tax  basis  for loss on sale of radar  business  and
     equity in loss of affiliate.
7    Includes  an  Extraordinary  item,  net of tax  $1,076,880  for  the  early
     extinguishment of $15,000,000 11.25% Senior Subordinated Notes due December
     2004.
8    Includes $5,800,000 on a pre-tax basis and $3,716,000 on an after tax basis
     for non-recurring costs related to Galaxy IV outage.
9    Less than one cent per share.

</FN>


Trading Information
--------------------------------------------------------------------------------
                              Market Price 1999            Market Price 1998
                           -----------------------      -----------------------
Quarter Ended              High     Low       Last      High     Low      Last

  March 31                33 1/4   16 1/8   23 7/8     38 1/2   26 1/4   34 1/2
  June 30                 28 3/8   20       28 1/8     46       34 3/4   40
  September 30            28 5/16  23 9/16  24 15/16   40 1/2   24       30
  December 31             26 3/4   16 1/2   17 1/4     35       22 1/4   28 7/8

     The  Company's  common  stock  trades on the Nasdaq  Stock Market under the
symbol: DTLN. On December 31, 1999, there were approximately 500 stockholders of
record,  not including  beneficial  holders whose shares are held in names other
than their own.



                                       57
                                     -349-
<PAGE>

Board of Directors

Peter H. Kamin                                     Joseph F. Mazzella
President, Non-Executive Chairman of the Board     Partner
Peak Management, Inc.                              Law Firm of Lane Altman
                                                     & Owens LLC
                                                   Director
Jay H. Golding                                     Alliant Techsystem, Inc.
Chairman and Chief Executive Officer               Insurance Auto Auctions, Inc.
American International Partners, LLC
Director                                           Greg T. Sloma
Bogan Aerotech                                     President
                                                   Chief Operating Officer
Anthony S. Jacobs                                  Data Transmission Network
Private Investor                                   Corp.

David K. Karnes                                    Roger W. Wallace
President                                          Senior Vice President
Chief Executive Officer                            President, Ag Services Div.
The Fairmont Group Inc.                            Data Transmission Network
Of Counsel, Kutak Rock law firm                    Corp.




Corporate Officers

Greg T. Sloma                                   William R. Davison
President                                       Vice President
Chief Operating Officer                         President, Ag Services

Brian L. Larson                                 Scott A. Fleck
Senior Vice President                           Vice President
Chief Financial Officer and                     Director of Engineering
Secretary
                                                Daniel A. Petersen
James J. Marquiss                               Corporate Controller and
Senior Vice President                           Treasurer
Director of Business Research and
Product Development                             Joseph A. Urzendowski
                                                Vice President, Operations
Roger W. Wallace
Senior Vice President
President, Ag Services Division

Charles R. Wood
Senior Vice President
President, Financial Services Division
                                       58
                                     -350-
<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 is scheduled for Wednesday,  April 26, 2000.

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.

                                       59
                                     -351-