Data Transmission Network Corporation  (DTN(R)),  an electronic  information and
communication  services company headquartered in Omaha, Nebraska, is a leader in
the electronic  satellite  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 our
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 communication  network.
DTN distributes information via small dish Ku-band satellite, FM radio side-band
channels,  TV  cable  (VBI-vertical  blanking  interval),  FAX,  e-mail  and the
Internet.  Most subscribers 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.

DTN's  services reach 158,800  subscribers  in the U.S. and Canada.  The Company
provides  services for the  agricultural,  automotive,  energy,  farm implement,
financial,  mortgage,  produce, golf, turf management,  aviation,  construction,
emergency management and other weather-related  industries. The services include
DTN  AgDaily(R)  and DTN  FarmDayta(R),  targeted  for  agribusinesses;  DTN Pro
SeriesSM  and  DTN  FarmDayta  Elite(R),   advanced   information  services  for
agribusinesses;  DTNstant(R),  for  customers  needing a real-time  agricultural
ticker service;  DTNironSM for the farm implement  dealer;  DTN PROduce for the
produce industry; DTN Weather Center, for the golf, turf management,  aviation,
marine, forestry, travel and construction industries;  DTN Real^Time,  DTN Wall
Street and DTN SpectrumSM for the financial services  industry;  DTN FirstRate
for  the  mortgage  industry;   DTNergy  for  the  petroleum  and  natural  gas
industries;  DTNautoSM  for the auto  auctions  and auto  dealers;  DTN  Missing
Children  Information Center and joint ventures for the electrical equipment and
trucking 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-service
communication technology system delivering the most valuable of all commodities,
timely information (NEWS...NOT HISTORY).

Our Mission  continues as we strive to provide the best information and analysis
available, as quickly as possible, at an affordable cost to our customers. Among
many things critical to successfully  meeting those commitments,  the three most
important are customer service, customer service, and customer service!

As fellow  shareholders  of the Company,  DTN employees'  number one goal is the
long-term enhancement of the value of our company.

                                       1

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<PAGE>

<TABLE>
<CAPTION>


FINANCIAL HIGHLIGHTS
---------------------------------------------------------------------------------------
                                                                                Percent
                                                    1997             1996       Change
                                                ------------     -------------  -------
<S>                                             <C>              <C>               <C>
For the Year
        Revenues                                $126,374,352     $ 98,383,713      28 %
        Operating cash flow1                      54,698,708       40,377,428      35 %
        Income (loss) before income taxes          3,407,081       (1,404,306)      -
        Net income (loss)                          2,236,081         (958,306)      -
        Diluted income (loss) per share         $        .19     $       (.09)      -
At Year End
        Total assets                            $162,430,898     $ 77,729,762      (9)%
        Long-term debt and subordinated notes     72,891,370       97,747,823     (25)%
        Stockholders' equity                      32,196,173       28,290,289      14 %
        Book value per share                    $       2.89     $       2.57      12 %
Key Indicators
        Total subscribers at year-end                158,800          145,900       9 %
        Subscriber retention rate                     88.1 %           89.3 %      (1)%
        Net development costs2                  $  5,199,605     $  5,344,261      (3)%
        Operating cash flow from core services3 $ 59,701,141     $ 45,512,581      31 %
As a Percent of Revenue
        Operating cash flow1                          43.3 %           41.0 %
        Operating cash flow from core services3       48.5 %           47.4 %
        Depreciation and amortization                 33.5 %           34.0 %
        Interest                                       7.2 %            8.6 %
        Net income (loss) before income taxes          2.7 %           (1.4)%
<FN>

1 Operating income before depreciation and amortization expense.

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

3 Core services are services no longer in the initial development process. Oper-
  ating cash flow from core services as a percent of revenue is calculated on
  core services revenue.

</FN>
</TABLE>

                                       2

                                    - 262 -
<PAGE>
<TABLE>
<CAPTION>

                              FIVE YEARS IN REVIEW
--------------------------------------------------------------------------------
GRAPHS IN TABULAR FORM:
<S>                       <C>       <C>       <C>       <C>       <C>
                          1993      1994      1995      1996      1997
                          ----      ----      ----      ----      ----

  Revenues
($ millions)              36.0      46.1      62.3      98.4     126.4


                          1993      1994      1995      1996      1997
                          ----      ----      ----      ----      ----
Operating Cash Flow
    ($ millions)          12.9      15.8      23.2      40.4      54.7



                          1993      1994      1995      1996      1997
                          ----      ----      ----      ----      ----
Operating Cash Flow
(percent of revenue)       36%       34%       37%       41%      43.3%


                          1993      1994      1995      1996      1997
                          ----      ----      ----      ----      ----
Net Development Costs
    ($ millions)           2.7       4.3       3.7       5.3       5.2


                          1993      1994      1995      1996      1997
                          ----      ----      ----      ----      ----
Subscribers At Year End
      (thousands)         74.1      82.0      95.9      145.9     158.8


                          1993      1994      1995      1996      1997
                          ----      ----      ----      ----      ----
Subscriber Retention Rate
       (percent)          88.8      89.8      91.0      89.3      88.1


                          1993      1994      1995      1996      1997
                          ----      ----      ----      ----      ----
Annual Revenue
Per Subscriber
($ based on average
 subscribers)             507       591       700       775       830



                          1993      1994      1995      1996      1997
                          ----      ----      ----      ----      ----
Annual Operating Cash
Flow Per Subscriber
($ based on average
 subscribers)             123       202       260       318       359

</TABLE>

                                       3

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<PAGE>


LETTER TO SHAREHOLDERS
--------------------------------------------------------------------------------

1997 was a very good year for DTN.  Your company  produced  record  revenues and
operating cash flow (operating  income before  depreciation  and  amortization),
known  by  analysts  as  EBITDA.  The  employees  at DTN  were  kept  busy  with
integration  of the  Broadcast  Partners  acquisition,  a few  additional  small
acquisitions,  focusing on maintaining operating  efficiencies,  introduction of
new services, and the support and growth of existing services.

The following 1997 operating results are our leading economic indicators and are
what we use to quantify DTN's fiscal well being.

o  Total  subscribers increased 9% to 158,800, up from 145,900 in 1996.

o  Revenues grew 28% to $126,374,352 compared to $98,383,713 in 1996.

o  Operating cash flow increased 35% to $54,698,708, up from $40,377,428 in
   1996.

o  Net  Income was  $2,236,081  or $.19 per share in 1997  compared  to a loss
   of $958,306 or $(.09) per share in 1996.

o  Operating  cash flow as a percentage of revenue  increased  to 43%,  up from
   41% in 1996.

o  Subscription  revenue  per subscriber per month for all  subscribers  was
   $55.10 in 1997 compared to $49.24 in  1996.

o  Subscription   revenue  per  subscriber per month  for  all  new subscription
   sales was an all time high of $67.84 for 1997.

o  Operating revenue per subscriber per month consisting of subscriptions,
   additional services, communications and advertising increased to $66.29 for
   1997, up from $60.92 in 1996.

During 1997, the Broadcast Partners  acquisition recorded $25,257,700 of revenue
compared  to  $15,446,800  in  1996.  In  addition,   this  operation   recorded
$15,687,800  of operating  cash flow  compared to  $9,838,200  in 1996.  This is
primarily the result of 1996 including  approximately  eight months of operating
results  due to the  closing  on May 3, 1996,  vs.  twelve  months of  operating
results for 1997.  During 1997, we made an effort to educate our shareholders on
why our percentage growth in revenue and cash flow is significantly  higher than
our  percentage  growth in  subscribers.  Substantively  our growth in operating
revenue per  subscriber per month from $60.92 in 1996 to $66.29 in 1997 or 9% is
a key ingredient in these percentage growth  differences.  We expect revenue and
operating cash flow growth to continue to outdistance  our percentage  growth in
subscribers.  We continue to review potential  acquisitions  that make sense for
DTN and here is a summary of those completed in 1997.

o In January,  the Company acquired 500 real-time commodities  subscribers from
  Market Quoters and Northern Data for  $750,000  cash.

o In March,  the  Company  acquired  2,400  real-time commodities subscribers
  from Market Communications Group LLC, a joint venture of Reuters  America,
  Inc.  and Farmland  Industries,  Inc. for $3.6  million  cash.  Included,  DTN
  acquired preferred rights to distribute Reuters real-time news and information
  to the commodities, energy and metals markets.

o In July,  the Company  acquired The Network,  Inc., a cotton  trading  network
  for $1,000,000  payable over five years. This enables DTN to generate revenues
  from a transactional  service which facilitates in the trading of cotton.

o In October,  the Company  acquired  approximately  700  subscribers  on the
  ACRES agriculture system from the Arkansas Farm Bureau. DTN agreed to pay $600
  per  converted  subscriber  plus a $6.00 per month royalty to Arkansas for the
  lesser of the life of the subscriber or ten years.

                                       4

                                    - 264 -
<PAGE>

In addition to growth from acquisitions,  we are focused on growing the business
with the introduction of new services.  The  following is a quick review of the
services  introduced in 1997.

o DTN Travel Center -- A weather, news, markets and sports information service
  which includes special weather  features on road condition  forecasts and road
  closed  notices.  Our initial target market for this service is for display in
  the lobbies of the  approximately  20,000 U.S. hotels and motels with 50 rooms
  or more.

o DTN Marine -- Primarily a weather  service with  specialty  weather  features
  which include coastal sea condition forecasts, marine buoy data for wind, tide
  and water  temperature  and sea surface  temperature  maps. Our initial target
  market is marinas and charter boats which total approximately 15,000.

o DTN  Forestry Center -- Primarily a weather service which we developed with
  help from the U.S.  Forestry Service.  Specialty  weather features  associated
  with this  product  include a relative  fire risk map,  upper air analysis and
  humidity and wind speed maps. Our initial  target market is the  approximately
  5,000 District Forest  Management  offices located in the lower 48 U.S. states
  and Canada.

o DTN Real^Time -- DTN Real^Time is our first  venture into  providing a service
  which  delivers  instant  securities  quotes (vs.  15 minute  delayed) on over
  175,000 different stocks, options and commodities.  DTN Real^Time delivers the
  information via new generation of DTN  proprietary  hardware into a customer's
  PC where it is captured and displayed through use of custom software.

Regarding DTN Real^Time,  I opened in my 2nd  Quarter,  1997 letter to  share-
holders  that "we  believe the  combination  of our  product  quality,  our very
competitive  pricing strategies and our distribution  capabilities will allow us
to succeed and maybe even excel in this marketplace." I still believe this to be
the case.  From May of 1997 thru December of 1997,  DTN  Real^Time  subscription
sales have grown steadily from 30 per month to approximately 300 per month.

Applying a western cliche for 1998, I would say that if "the good Lords willin'
and the creek  don't  rise",  1998 should be replete  with some of our  previous
successes.

As always, many thanks to our customers, shareholders,  financiers and suppliers
for their  support.  And a  special  thanks  to all of our  employees  and their
families for a successful 1997.

                              Very sincerely yours,


                              Roger Brodersen
                              Chairman and CEO


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<PAGE>

INFORMATION TECHNOLOGY UPDATE
--------------------------------------------------------------------------------

In last quarter's  Report to  Shareholders,  I provided a summary covering DTN's
real-world  experience  with the  Internet  at the  product  level.  While those
examples and quotations  could be updated,  the general analysis and conclusions
regarding the Internet remain  fundamentally  sound.  In this update,  I will be
providing you with more generalized  information and comments  pertaining to the
broader nature of information technology, the information marketplace, and DTN's
position  within  that  marketplace.  Many of my  comments  are in  response  to
questions or concerns communicated from our shareholders.  (New shareholders may
wish to look at the Technology Updates in DTN's 1996 Annual Report and the first
and third quarters' 1997 Report to Shareholders.  Copies of these updates may be
requested from Linda Grunberg--DTN Public Relations Director at (402)390-2328 or
seen at DTN's  corporate  web site,  www.dtn.com,  under  Company  Information.)


Updates  Revisited

While the Internet has become a very useful and  versatile  tool,  it is not the
only nor always the best tool for every situation.  With its strengths come some
limitations and weaknesses. I do not contend that the Internet is broken (except
when parts of it occasionally  are), nor unusable  (except once in awhile),  nor
anything but a revolution in progress.  It is  undoubtedly a revolution  that is
changing the face of information  technology  and,  indeed,  the world.  This is
taking place somewhat more slowly than the hype would lead you to believe,  with
the change deepening and expanding over generations.  Increasingly, the Internet
is finding its niches based, not on hype, but on its inherent strengths. So far,
these  strengths  focus on e-mail,  entertainment,  and  research,  with digital
telephony  starting  to  come  to  the  fore--none  of  which  are  particularly
competitive with DTN's orientation.

          NOTE:  While my observation  is subjective,  of late there
          seems to be significantly  more humility and somewhat less
          hubris in Internet businesses at  large.  That  in  itself
          is an indication of the maturing of this  information tech-
          nology and the companies that are involved in it.

Business Models...or,  When Technology is not Enough!

Over the course of the last year, many new and exciting  capabilities  have come
to the Internet.  But, in addition, a dawning sense of reality is intruding into
this  sometimes-tangled  web.  Most  interesting  to  me,  both  personally  and
professionally,  is that so much of this  reality is due to  limitations  in the
various  business  models  for  providing   Internet   services  as  opposed  to
limitations of any specific  technology.  Achieving a consistent and predictable
level of  revenue,  let  alone  profit,  proves to be more of a  challenge  than
creating  the  specific   technology   needed.  The  dazzle  and  drama  of  new
technological advances no longer exist only on a utopian stage--where content is
free,  bandwidth is free,  everything always works,  there is no human error, no
hardware failures,  no need for customer service,  and the world beats a path to
your door to give you money.  (I'm reminded of the fine line between  vision and
hallucination...)


                                       6

                                    - 266 -
<PAGE>

Some interesting  examples  showing that economic reality is setting in include:

USA TODAY runs a cover story,  "More sites take first steps toward charging
users." Some of the more pertinent  quotes include:

   "People are realizing that the experimentation is over--'98 is about
   making money."
        --Jim Kinsella, MSNBC's general manager.

   "But I've spent the last year and a half  looking  at the  economics,
   and we're nowhere even close. I don't believe that as the Web matures
   for advertising that there will be enough revenue to support us."
       --Roger Weed,  Publisher  of  SLATE  (Microsoft's  news  and
         politics oriented webzine).

   "The  lesson  everyone  will have to learn is that no one model  will
   work."
       --Rich Wiggens, WebReference.com (an online technical magazine).

INVESTOR'S BUSINESS DAILY (10/10/97) ran a front-page article, "WAS THE INTERNET
OVERHYPED?"  According to this article:

   About 60% of U.S.  households  still don't have a computer  and about
   85% don't have a modem.

   "...companies,  many of them  sucked  in by the hype,  have  invested
   heavily in the Internet. Last year, they sank nearly $35 billion into
   the Internet,  including  infrastructure,  World Wide Web sites,  and
   data  protection."   --Zona  Research.   "So  far,  returns  on  that
   investment have been low--a lot of glitter, but not much gold."

ZDNet, an online Web site that closely tracks  technology  and the Internet in
general,  provides several  interesting views:

   "We've   entered   a   period   of   Internet    disappointment   and
   dissatisfaction.  For instance,  a survey by the Deloitte  Consulting
   group claims North American  corporate  executives are  disillusioned
   with the Internet.  Some 69% of the  respondents  said Internet costs
   are a  `significant  concern,'  way up from 16% in 1995. As a result,
   the number  planning to increase  Internet  spending  dropped to 31%,
   less than half the  previous  figure of 65%."
       --Jesse  Berst  (ZDNet AnchorDesk Editorial Director) 01/19/98.

   "The Net traffic jam is for real."
       --Randy Barrett (Inter@ctive Week Online.) 12/24/97.

As an  entertaining  side  bar,  I heard an  industry  speaker  discuss a survey
directed towards new (less than 6 months online) Internet users.  Only seven out
of ninety  said they knew what a  "browser"  was.  Two of the seven  said it was
themselves. They were right!

Though I could add  technology-oriented  headlines to the above  sampling,  they
would serve only to cloud my point. Instead, the quotes above address day-to-day
issues that are far less sexy than is  technology.  They  concern  such  mundane
issues  as  day-to-day   operations,   fundamental   economics,   revenues,  and
returns--the basics of doing business.  The challenge lies in making it all work
reliably while making money doing it.

Broadcast Data...or, Everything Old is New Again

While  DTN has  embraced  the  Internet  where  we think  it is  applicable  and
profitable, we remain a company that is focused on exploiting a full spectrum of
data broadcasting technology. Pre-Internet, DTN found that broadcast data, using
one technology or another, was the only truly cost-effective and efficient means
of widespread data distribution.  Today, technology advances, like the Internet,
have  provided  more  choices  for data  delivery,  but with each  choice  comes
limitations.   DTN  uses  systems   that  send  large   volumes  of  data  in  a
point-to-multipoint,  simultaneously-delivered, efficient, reliable, convenient,
and  inexpensive   manner--i.e.,   broadcast  data.  By  its  nature,  different
permutations  of the Internet can exhibit some of broadcast  data's  attributes,
but not all of them together.  Until the promised land is indeed reached,  where
bandwidth  (throughput  capacity)  is  unlimited  and  free and  reliable,  data
broadcast will have a fairly secure niche.


                                       7

                                    - 267 -
<PAGE>

While broadcast data's advantages are generally overlooked in the Internet stam-
pede,  they are again  being  recognized.  An article by J.  William  Gurley,  a
regular commentator on the Internet, makes this point [(ABOVE THE CROWD on CNET,
a high profile web site at  www.news.com  on Monday,  December 22, 1997),  later
edited    down   into   an    article    in    FORTUNE    magazine    (01/12/98)
(pathfinder.com/fortune/digitalwatch/0112tec2.html)].  With all due respect,  he
comes  somewhat late to this  realization  and aims his  conclusions  toward the
future,  being  perhaps  unaware  that DTN built its business in this arena many
years ago. Highlights include:

   "What would you think if I told you that the Internet would soon have
   a competitor for broad-based  data  distribution?  Could something as
   mind-numbingly  huge as the Internet see  competition in such a short
   time  frame  after its own burst of  stardom?...The  technology  that
   could  cause  such  profound  changes  goes  by  the  name  of  `data
   broadcasting'  and although  it's been around for years,  its time to
   shine has finally come."

   "So what is data  broadcasting?  Just what it sounds  like:  a system
   that  sends  huge  amounts  of  data  to  a  huge  number  of  people
   simultaneously.  This information could be anything that might appeal
   to multiple  users...stock  prices,  say, or sports scores. But isn't
   the Internet  supposed to do all this?  Well,  no. The Internet  does
   very well with one-to-one  interactive  applications  like e-mail; it
   does poorly in situations  where it has to broadcast  information  to
   many people at once.  Applications  like audio and video  "streaming"
   place severe  strain on the  Internet.  This strain is  compounded in
   cases  where a lot of  people  want to see that same  information  at
   once, in the event of a stock market crash, for example, or any major
   piece of news."

   "The  Internet  was  designed to  facilitate  one-to-one  interactive
   asynchronous  (no time guarantee)  communications.  In the beginning,
   Internet  usage was  primarily  focused  on this  one-to-one  type of
   communication  with  applications  such as  e-mail  or a single  user
   interacting  with a Web page.  Over time, we began to appreciate data
   that might appeal to multiple users simultaneously."

Unrecognized  in this  article  is one of the  primary  strengths  of  broadcast
data--because it is truly  point-to-multipoint,  it is irrelevant how many users
are on it (unlike  the  Internet!).  One need only think back to last  October's
wild  market  gyrations  for a  vivid  example  of what  this  can  mean.  DTN's
subscribers,  unlike Internet users,  kept receiving their data without a hitch.
That more people suddenly and unexpectedly used DTN's information more intensely
and for longer  durations had zero impact on DTN's  ability to reliably  perform
under  extreme  market  conditions.   The  Internet,  on  the  other  hand,  was
effectively  choked,  either  because  the  Information  Provider's  site proved
insufficient  to handle the  increased  number of users or because the  Internet
Backbone  could not manage the  increase in the  cumulative  load. A system most
likely to fail or be otherwise  unreliable at the most critical  times,  failing
specifically  because these are critical moments, is not what a serious business
model is built upon.

Also somewhat  unrecognized  is the nature of information  content.  Much of the
lure of the Internet is the sheer volume of information.  Nearly any information
you might ever want is in  there--somewhere.  (This led to the descriptive term,
"Data Smog".) This superfluity  becomes somewhat less thrilling the first time a
search is conducted that comes back with 80,000 sites to visit.  As the Internet
expands,  it becomes ever more complex and confusing  until even the  "insiders"
can't sort it out,  let alone those in the broader  consumer  markets.  However,
there is a growing awareness of the difference  between abundance and relevance.
People are  impressed by the former,  but will pay for the latter.  One of DTN's
primary advantages lies in the nature of our information  content.  It is highly
focused and kept relevant to the targeted market. It is consistently tailored to
be  appropriate  to the  user's  needs.  Our  content  is  vetted  by a  trusted
source--DTN.  Being well organized,  content is easily accessed through a simple
and consistent interface. This enhances the likelihood of frequent use, and thus
value.

DTN has used  broadcast  data for the last fourteen  years.  To  paraphrase  the
country  western  song--DTN was PUSH before PUSH was cool. As new  variations of
broadcast-data-oriented  technology become economical and reliable,  DTN has the
years of  experience  to best take  advantage of them.  As many  companies  have
discovered, it's not as easy as it looks.

                                       8

                                    - 268 -
<PAGE>

The Information Appliance...or,  Can't It Just  Be  There  When I Need  It?

A new holy grail is dreamed of in the information marketplace. It is referred to
as the  "Information  Appliance".  This,  once found, is dreamed of as the entry
vehicle into the non-computer-oriented  mass market. This construct is generally
agreed to have the following attributes:

   1) Targeted  purpose:  It is meant to do what it does well and with complete
      reliability;  therefore,  it is not built to do everything under the sun.
      Quality counts.

   2) Connectionless:  It is on and available at all times. It does not require
      that a special  connection be made each day or for each use.

   3) Easy to use: It is simple, convenient, and intuitive. Virtually anyone
      should be able to walk up and use it  without  training.  There is already
      too much intricacy and complexity in people's lives.

   4) Affordable:  This is subjective,  but generally means  that  there is not
      a large front-end load when getting the system or service.

   5) Flexible:  Can be modified to provide different  uses in differing markets
      for different user needs.

   6)  Transparency:  The user is unaware of the internals  of the  computing;
       i.e., by analogy,  one need not  understand  the  workings of the engine,
       transmission, drive train, etc. in order to get in and drive a car.

While these are considered "new" concepts to much of the technology marketplace,
DTN has a fourteen-year  history of successfully  implementing them. Focusing on
niche  markets with real profit  potential has arguably kept DTN somewhat out of
the limelight.  Meanwhile,  we've long been drawing far ahead of our competition
in many ways.  DTN has grown to dominate  several niche  markets,  often against
major  recognized  name-brand  competition.  That we strive to  incorporate  the
attributes  listed  above  helps  to  explain  why.  DTN  uses  technology  that
works--including, when appropriate, the Internet.

Building Lasting Value...or,  Feeding the Rat!

Many  of us at  DTN  have  been  seeing  various  Web-oriented  sites  that  are
technologically impressive.  However, they often remind us of a battle of "bells
& whistles"  representing software and site without a real business.  One of the
problems  with  software,  even  very  good  software,  is  that,  if you find a
successful niche, you will be copied or surpassed. In most instances, within the
world of the Internet,  the latest  technological  advance provides little or no
long-term advantage or franchise.  Legion are the companies that are on this rat
race of a developmental treadmill.  Generally, without enough reliably-recurring
revenue to feed the rat, even venture capital runs out some time.

In short, the technology wars continue. With so many market niches to be served,
it is unlikely that there will ever be a single winner.  Different tools are the
right tools for differing needs and different niches. Because of this, while the
Internet  is a clear  winner  in many  sectors,  so are DTN's  basic  technology
choices.  Technology, while oftentimes flashy and captivating our interest, does
not alone hold the key to long-term  success.  Instead,  the full  spectrum of a
coherent market-proven business model, well-implemented and flexibly maintained,
does. We at DTN strive to overlook no tool or  technology  that will continue to
support our successful  business model and enhance the lasting value represented
by our company. See us at www.dtn.com and www.dayta.com.

                                   Sincerely,


                                   Robert S. Herman
                                   Senior VP, Research & Product Development

                                       9

                                    - 269 -
<PAGE>

BUSINESS REVIEW
--------------------------------------------------------------------------------

Data Transmission  Network  Corporation (DTN) began operations in April 1984 and
continues to provide comprehensive, time-sensitive information and communication
services for a variety of industries.  DTN services grew to 158,800  subscribers
throughout the U.S. and Canada in 1997.  The subscriber  growth is attributed to
the high  retention  rate of existing  services  and the addition of several new
services in the agricultural, weather and financial service industries. A review
of these  services and the year's  highlights for each industry 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 of a cost-effective  electronic satellite
delivery  system,  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  invest  time and  money  developing  and
enhancing its information distribution  technology.  These investments allow the
Company to take advantage of many  engineering  and software  advancements in an
exciting and growing industry.

                                       10

                                    - 270 -
<PAGE>

INFORMATION DISTRIBUTION TECHNOLOGY
--------------------------------------------------------------------------------

The Company is committed to
researching  and  developing  distribution  technologies  that cost  effectively
delivers the timely  information  that the  Company's  subscribers  demand.  DTN
supports several information distribution technologies allowing the distribution
(transmission) and receiving (capture, manipulation and display) of information.
These technologies include small dish Ku-band satellite (Ku), FM radio side-band
channels (FM), FAX, Cable TV (by using the vertical blanking interval,  or VBI),
e-mail and the Internet.

The  first  technology  used  by the  Company  was FM  radio  side-band.  The Ku
technology was added in 1989,  providing the ability to reach customers  outside
the  geographic  territory of the FM signal.  FAX, VBI,  e-mail and the Internet
were added to further expand our distribution network.

The Company  provides all of the equipment  necessary for subscribers to receive
their service  based on FM, Ku and VBI. The exception is DTN's new service,  DTN
Real^Time,  where  information  is delivered via a new generation of proprietary
hardware into a personal computer (PC), owned by the subscriber.  This equipment
includes a receiver,  specifically  built for the Company,  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 the subscriber equipment.

Prior to 1992,  the Company  utilized a  "page-based"  receiver  and  monochrome
system. The monochrome system translates the Company's data stream into text and
is capable,  depending on capacity,  of receiving and displaying from 126 to 246
pages of  information.  The  monochrome  receiver is also capable of downloading
information to a printer or computer.

In 1992,  the  Company  introduced  the  Advanced  Communications  Engine  (ACE)
receiver,  a color  graphics  receiver  system,  expanding the unit's ability to
provide  information  and  communication  services.  The ACE  receiver  contains
multiple  processors for capturing,  manipulating and displaying high resolution
color pictures, graphics and text. A separate processor enables the unit to play
audio clips for weather forecasts,  voice advertisements or audio alarms set for
when a futures contract reaches a pre-set price. In addition, this processor may
send and retrieve  information by using an internal  modem  connected to a phone
line.

                                       11

                                    - 271 -
<PAGE>


The ACE  receiver is also  capable of  downloading  information  to a printer or
computer.  This  receiver  is  equipped  with an  internal  hard drive  allowing
processed  information to be stored,  archived (versus frequent  rebroadcasting)
and displayed.  The receiver's built-in control panel,  keyboard or mouse allows
subscribers to conveniently access this information.

One unique aspect of the Company's  information  distribution  technology is the
computer  software  developed  by the  Company  specifically  for use  with  DTN
receivers. This software manages information from a wide array of input sources,
runs  routines,   sets  priorities  and  then  initiates  transmissions  to  the
satellite.  The software can individually address each receiver unit placed with
a  subscriber,  permitting  the Company to transmit  specific  information  to a
specific  subscriber  or group  of  subscribers.  The  Company  leases  FM radio
side-band  channels,  satellite channels and VBI space to deliver information to
the Company's  receivers used by its  subscribers.  All information is up-linked
from Omaha to  satellite  (except  Internet,  FAX and other  telephone  delivery
technology)  and down-linked  from the satellite to the subscriber  based on the
distribution technology.

FM  monochrome  subscribers  receive  their  services  from an FM  antenna  that
delivers the information via side-band signals transmitted from radio stations.

On December 31, 1997, 12,500  subscribers were receiving the Company's  services
via FM distribution technology. The Ku subscribers utilize a 30" satellite dish,
a direct down-link, to receive their information.  On December 31, 1997, 143,300
subscribers   were  receiving  the  Company's   services  via  Ku   distribution
technology.

Early in 1994,  the Company began using a new cable TV  distribution  technology
involving vertical blanking intervals (VBI). The Company contracted with a major
cable TV  superstation  to  transmit  information  along with the  station's  TV
signal. This technology  eliminates the need for an FM antenna or satellite dish
and is available to  businesses  or  residences  that are wired for cable TV and
receive the superstation's service. On December 31, 1997, 2,000 subscribers were
receiving the Company's services by VBI distribution technology.

The Company has approximately  18,000 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.  Currently, there are
over  900  e-mail  sources   delivering  over  1,500  pages  of  information  to
subscribers daily.

Currently,  DTN offers  services via the Internet in the  agriculture,  produce,
weather  and  finance  service  lines and  plans to  continue  researching  this
information  distribution  technology.  On December 31, 1997, 1,000  subscribers
were receiving the Company's services by Internet distribution technology.


                                       12

                                    - 272 -
<PAGE>

SERVICES OFFERED
--------------------------------------------------------------------------------

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

                                1997    1996    1995
                                ----    ----    ----
        <S>                     <C>     <C>     <C>
        Subscriptions           80 %    76 %    74 %
        Optional services        5 %     6 %     6 %
        Communication services   8 %     9 %    11 %
        Advertising              3 %     3 %     3 %
        Service Initiation Fees  4 %     6 %     6 %

</TABLE>

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

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

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.
Communication revenue continued to grow in total dollars and management believes
this area offers opportunities for future growth.

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

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

                                       13

                                    - 273 -
<PAGE>

<TABLE>
<CAPTION>

INDUSTRY SERVED AT A GLANCE
------------------------------------------------------------------------------------------------------------------------------------
INDUSTRY/SERVICE                                                                    TRANSMISSION/RECEIVER                    PRICE
---------------------------------------------------------------------------------   -----------------------------------    ---------
THE AGRICULTURAL INDUSTRY
DTN/AgDaily/DTN FarmDayta

<S>                                                                                 <C>                                    <C>
Providing agricultural market information, delayed commodity futures and options    FM-Side Band/Page Based-Monochrome     $31
quotes, local cash grain and livestock prices, regional and world weather updates   Ku-Band Satellite/Page Based-Mono.     $37
and a variety of daily analysis, commentary and news affecting grain and live-      Ku-Band Satellite/ACE Color System     $46-$54
stock prices.                                                                       Internet/Subscriber PC                 $25

Pro-SeriesSM/DTN FarmDayta Elite Plus
Providing services with advanced information sources for Ag producers, agri-        Ku-Band Satellite/ACE Color System     $67-$84
businesses and commodity traders requiring extensive information to be
customized for their specific needs.

DTNstant
Providing real-time futures and options quotes, headline commodity news and         Ku-Band Satellite/ACE Color System     $180
information.  This service also includes all the information found on DTN AgDaily.

DTNironSM
Providing an equipment locator and inventory management service for the farm        Ku-Band Satellite/ACE Color System     $104
implement dealer.  Designed to allow dealers to work together to locate, buy and
sell used farm equipment with other dealers/subscribers.

DTN Produce
Providing comprehensive weather, pricing, transportation and news information for   Ku-Band Satellite/ACE Color System     $65-$91
the growers, shippers, packers, brokers, retailers and institutions linked to       Internet/Subscriber PC                 $53
the produce industry.

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

THE WEATHER INDUSTRY
DTN Weather Center
Providing a comprehensive weather information system to meet the weather infor-     Ku-Band Satellite/ACE-Color            $76
mation needs of many industries.  Subscribers to DTN Weather Center rely on         Internet/Subscribers' PC               $35
accurate and easily accessible weather information as a critical ingredient in
operating planning and staffing decisions.

DTN Turf ManagerSM
Providing weather information to individuals and businesses involved in turf-       Ku-Band Satellite/ACE Color System     $84
related operations such as golf course, lawn maintenance, landscaping and sod
farms.  The service provides news, weather and chemical information designed for
turf management.

DTN Aviation CenterSM
Providing comprehensive aviation weather specifically for pilots, airports and      Ku-Band Satellite/ACE Color System     $103-$152
Fixed Based Operators (FBO's).  This service supplies airports, pilots and FBO's
with comprehensive flight-plan information found on premier "on-line" systems.

DTN Contractor DaytaSM
Providing construction businesses with industry news, association and industry      Ku-Band Satellite/ACE Color System     $82
information, construction news, bids and resources along with all the weather
information on DTN Weather Center.

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

DTN MarineSM
Providing specialty weather features including coastal sea condition forecasts,     Ku-Band Satellite/ACE Color System     $91
marine buoy data for wind and weather temperature and sea surface temperature
maps.

DTN ForestrySM
Providing specialty weather services targeted at the District Forest Management     Ku-Band Satellite/ACE Color System     $91
offices in the lower 48 U.S. states and Canada.

</TABLE>

                                       14

                                    - 274 -
<PAGE>


<TABLE>
<CAPTION>

INDUSTRY/SERVICE                                                                    TRANSMISSION/RECEIVER                  PRICE(1)
---------------------------------------------------------------------------------   -------------------------------      -----------
THE FINANCIAL SERVICES INDUSTRY
DTN Real^Time
<S>                                                                                 <C>                                  <C>
Providing instant quotes on over 175,000 different stocks, stock options and        Ku-Band Satellite/ACE Color System   $98-$138(2)
commodities.  This service delivers the information via a new generation of DTN     Subscribers' PC
proprietary hardware into a subscriber's PC when it is captured and displayed
through the use of customer software.

DTN Spectrum
Providing delayed quotes, business news, economic data and financial market         Ku-Band Satellite/ACE Color System   $68
information.  This service is an enhanced version of DTN Wall Street that
includes customer programming.

DTN Wall Street
Providing exchange delayed financial quotes plus in-depth economic and business     Ku-Band Satellite/Page-Based Mono.   $44
news, financial information to independent brokers, financial advisors and          Cable TV-VBI/Page-Based Monochrome   $44
instructions.

DTN FirstRate
Providing wholesale price information in an easy-to-use standard format along       Ku-Band Satellite/Page Based-Mono.    $98
with intra day interest rate information.                                           Cable TV-VBI/Page Based Monochrome   $98
                                                                                    Ku-Band Satellite/ACE Color System   $129
                                                                                    Cable TV-VBI/ACE Color               $129

THE ENERGY INDUSTRY

DTNergy-Refined Fuels
Providing terminal prices, alerts, electronic fund transfer notifications and       Ku-Band Satellite/Page Based-Mono.   $40
other communication services from petroleum refiners to their customers (also       Ku-Band Satellite/ACE Color System   $79
DTN subscribers).

DTNergy-DTN Natural Gas and Electricity
Providing instant or delayed NYMEX energy options and futures quotes, weather       Ku-Band Satellite/ACE Color System   $40-$180
and industry information.


THE AUTOMOBILE INDUSTRY

DTNautoSM
Providing a communication and information vehicle for the automobile industry       Ku-Band Satellite/ACE Color System   $98-$120
including precise value trade-in information for dealerships, a used car inven-
tory locating service and direct communication services for auction companies
and manufacturers.


THE ELECTRICAL EQUIPMENT INDUSTRY

TracElectric
Providing an equipment locator service for the electric equipment industry with     Ku-Band Satellite/Page Based-Mono.   $100(3)
over 100 pages of new, remanufactured, surplus and used electrical equipment
listings.

THE FREIGHT TRANSPORTATION INDUSTRY

DAT Services
Providing an information communication system for the tracking industry that        Ku-Band Satellite/ACE Color System   $89(4)
provides load and truck matching on a data base of 30,000 listings updated
daily.

OTHER SERVICES

DTN Missing Information Center
Providing instant transmission of data regarding children in danger to local,       Ku-Band Satellite/ACE Color System   $ - (5)
regional, national and Canadian outlets.
------------------------------------------------------------------------------------------------------------------------------------
<FN>

(1)      Monthly subscription price.  DTN offers discounts for annual prepayments.

(2)      Plus exchange fees.

(3)      DTN shares revenue with TracElectric.

(4)      DTN receives this fee from DAT Services.

(5)      Currently provided on all ACE Color systems.

</FN>
</TABLE>

                                       15

                                    - 275 -
<PAGE>

THE AGRICULTURAL INDUSTRY
--------------------------------------------------------------------------------

GRAPH IN TABULAR FORM:


<TABLE>
<CAPTION>

                                    1993      1994      1995      1996      1997
                                    ----      ----      ----      ----      ----
<S>                                  <C>      <C>        <C>      <C>       <C>
DTN Agricultural Services Revenue
         ($ millions)                27       33.7       44       69.7      87.5
</TABLE>

The DTN  Agricultural  Services are DTN Ag Services,  DTNstant,  DTN PROduce and
DTNiron.  Within DTN Ag Services are DTN AgDaily,  DTN ProSeries,  DTN FarmDayta
and DTN FarmDayta On Line.

New  subscriptions  are primarily sold by the Company's  national sales force of
employee district sales representatives,  in-house sales staff, and independent,
commission-only sales  representatives.  The Company obtains leads for the sales
force through  telemarketing,  direct mail, print media advertising and customer
referrals.

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

There are over 200  optional  services  available to  agricultural  subscribers.
These services consist of advisory,  informational  and educational  products as
well as newswire,  association and additional free services. DTN subscribers can
customize their DTN unit to their specific needs by choosing from a broad mix of
these "a la carte" services. DTN is continually developing new optional services
to meet  customer  demands  by  listening  closely  to the  marketplace  and the
customer.

The Company  markets these  services  through a combination  of individual  free
trials,   system-wide  trials,  on-screen  advertising,   direct  mail,  invoice
stuffers,  equipment stuffers and telemarketing.  Optional Service subscriptions
increased in 1997 fueled by these marketing  campaigns and the increase in total
DTN subscription  sales.  Optional service  subscription prices range from $6 to
$1,200 per quarter with the average subscription price of $60/quarter.

Communication  services (DTN  InfoMail)  plays an important  role in providing a
cost effective means to reach a large number of targeted customers daily. At the
touch of a button,  subscribers  have instant access to messages 24 hours a day.
Currently,  there are over 900 InfoMail customers receiving information tailored
to their specific  needs.  DTN InfoMail  provides  services for elevators,  seed
sales reps, agronomists,  chemical sales reps and technical advisors,  commodity
brokers,  processing  plants,  feedlots and anyone with a need to communicate to
DTN subscribers.

                                       16

                                    - 276 -
<PAGE>

In 1997, the agricultural services sold over $3.7 million dollars in advertising
to major players in the ag industry,  ag chemical and seed companies,  equipment
and finance businesses.  The color system  capabilities,  such as inter-activity
and animation, continue to entice new advertisers.  Advertising research in 1997
confirmed that DTN is an important player in the agricultural media field.

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

DTN ag management  believes the trend toward  consolidation into larger farms as
well as the government's  move toward fewer  agricultural  price supports and an
open market system, expands the need for agricultural information services. This
expansion need provides for steady growth within DTN Ag Services.

AgDaily Service Review
DTN AgDaily is an agricultural  market  information,  quote and weather service.
Subscribers  receive delayed  commodity  futures and options quotes;  local cash
grain and livestock prices;  selected regional and world weather updates;  and a
variety of daily  analysis,  commentary and news that affect grain and livestock
prices.

DTN AgDaily color graphics allows for an advanced  weather segment with national
and regional radar maps (updated  every 15 minutes),  infrared  satellite  cloud
cover maps, precipitation,  temperature, jet stream, surface wind and snow cover
maps, and much more. The  subscriber  can custom design high  resolution  charts
and/or select from a library that holds over 1,000 charts. The system is capable
of custom  programming  the  futures  quotes  pages to  display  only the quotes
subscribers desire. The service also includes  information segments for specific
crop  and  livestock  enterprises  as  well as  general,  business,  sports  and
entertainment news.

The DTN AgDaily color service also offers crop liability insurance and livestock
profitability  calculators  by  using  the  inter-activity  feature  allowing  a
subscriber to search a comprehensive database.

Pro Series Service Review
DTN offers services with advanced  features for the agricultural  industry.  The
Pro  Series'  enhanced  functionality  includes a high  interest  window to view
future or  options  quotes  on any  page,  key word  search  that  automatically
searches the news story database for articles affecting the user's operation,  a
customized  segment with up to five of the user's favorite pages, and a personal
library serving as a customized archive segment.

The DTN Pro Series  includes six  services:  Weather Pro,  News Pro,  Chart Pro,
Intraday Pro, Stock Pro and DTN Premier.

Weather Pro is the  "meteorological  connection" to an array of current weather,
forecast and satellite  radar  information.  This service allows  subscribers to
choose from over 70 weather maps  including  detailed  regional,  state and zone
forecasts.  The Weather Pro service gives subscribers 32 programmable  pages for
creating their own unique weather information.

 News Pro is the "broadcast connection" to timely
business,  sports,  entertainment,  financial,  and general news of the day. The
service also provides an audio summary of the day's  agricultural news. News Pro
subscribers  receive AP Online, a service of the Associated Press.

Chart Pro is the "graphic  connection"  bringing a variety of information to the
screen in an organized format allowing  subscribers to analyze trends,  patterns
and cycles.  This service includes 40 pages for programmable charts allowing the
subscriber to create an extensive "chart book".

Intraday Pro is the "trading  connection" to the first low-cost system available
with the ability to chart market  sessions  minute-by-minute  during the trading
day. This service  allows  subscribers  to choose time intervals for charting to
keep them abreast of the markets.

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

                                       17

                                    - 277 -
<PAGE>

DTN Premier  combines  Weather Pro, News Pro,  Chart Pro and Intraday Pro into a
comprehensive ag marketing and information  package. DTN Premier Plus adds Stock
Pro to the package targeting the farmer, rancher or agribusiness needing all the
market information available in one convenient location.

DTN FarmDayta  Service  Review
DTN FarmDayta was the principle asset acquired from the acquisition of Broadcast
Partners in May 1996. Its content is very similar to DTN AgDaily. In fact, since
its  inception  in 1990,  DTN  FarmDayta  was the  primary  competition  for DTN
AgDaily.  FarmDayta gives the Company a fully  integrated  agricultural  service
line with price entry points  across a wide  spectrum,  expanding  the marketing
horizons  for all DTN  agricultural  services.  The  Company  maintains  the DTN
FarmDayta facilities, with nearly 100 employees, in Des Moines, Iowa.

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

DTN FarmDayta Elite is an advanced  version of DTN FarmDayta.  Features  include
additional options quotes, charting, weather maps and a hard drive to store data
in the receiver which is critical to maintaining storage of information during a
power outage.

DTN FarmDayta Elite Plus is an advanced  service that includes the DTN FarmDayta
Elite  features  and is similar in content to the DTN Pro Series.  This  service
includes more advanced news (Reuters Headline News), quotes,  weather (including
motion and zoom capabilities) and programmable charts.

DTN FarmDayta On Line Service Review
The Company introduced its first agricultural Internet service, DTN FarmDayta On
Line,  in 1996.  DTN  FarmDayta  On Line is similar in content to DTN  FarmDayta
Elite  Plus  and is  designed  for  the  producer  preferring  to use his or her
personal  computer  to  receive  information  or is  not  able  to  utilize  the
traditional   satellite-based   system   supplied   by  DTN.   The   market  for
subscription-based  Internet  services is  relatively  new yet FarmDayta On Line
closed the year with over 1,000 subscribers.

Information  includes  animated weather maps,  satellite and summary maps, short
and long range forecast maps,  news commentary and analysis as well as unlimited
access to futures and option quotes from all the major exchanges. Also available
is commodities for energy,  financial,  currency,  metals and other exchanges as
well  as  instant  access  to  daily,   weekly  and  monthly  commodity  charts.
Customization  capabilities  allow  for  organization  of the  most  often  used
information for business decisions.

1997 DTN Ag Services Highlights
DTN Ag Services enjoyed another banner year in 1997,  generating over 12,000 new
sales and  maintaining  a  retention  rate of over  90%.  Ag  Services  exceeded
corporate expectations in sales, revenues and operating cash flow.

                                       18

                                    - 278 -
<PAGE>

DTN Pro Series continued to grow, increasing 21% in net subscribers. This growth
is an example of Ag Services' ongoing efforts to switch  subscribers to enhanced
service lines,  providing them with more information and DTN with higher revenue
per subscriber.

Integration  of  FarmDayta  into DTN is  complete.  The  FarmDayta  service  now
represents  a  significant  percentage  of Ag  Services  total sales and service
upgrades.

DTN FarmDayta On Line continues to grow with over 1,000  subscribers.  Continued
enhancements to the Internet service is scheduled for 1998. The most significant
enhancement  planned is the  introduction  of DTN AgDayta,  an Internet  service
featuring  a  combination  of both  AgDaily  and  FarmDayta  providing  the most
comprehensive ag service available.

In 1998 Ag Services will continue to seek  opportunities for enhancing  existing
services by strengthening  the content and increasing the variety of information
provided.

DTNstant Service Review
DTNstant is a leader in providing  satellite  delivery of real-time  futures and
options quotes from the major  commodity  exchanges and headline  commodity news
from  multiple  sources such as the  Associated  Press,  Futures  World News and
Bridge.  The service also provides  market-leading  cash  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 allowing the "pass thru" of data and graphics
into a computer's  local area network  (LAN).  With this  capability,  a DTN ACE
receiver can feed  information to multiple  users/traders on the LAN. This "pass
thru" software opens new markets by utilizing information  distribution within a
customer's LAN, enhancing analytical capabilities.

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

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

1997 DTNstant Highlights
DTNstant experienced substantial growth in 1997, in part, due to two synergistic
acquisitions.  In February, DTN acquired 500 subscribers from Market Quoters and
Northern  Data  Services  in  Minnesota,  the  Dakotas  and Iowa,  mainly  grain
elevators and brokers. In March, DTNstant acquired 2,400 subscribers from Market
Communications Group LLC (MCG).

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

DTNstant  subscribers  and  revenues  grew  36% and 49%,  respectively,  in 1997
compared to 1996. This growth reflects the acquisitions as well as the continued
use of third party  software for display of news,  quotes and maps for increased
analytical  capabilities  and for  access  to  subscribers  through  Local  Area
Networks (LAN).
                                       19

                                    - 279 -
<PAGE>

DTNiron Service Review
DTNiron provides a cost-effective  communication resource for the farm implement
industry.  DTNiron is an  equipment  locator and  inventory  management  service
providing a communication tool for farm implement dealers throughout the U.S and
Canada.

DTNiron provides  detailed listings of farm implements and equipment for sale or
needed by  dealers.  A listing  remains  on the 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.
DTNiron also includes listings of construction  equipment,  trucks, trailers and
other  equipment  found  in the  agricultural  industry.  The  service  provides
listings for implement and equipment  parts,  especially  hard to find parts. In
addition,  the service  sorts  listings by regions and provides  hourly  updates
keeping information timely for DTN subscribers.

DTNiron includes the Combine and Tractor Demand Monitor which provides the first
widely   distributed   annual   sales   outlook  for  the  tractor  and  combine
manufacturers.  This monthly economic study released to all DTNiron  subscribers
helps track the  money-making  trends in the  industry.  The Combine and Tractor
Demand Monitor is released to the trade and  agricultural  press one or two days
after release to DTNiron subscribers.

1997 DTNiron Highlights
In 1997,  DTNiron added their retail  equipment  listings to its newly developed
website on the  Internet  (www.dtniron.com).  This  allows  subscribers  to gain
additional  exposure for their listings at no additional charge.  Internet users
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.

Also in 1997,  dealer  listings  were  added to DTN Pro  Series  increasing  the
dealer's ability to reach an additional 50,000 plus high-income farmers.

DTN PROduce Service Review
DTN PROduce is an  authority  in providing  the produce  industry  with the most
timely information available. There are four major components to the DTN PROduce
service.  First  is  weather,  the most  critical  information  for the  produce
industry. Second is immediate pricing updates,  formatted by commodity,  growing
area and terminal market. Third is transportation information with freight rates
and daily truck availability for the major growing areas.  Finally,  the service
provides a comprehensive  news package including AP Online.  Other  key-industry
news  sources  are "The  Packer"  and "The  Produce  News" in addition to credit
information  provided by the "Produce Reporter Company" and the "Red Book Credit
Service".

DTN PROduce maintains a price discovery network,  DTNdexSM, that is the industry
standard.  Competition in this industry  continues to focus on older technology,
such as FAX machines.

                                       20

                                    - 280 -
<PAGE>

The entire produce food chain of growers, shippers,  packers, brokers, retailers
and  institutions  benefit from information  provided by this service.  A custom
service for the produce grower is also available  containing all the features of
DTN  PROduce  except for  transportation  information  and AP Online  news.  DTN
PROduce expanded its service to the Internet in 1996 to accommodate seasonal and
international customers unable to utilize the satellite dish technology.

1997 DTN PROduce  Highlights
DTN PROduce  introduced Price Link in 1997. This service allows suppliers to use
the DTN  system to FAX,  e-mail  and send  messages  in a more  timely  and cost
effective  manner.  Instead of phoning or faxing price lists,  a supplier  sends
lists  through  the DTN  system.  Prices  can be changed  or added  quickly  and
efficiently  using this system.  New software,  Price Link Plus, allows users to
download  price  lists  from  the DTN  system  to  their  personal  computer  to
manipulate  information in  spreadsheets or to develop  specialized  screens for
individual needs.

DTN PROduce  continues to provide the industry with the tools  necessary to save
time, make money and communicate information, pricing and other information in a
fraction of the time of existing systems.

DTN Cotton  Network  Service  Review
In July of 1997,  DTN  acquired  the  customer  base and  other  assets  of "The
Network", a cotton  communications  company based in Lubbock,  Texas. DTN Cotton
Network is an electronic cotton marketing system designed to operate on a user's
personal  computer using software  developed  specifically for cotton accounting
and marketing.

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

1997 DTN Cotton Network  Highlights
After  acquiring "The Network",  seven gins were added and DTN more than doubled
the number of buyers on the system to 46. At many sites,  computer  hardware was
upgraded and  additional  software  enhancements  made,  providing more reliable
systems.

DTN Cotton Network subscribers are primarily located in West Texas and Oklahoma.
Expansion  into other areas of the cotton belt are  expected in the future.  The
service  handled  over 569,000  bales during the 1997 crop year  compared to the
previous crop year of only 452,000 bales.

                                       21

                                    - 281 -
<PAGE>

THE WEATHER INDUSTRY
--------------------------------------------------------------------------------

GRAPH IN TABULAR FORM:


<TABLE>
<CAPTION>

                                    1994      1995      1996      1997
                                    ----      ----      ----      ----
<S>                                    <C>      <C>      <C>      <C>
DTN Weather Services Revenue
         ($ millions)                 .0        1.0      5.6      10.7
</TABLE>

DTN Weather Center Service Review 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 and aviation.

DTN Weather Center  introduced new products in 1997 designed  especially for the
marine,  forestry and travel industry. DTN Weather Center provides more than 100
weather  maps,  20 regional  radar maps,  including  NEXRAD  radar and  infrared
satellite  photos and six  satellite  maps.  The  service  provides  short-range
(immediate to 48-hour)  forecasts,  long-range  (3-90 day) outlooks,  and 10-day
city  forecasts  for more than 550 cities in the U.S.  and  Canada.  The service
includes  programmable  capabilities to customize maps, and an archival  section
for saving maps.

Optional services, such as AP Online News, newswires,  industry association news
and others are also available on all Weather Center services.

DTN Weather Center is a critical  ingredient in  operational  planning and staff
decisions  for  industries  where  timely,   accurate  and  accessible   weather
information are vital.

DTN Turf Manager Service Review
DTN Weather  Center Turf  Manager is  available to  individuals  and  businesses
involved in  turf-related  operations  such as golf courses,  lawn  maintenance,
landscaping and sod farms. This service provides the news,  weather and chemical
information  needed for effective turf management.

Chemical  and  Pesticide  Press  Turf  Index is a unique  feature  providing  an
information  database  of more than 275 turf  pesticides.  Material  Safety Data
Sheets (MSDS) were recently  added  providing an even more valuable  information
service for subscribers.

Thor Guard, the only lightning  prediction system available,  warns of lightning
strikes  before  they  happen  and  is now  available  as an  optional  service.
Evapotranspiration  Tables  provide  regional  evaporation  rates  to  plan  for
watering and chemical applications.

ESPN Sports  Ticker  provides  current golf  related  stories and results and AP
Online provides more than 300 current news stories from four chapters,  General,
Business, Sports and Entertainment.  The National Golf Course Directory includes
a database of locations,  phone numbers,  course pros and course superintendents
for all member courses.

These features,  along with the comprehensive  weather  information,  provides a
complete turf industry package.

DTN Aviation  Center Service Review
DTN  Aviation  Center is a  comprehensive  aviation  weather  package  specially
designed for pilots,  airports and Fixed Base  Operators  (FBO's).  DTN Aviation
Center  supplies  airports,  pilots  and FBO's  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 and TAF  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.

                                       22

                                    - 282 -
<PAGE>

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 Contractor Dayta  Service  Review
DTN  Contractor  Dayta is designed  for the  construction
industry  and includes  construction-related  news and  information  providing a
competitive  advantage for subscribers.  This service provides  valuable weather
information necessary for important day-to-day  construction business decisions.

Industry  specific  information  includes general  information,  association and
industry information, construction news, bids and resources and the contractor's
exchange. Additionally, subscribers receive sports scores, sports highlights and
financial  indicators.

The service  provides a practical tool  contributing  to labor and material cost
savings and effective management of scheduling and staffing for the construction
industry.

DTN Forestry Center Service Review
DTN Forestry  Center  combined  efforts with the U.S.  Forest Service to provide
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,  forest  service  district  managers  quickly  access fire
weather text bulletins along with a comprehensive set of weather maps.

Bulletins  provided for the forest service market 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 & 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 Service Review
DTN Marine Center is a provider of  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, service and recreation. The
service includes Lake and Marine Text Bulletins,  Buoy Reports,  Lake and Marine
Maps and Tide Tables as well as general weather  information and sea conditions.
Optional  Services are also available as service  add-ons  providing  additional
means for a more complete information and weather package.

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

DTN Travel Center provides a comprehensive  weather and news information package
for the traveler whether he or she is on business or vacationing.

1997 DTN Weather Services  Highlights
DTN Weather  Center  increased  its  subscriber  base in 1997 by more than 5,000
subscribers  bringing  the  total  subscriber  count to  13,000.  Golf  courses,
aviation,  governmental  agencies (emergency management and state transportation
departments) and construction-related  businesses are the leading industries for
DTN Weather Center.

In addition,  DTN Weather  Center  continues  to expand its sales and  marketing
force and to add sales directors for new services when needed.

Other main highlights include the introduction of DTN Forestry Center, developed
in  cooperation  with the U.S.  Forest  Service and the Great Lakes  Forest Fire
Compact.  Also,  the Illinois DOT awarded DTN Weather  Center a bid to more than
double the number of Weather Center units in use in the maintenance  facilities.
Development  and  promotion  of  special  communications  segments  to  transmit
pavement temperatures and site-specific forecasts continued.

                                       23

                                    - 283 -
<PAGE>

THE FINANCIAL SERVICES INDUSTRY
--------------------------------------------------------------------------------

GRAPH IN TABULAR FORM:

<TABLE>
<CAPTION>

                                   1993      1994      1995      1996      1997
                                   ----      ----      ----      ----      ----
<S>                                 <C>       <C>       <C>       <C>      <C>
DTN Financial Services Revenue
    ($ millions)                    4.1       5.1       6.1       8.6      10.3

</TABLE>

DTN Financial Services offers four services,  DTN Real^Time,  DTN SPECTRUM,  DTN
Wall  Street,  and DTN  FirstRate.  There are a  variety  of  Optional  Services
available to Financial Service subscribers  providing stock selection and timing
advice, earnings estimates,  fundamental stock market data, U.S. Treasury quotes
and other financial market-related services.

DTN Financial  Services revenue grew 20% during 1997,  adding to its bullish 26%
compounded revenue growth for the past 5 years.

The main objective for Financial Services is providing  comprehensive,  in-depth
financial  information at an affordable cost to its subscribers.  This objective
is critical due to the highly  competitive  nature of the business.  Contents of
all DTN Financial  Services are broader in scope and cost less than  competitive
services. The "a la carte" optional services offered to subscribers give them an
even greater variety of  information.  This  combination  allows the services to
maintain its competitive advantage in the market.

DTN Real^Time Service Review
DTN  Real^Time  delivers  real-time  stock  and stock  option  quotes as well as
real-time futures quotes,  fixed income  government  securities  quotes,  market
statistics and indicators,  news, commentary and other time-sensitive  financial
market  information.  The  service  is  delivered  at a rate  of  nearly  12,000
characters per second, roughly four times faster than a computer modem operating
at 28.8  kbs,  the  speed  investors  rely on to  receive  Internet-based  quote
services.  DTN  Real^Time  is two to more  than four  times  faster  than  other
dedicated, competitive, real-time quote services.

DTN  Real^Time  is the first DTN  service  delivered  directly  via  proprietary
hardware to a personal computer.  Previously, DTN services displayed information
on the DTN proprietary  systems or stand-alone units. If desired,  text and data
are "passed thru" these units to a PC using various software packages.

Subscribers  are  offered,  at no  additional  cost,  the  option  of using  DTN
Chameleon,  an exclusive  software  package  compatible  with  Windows  95(R) to
display  market  data,  news and other  financial  information  delivered by DTN
Real^Time.  DTN Chameleon  software also provides market condition alarms,  news
alerts and archiving, charting and portfolio monitoring. There are several other
popular  third-party  software programs available for formatting,  manipulating,
analyzing and displaying market data and news on a single PC or networked PC's.

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

DTN SPECTRUM is very well received by new  subscribers  as well as existing DTN
Wall  Street  subscribers  choosing  to  "switch-up"  to the  advanced  SPECTRUM
features.

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

                                       24

                                    - 284 -
<PAGE>



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

The  majority  of  subscribers  to DTN Wall  Street  are  individual  investors,
independent brokers, financial advisors and financial institutions.  The primary
competition  for DTN Wall Street is  satellite,  TV cable  (VBI),  Internet  and
dial-up quote services.

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

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

DTN FirstRate is marketed by DTN Financial  Services'  institutional sales group
(a select group within the National Sales Force).

1997 DTN Financial Services Highlights
The most noteworthy  development for DTN Financial Services was the debut of DTN
Real^Time.  DTN SPECTRUM sales also continued strong and prospects for increased
sales of DTN FirstRate is promising.

DTN Financial  Services is now  well-positioned in its market place and offers a
full line of exceptionally  low-cost  financial  information  services useful to
both  individual  investors and to  higher-end  professional  and  institutional
users.  Plus  subscribers  can  choose  to use a  proprietary  DTN  platform  or
networked PC applications.

The  release  of  DTN  Real^Time  created  greater   opportunities   within  the
institutional marketplace. Results are achieved through the National Sales Force
and a subset of financial specialists located in key metropolitan markets. Sales
to individual  investors  also  expanded  driven by direct  response  marketing,
utilizing an inside sales staff.

The  importance  of  relationships  with third  party  software  developers  was
heightened as  subscribers  to DTN  Real^Time  relied on their PC to display and
manipulate  quotes  and  news.   Several   relationships  were  strengthened  or
established for the first time, allowing  subscribers to utilize a wider variety
of analytical tools than those provided with Chameleon software.

An  increased  emphasis was placed on sales to  financial  institutions  (banks,
money managers,  brokerage firms, etc.). In 1997 this effort relocated from Salt
Lake  City to Omaha to take  advantage  of  economies  of scale  and to  improve
communication.

In  order  to  streamline  service  offerings  and  create  less  confusion  for
prospective  customers,  two previous financial services,  Broker+ and GovRate+,
were folded back into the SPECTRUM  brand.  The same content is  available,  but
through add-on modules rather than a bundled basis.

                                       25

                                    - 285 -
<PAGE>



THE ENERGY INDUSTRY
--------------------------------------------------------------------------------

GRAPH IN TABULAR FORM:

<TABLE>
<CAPTION>

                                 1993      1994      1995      1996      1997
                                 ----      ----      ----      ----      ----
<S>                                <C>      <C>      <C>       <C>       <C>
DTN Energy Services Revenue
      ($ millions)                4.9       7.2      10.0      12.2      14.3

</TABLE>

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

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

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

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

DTNergy  generates  revenue from two primary  sources,  the  wholesaler  and the
refiner.  Wholesalers currently pay a monthly subscription fee of $40.00 for the
monochrome Ku-band satellite service.  Refiners pay fees based on the number and
length of communications sent to wholesalers.

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.

1997 DTNergy Highlights
1997  revenues  for  DTNergy  grew  18%  over  1996,  making  1997  the  seventh
consecutive year for increased  revenue growth.  DTN remains the dominant player
in the refined  fuels market with  virtually  all major U.S.  refiners and their
customers receiving DTNergy information.

These refiners continue to find new uses for the DTNergy  communications link to
their   wholesalers,   such  as  the  implementation  of  EDI  (Electronic  Data
Interchange) fuel invoices.  EDI/VAN services help automate  customers' business
processes by converting  refiner text invoices into an industry standard format.
Once  these  invoices  are in a  standard  format,  invoice  data is  seamlessly
transferred into a customer's accounting system from the ACE unit.

DTNergy is also developing a number of Internet services slated for introduction
in 1998.

                                       26

                                     - 286 -
<PAGE>



THE AUTO INDUSTRY
--------------------------------------------------------------------------------

GRAPH IN TABULAR FORM:

<TABLE>
<CAPTION>

                                    1994      1995      1996      1997
                                    ----      ----      ----      ----
<S>                                 <C>       <C>       <C>        <C>
DTN Auto Services Revenue
      ($ millions)                  0.0       0.7       1.4        1.9

</TABLE>

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

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

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

DTNauto is marketed by DTNauto  sales  specialists  (a select  group  within the
National Sales Force).

1997 DTNauto Highlights
In 1997, DTNauto  introduced the "Autos Wanted" listing service.  "Autos Wanted"
consists  of a list of new and used car buyers who  provide a  description  of a
vehicle or vehicles they are interested in purchasing. These leads are posted on
"Autos Wanted" for 5 days.  Dealers  subscribing to this service review the list
daily to match inventory with the sales lead. Potential car buyers learn of this
service from print media ads in newspapers and trade publications, the Internet,
TV commercials and ads on select DTN services.  Feedback from dealers  utilizing
this feature is very positive.

Providing current vehicle wholesale prices and the pre-auction  listings of used
cars remains the driving force behind the DTNauto service.


DTN JOINT VENTURE SERVICES
--------------------------------------------------------------------------------

GRAPH IN TABULAR FORM:

<TABLE>
<CAPTION>

                                    1994      1995      1996      1997
                                    ----      ----      ----      ----
<S>                                  <C>       <C>       <C>       <C>
DTN Joint Services Revenue
      ($ millions)                   0.1       0.3       0.9       1.7

</TABLE>

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

Trac Electric Service Review
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 U.S. and Canada.

DAT  Service  Review
The DAT (Dial-A-Truck)  Transportation  Terminal service,  located in Beaverton,
Oregon, is an information  communication  system for the trucking industry.  The
service  provides  load and truck  matching  performed  on a database  of 50,000
listings updated daily.

DAT allows  subscribers  to input  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 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 U.S. and Canada.

DTN Missing Children Information Center Service Review
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 locate missing children and the criminals  involved,  photos
and  information  regarding these children are posted as a public service on all
DTN color systems.

                                       27

                                    - 287 -
<PAGE>

<TABLE>
<CAPTION>

PIE GRAPHS IN TABULAR FORM:

                                       1997          1996          1995
                                       ----          ----          ----
<S>                                    <C>           <C>           <C>
Revenues
  DTN Ag Services                      69%            71%           71%
  DTN Weather Services                  8%             6%            2%
  DTN Financial Services                8%             9%           10%
  DTN Energy Services                  11%            12%           16%
  Other Services                        4%             2%            1%

Subscribers At Year End
  DTN Ag Services                      76%            80%           78%
  DTN Weather Services                  8%             5%            3%
  DTN Financial Services                8%             8%           10%
  DTN Energy Services                   5%             5%            8%
  Other Services                        3%             2%            1%

</TABLE>


<TABLE>
<CAPTION>

                                        1997            1996            1995           1994            1993
--------------------------------------------------------------------------------------------------------------
For the Year:

<S>                                 <C>             <C>             <C>            <C>            <C>
Revenues ........................   $126,374,352    $ 98,383,713    $ 62,287,989   $ 46,109,789   $ 35,992,754
Operating income ................     12,383,403       6,920,791       4,343,252        694,560      2,408,868
Income (loss) before income taxes      3,407,081      (1,404,306)      ( 397,076)    (2,422,738)     1,020,831
Net income (loss) ...............      2,236,081      (  958,306)      ( 283,076)    (1,602,738)       663,831
Basic income (loss) per share . .
Diluted income (loss) per share .            .20            (.09)           (.03)          (.16)           .07
Dividends per share .............            .19            (.09)           (.03)          (.16)           .07

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

At Year End:

Total assets ....................   $162,430,898    $177,729,762    $ 92,672,050   $ 71,459,356   $ 57,242,313
Long-term debt and
   subordinated notes ...........     72,891,370      97,747,823      47,020,527     33,982,814     25,375,000
Stockholders equity .............     32,196,173      28,290,289      12,876,965     12,706,978     12,780,477
</TABLE>


                                       28

                                    - 288 -
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------

FINANCIAL CONDITION
General Overview
The equipment used by subscribers is a large capital investment for the Company.
The cost, net of depreciation,  of this equipment accounts for approximately 64%
of the Company's total assets.

The Company has financed a majority of the  investment in  subscriber  equipment
with long-term debt and plans to continue using  long-term debt financing  until
cash provided by operating activities is sufficient to cover these investments.

The Company made significant  investments during 1995, 1996 and 1997 to purchase
the assets, including subscribers,  of several businesses.  The Company recorded
these  transactions as asset purchases and the net intangible  assets (goodwill)
are approximately 21% of the Company's total assets.  The Company's  acquisition
strategy  focuses on  businesses  that  management  believes  will  enhance  the
operating performance and financial condition of the Company.

The Company's overall financing strategy is simple, use long-term debt financing
versus equity, whenever possible, to prevent the dilution of shareholder value.

Net Cash Provided by Operating Activities
Net cash provided by operating  activities in 1997 was  $47,543,395  compared to
$33,777,467 in 1996.  This increase of  $13,765,928  was primarily the result of
the $14,321,280  increase in operating cash flow plus the $168,687 of additional
cash  generated  from the  change in assets and  liabilities.  The  increase  in
operating  cash  flow  and  additional  cash  from  the  change  in  assets  and
liabilities was offset by the $665,961  increase in interest  expense related to
the Company's investing activities for subscriber equipment and acquisitions.

Net Cash Used by Investing  Activities
Net cash  used by  investing  activities  in 1997 was  $30,191,998  compared  to
$106,290,603  in 1996.  This  decrease is  primarily  due to a reduction  in the
purchase of equipment  used by subscribers in 1997 and the purchase of Broadcast
Partners in May of 1996.  The  majority of  expenditures  on  equipment  used by
subscribers are for color  receivers,  monitors,  and satellite dishes including
LNB's.  The decrease in purchases on  equipment  used by  subscribers  is due to
lower net subscriber growth and the reduction of inventory levels.

The majority of the  investment  in equipment  used by  subscribers  is a direct
result of the growth in the Company's  subscriber base. The Company's  marketing
efforts to obtain new subscribers includes investing in subscriber equipment for
trial  and  complimentary  subscriptions.   In  addition,   approximately  3,000
monochrome  system (FM and Ku) and DTN FarmDayta  subscribers  upgraded  service
requiring the color Ku-band system with 54% of these  conversions  involving DTN
AgDaily  subscribers.  The  remaining  46% involved DTN  Financial  Services and
DTNergy subscribers.  The conversion of approximately 1,700 subscribers from DTN
AgDaily on the color Ku-band system to other more advanced Ku-band services such
as DTN Pro  Series,  DTNstant,  DTNiron,  DTN  PROduce  and DTN  Weather  Center
resulted in upgraded equipment.  During 1997, the acquisition of Market Quoters,
Northern Data and Arkansas  Farm Bureau  subscribers  resulted in  approximately
1,000 systems being installed to convert these subscribers to DTN systems.

DTN  decreased it inventory of color  receivers  and  components  to build color
receivers  during  1997.  At December  31,  1997 the  Company had  approximately
$7,000,000 of this  inventory  compared to  $10,000,000 in 1996. The build up of
inventory in 1996 occurred due to advance  commitments  on inventory  purchases.
The Company adjusted production  schedules during the fourth quarter of 1996 and
reduced the inventory to a level adequate to supply  forecasted  sales activity.
The reduced  production of color systems reduced  borrowing  requirements in the
first half of 1997.

The Company had approximately  30,000 monochrome customers at December 31, 1997.
The Company utilizes  monochrome  receiver  equipment coming in from conversions
for new DTN AgDaily, DTN Wall Street and DTNergy subscribers.  DTN will continue
to research  new markets for  monochrome  system  services  but at this time the
Company's  management  believes  the  prospects  are more  favorable  for  color
services.

As it relates to the Company's  investing  activities,  the Company had negative
working capital of $21,520,377 at December 31, 1997,  compared to $14,748,094 in
1996.  The increase in the working  capital  deficiency was primarily due to the
growth in the current  portion of long term debt of  $6,718,750  from  increased
term debt needed to finance acquisitions and converting $38,000,000 of revolving
debt to term notes in the first quarter of 1997.

The working  capital  deficiency  also  increased  due to a reduction of current
assets of  $1,158,119  offset by a decrease  in  accounts  payable  and  accrued
expenses of $1,104,586 from December  31,1996 to 1997. The reduction in accounts
receivable  was due to  aligning  receivable  recognition  methods  of  acquired
operations with the Company's. The decrease in accrued

                                       29

                                    - 289 -
<PAGE>


expenses  is due to a  reduction  of  startup  costs  related  to the  Broadcast
Partners  operations.

On July 26,  1995,  the Company  entered into an  agreement  with Knight  Ridder
Financial (KRF)   to  acquire  2,900  Knight  Ridder   Commodity   News  Service
subscribers.  The Company agreed to pay KRF  approximately  $4,970,000 for these
subscribers  over two years. The Company agreed to pay $1,500,000 at closing and
$1,500,000 on the first anniversary of the closing. The remaining $1,970,000 was
based on company estimates of future revenue sharing. This payment was scheduled
to be paid  quarterly  during  the  first  two  years of the  agreement  and was
completed during 1997. The Company capitalized $4,970,000 as an intangible asset
(goodwill) and is amortizing this cost using the straight-line method over eight
years.

On May 3, 1996, the Company acquired  substantially  all the assets of Broadcast
Partners, an electronic information and communication services company providing
similar services as DTN AgDaily in the agricultural  industry.  The Company paid
$63.5 million cash and assumed  certain  "non-interest"  bearing  liabilities of
approximately $9.8 million. The Company received 39,000 agricultural subscribers
in this acquisition.

The $63.5 million cash paid for the Broadcast Partners  acquisition was financed
with a  combination  of $15 million of privately  placed common stock equity and
$48.5  million  of six year term debt (see note 3). As part of the  acquisition,
the Company capitalized approximately $38.2 million of equipment. The Company is
depreciating this equipment using the straight-line  method over five years. The
Company   capitalized   approximately  $34.8  million  as  an  intangible  asset
(goodwill) and is amortizing this cost using the straight-line method over three
to eight years.

 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 (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.

On July 1, 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  paid  $200,000  cash in 1997 and will pay
$200,000 cash on each of the next four  anniversary  dates.  The Company has the
option to terminate  the agreement at any time and cease all payments and return
the assets to the  original  owner.  The Company is  capitalizing  the  $200,000
payments when made as an intangible  asset  (goodwill) and amortizing  this cost
using the  straight-line  method over 12 months.  In effect, if all payments are
made, the Company is amortizing the $1,000,000 purchase price over five years.

On October  24, 1997 the Company  agreed to acquire the 700  subscribers  on the
ACRES  platform from the Arkansas Farm Bureau (AFB).  The Company  agreed to pay
$600 for each  subscriber that converts to a DTN service.  The Company  believes
the majority  will convert 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 will
capitalize the $600  acquisition  payment per subscriber as an intangible  asset
(goodwill)  and  amortize  this cost using the  straight-line  method over eight
years. No payments were made in 1997.

Net Cash  Provided  (Used) by  Financing  Activities
Net cash used by financing activities of $17,222,280 was primarily the result of
a decrease in total debt outstanding (current and long-term) of $18,217,083. The
decrease in debt  outstanding  was  primarily  due to  $22,217,083  of principal
payments  during 1997. The Company was able to pay down debt due to the increase
in  cash  provided  by  operating  activities  and  using  subscriber  equipment
inventory for new  subscribers  during the first half of 1997.  The Company made
$9,036,459 of principal payments on bank term debt during 1996.

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

                                       30

                                    - 290 -
<PAGE>

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.

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

Technology -- Although the business of the Company is subject to the  continuous
changes in  technology,  the Company is currently  unaware of any new technology
which is likely to replace its present  electronic  delivery systems,  equipment
and the  business  applications  these  systems and  equipment  are  designed to
provide at a competitive price.

Year 2000 -- The Company is  conducting a  comprehensive  review of its computer
systems to identify  the systems  that could be affected by the Year 2000 Issue.
The  company  plans to use  internal  resources  to perform  the review and make
programming  changes or replacements as necessary.  The Company is pursuing Year
2000 compliance  statements  from all vendors that provide  services or products
critical to the operation of the Company's systems.  The Company does not expect
the cost of making the necessary changes to be significant.  The Company expects
its year 2000  conversion  project to be completed on a timely  basis,  however,
failure to do so or failure on the part of third  parties  with whom the Company
does business could materially impact operations and financial results.

RESULTS OF OPERATIONS

GRAPH IN TABULAR FORM:

<TABLE>
<CAPTION>

                            1993      1994      1995      1996      1997
                            ----      ----      ----      ----      ----
<S>                         <C>       <C>       <C>       <C>       <C>
Operating Cash Flow
    ($ millions)            12.9      15.8      23.2      40.4      54.7


</TABLE>

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

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

DTN's operating cash flow (operating income before depreciation and amortization
expense),  a key  indicator  monitored  by DTN  management,  has  increased at a
compounded  rate of 41% from 1992 to 1997. This trend is primarily the result of
a growing  base of  subscribers  covering  the  Company's  fixed  expenses.  The
following  graph  details the trend in operating  cash flow as a  percentage  of
revenue to illustrate operating leverage.

GRAPH IN TABULAR FORM:

<TABLE>
<CAPTION>

                           1993      1994      1995      1996      1997
                           ----      ----      ----      ----      ----
<S>                        <C>       <C>       <C>       <C>       <C>
Operating Cash Flow
(percent of revenue)        36        34        37        41       43.3

</TABLE>

The Company has  operating  leverage due to low variable  costs per  subscriber.
This leverage is present when a growth in subscribers and related revenues has a
direct impact on operating  cash flow.  This  leverage,  as seen in the 1993 and
1994 periods,  can be negatively  impacted by the Company  increasing the amount
committed to research and development activities.

DTN accumulates research and development  activities as "Net Development Costs".
The Company defines "Net

                                       31

                                    - 291 -
<PAGE>

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  the  1993  and 1994  periods,  the  Company  was  expanding  development
activities (see chart on page 3) quite rapidly, therefore,  negatively impacting
operating cash flow on a total and percentage basis.

During 1995, the success of subscription sales of the new developmental services
decreased  net  development  costs.  While the  overall  developmental  expenses
increased,  the growth rate of developmental  related expenses  declined in 1995
compared to 1994.  The result,  operating  cash flow as a percentage  of revenue
increased to 37% in 1995 compared to 34% in 1994. Core services revenue improved
to 44.4% in 1995 compared to 43.8% in 1994.

During 1996, DTN expanded it developmental activities with net development costs
growing  from  $3.7  million  in 1995 to $5.3  million  in 1996.  The  Company's
increased  efficiencies  on a per subscriber per month basis and the acquisition
of subscribers from Broadcast  Partners  contributed to an increase in operating
cash flow as a percentage of revenue from 37% in 1995 to 41% in 1996.  Operating
cash flow as a percentage  of revenue,  excluding the  acquisition  of Broadcast
Partners, was 37% in 1996. The expansion of developmental  activities was offset
by increased  efficiencies  on a per subscriber  per month basis.  Core services
operating cash flow as a percentage of core services  revenue  improved to 47.4%
in 1996  compared  to 44.4% in 1995.  Core  services  operating  cash  flow as a
percentage of core services  revenue,  excluding  Broadcast  Partners  operating
results, was 43.4% in 1996 compared to 44.4% in 1995.

Finally,  during 1997, the Company's  developmental  activities  were relatively
flat at $5.2 million compared to $5.3 million in 1996. The  efficiencies  gained
in 1996  carried  over into 1997 and  contributed  to  operating  cash flow as a
percentage of revenue  growing from 41% in 1996 to 43.3% in 1997.  Core services
operating cash flow as a percentage of core services  revenue  improved to 48.5%
in 1997  compared  to 47.4% in 1996.  Core  services  operating  cash  flow as a
percentage of core services  revenue,  excluding  Broadcast  Partners  operating
results, was 45.0% in 1997 compared to 43.4% in 1996.

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

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

</TABLE>


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

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

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

The  subscribers  converting  to higher  priced  services  includes  those  that
switched from the  monochrome FM or Ku-band  satellite DTN AgDaily priced at $52
in 1997 and $50 in 1996 ($46 prior to June 1, 1996).  Subscribers  continued  to
convert from the color Ku-band satellite DTN AgDaily service to the color

                                       32

                                    - 292 -
<PAGE>

Ku-band  satellite  DTN Pro Series  which ranged in price from $63 ($59 prior to
June 1, 1996),  for one Pro Series service,  to $79 ($74 prior to June 1, 1996),
for all four Pro Series  services (DTN Premier),  in both 1997 and 1996. The DTN
Premier and Stock Pro, DTN Premier  Plus,  was priced at $82 a month in 1997 and
$82 a month in 1996 ($78 prior to June 1, 1996)

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

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

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

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

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

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

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

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

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

                                       33

                                    - 293 -
<PAGE>

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

The Company's  federal and state effective tax rate was 34% and 32% for 1997 and
1996, respectively.

 1996  COMPARED  TO 1995
DTN'S  management  team remained  focused on growing  subscribers,  revenues and
operating  cash flow during 1996. The  acquisition  of Broadcast  Partners and a
focus on improving subscriber  efficiencies led to outstanding operating results
as compared to the prior year.  Operating  income  improved but higher  interest
expense linked to the expansion of the business and the acquisition of Broadcast
Partners resulted in a loss for the year.

<TABLE>
<CAPTION>
                                                           Percent
In Thousands                 1996            1995           Change
------------------------------------------------------------------
<S>                        <C>             <C>               <C>
Subscribers                  145.9            95.9            52%
Revenues                   $98,384         $62,288            58%
Operating cash flow         40,377          23,154            74%
Operating income             6,921           4,343            59%
Net Loss                      (958)           (283)         (239%)

</TABLE>

Total revenue  increased 58% in 1996 compared to 1995 and all operating  revenue
categories made significant  contributions to this increase.  Operating revenues
consisting of subscriptions, additional services, communications and advertising
increased to $60.92 per subscriber per month in 1996 compared to $55.70 in 1995.

A 52% growth in total  subscribers  and  subscribers  upgrading to higher priced
services  led to a 63%  growth in  subscription  revenue.  On May 3,  1996,  the
Company   acquired  39,000   subscribers  from  Broadcast   Partners   receiving
agricultural  information and communications services. The subscriber growth for
DTN without the  acquisition  of Broadcast  Partners was 11,000  subscribers,  a
growth of 11.5%, and subscription  revenue related to this subscriber growth was
up  34% in  1996  compared  with  1995.  At  December  31,  1996,  88% of  total
subscribers were receiving service via Ku-band satellite  transmission  compared
to 77% in 1995.  All acquired  subscribers  were  receiving  service via Ku-band
satellite transmission. Subscription revenue on a per subscriber per month basis
increased to $49.24,  in 1996  compared to $43.60 in 1995.

The price of Ku-band satellite delivered services ranged from $35 for monochrome
DTN AgDaily to $160 for the color  DTNstant  service  during 1996.  The price of
Ku-band satellite  delivered services ranged from $33 for monochrome DTN AgDaily
to $160 for the color DTNstant  service during 1995. The price of the monochrome
FM delivered DTN AgDaily (the only FM service) was $27 in 1996 and $26 in 1995.

The  subscribers  converting  to higher  priced  services  includes  those  that
switched from the monochrome FM or Ku-band  satellite DTN AgDaily service to the
color Ku-band satellite DTN AgDaily, priced at $50 in 1996 ($46 prior to June 1,
1996) and $46 in 1995.  Subscribers  continued to convert from the color Ku-band
satellite  DTN AgDaily  service to the color  Ku-band  satellite  DTN Pro Series
which  ranged in price from $63 ($59 prior to June  1,1996),  for one Pro Series
service,  to $79 ($74 prior to June  1,1996),  for all four Pro Series  services
(DTN Premier), in both 1996 and 1995. The DTN Premier and Stock Pro, DTN Premier
Plus,  was  priced at $82 a month in 1996 ($78  prior to June 1, 1996) and $78 a
month in 1995.

The Company  increased the number of information  services  through "a la carte"
optional  services  (180 in 1996  versus 100 in 1995).  The  growth in  services
combined with the growth of total  subscribers  and the acquisition of Broadcast
Partners  resulted  in a  48%  increase  in  additional  services  revenue.  The
additional  services  revenue  growth,  excluding the  acquisition  of Broadcast
Partners,  was 30% in 1996. The revenue  increased on a per subscriber per month
basis to $3.80 in 1996 compared to $3.70 in 1995.

The growth in communications  revenue was primarily in the DTNergy service.  The
DTNergy   service    transmits    refiner   prices   and    communications    to
wholesaler/subscribers.  The number of refiner communications  continued to rise
and produced a revenue growth of 28% over 1995 levels.  The revenue decreased on
a company wide per subscriber per month basis to $5.78, down from $6.49 in 1995.
This decrease is due to spreading  communications  revenue over a larger base of
subscribers,  with the largest increase coming from the acquisition of Broadcast
Partners.
                                       34

                                    - 294 -
<PAGE>

Advertising  revenue grew 58% to  $3,198,321  in 1996  compared to $2,022,440 in
1995.  This growth was due to an increase in the  acceptance of the color system
as an  electronic  medium,  the  acquisition  of  Broadcast  Partners  and  less
discounting   due  to  the  increased   subscriber   base  associated  with  the
acquisition.  Advertising revenue growth, excluding the acquisition of Broadcast
Partners,  was 30% in 1996.  Advertising revenue increased on a company wide per
subscriber per month basis to $2.10 in 1996, up from $1.89 in 1995.

Service  initiation  fees,  the  Company's  up-front  one-time  charges  to  new
subscribers  ranged  from  $150 to $495 in 1996  and  from  $150 to $295 in 1995
depending on the service and  information  distribution  technology.  Initiation
fees for  subscribers  that  convert  to  another  service  or  change  delivery
technology  (such as FM to Ku) ranged from $50 to $100  depending on the service
in 1995 and 1996. The total fees  collected  increased 66% in 1996 to $5,560,049
compared to $3,357,311 in 1995. The increase was due to increased sales activity
related to the expansion of the national sales force, reduced discounting in the
agricultural  related  services  and an  increase in  conversions  from DTN Wall
Street  to  DTN  SPECTRUM.   Service  initiation  fee  revenue,   excluding  the
acquisition of Broadcast Partners, was 53% in 1996.

Total operating  expenses increased 58% in 1996 over 1995. This increase was due
to a 45% increase in selling,  general and administrative  costs, a 71% increase
in sales commissions and a 78% increase in depreciation and amortization.  These
expenses  (excluding the sales  commission  costs) increased on a per subscriber
per month basis to $54.07 in 1996 compared to $49.75 in 1995.

Selling, general and administrative expenses on a per subscriber per month basis
increased to $32.12,  up slightly from 31.97 in 1995.  These costs were flat due
to  efficiency  gains from  spreading  costs over a larger  base of  subscribers
obtained from an expanded sales force and from acquisitions.  Selling,  general,
and  administrative  expenses as a percentage of revenue  decreased  from 54% in
1995  to  50%  in  1996.  Selling,  general  and  administrative  expenses  as a
percentage  of  revenue,   excluding  the  acquisition  of  Broadcast  Partners,
decreased to 53%.

Sales commissions are generated from new subscription sales and revenues related
to the DTNergy service.  Sales commissions increased 71% during 1996 compared to
1995. This increase is due to higher subscription  sales,  incentive programs to
the national sales force and sales management related to the rapid expansion and
22% higher revenues in DTNergy.  Sales  commissions  growth,  excluding  the
acquisition  of  Broadcast   Partners,   was  60%  in  1996.

Depreciation and amortization expense primarily increased due to the purchase of
$37,424,684  of new  equipment  used  by  subscribers  and  the  acquisition  of
Broadcast  Partners.  The Company acquired and capitalized  approximately  $38.2
million of  equipment  and $34.8  million of  intangible  assets  related to the
acquisition. The Company began using a six year life for depreciating subscriber
equipment  in July of 1992  compared  to an eight year life prior to the change.
The  Company is  depreciating  the  equipment  acquired  in the  acquisition  of
Broadcast Partners over a five year life and is amortizing the intangible assets
from this acquisition over a three to eight year life beginning in May of 1996.

Operating  income  increased 59% to $6,920,791,  up from $4,343,252 in 1995 as a
result of the growth in revenues and expenses  discussed  above.  Operating cash
flow grew 74% to  $40,377,428,  up from  $23,154,402 in 1995.

Interest expense increased 76% in 1996 compared to 1995. The increase is related
to  borrowings  to finance  new  subscriber  equipment  and the  acquisition  of
Broadcast  Partners.  The Company increased the revolving credit line borrowings
from  $21,250,000  at December 31, 1995 to $38,500,000 at December 31, 1996. The
Company borrowed $48,490,000 to acquire Broadcast Partners.

The Company's  federal and state effective tax rate was 32% and 29% for 1996 and
1995, respectively.

                                       35

                                    - 295 -
<PAGE>

                                NOTES
--------------------------------------------------------------------------------





















                                       36

                                    - 296 -
<PAGE>

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

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

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

The  Audit  Committee  meets  periodically  with our  independent  auditors  and
management  to review  accounting,  auditing,  internal  control  and  financial
reporting matters.



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

INDEPENDENT AUDITOR'S REPORT
--------------------------------------------------------------------------------


Board of Directors and Stockholders
Data Transmission Network Corporation

We have audited the  accompanying  balance sheets of Data  Transmission  Network
Corporation  as of December  31, 1997 and 1996,  and the related  statements  of
operations,  stockholders'  equity and cash flows for each of the three years in
the  period  ended  December  31,  1997.  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  financial  statements  present  fairly,  in all material
respects,  the financial position of Data Transmission Network Corporation as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.



Deloitte & Touche LLP, Omaha, Nebraska
February 6, 1998

                                       37

                                    - 297 -
<PAGE>

<TABLE>
<CAPTION>


                                 BALANCE SHEETS
---------------------------------------------------------------------------------------------

                     Data Transmission Network Corporation
                        As of December 31, 1997 and 1996


                                                                       1997            1996
---------------------------------------------------------------------------------------------
ASSETS
<S>                                                              <C>             <C>
Current Assets:
        Cash                                                     $    837,170    $    708,053
        Accounts receivable, net of allowance for
                doubtful accounts of $810,000 and $520,000          7,629,296       9,653,766
        Prepaid expenses                                              825,577         583,985
        Deferred commission expense                                 3,302,972       2,807,330
                                                                 ----------------------------
                Total Current Assets                               12,595,015      13,753,134

Property and Equipment
        Equipment Used By Subscribers                             224,620,148     203,310,661
        Equipment and Leasehold Improvements                       23,155,237      19,702,330
                                                                 ----------------------------
                                                                  247,775,385     223,012,991
        Less: Accumulated Depreciation                            135,265,090      98,564,288
                                                                 ----------------------------
                Net Property and Equipment                        112,510,295    124,448,703
Intangible Assets From Acquisitions, net of accumulated
        amortization of $9,728,684 and $3,871,956                 34,764,802     36,517,799

Other Asset                                                         2,560,786      3,010,126
                                                                 ----------------------------
                                                                 $162,430,898    $177,729,762
---------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS EQUITY

Current Liabilities:
        Accounts payable                                         $  6,985,053    $  7,485,517
        Accrued expenses                                            5,319,506       5,923,628
        Current portion of long-term debt                          21,810,833      15,092,083
                                                                 ----------------------------
                Total Current Liabilities                          34,115,392      28,501,228

Long-Term Debt                                                     58,248,540      83,184,373
Subordinated Long-Term Notes, net of unamortized
        discount of $357,170 and $436,550                          14,642,830      14,563,450
Equipment Deposits                                                    484,017         515,142
Unearned Revenue                                                   22,743,946      22,675,280

Stockholders Equity:
        Common stock, par value $.001, authorized
                20,000,000 shares, issued 11,148,052
                and 11,074,224                                         11,148          11,074
        Paid-in capital                                            31,326,683      14,302,689
        Retained earnings (deficit)                                   858,342      (1,404,602)
        Treasury stock, at cost, 0 and 45,919 shares                        -        (342,173)
                                                                 ----------------------------
                Total Stockholders Equity                          32,196,173      28,290,289
                                                                 ----------------------------
                                                                 $162,430,898    $177,729,762

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


                                       38

                                    - 298 -
<PAGE>


<TABLE>
<CAPTION>
                            STATEMENTS OF OPERATIONS
-------------------------------------------------------------------------------------------

                      Data Transmission Network Corporation
                  Years ended December 31, 1997, 1996 and 1995



                                                  1997            1996            1995
-------------------------------------------------------------------------------------------
REVENUES
<S>                                           <C>             <C>             <C>
        Subscriptions                         $101,194,290    $ 75,019,826    $ 46,126,332
        Additional services                      6,694,754       5,792,799       3,917,631
        Communication services                  10,050,073       8,812,718       6,864,275
        Advertising                              3,809,748       3,198,321       2,022,440
        Service initiation fees                  4,625,487       5,560,049       3,357,311
                                              ---------------------------------------------
                                               126,374,352      98,383,713      62,287,989

EXPENSES

        Selling, general and administrative     61,790,861      48,944,027      33,827,282
        Sales commissions                        9,884,783       9,062,258       5,306,305
        Depreciation and amortization           42,315,305      33,456,637      18,811,150
                                              ---------------------------------------------
                                               113,990,949      91,462,922      57,944,737
                                              ---------------------------------------------
OPERATING INCOME                                12,383,402       6,920,791       4,343,252

        Interest expense                         9,098,231       8,432,270       4,798,112
        Other income, net                          121,909         107,173          57,784
                                              ---------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES                3,407,081      (1,404,306)       (397,076)

        Income tax expense (benefit)             1,171,000        (446,000)       (114,000)
                                              ---------------------------------------------

NET INCOME (LOSS)                             $  2,236,081    $   (958,306)  $    (283,076)
-------------------------------------------------------------------------------------------

BASIC INCOME (LOSS) PER SHARE                 $       0.20    $      (0.09)   $      (0.03)
-------------------------------------------------------------------------------------------

DILUTED INCOME (LOSS) PER SHARE               $       0.19    $      (0.09)   $      (0.03)
-------------------------------------------------------------------------------------------

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

                                       39

                                     - 299 -
<PAGE>

<TABLE>
<CAPTION>

                                              STATEMENTS OF STOCKHOLDERS EQUITY
------------------------------------------------------------------------------------------------------------------------

                                            Data Transmission Network Corporation
                                         Years ended December 31, 1995, 1996 and 1997


                                                                             RETAINED                         TOTAL
                                                COMMON      PAID -IN         EARNINGS        TREASURY      STOCKHOLDERS
                                                 STOCK       CAPITAL         (DEFICIT)         STOCK          EQUITY
------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>            <C>              <C>            <C>             <C>

Balance, January 1, 1995                      $  3,375   $ 14,302,689      $  (217,501)    $(1,381,585)     $12,706,978
Treasury stock issued on exercise of
        employee stock options                       -              -            2,890         330,173          333,063
Tax benefit related to exercise of
        employee stock options                       -       120,000                 -               -          120,000
Net loss                                             -             -          (283,076)              -         (283,076)
                                              --------------------------------------------------------------------------
Balance, December 31, 1995                    $  3,375   $ 14,422,689      $  (497,687)    $(1,051,412)     $12,876,965
Treasury stock issued on exercise of
        employee stock options                       -              -           51,391         709,239          760,630
Tax benefit related to exercise of
        employee stock options                       -        634,000                -               -          634,000
Issuance of common stock                           316     14,976,684                -               -       14,977,000
Three-for-one stock split                        7,383         (7,383)               -               -                -
Net loss                                             -              -         (958,306)              -         (958,306)
                                              --------------------------------------------------------------------------
Balance, December 31, 1996                    $ 11,074   $ 30,025,990      $(1,404,602)    $  (342,173)     $28,290,289
Treasury stock issued on exercise of
        employee stock options                       -              -           26,863         342,173          369,036
Tax benefit related to exercise of
        employee stock options                       -        675,000                -               -          675,000
Issuance of common stock                            74        625,693                -               -          625,767
Net income                                           -              -        2,236,081               -        2,236,081
                                              --------------------------------------------------------------------------
Balance, December 31, 1997                    $ 11,148   $ 31,326,683      $   858,342     $         -      $32,196,173

<FN>

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

</FN>
</TABLE>

                                       40

                                    - 300 -
<PAGE>

<TABLE>
<CAPTION>

                                                        STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------------------------------------------------------

                                                   Data Transmission Network Corporation
                                                Years ended December 31, 1997, 1996 and 1995

                                                                                   1997           1995             1995
-------------------------------------------------------------------------------------------------------------------------

<S>                                                                          <C>             <C>             <C>
Cash Flows From Operating Activities
        Net income (loss)                                                    $  2,236,081    $   (958,306)   $   (283,076)
        Adjustments to reconcile net income (loss) to
                net cash provided by operating activities:
                Depreciation and amortization                                  42,315,305      33,456,637      18,811,150
                Amortization of debt issue costs and discount                     147,880         139,694         128,760
                Deferred income taxes                                           1,056,000        (480,000)       (239,000)
        Change in assets and liabilities:
                Accounts receivable                                            (1,278,437)        (63,634)     (3,178,803)
                Prepaid expenses                                                 (180,068)        (21,839)       (284,803)
                Deferred commission expense                                      (400,469)       (310,792)     (1,446,337)
                Deferred debt issuance costs                                            -        (112,078)              -
                Other assets                                                            -               -      (1,029,433)
                Accounts payable                                                  518,361      (1,947,116)        604,791
                Accrued expenses                                               (1,113,749)       (149,687)        739,453
                Equipment deposits                                                (51,175)        (26,578)           (382)
                Unearned revenue                                                4,293,666       4,251,166       2,800,990
                                                                             ---------------------------------------------
        Net Cash Provided By Operating Activities                              47,543,395      33,777,467      16,623,310
Cash Flows From Investing Activities
        Capital expenditures:
                Equipment used by subscribers                                 (21,137,267)    (37,424,684)    (23,746,086)
                Equipment and leasehold improvements                           (3,367,535)     (3,120,125)     (3,914,442)
        Acquisition of Subscribers                                             (5,687,196)    (65,745,794)     (1,767,420
                                                                             ---------------------------------------------
         Net Cash Used By Investing Activities                                (30,191,998)   (106,290,603)    (29,427,948)
Cash Flows From Financing Activities
        Proceeds from term debt agreement                                               -      48,490,000               -
        Principal payments on long-term debt                                  (22,217,083)     (9,036,459)     (8,718,750)
        Proceeds from revolving credit agreement                                4,000,000      17,250,000      21,250,000
        Proceeds from the exercise of stock options                               994,803         760,630         333,063
        Proceeds from the issuance of common stock                                      -      14,977,000               -
                                                                             ---------------------------------------------
         Net Cash Provided (Used) By Financing Activities                     (17,222,280)     72,441,171      12,864,313
                                                                             ---------------------------------------------
Net Increase (Decrease) in Cash                                                   129,117         (71,965)         59,675
Cash at Beginning of Period                                                       708,053         780,018         720,343
                                                                             ---------------------------------------------
Cash at End of Period                                                        $    837,170    $    708,053 $       780,018
<FN>

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

</FN>
</TABLE>

                                       41

                                    - 301 -
<PAGE>

                         NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                     Data Transmission Network Corporation
                  Years ended December 31, 1997, 1996 and 1995

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------
Revenue Recognition
The Company provides its subscribers  with equipment to receive  information and
communications  service.  DTN charges a recurring  subscription  fee and in most
instances a one-time service  initiation fee. The  subscriptions  are contracted
for an initial period of one year and are generally billed quarterly in advance.
Payments  received  in  advance  for  subscriptions,   additional  services  and
advertising  are  deferred  and  recognized  as the services are provided to the
subscribers.  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.

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

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

Equipment and Leasehold  Improvements
Equipment  and  leasehold  improvements  are  stated  at cost  less  accumulated
depreciation. Depreciation is calculated using the straight-line method over the
estimated  useful lives of the assets,  which range from two to seven years,  or
the related lease, which range from five to ten years.

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

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

Earnings (Loss) Per Share
The  Financial  Accounting  Standards  Board (FASB)  issued  statement  No. 128,
"Earnings Per Share", which is effective for 1997 financial statements. FASB No.
128 requires dual  presentation of Basic and Diluted  earnings per share for all
periods for which an income  statement is  presented.  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.  All prior periods  earnings per
share data have been restated in accordance with FASB No. 128.

Statement of Cash Flows
For purposes of the  statement of cash flows,  the Company  considers all highly
liquid investments  purchased with a maturity of three months or less to be cash
equivalents.  During the periods  ended  December 31, 1997,  1996 and 1995,  the
Company  made  interest  payments  of  $8,983,000,  $8,555,000  and  $4,386,000,
respectively. Capital expenditures for subscriber equipment included in accounts
payable at year end totalled  $1,105,000  $1,394,000  and $2,191,000 at December
31, 1997,  1996 and 1995,  respectively.  The Company paid $1,146,000 of federal
income taxes in 1995 relating to recoverable Alternative Minimum Taxes (AMT) for
prior  periods  which is included in other  assets.  The Company paid no federal
income taxes during 1997 or 1996. At December 31, 1996, $931,700 of the purchase
price for  acquired  subscribers  was due in future  periods and was included in
accounts payable.

Research  and Development
Research  and  development  costs  are  charged  to  earnings  as  incurred  and
approximated $3,059,000, $2,263,000 and $1,596,000 for the periods ended
December 31, 1997, 1996, and 1995.

                                       42

                                    - 302 -
<PAGE>

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

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  have a fair value  approximating  their carrying  value.
These  instruments  include  accounts  receivable,  revolving  credit  and  term
borrowings, subordinated debt, commercial paper, and trade payables.

Accounting Pronouncements
In June 1997,  the FASB  issued  Statement  No.  130,  "Reporting  Comprehensive
Income".  This statement  establishes for reporting and display of comprehensive
income and its components in a full set of general-purpose financial statements.
This statement is effective for 1998 financial statements.


Also in June 1997, the FASB issued statement No. 131, "Disclosure about segments
of an Enterprise and Related Information", which will be effective in 1998. FASB
No. 131 establishes  standards for the way public enterprises report information
about operating segments. The Company has not yet completed its analysis of this
statement to determine if additional  disclosure  will be required  beginning in
1998.

2.  ACQUISITIONS
--------------------------------------------------------------------------------
Knight-Ridder
On July 26,  1995,  the Company  entered into an  agreement  with Knight  Ridder
Financial (KRF)   to  acquire   2,900  Knight  Ridder   Commodity  News  Service
subscribers.  The Company agreed to pay KRF  approximately  $4,970,000 for these
subscribers  over two years. The Company agreed to pay $1,500,000 at closing and
$1,500,000 on the first anniversary of the closing. The remaining $1,970,000 was
based on company estimates of future revenue sharing. This payment was scheduled
to be paid  quarterly  during  the  first  two  years of the  agreement  and was
completed during 1997. The Company capitalized $4,970,000 as an intangible asset
(goodwill) and is amortizing this cost using the straight-line method over eight
years.

Broadcast  Partners
On May 3, 1996, the Company acquired  substantially  all the assets of Broadcast
Partners, an electronic information and communication services company providing
similar services as DTN AgDaily in the agricultural  industry.  The Company paid
$63.5 million cash and assumed  certain  "non-interest"  bearing  liabilities of
approximately $9.8 million. The Company received 39,000 agricultural subscribers
in this acquisition.

The $63.5 million cash paid for the Broadcast Partners  acquisition was financed
with a  combination  of $15 million of privately  placed common stock equity and
$48.5  million  of six year term debt (see note 3).  The  Company  acquired  and
capitalized   approximately   $38.2  million  of   equipment.   The  Company  is
depreciating this equipment using the straight-line  method over five years. The
Company   capitalized   approximately  $34.8  million  as  an  intangible  asset
(goodwill) and is amortizing this cost using the straight-line method over three
to eight years.

The  following  unaudited  pro  forma  information  sets  forth the  results  of
operations  as though the  acquisition  of  Broadcast  Partners  had occurred at
January 1, 1995:

<TABLE>
<CAPTION>

Proforma  December  31,                        1996                   1995
--------------------------------------------------------------------------------
<S>                                       <C>                     <C>
Revenues                                  $ 106,646,073           $ 84,018,887
Net Loss                                  $  (1,303,509)          $ (2,992,648)
Loss Per Share                            $  (     0.12)          $ (     0.27)

</TABLE>

This  unaudited  pro  forma  information  is  based  on  historical  results  of
operations  as if the  acquisition  took place on January 1, 1995  adjusted  for
acquisition costs,  realized  efficiencies and in the opinion of Management,  is
not  necessarily  indicative of what the results would have been had the Company
operated with the acquisition since the beginning of 1995.

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

                                       43

                                    - 303 -
<PAGE>

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 (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.
On July 1, 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  paid  $200,000  cash in 1997 and will pay
$200,000 cash on each of the next four  anniversary  dates.  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 is capitalizing the $200,000  payments when
made as an  intangible  asset  (goodwill)  and  amortizing  this cost  using the
straight-line  method over 12 months.  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
On  October  24,  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 $600 for each  subscriber  that converts to a DTN service.
The Company  believes the majority  will convert 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 will  capitalize the $600  acquisition  payment per subscriber as an
intangible  asset  (goodwill)  and  amortize  this cost using the  straight-line
method over eight years. No payments were made in 1997.

3.  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, 1999 unless extended,  provides for a total commitment of up to
$33,000,000 in new borrowings.  As of December 31, 1997, $4,500,000 of the total
commitment had been borrowed,  with the remaining  $28,500,000  available to the
Company subject to certain restrictions as discussed below.

<TABLE>
<CAPTION>

December  31,                                 1997                   1996
--------------------------------------------------------------------------------
<S>                                   <C>                    <C>
Revolving  Credit Agreement
        Revolving credit line         $       4,500,000      $       38,500,000
        Term notes                           35,151,040              10,786,456
Term Credit Agreement
        Term notes                           40,408,333              48,490,000
Stock Repurchase Agreement
        Term notes                                    -                 500,000
--------------------------------------------------------------------------------
Total Loan Agreements                        80,059,373              98,276,456
--------------------------------------------------------------------------------
Less current portion                         21,810,833              15,092,083
--------------------------------------------------------------------------------
Total Long-Term Debt                 $       58,248,540      $       83,184,373

</TABLE>

Additional  borrowings under the Revolving Credit Agreement are available to the
Company,  as long as at the time of the advance,  no default  exists with any of
the Company loan  agreements or the  subordinated  notes agreement (see Note 4),
and total debt  outstanding  (including  term notes  outstanding  but  excluding
long-term  subordinated debt) does not exceed thirty-six times monthly operating
cash flow (as defined).  As of December 31, 1997 based on current operating cash
flow,  the  Company  would be able to borrow  all of the  remaining  $28,500,000
commitment available.

In addition to the restrictions mentioned above with respect to advances,  total
debt  outstanding   (excluding  long-term   subordinated  debt)  is  limited  to
forty-eight  times  monthly  operating  cash  flow.  Additionally,   total  debt
outstanding  (including  subordinated  debt) is limited to sixty  times  monthly
operating  cash flow.  The Company is required to maintain  total  stockholders'

                                       44

                                    - 304 -
<PAGE>

equity of at least  $23,500,000  plus fifty percent (50%) of net income (but not
losses) at fiscal  year end through  June 30,  1999.  The minimum  stockholders'
equity  required to be maintained is  $24,618,040  as of December 31, 1997.  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  (excluding  long-term  subordinated
debt) to  operating  cash flow  (the  "Leverage  Ratio").  The  following  table
outlines the "Leverage Ratio", the applicable Margin, Unused Commitment Fees and
Fixed Note Margin to be discussed below.

<TABLE>
<CAPTION>

                                                UNUSED        FIXED
                                              COMMITMENT       NOTE
LEVERAGE  RATIO                     MARGIN        FEE         MARGIN
--------------------------------------------------------------------
<S>                                 <C>          <C>          <C>
More than 42                         .250%       .375         2.25%
More than 36 and less than 42        .500%       .250%        2.25%
More than 30 and less than 36        .750%       .250%        2.00%
More than 24 and less than 30       1.000%       .250%        2.00%
More than 18 and less than 24       1.250%       .125%        1.75%
Less than 18                        1.375%       .125%        1.75%

</TABLE>

The Revolving  Credit Rate is the First National Bank of Omaha's  "National Base
Rate", minus the applicable Margin. The base rate is adjusted monthly,  with the
interest rate margin (as defined  above) changed  quarterly.  As of December 31,
1997, the Revolving Credit Rate is 7.25%.

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 1/2% over the Revolving Credit Rate 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. As of December 31, 1997, $4,500,000
of the total borrowings  outstanding had not been converted to term loans. As of
December  31,  1997,  $35,151,040  of term loans were  outstanding  with monthly
installments  due up through 2001 having  interest  rates ranging from 7.865% to
9.25%.

The Company  pays a  commitment  fee of 1/8 - 3/8% on the unused  portion of the
total revolving credit  commitment based on the "Leverage Ratio". As of December
31, 1997 the commitment fee was 1/8% on all unused revolving credit  commitment.
Additionally, if total borrowings (excluding long-term subordinated debt) exceed
36 times the Operating  Cash Flow (as defined),  the Company will be required to
pay a closing fee of 1/2% on all new  borrowings  made after that point in time.
In the event the total borrowings  exceed 36 times Operating Cash Flow, any term
note accruing  interest at less than 7.5% is included in a "Trigger Event".  The
Company is  obligated  to pay the  holders of such term notes a fee of 0.375% of
the  outstanding  balance of the notes upon the  occurrence of the Trigger Event
and like amounts on the six month  anniversary and the twelve month  anniversary
of the Trigger Event.

The Company has a Term Credit Agreement dated February 26, 1997, with a group of
banks providing for an aggregate principal amount of $48,490,000 to be repaid in
72 fixed  principal  installments  beginning  January 31,  1997.  As of December
31,1997,  the principal  balance was $40,408,333 with $21,157,500  accruing at a
variable  interest rate of NY prime rate less one-half of one percent,  or 8.00%
and the  remaining  $19,250,833  accruing at fixed  interest  rates ranging from
8.25% to 8.36%.

During 1992, the Company  entered into a loan agreement and borrowed  $2,000,000
solely for the repurchase of the Company's  outstanding common stock (the "Stock
Repurchase" Agreement).  As of December 31, 1997, the amounts borrowed under the
Stock Repurchase Agreement, have been fully repaid.

<TABLE>
<CAPTION>

                 MINIMUM PRINCIPLE MATURITIES OF LONG-TERM DEBT*
--------------------------------------------------------------------------------
Year ending December 31,


        <S>                                                  <C>
        1998                                                 $       21,810,833
        1999                                                         17,628,540
        2000                                                         17,581,667
        2001                                                         10,456,667
        2002 and after                                                8,081,666
--------------------------------------------------------------------------------
Total                                                        $       75,559,373

<FN>

* Excluding revolving credit line.
</FN>
</TABLE>

The revolving  credit lines are  classified as long-term  debt since the Company
has the ability and the intent to maintain these obligations for longer than one
year.  Substantially all of the Company's assets are pledged as collateral under
the Company's long-term debt and loan agreements.


4.  SUBORDINATED LONG-TERM NOTES
--------------------------------------------------------------------------------
On June 30, 1994,  the Company sold to one  investor  $15,000,000  of its 11.25%
subordinated   long-term  notes  in  a  private   placement   transaction   (the
"subordinated  debt"). The subordinated debt is subordinated in right of payment
to all current and future  senior  debt.  Interest on the  subordinated  debt is
scheduled  to be  paid  quarterly,  with  principle  due in  five  equal  annual
installments beginning on June 30, 2000.

The  Company  has the option to prepay the  subordinated  debt on any date after
June 30, 1997 at a premium beginning at

                                       45


                                    - 305 -
<PAGE>

7.5% of the principal  prepaid,  and  decreasing by 1.5% per year until June 30,
2002 when no  premium  is  required.  There are also  provisions  for  mandatory
prepayment  upon a change  in  ownership  control  (as  defined),  at a  premium
beginning  at 12.0% of the  principal  prepaid  during the period ended June 30,
1995 and  decreasing  by 1.5% per year  until  June 30,  2002 when no premium is
required.

The subordinated debt agreement contains a  cross-acceleration  clause,  whereby
the  subordinated  debt will become  immediately  due and payable upon a payment
default on the revolving and term credit  agreements.  Other  subordinated  debt
financial  covenants and  restrictions are generally less restrictive than those
of the other loan agreements.

The Company also issued a warrant to the investor to purchase  75,000  shares of
the Company's $.001 par value common stock at $7.39 per share (as adjusted after
the  three-for-one  stock split) on or before June 30, 2004. In connection  with
the issuance of the warrant to purchase  common  stock,  the Company  recorded a
$635,000 credit to additional paid-in capital and a related debt discount, which
represented an estimate of the fair value of the warrant issued.

5.  INCOME  TAXES
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Components  of the income tax (benefit) provision are as follows:
                                      1997           1996               1995
--------------------------------------------------------------------------------
<S>                             <C>              <C>                 <C>
Current                         $    115,000     $   34,000          $  125,000
Deferred                           1,056,000       (480,000)           (239,000)
--------------------------------------------------------------------------------
                                $  1,171,000     $ (446,000)         $ (114,000)
</TABLE>

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

                                      1997           1996               1995
--------------------------------------------------------------------------------

<S>                            <C>               <C>                 <C>
Federal                        $   1,158,000     $ (477,000)         $ (139,000)
State taxes                           68,000        (28,000)              1,000
Other                                (55,000)        59,000              24,000
--------------------------------------------------------------------------------
                               $   1,171,000     $ (446,000)         $ (114,000)

</TABLE>

The components of deferred tax liability (asset) are as follows:

<TABLE>
<CAPTION>


                                              1997                      1996
--------------------------------------------------------------------------------
<S>                                     <C>                        <C>
Depreciation                            $  6,573,000               $  6,411,000
Net operating loss carryforwards          (8,101,000)                (8,301,000)
Other                                        182,000                    282,000
--------------------------------------------------------------------------------
Net Deferred Asset                      $ (1,346,000)              $ (1,608,000)

</TABLE>

The Company had  approximately  $22,500,000  of unused net operating  loss (NOL)
carryforwards  at December 31, 1997.  The NOL  carryforwards  will expire in the
years 2002 to 2012.  In addition,  the Company is reflecting in the Other Assets
approximately $911,000 relating to pending IRS refund claims.

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

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

As part of the May 3, 1996 acquisition of Broadcast  Partners,  the Company sold
948,000 (split adjusted) shares through a private placement transaction.

During the second  quarter of 1996,  the  Company  effectuated  a  three-for-one
common stock split,  payable  June 28, 1996 to  stockholders  of record June 14,
1996.  The stated par value of each share was not changed from $.001. A total of
$7,383 was reclassified from the Company's additional paid in capital account to
the Company's common stock account.

7.  BENEFIT  PLAN
--------------------------------------------------------------------------------
The Company has a defined contribution plan under provisions of Internal Revenue
Code  Section  401(k).  All  employees  with at least  one year of  service  may
participate in the plan. The Company  matches the employee's  contribution up to
4% of  the  employee's  compensation,  and  may  make  additional  discretionary
contributions.  During 1997,  1996 and 1995, the Company  contributed  $848,000,
$671,000 and $482,000, respectively, to the plan as matching contributions.


                                       46

                                    - 306 -
<PAGE>


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

At December 31, 1997,  shares of the Company's  authorized  but unissued  common
stock were reserved for issuance as follows:
<TABLE>
<CAPTION>

                                        SHARES
-----------------------------------------------
<S>                                     <C>
Employee stock option plan              880,663
Non-employee director plan              100,503
-----------------------------------------------
Total                                   981,166

</TABLE>

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

The effect on 1997,  1996 and 1995 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>


                                       1997           1996           1995
--------------------------------------------------------------------------------
<S>                               <C>             <C>              <C>
Net Income (Loss)
        As Reported               $ 2,236,081     $  (958,306)     $ (283,076)
        Proforma                  $   920,827     $(2,452,206)     $ (675,125)
Diluted Income (Loss) per share
        As Reported               $      0.19     $     (0.09)     $    (0.03)
        Proforma                  $      0.08     $     (0.23)     $    (0.07)
--------------------------------------------------------------------------------
Fair Value                        $     11.56     $      8.22      $     3.21

</TABLE>

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

<TABLE>
<CAPTION>

                                         1997            1996            1995
--------------------------------------------------------------------------------
<S>                                     <C>             <C>             <C>
Risk-free interest rate                 5.5 %           5.4 %           7.8 %
Dividend yield                          0.0 %           0.0 %           0.0 %
Expected volatility                    51.0 %          56.0 %          54.0 %
Expected life (years)                    5.60            4.75            4.25


</TABLE>

The following table summarizes the stock options as of December 31, 1997, 1996,
1995:

<TABLE>
<CAPTION>

                                              1997                         1996                       1995
-----------------------------------------------------------------------------------------------------------------------
                                               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    1,520,810     $    9.04      1,276,959     $   5.79        988,185     $ 5.57
-----------------------------------------------------------------------------------------------------------------------
Granted                               207,350     $   21.60        538,800     $  15.64        401,250     $ 6.23
Exercised                            (119,644)    $    8.33       (134,878)    $   5.64        (70,224)    $ 4.74
Cancelled                             (62,084)    $   14.23       (160,071)    $   7.93        (42,252)    $ 6.32
-----------------------------------------------------------------------------------------------------------------------
Outstanding at end of year          1,546,432     $   10.55      1,520,810     $   9.04      1,276,959     $ 5.79
-----------------------------------------------------------------------------------------------------------------------
Exercisable at end of year            968,834     $    7.25        741,409     $   5.67        629,811     $ 5.08

</TABLE>


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

<TABLE>
<CAPTION>

                                           OPTIONS OUTSTANDING                           OPTIONS EXERCISABLE
------------------------------------------------------------------------------------------------------------------
                                Shares      Weighted-Average   Weighted-Average     Shares        Weighted-Average
Range of Exercise Prices     Outstanding     Remaining Life     Exercise Price     Exercisable     Exercise Price
------------------------------------------------------------------------------------------------------------------
<C>        <C>               <C>               <C>                  <C>              <C>              <C>
$  0.00 -  $  4.67             432,629         4.0 years            $  4.30          428,129          $  4.34
$  4.75 -  $  8.83             451,983         6.1 years            $  6.60          375,335          $  6.82
$  9.67 -  $ 14.42               2,050          7.7 years           $ 11.67            1,950          $ 11.53
$ 15.50 -  $ 31.50             659,770          8.3 years           $ 17.36          163,420          $ 15.81
------------------------------------------------------------------------------------------------------------------
$  0.00 -  $ 31.50           1,546,432          6.5 years           $ 10.55          968,834          $  7.25

</TABLE>


                                       47

                                    - 307 -
<PAGE>


9. EARNINGS PER SHARE
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

The following table provides a reconciliation between basic and diluted earnings per share.
                                             1997                            1996                               1995
------------------------------------------------------------------------------------------------------------------------------------
                                                        Per-Share                       Per-Share                        Per-Share
                                  Income      Shares     Amount    Income      Shares     Amount     Income      Shares    Amount
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>          <C>         <C>     <C>          <C>         <C>       <C>          <C>        <C>
Basic EPS
   Net Income (Loss)           $ 2,236,081  11,100,684  $ 0.20  $ (958,306)  10,657,893  $ (0.09)  $ (283,076)  9,908,592  $(0.03)
Effect of Dilutive Securities
   Stock Options and Warrants            -     981,872       -           -            -        -            -           -       -
------------------------------------------------------------------------------------------------------------------------------------
Diluted EPS                    $ 2,236,081  12,082,556  $ 0.19  $ (958,306)  10,657,893  $  0.09)  $ (283,076)  9,908,592  $(0.03)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

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

Future  minimum lease  payments  under all  non-cancelable  operating  leases at
December 31, 1997 are as follows:

Year ending December 31,
--------------------------------------------------
        1998                         $   4,898,000
        1999                             4,090,000
        2000                             3,846,000
        2001                             3,062,000
        2002                             2,156,000
        2003 and after                   4,100,000
--------------------------------------------------
Total future minimum lease payments   $ 22,152,000

Total  rent  expense on all  operating  leases was  $4,842,000,  $3,459,000  and
$2,712,000 for the years ended December 31, 1997, 1996 and 1995, respectively.


                                       48

                                    - 308 -
<PAGE>

                                     NOTES
--------------------------------------------------------------------------------


















                                       49

                                    - 309 -
<PAGE>

                                      NOTES
--------------------------------------------------------------------------------



















                                       50

                                    - 310 -
<PAGE>


<TABLE>
<CAPTION>

                                                      QUARTERLY DATA (UNAUDITED)
---------------------------------------------------------------------------------------------------------------------

                                                  Data Transmission Network Corporation


                                        OPERATING       PRE-TAX                NET INCOME (LOSS)           TOTAL
                                                                           --------------------------
                        REVENUES        CASH FLOW1     INCOME (LOSS)       AMOUNT        DILUTED EPS2    SUBSCRIBERS
--------------------------------------------------------------------------------------------------------------------
<S>                 <C>               <C>               <C>               <C>                <C>          <C>
Fiscal 1997
        First       $  29,466,873     $ 13,141,205      $   566,619       $    361,619       $ .03        151,800
        Second         31,391,287       13,508,667          757,061            485,561         .04        153,700
        Third          32,216,238       13,770,835          891,300            571,800         .05        155,700
        Fourth         33,299,954       14,278,001        1,192,101            817,101         .07        158,800
--------------------------------------------------------------------------------------------------------------------
Year                $ 126,374,352     $ 54,698,708      $ 3,407,081       $  2,236,081       $ .19        158,800
--------------------------------------------------------------------------------------------------------------------
Fiscal 1996
        First       $  19,113,017     $  6,502,483      $  (557,991)      $   (356,991)      $(.04)        99,600
        Second         24,194,864        9,592,827         (701,346)          (447,346)       (.04)       142,000
        Third          27,141,339       11,759,893         (328,503)          (260,003)       (.02)       144,100
        Fourth         27,934,493       12,522,225          183,534            106,034          .01       145,900
--------------------------------------------------------------------------------------------------------------------
Year                $  98,383,713     $ 40,377,428      $(1,404,306)      $   (958,306)      $ (.09)      145,900

<FN>

1 Operating income before depreciation and amortization expense.
2 Net income per share for each of the four quarters may not agree to net income
  per share for the year due to rounding.

</FN>
</TABLE>


<TABLE>
<CAPTION>

                              TRADING INFORMATION
--------------------------------------------------------------------------------
                         MARKET PRICE 1997             MARKET PRICE 1996
                    --------------------------       ---------------------------
QUARTER ENDED       HIGH        LOW       LAST       HIGH        LOW       LAST

   <S>              <C>       <C>        <C>        <C>        <C>        <C>
   March 31        28 3/4     21 1/4     26 1/4     16 5/8     13 5/8     15 3/8
   June 30         33 1/4     22 3/4     31 3/4     23         15 5/8     21 3/8
   September 30    32 1/2     27 1/4     29 1/2     26 1/2     17         21
   December 31     32 5/8     25 3/4     28         23         19 3/4     22 1/4

</TABLE>

The  Company's  common  stock trades on the Nasdaq  National  Market tier of The
Nasdaq Stock MarketSM under the symbol:  DTLN. On December 31, 1997,  there were
approximately 500 stockholders of record, not including beneficial holders whose
shares are held in names other than their own.


                                       51


                                    - 311 -
<PAGE>


                               BOARD OF DIRECTORS
--------------------------------------------------------------------------------
                     Data Transmission Network Corporation

Roger R. Brodersen
Chairman of the Board
Chief Executive Officer
Data Transmission Network Corp.

Robert S. Herman
Senior Vice President
Data Transmission Network Corp.

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

J. Michael Parks
President
Chief Executive Officer
Alliance Data Systems

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

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

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


                               CORPORATE OFFICERS
--------------------------------------------------------------------------------
                     Data Transmission Network Corporation

Roger R. Brodersen
Chairman of the Board
Chief Executive Officer

Greg T. Sloma
President
Chief Operating Officer

Robert S. Herman
Senior Vice President
Research and Technology

James J. Marquiss
Senior Vice President
Co-President, Ag Division

Roger W. Wallace
Senior Vice President
Co-President, Ag Division

Charles R. Wood
Senior Vice President
President, Financial Services

Keith A. Cook
Vice President
Auto Services

William R. Davison
Vice President
President, Ag Services

Scott Fleck
Vice President
Director of Engineering

H. Wade German
Vice President
Business Research

Brian L. Larson
Vice President
Chief Financial Officer
Secretary and Treasurer

Gordon R. Lundy
Vice President
President, Energy Services

James G. Payne
Vice President
Services Support and Special Projects


                                       52


                                    - 312 -
<PAGE>


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

INDEPENDENT AUDITORS
Deloitte & Touche LLP

STOCK TRANSFER AGENT
First National Bank of Omaha
Attn: Corporate Trust Services
One First National Center
Omaha, Nebraska 68102

ANNUAL SHAREHOLDERS MEETING
The annual shareholders meeting will be held on:
Wednesday, April 22, 1998 at 10:00 A.M.,
at the Best Western Regency West, 909 South 107 Avenue, Omaha, Nebraska.

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

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

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

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