SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission file Number: 0-22334
LODGENET ENTERTAINMENT CORPORATION 401(K) PLAN AND TRUST
(Title of the Plan)
LODGENET ENTERTAINMENT CORPORATION
(Name of Issuer of the Securities Held Pursuant to the Plan)
DELAWARE 46-0371161
(State of Incorporation) (IRS Employer Identification Number)
3900 WEST INNOVATION STREET, SIOUX FALLS, SOUTH DAKOTA 57107
(Address of Principal Executive Offices)
(605) 988-1000
(Registrant's Telephone Number, including Area Code)
INDEX
PAGE
----
Form 11-K cover page for the LodgeNet Entertainment Corporation
401(k) Plan and Trust ........................................................................ Cover
Index............................................................................................ 2
Signature........................................................................................ 3
FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements of The LodgeNet Entertainment Corporation
401(k) Plan and Trust for the time periods specified below are submitted
herewith together with the independent auditor's report thereon:
Report of Independent Public Accountants......................................................... F-1
Statements of Net Assets Available for Benefits
as of December 31, 2000 and 1999 ............................................................. F-2
Statements of Changes in Net Assets Available for Benefits for the
years ended December 31, 2000 and 1999........................................................ F-3
Notes to Financial Statements.................................................................... F-4
Schedule of Assets (Held At End of Year)......................................................... F-7
Exhibit 23-
Consent of Independent Public Accountants........................................................
All other schedules are omitted since the required information is not present,
or is not present in the amounts sufficient to require submission of a schedule;
or because the information required is included in the financial statements and
notes thereto.
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange
Act of 1934, the trustees (or other persons who administer the employee
benefit plan) have duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
Lodgenet Entertainment Corporation 401(k) Plan and Trust
--------------------------------------------------------
(Name of Plan)
Date: June 29, 2001 /s/ Scott C. Petersen
---------------------------------------------------
Scott C. Petersen
President, Chief Executive Officer and
Plan Trustee
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of
LodgeNet Entertainment Corporation 401(k) Plan:
We have audited the accompanying statements of net assets available for benefits
of LodgeNet Entertainment Corporation 401(k) Plan as of December 31, 2000 and
1999, and the related statement of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of LodgeNet
Entertainment Corporation 401(k) Plan as of December 31, 2000 and 1999, and the
changes in net assets available for benefits for the years then ended in
conformity with accounting principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplementary schedule is the responsibility of the Plan's
management. The supplemental schedule of assets (held at end of year) has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Minneapolis, Minnesota,
April 17, 2001
F-1
LODGENET ENTERTAINMENT CORPORATION 401(k) PLAN
Statements of net assets available for benefits
As of December 31
2000 1999
-------------- --------------
INVESTMENTS $10,481,773 $10,539,580
CONTRIBUTIONS RECEIVABLE:
Participant - 177
Employer - 25,386
-------------- --------------
Total contributions receivable - 25,563
-------------- --------------
Net assets available for benefits $10,481,773 $10,565,143
============== ==============
The accompanying notes are an integral part of these statements.
F-2
LODGENET ENTERTAINMENT CORPORATION 401(k) PLAN
Statements of changes in net assets available for benefits
For the year ended December 31
2000 1999
------------ --------------
ADDITIONS:
Contributions-
Participant $ 1,588,558 $ 1,433,571
Employer 627,876 560,267
Rollover 88,099 18,369
------------ --------------
Total contributions 2,304,533 2,012,207
------------ --------------
Investment income-
Interest income 49,687 44,428
Net realized/unrealized appreciation (depreciation) of investments (1,806,970) 2,432,458
------------ --------------
Total investment income (loss) (1,757,283) 2,476,886
------------ --------------
Total additions 547,250 4,489,093
------------ --------------
DEDUCTIONS:
Expenses - (164)
Distributions to participants (630,620) (827,236)
Forfeitures, net - (1,111)
------------ --------------
Total deductions (630,620) (828,511)
------------ --------------
Net increase (decrease) (83,370) 3,660,582
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 10,565,143 6,904,561
------------ --------------
End of year $10,481,773 $10,565,143
============ ==============
The accompanying notes are an integral part of these statements.
F-3
LODGENET ENTERTAINMENT CORPORATION 401(k) PLAN
Notes to financial statements
December 31, 2000 and 1999
1 DESCRIPTION OF THE PLAN
The following is not a comprehensive description of LodgeNet Entertainment
Corporation 401(k) Plan (the Plan) and, therefore, does not include all
situations and limitations covered by the Plan. Participants should refer to the
plan agreement for a more complete description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan covering all full-time employees of
LodgeNet Entertainment Corporation (the Company) who have completed 90 days of
service and are age 18 or older. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA), as amended.
PLAN OPERATIONS
The Company functions as the plan administrator. The plan administrator utilizes
Fringe Benefits Design, Inc. and Nationwide Life Insurance Company to provide
record-keeping and reporting services. Nationwide Life Insurance Company and
Charles Schwab Retirement Plan Services are the asset custodians of the Plan.
Administrative expenses of the Plan are paid by the Company and were $32,613 in
2000 and $29,355 in 1999.
CONTRIBUTIONS
Participants in the Plan may make a basic voluntary contribution by salary
deferral in amounts ranging from 1 percent to 15 percent of their
compensation, as defined by plan document. The Company matches participant
contributions in an amount equal to 50 percent of the first 6 percent of each
participant's eligible contribution for the plan year, not to exceed 3
percent of their compensation, as defined by plan document.
The Company may make discretionary contributions to the Plan. In a year in which
the Company chooses to make discretionary contributions, the contributions will
be allocated based upon a participant's proportionate share of total
compensation for all participants. There were no discretionary contributions in
2000 or 1999.
VESTING
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the Company's matching contribution portion of participant
accounts plus actual earnings thereon is based on years of continuous service. A
participant is 100 percent vested after five years of credited service based on
the following percentages:
Percent
vested
--------
Less than one year of service -%
One year but less than two 20
Two years but less than three 40
Three years but less than four 60
Four years but less than five 80
Five years or more 100
If a participant dies or becomes disabled while still employed by the Company,
his or her entire plan interest becomes 100 percent vested. Forfeitures of the
nonvested employer contributions, resulting from participants who withdraw from
the Plan, are used to reduce future employer contributions. Forfeitures from
participants were approximately $28,051 in 2000 and $35,965 in 1999.
PARTICIPANT LOANS
Participants may borrow funds from the Plan up to 50 percent of their vested
balance. Loans will not be granted in amounts less than $1,000 or greater than
$50,000. Loans are evidenced by a promissory note and have a repayment period of
up to five years, unless the loan qualifies as a home loan. The plan
administrator will determine the
F-4
appropriate interest rate by obtaining at least one quote from a financial
institution, as chosen by the plan administrator, that is in the business of
lending money.
DISTRIBUTION OF BENEFITS
Upon retirement, death, disability or attainment of age 62, a participant or a
participant's beneficiary, in the case of death, may receive the vested portion
of the amount credited to the participant's account by a lump-sum payment or, if
the invested portion exceeds $5,000, the participant may elect to receive
periodic installment payments.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements have been prepared on the accrual basis of accounting.
USE OF ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires the Company to make estimates
and assumptions that affect the reported amounts of net assets available for
benefits at the date of the financial statements and the reported amounts of
changes in net assets available for benefits during the reporting period.
Ultimate results could differ from those estimates.
INVESTMENTS
Participants have the opportunity to direct all money allocated to their
accounts. Participants have 14 investments from which to choose. A description
of each investment is as follows:
DREYFUS STANDARD & POOR'S 500 INDEX--Seeks investment results that
correspond to the price and yield performance of publicly traded common
stocks in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index.
FIDELITY ASSET MANAGER--Seeks capital appreciation.
NEUBERGER/BERMAN LIMITED BOND--Seeks income, consistent with low risk to
principal and liquidity.
OPPENHEIMER GLOBAL--Seeks capital appreciation; current income is not an
objective.
AMERICAN CENTURY 20TH CENTURY ULTRA--Seeks capital growth.
NATIONWIDE VIRTUOSO II--Seeks the guarantee of principal and interest
through an unallocated insurance contract. A new interest rate is declared
annually.
DREYFUS A BOND--Seeks current income consistent with preservation of
capital and maintenance of liquidity.
NATIONWIDE MONEY MARKET--Seeks to provide a high level of current income
while preserving capital and maintaining liquidity.
WARBURG PINCUS EMERGING GROWTH--Seeks maximum capital appreciation.
JANUS WORLDWIDE--Seeks long-term growth of capital. This fund is considered
to be moderately volatile.
JANUS TWENTY--Seeks stocks with strong current financial positions and the
potential for future growth. It may invest without limit in foreign
securities. This fund is nondiversified.
FIDELITY ADVISOR GROWTH OPPORTUNITY--Seeks to provide capital growth.
Considered to be a moderately volatile investment option.
AMERICAN CENTURY INCOME & GROWTH--Seeks long-term growth of capital as well
as current income. Considered to be a relatively volatile investment
option.
LODGENET ENTERTAINMENT CORPORATION COMMON STOCK--Invests in LodgeNet
Entertainment Corporation common stock. Limited to 10 percent of
contributions made.
F-5
All of the investments described above, except for Nationwide Virtuoso II and
the Company's common stock, are part of an unallocated insurance contract pooled
separate account with Nationwide Life Insurance Company.
Investment contracts are valued at contract value. Fair value is not
available from the custodian. The average yield for the period and the
crediting interest rate at the financial statement date is 4.85 percent.
Other investments are recorded at fair value as determined by Nationwide Life
Insurance Company by reference to quoted market prices. Investment income
includes realized gains and losses, unrealized appreciation and depreciation,
dividends and interest income. Realized gains and losses on the sale of
investments are calculated based on the cost of the investments sold.
Unrealized appreciation and depreciation of investments represent the change
in market value of investments from the end of the prior period or from the
date of purchase, if purchased during the current period. Plan investment
income is allocated to plan participants based on their pro rata account
balances.
Investments, except for Nationwide Virtuoso II which is valued at contract
value, are valued at market value as reported by the asset custodian as of
December 31, 2000 and 1999, based on quoted market prices of investments held by
the funds.
3 INVESTMENTS
The following presents investments that represent 5 percent or more of the
Plan's net assets at December 31:
2000 1999
------------- ------------
Dreyfus S&P 500 Index Fund, 500,359 and 540,069
shares, respectively $1,780,681 $2,161,068
Fidelity Asset Manager Fund, 377,047 and 351,903
shares, respectively 768,323 713,845
Oppenheimer Global Fund, 181,690 and 177,867
shares, respectively 660,063 630,519
American Century 20th Century Ultra Fund, 575,490 and 529,902
shares, respectively 2,073,346 2,423,032
Janus Worldwide Fund, 511,520 and 332,722
shares, respectively 1,039,646 827,952
Janus Twenty Fund, 474,938 and 327,887 shares,
respectively 1,089,990 1,131,644
LodgeNet Entertainment Corporation common stock, 25,891 and
23,768, respectively 457,144 593,898
4 TAX STATUS
The Internal Revenue Service has determined and informed the Company by a letter
dated February 14, 1995, that the Plan is designed in accordance with applicable
sections of the Internal Revenue Code (the IRC). The Plan has been amended since
receiving the determination letter; however, the plan administrator and the
Plan's tax counsel believe that the Plan document is in compliance with the
applicable requirements of the IRC. The plan sponsor is committed to taking any
action necessary to maintain the Plan's qualified status.
5 PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of the Plan's termination,
participants will become 100 percent vested in their accounts.
6 SUBSEQUENT EVENT
Effective January 2001, the Plan's net assets were transferred from
Nationwide Life Insurance Company (Nationwide) and Charles Schwab Retirement
Plan Services to SunTrust Bank. In addition, all trustee and plan record
keeping administration duties were transferred to SunTrust Bank. Upon
termination of the arrangement with Nationwide, a liquidation charge of
approximately $236,000 was paid by the Company on behalf of the Plan.
7 PARTY-IN-INTEREST TRANSACTIONS
Certain transactions with participants, the plan sponsor, the custodian and
the trustees are considered party-in-interest transactions. These
transactions qualify as exempt party-in-interest transactions.
F-6
LODGENET ENTERTAINMENT CORPORATION 401(k) PLAN
(EMPLOYER IDENTIFICATION NUMBER: 46-0371161) (PLAN NUMBER: 001)
Schedule H, line 4i--Schedule of assets (held at end of year)
As of December 31, 2000
Number of
units or
shares Description Cost Current value
- ------------- -------------------------------------------------------------------- ------- --------------
151,371 Nationwide Virtuoso II unallocated insurance contract** * $ 203,975
Nationwide Arranger pooled separate accounts**:
500,359 Dreyfus Standard & Poor's 500 Index * 1,780,681
377,047 Fidelity Asset Manager * 768,323
136,188 Neuberger/Berman Limited Bond * 172,364
181,690 Oppenheimer Global * 660,063
575,490 American Century 20th Century Ultra * 2,073,346
157,482 Dreyfus A Bond * 206,210
208,023 Nationwide Money Market * 412,460
151,506 Fidelity Advisor Growth Opportunity * 240,737
203,529 Warburg Pincus Emerging Growth * 362,942
511,520 Janus Worldwide * 1,039,646
474,938 Janus Twenty * 1,089,990
271,692 American Century Income & Growth * 507,102
25,891 LodgeNet Entertainment Corporation common stock** * 457,144
Loans to participants, with interest ranging from 8.25 percent to
9.75 percent** 506,790
Total investments ------------
$10,481,773
============
*Historical cost is omitted for participant-directed investments.
**Denotes party in interest.
F-7