NEWS: Computer Network Technology Announces 1998 First Quarter Results
MINNEAPOLIS, April 22 /PRNewswire/ -- Computer Network Technology Corp. (Nasdaq: CMNT - news; CNT) today reported revenue of $31.2 million for the first quarter ended March 31, 1998, which represents an increase of $9.4 million or 43 percent when compared to revenue of $21.7 million for the same period in l997. Net income for the first quarter of l998 was $369,000 or $.02 per share compared to net income of $376,000 or $.02 per share for the first quarter of l997.
''We are pleased with our revenue improvement in the first quarter,'' said Thomas G. Hudson, CNT's president and chief executive officer. ''Product revenue for the quarter totaled $22.3 million, up 47 percent when compared to total product revenue of $15.2 in the first quarter of l997. This reflects a strong interest in our new UltraNet product family and our Channelink products that support the rapidly growing Storage Area Network (SAN) market. Internet product revenue increased 48 percent from the first quarter of l997 to $4.5 million, due in part to the acquisition of the Internet Solutions Division from Apertus Technologies Inc. [Nasdaq:APTS - news] in the fourth quarter of l997. Service revenue also increased 34 percent to $8.8 million compared to the year ago period due to our growing installed customer base and the Internet Solutions Division acquisition.
''During the quarter, we recorded revenue of $600,000 from Bay Networks as a result of the OEM agreement we signed with them for our SNA gateway and Web-to-host products in the third quarter of l997, and a $311,000 order from Comdisco to supply storage area networking products that will be integrated into a disk mirroring application for a large U.S. financial institution,'' said Hudson. ''This was in addition to a $2.5 million order we received and completed from Comdisco last December. We also signed a new OEM agreement with Hitachi Data Systems for the purchase of the CNT FileSpeed solution for use with their Nucleus Series Intelligent Data Storage system.
''We refocused our networking solutions sales organization with the addition of Nick Ganio as vice president of worldwide sales and the naming of Peter Dixon as vice president of worldwide distribution,'' said Hudson. ''Ganio brings to CNT extensive sales, marketing and general management experience in both domestic and international arenas, and his expertise combined with Dixon's extensive product and market knowledge, which will be focused on developing new sales channels worldwide, provide added strength to our global sales efforts.
''Our overall goal for l998 is to improve CNT's profitability and growth,'' said Hudson. ''We continue to be pleased with the acceptance of our Storage Area Networking strategy and UltraNet family of products as well as the continued strength of our traditional Channelink products. SAN applications running on Channelink and UltraNet products were stronger than anticipated. However, the ISD revenues were less than expected due to the Apertus gateway product delay from first quarter to mid-second quarter to complete an engineering quality review. The integration of the Brixton and Internet Solutions Division is proceeding and our future strategic direction, based on the recently introduced CNT Application Re-engineering Environment (CARE) product suite, is expected to be completed in the second quarter. With continued excellent revenue growth and tight expense controls, we expect improved profits for the full year.''
About Computer Network Technology (CNT)
Computer Network Technology, based in Minneapolis, Minn., is a leading provider of high-performance networking solutions that allow mainframe systems and open systems environments to share data and information. The company's Channelink(R), FileSpeed(TM) and UltraNet(R) product lines offer high-speed open systems connectivity, access to legacy data and guaranteed data integrity for applications such as remote storage, mirroring and disaster recovery. In addition, its Enterprise/Connect, Enterprise/View and Enterprise/Access product lines offer unique gateway and Web-to-host integration solutions. The company's products are sold worldwide through a direct sales force and a network of authorized distributors. For more information, visit CNT's web site at cnt.com, or call 800-638-8324 (U.S.) or 612-797-6000 (International).
All brand names and product names are trademarks or registered trademarks of their respective companies.
Certain statements in this press release constitute ''forward-looking statements.'' All forward-looking statements involve risks and uncertainties, and actual results may be materially different. The company's ability to generate additional OEM business in the remainder of l998 may be impacted by the company's success in reaching mutually agreeable terms with potential strategic partners, the success of any product engineering work needed in connection with such relationships, and the timely receipt and fulfillment of orders with respect to such relationships. The company's ability to realize additional sales opportunities and grow revenue during l998 may be impacted by the actions of the company's competition including price reductions by such competition to gain or retain market share, new product introductions, and by the company's success in hiring and retaining new employees, distributors, and developing new sales channels for its products. The ultimate success of the company's new line of products may be impacted by the company's success in identifying and incorporating new technologies into new product offerings, identifying referable beta sites, developing and maintaining compatibility and interoperability with the products of others, as well as new product introductions by competitors. The company's ability to increase its balances of cash and marketable securities, excluding share repurchases, and improve profitability in l998, may be impacted by the results of operations, ability to manage expenses and tighten expense controls, unexpected costs associated with the integration of the Apertus Internet Solutions Division into the company's existing businesses, new investment opportunities, unexpected expenses, the need for additional funds to react to changes in the company's marketplace, and developing new sales channels for its products. Furthermore, the integration of the Apertus Internet Solutions Division into the company includes significant commitments of management, engineering, financial and marketing resources and there can be no assurance that such integration will be successful. Additional factors that could impact the company's future results are described in the company's most recently filed SEC documents, including the company's Annual Report on Form 10-K and quarterly report on 10Q. The company assumes no obligation to publicly release results of any revision or updates to these forward-looking statements to reflect future events or unanticipated occurrences.
COMPUTER NETWORK TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
Three months ended March 31
1998 1997
Revenue:
Product sales $22,337 $15,179
Service fees 8,829 6,569
Total revenue 31,166 21,748
Cost of revenue:
Cost of product sales 6,854 4,499
Cost of service fees 5,678 4,581
Total cost of revenue 12,532 9,080
Gross profit 18,634 12,668
Operating expenses:
Sales and marketing 11,130 7,884
Engineering and development 5,585 3,562
General and administrative 1,397 1,051
Total operating expenses 18,112 12,497
Income from operations 522 171
Other income (expense):
Interest income 87 486
Interest expense (39) (10)
Other, net 21 (45)
Other income, net 69 431
Income before income taxes 591 602
Provision for income taxes 222 226
Net income $369 $376
Basic:
Net income per share $.02 $.02
Shares 22,106 23,400
Diluted:
Net income per share $.02 $.02
Shares 22,243 23,772
COMPUTER NETWORK TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
March 31 December 31
1998 1997
Assets (unaudited)
Current assets:
Cash and cash equivalents $7,988 $4,790
Marketable securities 0 6,034
Receivables, net 34,365 32,752
Inventories 13,305 12,322
Deferred tax asset 2,284 2,284
Other current assets 1,424 1,377
Total current assets 59,366 59,559
Property and equipment, net 15,073 14,501
Field support spares, net 3,683 3,589
Deferred tax asset 3,823 3,823
Goodwill and other intangibles, net 3,642 3,530
Other assets 478 485
$86,065 $85,487
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $9,071 $7,656
Accrued liabilities 9,363 12,135
Deferred revenue 11,568 9,207
Current installments of obligations
under capital lease 181 181
Total current liabilities 30,183 29,179
Obligations under capital
lease, less current installments 638 701
Total liabilities 30,821 29,880
Shareholders' equity:
Preferred stock, authorized 1,000
shares; none issued and outstanding -- --
Common stock, $.01 par value;
authorized 30,000 shares, issued and
outstanding 22,054 at March 31, 1998
and 22,195 at December 31, 1997 221 222
Additional paid-in capital 53,916 54,439
Unearned compensation (236) (35)
Retained earnings 1,781 1,412
Cumulative translation adjustment (438) (431)
Total shareholders' equity 55,244 55,607
$86,065 $85,487
SOURCE: Computer Network Technology |
