I know this is not a thread about CMNT, but this just out and since ancr and cmnt are tied together through the cmnt ultranet product, this has some implications for ancor.
Computer Network Technology Reports Highest Net Income in Over Three Years
Increased Demand for SAN Services and Internet Products, with Decreased
Operating Expenses, Results in Net Income 3.8 Times Higher than 1997
MINNEAPOLIS, Oct. 20 /PRNewswire/ -- Computer Network Technology Corp.
(CNT(R)), the leading provider of high-performance networking solutions for
Storage Area Network (SAN) and enterprise integration applications, today
reported strong company results for the third quarter of 1998.
Revenue of $33.0 million for the third quarter ended September 30, 1998,
represents an increase of $9.2 million or 39 percent when compared to revenue
of $23.8 million for the same period in l997. Net income for the third
quarter of l998 was $1.8 million or $.08 per share compared to a net income of
$373,000 or $.02 per share for the third quarter of l997. This is the highest
net income reported for CNT since second quarter 1995.
For the first three quarters of 1998, revenues totaled $97.6 million, an
increase of $31.4 million or 47 percent when compared to $66.3 million for the
same period in 1997. Net income for the first three quarters of 1998 totaled
$3.0 million or $.14 per share, compared to a net loss of ($108,000) for the
comparable period of 1997.
"I'm very pleased to report that the increased demand for our SAN Services
and Internet products, along with decreased operating expenses, resulted in a
net income that is 3.8 times higher than 1997," said Thomas G. Hudson, CNT's
president and chief executive officer. "Product revenue for the quarter
totaled $23.4 million, up 39 percent when compared to total product revenue of
$16.8 million in the third quarter of 1997.
"Revenue for networking products increased 26 percent to $17.8 million,"
Hudson continued. "Very strong interest in disk mirroring and other SAN
applications, along with a mix of channel extension sales and solid interest
in data movement solutions from FileSpeed(TM), has led to this increase.
Substantially stronger revenues via our international channels were the result
of personnel investments made last year. Customer acceptance of our new
UltraNet(R) technology and interest in CNT's SAN applications continues to
drive our UltraNet product sales, particularly in the International market.
"Internet product revenue increased 102 percent, to $5.6 million from the
third quarter of 1997, primarily due to the acquisition of the Internet
Solutions Division from Apertus Technologies, Inc. in the fourth quarter of
1997," Hudson added. "Our continuing strength in the SNA Gateway market and
the initial growth of our re-engineering products are factors contributing to
this product revenue. In addition, we received a $2.2 million dollar order on
October 1, 1998, from a foremost Systems Integrator for a large government
re-engineering project.
"Service revenue increased 38 percent from the third quarter of 1997, to
$9.6 million due to the Apertus acquisition and new incremental revenue
generated from the sale of professional services to our customers, which
increased 27 percent from the second quarter of 1998," said Hudson. "CNT is
focused on increasing our strong customer service and creating additional
value-add professional services to help our customers accelerate their product
implementation plans thereby improving their return on investment.
"We made progress on our goal of expense management by decreasing third
quarter operating expenses to 49 percent of revenue, down from 55 percent of
revenue in the second quarter and 57 percent of revenue in the third quarter
of 1997," Hudson continued. "At our 1998 Shareholders meeting, we committed
to achieve a 7.5 percent quarterly operating margin in the fourth quarter. We
actually achieved this goal in the third quarter with an operating margin
equal to 7.9 percent of revenue. Although we have met our goal, we will
continue to work to satisfy customers, grow revenue and contain expenses,
thereby improving the company's overall level of profitability."
About Computer Network Technology (CNT)
Computer Network Technology (Nasdaq: CMNT), based in Minneapolis, Minn.,
is a leading provider of high-performance networking solutions that allow
mainframe 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, disk mirroring and
disaster recovery. In addition, its Enterprise/Connect, Enterprise/Access and
Web/Integrator products offer unique gateway and legacy application
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
1-800-638-8324 (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 expectation that SAN
applications for the Company's products will continue to drive revenue in
future periods and the ability to add new SAN applications to the UltraNet
product line 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 by competitors, the Company's success in identifying
and incorporating new technologies into new product offerings, developing and
maintaining compatibility and interoperability with the products of others,
and by the Company's success in developing new sales channels for its
products. The expectation that revenue under the OEM agreement with IBM will
increase in the future may be impacted by the actions of IBM and competitors,
including price reductions and new product introductions. The ability of the
Company to realize expense reductions in the future may be impacted by its
ability to manage expenses and tighten expense controls. The ability of the
Internet Solutions Division to be a key profit contributor in the future may
be impacted by the ability of the Company to generate revenue as planned and
unexpected expense required to react to changes in the marketplace.
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 reports on Form 10-Q. 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 OPERATIONS
(unaudited)
(in thousands, except per share data)
Three months ended Nine months ended
September 30 September 30
1998 1997 1998 1997
Revenue:
Product sales $23,380 $16,846 $69,906 $46,042
Service fees 9,630 6,964 27,736 20,211
Total revenue 33,010 23,810 97,642 66,253
Cost of revenue:
Cost of product sales 8,089 5,508 22,935 14,450
Cost of service fees 6,037 4,577 17,672 13,674
Total cost
of revenue 14,126 10,085 40,607 28,124
Gross profit 18,884 13,725 57,035 38,129
Operating expenses:
Sales and marketing 9,827 8,039 32,045 23,656
Engineering and
development 4,843 4,188 15,905 12,243
General and
administrative 1,604 1,292 4,694 3,622
Total operating
expenses 16,274 13,519 52,644 39,521
Income (loss) from
operations 2,610 206 4,391 (1,392)
Other income (expense):
Interest income 75 392 275 1,316
Interest expense (15) (23) (66) (39)
Other, net 185 23 250 (55)
Other income 245 392 459 1,222
Income (loss) before
income taxes 2,855 598 4,850 (170)
Provision (benefit)
for income taxes 1,056 225 1,812 (62)
Net income (loss) $ 1,799 $ 373 $ 3,038 $ (108)
Net income (loss)
per common and common
equivalent share $ .08 $ .02 $ .14 $ (.00)
Weighted average number
of common and common
equivalent shares 22,554 22,812 22,321 22,920
COMPUTER NETWORK TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30 December 31
1998 1997
Assets
(unaudited)
Current assets:
Cash and cash equivalents $10,357 $ 4,790
Marketable securities 1,237 6,034
Receivables, net 28,988 32,752
Inventories 17,242 12,322
Deferred tax asset 2,284 2,284
Other current assets 1,593 1,377
Total current assets 61,701 59,559
Property and equipment, net 14,485 14,501
Field support spares, net 3,719 3,589
Deferred tax asset 3,823 3,823
Goodwill and other
tangibles, net 3,657 3,530
Other assets 369 485
87,754 $85,487
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 9,337 $ 7,656
Accrued liabilities 12,114 12,135
Deferred revenue 7,509 9,207
Current installments of
obligation under
capital lease 189 181
Total current liabilities 29,149 29,179
Obligation under capital
lease, less current
installments 543 701
Total liabilities 29,692 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
22,099 at September 30,
1998 and 22,195 at
December 31, 1997 221 222
Additional paid-in capital 53,941 54,439
Unearned compensation (222) (35)
Retained earnings 4,450 1,412
Cumulative translation
adjustment (328) (431)
Total shareholders' equity 58,062 55,607
87,754 $85,487
SOURCE Computer Network Technology
CO: Computer Network Technology Corp.
ST: Minnesota
IN: CPR
SU: ERN
10/20/98 10:14 EDT prnewswire.com
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