Computer Network Technology (CMNT) 8-K CNT Reports Second Quarter Results

EXHIBIT 99

NEWS RELEASE
For Immediate Release

CNT REPORTS SECOND QUARTER RESULTS

Results In Line with Previously Released Expectations

MINNEAPOLIS, MN. August 17, 2004 —CNT (NASDAQ: CMNT), the global expert in storage networking solutions, today reported financial results for the second quarter ended July 31, 2004. Second quarter revenue totaled $77.2 million, compared to $94.9 million in the second quarter of 2003. Revenue and operating results for the second quarter and six months of 2004 and 2003 include the acquisition of Inrange Technologies on May 5, 2003.

On the basis of generally accepted accounting principles (GAAP), the company reported a net loss for the second quarter of 2004 of $12.1 million, or $.44 per share, compared to a net loss of $25.8 million, or $.96 per share, in the second quarter of 2003. On a pro forma basis, the company reported a net loss of $5.5 million, or $.20 per share, in the second quarter, compared to a net profit of $863,000, or $.03 per share, in the year-ago quarter. Pro forma results for the second quarter of 2004 and 2003 exclude $1.7 million of intangibles amortization related to our acquisition of Inrange, and losses from discontinued operations in 2004 and 2003 of $370,000 and $437,000, respectively. Pro forma results for the second quarter of 2004 exclude a $331,000 restructuring charge and stock compensation expenses of $507,000. Pro forma results for the second quarter of 2003 exclude a $19.7 million charge for purchased in-process research and development and $5.0 million of integration charges related to our acquisition of Inrange. Pro forma net results for the second quarter of 2004 and 2003 include income taxes at a 34% effective rate, compared to GAAP tax rates for the second quarter of 2004 and 2003 of a negative 8% and a negative 1%, respectively. A reconciliation of GAAP to pro forma results for the second quarter and first six months of 2004 and 2003 can be found in the attached schedules.

CNT Corporation

6000 Nathan Lane North  Minneapolis, Minnesota 55442
Tel: U.S. 800-638-8324  International 763-268-6000  Fax: 763-268-6800

“Our results for the second quarter of 2004 were very disappointing, as noted in our August 5th, 2004 second quarter earnings guidance release. In response to industry and company trends, we have quickly realigned our resources around key CNT offerings, including the UltraNet Multi-Service Director (UMD), and have adjusted our expense levels to reflect the current outlook for our markets. These adjustments have reduced our anticipated level of quarterly expenses by approximately $7.5 million. Included in the expense actions is a reduction in workforce of approximately 220 employees and consultants, along with a reduction in other discretionary expenses. While painful, the employee lay-offs were a necessary reaction to changing conditions in our markets. Taking these actions will also allow us to bring on additional resources in the future for the UMD,” commented Tom Hudson, CNT’s President, Chairman, and CEO.

“We anticipate that our third quarter results will include a restructuring charge related to our expense reduction actions of approximately $3.5-$4.5 million, primarily for severance and facility closures. We may also incur an additional charge in the third quarter for impairment of goodwill and other long-lived assets” added Greg Barnum, CNT’s vice president of finance and CFO.

Conference Call Information
CNT will conduct a webcast and conference call for analysts and investors beginning at 4:30 pm Central Daylight Time, 5:30 pm Eastern Daylight Time on August 17, 2004. The webcast is available through CNT’s web site at http://www.cnt.com/cnt/financials/. To participate via telephone, dial 212-896-6169 and ask for the CNT Second Quarter Earnings Call. A one-week webcast replay will be available at http://www.cnt.com/cnt/financials/. A two-day telephone replay will be available at 800-633-8284 or 402-977-9140; enter 21204873# at the reservation number prompt.

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About CNT
CNT is the expert in today’s most cost-effective and reliable storage networking solutions. For over 20 years, businesses around the world have depended on us to improve business efficiency, increase data availability and manage their business-critical information. CNT applies its technology, products and expertise in open storage networking architecture and business continuity to help companies build end-to-end solutions consisting of analysis, planning and design, multi-vendor integration, implementation and ongoing remote management of the SAN or storage infrastructure. For more information, visit CNT’s web site at http://www.cnt.com or call 763-268-6000.

All brand names and product names are trademarks or registered trademarks of their respective companies.

For Additional Information, Contact:
Greg Barnum, VP of finance & CFO	Jennifer Weidauer, CNT Public Relations
763-268-6110; greg_barnum@cnt.com	763-268-8367; jennifer_weidauer@cnt.com

Certain statements in this press release and in documents we have filed with the Securities and Exchange Commission, and oral statements made by or with the approval of our executive officers contain “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include statements about our anticipated receipt of orders and their impact on quarterly sales, business strategy, expectations regarding future revenue levels, timing of and plans for the introduction or phase-out of products or services, enhancements of existing products or services, plans for hiring additional personnel, entering into strategic partnerships, and other plans, objectives, expectations and intentions that are not historical fact.

The words “may,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential” or “continue” and similar expressions are generally intended to identify forward-looking statements. These forward-looking statements involve risks and uncertainties. Actual results could differ materially from those expressed or implied by these forward-looking statements as a result of certain risk factors, including but not limited to (i) competitive factors, including pricing pressures, (ii) variability in quarterly sales, (iii) economic trends in various geographic markets, including changes in IT spending levels; (iv) relationships with our strategic partners; (v) unanticipated risks associated with introducing new products and features; (vi) technological change affecting our products (vii) adverse judgments in present and future litigation; (viii) our ability to maintain market acceptance of our products; (ix) our ability to anticipate end user needs; (x) dependence on sole source and limited source suppliers (xi) our ability to retain and attract key personnel; (xii) the existence of undetected errors in our products; (xiii) our ability to protect our intellectual property and defend against infringement claims; (xiv) variability in gross profit caused by sales mix and other factors (xv) receipt of anticipated orders; (xvi) actual expenses meeting anticipated levels; (xvii) the timing or amount of any restructuring or goodwill impairment charge, and (xviii) other events and other important factors disclosed previously and from time to time in our filings with the U.S. Securities and Exchange Commission. We assume no obligation to update any forward-looking statements. These statements are only predictions. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

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CNT
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

	Three months ended						Six months ended
	July 31,						July 31,
	2004			2003			2004			2003
Revenue:
Product sales	$	44,564		$	63,489		$	108,239		$	97,893
Service fees		32,600			31,390			65,162			49,316
Total revenue		77,164			94,879			173,401			147,209
Cost of revenue:
Cost of product sales		26,145			39,244			64,327			60,878
Cost of service fees		19,063			18,400			39,818			28,486
Total cost of revenue		45,208			57,644			104,145			89,364
Gross profit		31,956			37,235			69,256			57,845
Operating Expenses:
Sales and marketing		23,570			24,616			47,296			38,822
Engineering and development		13,901			12,025			27,058			17,945
General and administrative		4,593			5,266			8,095			7,822
In-process research and development charge		—			19,706			—			19,706
Total operating expenses		42,064			61,613			82,449			84,295
Loss from operations		(10,108	)		(24,378	)		(13,193	)		(26,450	)
Other income (expense):
Net gain on sale of marketable securities		—			—			—			747
Other, net		(748	)		(719	)		(1,570	)		(766	)
Other income (expense), net		(748	)		(719	)		(1,570	)		(19	)
Loss before income taxes		(10,856	)		(25,097	)		(14,763	)		(26,469	)
Provision for income taxes		913			288			1,188			998
Loss from continuing operations		(11,769	)		(25,385	)		(15,951	)		(27,467	)
Discontinued operations, net of tax		(370	)		(437	)		(714	)		(437	)
Net loss	$	(12,139	)	$	(25,822	)	$	(16,665	)	$	(27,904	)
Basic & diluted loss per share:
Continuing operations	$	(0.42	)	$	(0.94	)	$	(0.58	)	$	(1.02	)
Discontinued operations	$	(0.01	)	$	(0.02	)	$	(0.03	)	$	(0.02	)
Net loss	$	(0.44	)	$	(0.96	)	$	(0.60	)	$	(1.03	)
Shares		27,768			26,979			27,685			26,973

CNT
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)

	July 31,
	2004			January 31,
	(unaudited)			2004
Assets
Current assets:
Cash and cash equivalents	$	59,768		$	75,267
Marketable securities		11,730			2,219
Receivables, net		75,086			99,815
Inventories		45,785			29,976
Other current assets		5,123			4,400
Total current assets		197,492			211,677
Property and equipment, net		43,738			40,313
Field support spares, net		12,372			11,951
Goodwill		105,086			105,203
Other intangibles, net		29,743			33,225
Deferred tax asset		285			872
Other assets		14,105			9,140
	$	402,821		$	412,381
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	47,063		$	47,696
Accrued liabilities		35,986			43,733
Customer deposits		13,662			—
Deferred revenue		44,532			47,058
Current installments of obligations under capital lease		2,670			1,619
Total current liabilities		143,913			140,106
Convertible subordinated debt		125,000			125,000
Obligations under capital lease, less current installments		6,439			4,468
Total liabilities		275,352			269,574
Shareholders’ equity:
Preferred Stock		—			—
Common stock, $.01 par value; authorized 100,000 shares, issued and outstanding 27,921 at July 31, 2004 and 27,501 at January 31, 2004		279			275
Additional paid-in capital		191,085			187,652
Unearned compensation		(1,754	)		(319	)
Accumulated deficit		(63,664	)		(46,999	)
Accumulated other comprehensive income		1,523			2,198
Total shareholders’ equity		127,469			142,807
	$	402,821		$	412,381

CNT
CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

	Three months ended						Six months ended
	July 31,						July 31,
	2004			2003			2004			2003
Revenue:
Product sales	$	44,564		$	63,489		$	108,239		$	97,893
Service fees		32,600			31,390			65,162			49,316
Total revenue		77,164			94,879			173,401			147,209
Cost of revenue:
Cost of product sales		25,090			35,966			62,217			57,600
Cost of service fees		19,006			18,276			39,761			28,231
Total cost of revenue		44,096			54,242			101,978			85,831
Gross profit		33,068			40,637			71,423			61,378
Operating Expenses:
Sales and marketing		22,595			22,808			45,713			36,856
Engineering and development		13,829			11,682			26,986			17,602
General and administrative		4,251			4,121			7,753			6,654
Total operating expenses		40,675			38,611			80,452			61,112
Income (loss) from operations		(7,607	)		2,026			(9,029	)		266
Other income (expense), net		(748	)		(719	)		(1,570	)		(19	)
Income (loss) before income taxes		(8,355	)		1,307			(10,599	)		247
Provision (benefit) for income taxes		(2,841	)		444			(3,604	)		84
Net income (loss)	$	(5,514	)	$	863		$	(6,995	)	$	163
Basic income (loss) per share:
Net income (loss)	$	(0.20	)		0.03		$	(0.25	)	$	0.01
Shares		27,768			26,979			27,685			26,973
Diluted income (loss) per share:
Net income (loss)	$	(0.20	)	$	0.03		$	(0.25	)	$	0.01
Shares		27,768			27,857			27,685			27,765

CNT
CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

	Three months ended									Three months ended
	July 31, 2004									July 31, 2003
				Pro Forma									Pro Forma
	As Reported			Adjustments			Pro forma			As Reported			Adjustments			Pro forma
Revenue:
Product sales	$	44,564		$	—		$	44,564		$	63,489		$	—		$	63,489
Service fees		32,600			—			32,600			31,390			—			31,390
Total revenue		77,164			—			77,164			94,879			—			94,879
Cost of revenue:
Cost of product sales		26,145	(1)		(1,055	)		25,090			39,244	(6)		(3,278	)		35,966
Cost of service fees		19,063	(2)		(57	)		19,006			18,400	(8)		(124	)		18,276
Total cost of revenue		45,208			(1,112	)		44,096			57,644			(3,402	)		54,242
Gross profit		31,956			1,112			33,068			37,235			3,402			40,637
Operating expenses:
Sales and marketing		23,570	(3)		(975	)		22,595			24,616	(9)		(1,808	)		22,808
Engineering and development		13,901	(2)		(72	)		13,829			12,025	(8)		(343	)		11,682
General and administrative		4,593	(2)		(342	)		4,251			5,266	(8)		(1,145	)		4,121
In-process research and development charge		—			—			—			19,706	(4)		(19,706	)		—
Total operating expenses		42,064			(1,389	)		40,675			61,613			(23,002	)		38,611
Income (loss) from operations		(10,108	)		2,501			(7,607	)		(24,378	)		26,404			2,026
Other income (expense), net		(748	)		—			(748	)		(719	)		—			(719	)
Income (loss) before income taxes		(10,856	)		2,501			(8,355	)		(25,097	)		26,404			1,307
Provision (benefit) for income taxes		913	(5)		(3,754	)		(2,841	)		288	(5)		156			444
Income (loss) from continuing operations		(11,769	)		6,255			(5,514	)		(25,385	)		26,248			863
Discontinued operations, net of tax		(370)	(7)		370			—			(437	) (7)		437			—
Net income (loss)	$	(12,139	)	$	6,625		$	(5,514	)	$	(25,822	)	$	26,685		$	863
Basic income (loss) per share:
Continuing operations	$	(0.42	)	$	0.23		$	(0.20	)	$	(0.94	)	$	0.97		$	0.03
Discontinued operations	$	(0.01	)	$	0.01		$	—		$	(0.02	)	$	0.02		$	—
Net income (loss)	$	(0.44	)	$	0.24		$	(0.20	)	$	(0.96	)	$	0.99		$	0.03
Shares		27,768			27,768			27,768			26,979			26,979			26,979
Diluted income (loss) per share:
Continuing operations	$	(0.42	)	$	0.23		$	(0.20	)	$	(0.94	)	$	0.97		$	0.03
Discontinued operations	$	(0.01	)	$	0.01		$	—		$	(0.02	)	$	0.02		$	—
Net income (loss)	$	(0.44	)	$	0.24		$	(0.20	)	$	(0.96	)	$	0.99		$	0.03
Shares		27,768			27,768			27,768			26,979			26,979			27,857

(1)	Amortization expense related to the developed technology from the Inrange acquisition
(2)	Non-cash stock compensation expense
(3)	Amortization expense related to the customer list and trademarks from the Inrange acquisition of $608, severance related to restructuring of $331, and non-cash stock compensation expense of $36.
(4)	In-process research and development charge related to the Inrange acquisition.
(5)	Reflects income tax expense at a 34% effective rate.
(6)	Write-down of inventory resulting from integration of CNT and Inrange product offerings of $1,607, amortization expense related to developed technology from Inrange of $1,055, plus Inrange integration expenses of $616, primarily severance.
(7)	Discontinued operations — ERP consulting practice
(8)	Integration costs related to the Inrange acquisition, primarily wages and severance.
(9)	Amortization expense related to the customer list and trademarks from the Inrange acquisition of $608, plus integration costs related to the Inrange acquistion of $1,200, primarily wages and severance.

CNT
CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

	Six months ended									Six months ended
	July 31, 2004									July 31, 2003
				Pro Forma									Pro Forma
	As Reported			Adjustments			Pro forma			As Reported			Adjustments			Pro forma
Revenue:
Product sales	$	108,239		$	—		$	108,239		$	97,893		$	—		$	97,893
Service fees		65,162			—			65,162			49,316			—			49,316
Total revenue		173,401			—			173,401			147,209			—			147,209
Cost of revenue:
Cost of product sales		64,327	(1)		(2,110	)		62,217			60,878	(6)		(3,278	)		57,600
Cost of service fees		39,818	(2)		(57	)		39,761			28,486	(8)		(255	)		28,231
Total cost of revenue		104,145			(2,167	)		101,978			89,364			(3,533	)		85,831
Gross profit		69,256			2,167			71,423			57,845			3,533			61,378
Operating expenses:
Sales and marketing		47,296	(3)		(1,583	)		45,713			38,822	(9)		(1,966	)		36,856
Engineering and development		27,058	(2)		(72	)		26,986			17,945	(10)		(343	)		17,602
General and administrative		8,095	(2)		(342	)		7,753			7,822	(11)		(1,168	)		6,654
In-process research and development charge		—			—			—			19,706	(4)		(19,706	)		—
Total operating expenses		82,449			(1,997	)		80,452			84,295			(23,183	)		61,112
Income (loss) from operations		(13,193	)		4,164			(9,029	)		(26,450	)		26,716			266
Other income (expense), net		(1,570	)		—			(1,570	)		(19	)		—			(19	)
Income (loss) before income taxes		(14,763	)		4,164			(10,599	)		(26,469	)		26,716			247
Provision (benefit) for income taxes		1,188	(5)		(4,792	)		(3,604	)		998	(5)		(914	)		84
Income (loss) from continuing operations		(15,951	)		8,956			(6,995	)		(27,467	)		27,630			163
Discontinued operations, net of tax		(714	) (7)		714			—			(437)	(7)		437			—
Net income (loss)	$	(16,665	)	$	9,670		$	(6,995	)	$	(27,904	)	$	28,067		$	163
Basic income (loss) per share:
Continuing operations	$	(0.58	)	$	0.32		$	(0.25	)	$	(1.02	)	$	1.02		$	0.01
Discontinued operations	$	(0.03	)	$	0.03		$	—		$	(0.02	)	$	0.02		$	—
Net income (loss)	$	(0.60	)	$	0.35		$	(0.25	)	$	(1.03	)	$	1.04		$	0.01
Shares		27,685			27,685			27,685			26,973			26,973			26,973
Diluted income (loss) per share:
Continuing operations	$	(0.58	)	$	0.32		$	(0.25	)	$	(1.02	)	$	1.02		$	0.01
Discontinued operations	$	(0.03	)	$	0.03		$	—		$	(0.02	)	$	0.02		$	—
Net income (loss)	$	(0.60	)	$	0.35		$	(0.25	)	$	(1.03	)	$	1.04		$	0.01
Shares		27,685			27,685			27,685			26,973			26,973			27,765

(1)	Amortization expense related to the developed technology from the Inrange acquisition
(2)	Non-cash stock compensation expense.
(3)	Amortization expense related to the customer list and trademarks from the Inrange acquisition of $1,216, severance related to restructuring of $331, and non-cash stock compensation expense of $36.
(4)	In-process research and development charge related to the Inrange acquisition.
(5)	Reflects income tax expense at a 34% effective rate.
(6)	Write-down of inventory resulting from integration of CNT and Inrange product offerings of $1,607, amortization expense related to developed technology from Inrange of $1,055, plus Inrange integration expenses of $616, primarily severance.
(7)	Discontinued operations — ERP consulting practice
(8)	Integration expense related to the Inrange acquisition of $124, primarily wages and severance, plus earn-out related to the Bi-Tech acquisition of $131.
(9)	Amortization expense related to the customer list and trademarks from the Inrange acquisition of $608, integration costs related to the Inrange acquistion of $1,200, primarily wages and severance, and earn-out related to the Bi-Tech acquisition of $158.
(10)	Integration costs related to the Inrange acquisition, primarily wages and severance.
(11)	Integration costs related to the Inrange acquistion, primarily wages and severance of $1,145, plus earn-out related to the Bi-Tech acquisition of $23.