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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 1996 OR
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________________
TO ____________________
COMMISSION FILE NUMBER: 0-13994
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Computer Network Technology Corporation
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Minnesota 41-1356476
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(State of Incorporation) (I.R.S. Employer Identification No.)
605 North Highway 169, Suite 800, Minneapolis, Minnesota 55441
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(Address of principal executive offices) (Zip Code)
Telephone Number: (612) 797-6000
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(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days. Yes X No
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As of April 30, 1996, the registrant had 23,175,005 shares of $.01 par value
common stock issued and outstanding.
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COMPUTER NETWORK TECHNOLOGY CORPORATION
INDEX
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PART I. FINANCIAL INFORMATION Page
----
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1996 and
December 31, 1995...................................... 3
Consolidated Statements of Income for the three months
ended March 31, 1996 and 1995.......................... 4
Consolidated Statements of Cash Flows for the three
months ended March 31, 1996 and 1995................... 5
Notes to Consolidated Financial Statements.............. 6
Item 2. Management's Discussion and Analysis of
Results of Operations................................. 7
Financial Condition................................... 11
PART II. OTHER INFORMATION..................................... 13
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES........................................................ 16
2
COMPUTER NETWORK TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31 December 31
1996 1995
------------- --------------
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents $ 6,244,397 $ 5,959,931
Marketable securities 22,989,866 22,448,987
Receivables, net 22,033,570 18,545,363
Inventories 9,233,424 10,534,152
Deferred tax asset 2,559,000 2,559,000
Other current assets 1,689,616 1,477,568
------------- --------------
Total current assets 64,749,873 61,525,001
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Property and equipment, net 9,152,483 8,598,666
Field support spares, net 4,179,906 4,406,225
Purchased technology, net 3,364,711 3,534,849
Goodwill, net 699,220 722,167
Other assets 396,063 347,209
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$ 82,542,256 $ 79,134,117
============= ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,473,685 $ 2,578,188
Accrued liabilities 6,455,604 7,410,409
Deferred revenue 10,113,011 7,254,446
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Total current liabilities 20,042,300 17,243,043
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Deferred tax liability 1,385,000 1,385,000
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Total liabilities 21,427,300 18,628,043
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Shareholders' equity:
Preferred stock, authorized
1,000,000 shares; none issued
and outstanding - -
Common stock, $.01 par value;
authorized 30,000,000 shares,
issued and outstanding
23,119,474 at March 31, 1996 and
22,929,360 at December 31, 1995 231,195 229,294
Additional paid-in capital 58,795,892 58,150,984
Retained earnings 2,384,960 2,365,812
Cumulative translation adjustment (297,091) (240,016)
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Total shareholders' equity 61,114,956 60,506,074
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$ 82,542,256 $ 79,134,117
============= ==============
See accompanying notes to financial statements
3
COMPUTER NETWORK TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three months ended March 31
-------------------------------
1996 1995
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REVENUE:
Product sales $ 17,362,317 $ 14,583,513
Service fees 4,994,994 4,147,278
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Total revenue 22,357,311 18,730,791
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COST OF REVENUE:
Cost of product sales 6,067,150 4,093,652
Cost of service fees 3,988,223 3,452,597
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Total cost of revenue 10,055,373 7,546,249
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GROSS PROFIT 12,301,938 11,184,542
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OPERATING EXPENSES:
Sales and marketing 7,737,825 4,588,734
Engineering and development 3,156,378 2,743,234
General and administrative 1,785,460 1,372,718
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Total operating expenses 12,679,663 8,704,686
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INCOME (LOSS) FROM OPERATIONS (377,725) 2,479,856
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OTHER INCOME (EXPENSE):
Interest income 391,909 343,700
Interest expense (9,682) (13,109)
Other, net 24,646 54,055
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Other income 406,873 384,646
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INCOME BEFORE INCOME TAXES 29,148 2,864,502
PROVISION FOR INCOME TAXES 10,000 1,117,000
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NET INCOME $ 19,148 $ 1,747,502
============== ==============
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE $ .00 $ .07
============== ==============
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES 23,352,659 23,320,379
============== ==============
See accompanying notes to financial statements
4
COMPUTER NETWORK TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months ended March 31
-----------------------------
1996 1995
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OPERATING ACTIVITIES:
Net income $ 19,148 $ 1,747,502
Depreciation and amortization 1,859,955 1,994,787
CHANGES IN OPERATING ASSETS AND
LIABILITIES:
Receivables (3,488,207) 2,767,750
Inventories 1,300,728 (63,367)
Other current assets (212,048) 150,600
Accounts payable 895,497 935,207
Accrued expenses (954,805) (852,922)
Deferred revenue 2,858,565 2,086,087
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Cash provided by operating
activities 2,278,833 8,765,644
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INVESTING ACTIVITIES:
Additions to property and equipment (1,469,552) (714,533)
Additions to field support spares (524,816) (583,682)
Purchase (redemption) of marketable
securities (540,879) 493,949
Other (48,854) 32,118
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Cash used for investing activities (2,584,101) (772,148)
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FINANCING ACTIVITIES:
Proceeds from issuance of common stock 646,809 253,957
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Cash provided by financing
activities 646,809 253,957
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Effects of exchange rate changes (57,075) 325,935
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NET INCREASE IN CASH
AND CASH EQUIVALENTS 284,466 8,573,388
CASH AND CASH EQUIVALENTS - BEGINNING
OF PERIOD 5,959,931 15,855,905
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CASH AND CASH EQUIVALENTS - END OF
PERIOD $ 6,244,397 $ 24,429,293
============= =============
See accompanying notes to financial statements
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The accompanying consolidated financial statements, which are unaudited except
for the balance sheet as of December 31, 1995, have been prepared in
accordance with instructions to Form 10-Q and do not include all the
information and notes required by Generally Accepted Accounting Principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. These consolidated financial statements
should be read in conjunction with the financial statements and accompanying
notes included in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
(2) INVENTORIES
Inventories, stated at the lower of cost (first-in, first-out method) or
market, consist of:
MARCH 31 December 31
1996 1995
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Components and subassemblies $2,356,744 $ 4,471,969
Work in process 1,957,089 1,498,588
Finished goods 4,919,591 4,563,595
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$9,233,424 $10,534,152
========== ===========
(3) COMMON STOCK EQUIVALENTS
For the three months ended March 31, 1996 and 1995, net income per common and
common equivalent share was determined by dividing net income by the weighted
average number of common and common equivalent shares outstanding during the
period. Common equivalent shares, primarily resulting from dilutive stock
options and warrants, were converted using the treasury stock method.
6
Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
As an aid to understanding the Company's operating results, the following
table sets forth certain information derived from the Consolidated Statements
of Income of the Company. (All amounts are expressed as a percentage of
total revenue except gross profit which is expressed as a percentage of the
related revenue.)
Three months ended
March 31
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1996 1995
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REVENUE:
Product sales 77.7% 77.9%
Service fees 22.3 22.1
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Total revenue 100.0 100.0
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GROSS PROFIT:
Product sales 65.0 71.9
Service fees 20.2 16.8
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Total gross profit 55.0 59.7
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OPERATING EXPENSES:
Sales and marketing 34.6 24.5
Engineering and development 14.1 14.6
General and administrative 8.0 7.3
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Total operating expenses 56.7 46.4
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INCOME (LOSS) FROM OPERATIONS (1.7) 13.3
Other income 1.8 2.0
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INCOME BEFORE INCOME TAXES .1 15.3
Provision for income taxes - 6.0
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NET INCOME .1% 9.3%
===== =====
REVENUE
The Company's revenue primarily includes the sale and support of its Channelink
products for the high-performance networking market and licensing, sale, and
support of its Brixton hardware and software products for the enterprise-wide
application access and interoperability market.
Revenue increased 19% for the three months ended March 31, 1996 when compared to
the same period in 1995. Revenue from the Channelink product line totaled $19.1
million, an increase of 24% when compared to $15.4 million in the first quarter
of 1995. Revenue from the Brixton product line totaled $3.3 million, an
increase of 11% when compared to $2.9 million in the first quarter of 1995.
Revenue from product sales totaled $17.4 million, an increase of $2.8 million or
19% during the three months ended March 31, 1996 when compared to the same
period in 1995. The
7
increase in product sales primarily resulted from the sale of the Company's
Channelink products for network-based storage applications to two new OEM
customers. During the first quarter of 1996, the Company entered into an
agreement to provide network-based storage connectivity products to IBM. The
contract, which runs through December 31, 1996, is expected to provide
approximately $7 million of revenue to the Company. During the first quarter of
1996, the Company recognized approximately $1.7 million of the expected revenue
under this agreement. In addition, direct sales of the Company's Channelink
products to end user customers in North America also increased during the first
quarter of 1996 when compared to the same period in 1995.
Revenue from service fees, which primarily reflects purchased maintenance
service from the Company's technical support personnel, increased 20% for the
three- month period ended March 31, 1996 when compared to the same period in
1995. This increase primarily resulted from the growing installed base of
customers using the Company's Channelink and Brixton products.
The Company derived approximately 26% and 33% of its revenue from international
customers for the three-month periods ended March 31, 1996 and 1995,
respectively. The percentage of revenue derived from international customers
for any given period is subject to fluctuation because of the variable timing of
sizable orders from customers both internationally and in North America, and the
Company does not believe that these results are indicative of a trend toward
less international revenue as a percentage of total revenue.
Throughout most of 1995, the Company attempted to use its existing Channelink
sales force to sell Brixton products. The Company has determined that this
approach diverted sales focus away from the Company's traditional Channelink
market and was not an effective approach for the sale of Brixton products. As a
result, the Company has hired additional sales and marketing personnel to focus
exclusively on market opportunities for Brixton products and services through
direct sales and alternate distribution channels. In addition, the Company has
hired additional pre-sales and post-sales systems engineers dedicated to the
support of the Brixton product line.
While the Company believes that the market for traditional data center
consolidation applications for its Channelink products has matured, it believes
that additional network-based storage applications should result in continuing
demand for its Channelink products. In addition, the Company will continue to
pursue the sale of its Channelink products through alternate distribution
channels. The levels of Channelink revenue reported by the Company in any given
period have been, and will continue to be impacted by, among other things, the
timing of the introduction of certain storage products by IBM.
The Company believes that the improved product function associated with new
Brixton products released in 1995 and the anticipated growth in market size,
coupled with the increase in the number of employees dedicated to the marketing
and sale of the Brixton products, should result in increased Brixton revenue in
1996.
In 1996, the Company believes service fees for its Channelink and Brixton
product lines will grow at approximately the same rate as the installed base of
these products.
8
The Company expects to continue to see quarter-to-quarter fluctuations in
revenue. The timing of sizable orders, because of their relative impact on
total quarterly sales, may contribute to such fluctuations.
As a result of the Company's strategy to hire a separate sales and marketing
organization dedicated exclusively to the Brixton market, the introduction of
additional network-based storage applications for its Channelink products, and
the Company's existing $7 million OEM agreement with IBM, the Company believes
revenue in 1996 will increase when compared to 1995.
SPECIAL CHARGES
In connection with the management reorganization announced by the Company in the
fourth quarter of 1995, the Company issued a common equity put option to a
former officer and director. The Company has adjusted compensation expense in
the current period, and will be required to adjust compensation expense in
future periods, as the market price of its common stock increases or decreases
until such time as the Company has no remaining obligation pursuant to the
common equity put option. The adjustment to compensation expense due to the
increase in the market price of the Company's common stock for the three months
ended March 31, 1996 has been reflected as a $315,000 reduction in engineering
and development expense.
GROSS PROFIT
For the three months ended March 31, 1996, the gross profit margin from product
sales was 65%, as compared to 72% for the same period of 1995. The decrease in
gross margins from product sales primarily resulted from the sale of lower
margin network-based storage connectivity products to IBM, and a charge of
approximately $800,000 for inventory obsolescence.
As a result of continuing worldwide competition, and continued sales of its
lower margin network- based storage connectivity products, the Company
anticipates that its gross profit margins on sales of its Channelink products
will be somewhat lower for the remainder of 1996 when compared to the same
periods of 1995. The Company believes that the anticipated decrease in gross
profit margins from its Channelink products for the remainder of 1996 may be
offset somewhat by an increase in the percentage of product sales coming from
the Company's higher margin Brixton software products. Actual gross profit
margins on product sales in 1996 will depend on a number of factors, including
the mix of products, market acceptance of the Brixton product line, the relative
amount of products sold through indirect distribution channels, the requirement
to pay licensing fees for the right to use certain technology, and the level of
continuing price competition.
Gross profit margins from service fees were 20% and 17% during the three months
ended March 31, 1996 and 1995, respectively. The increase in gross profit
margins from service fees primarily resulted from a steadily increasing base of
installed Channelink units covered by maintenance contracts, which provides for
economies of scale. The Company anticipates that it will make additional
investments in its service business, particularly to support the Brixton
9
product line. The Company currently anticipates that gross profit margins from
its service business for the remainder of 1996 will be somewhat lower when
compared to the first quarter of 1996.
OPERATING EXPENSES
During the first quarter of 1996, the Company continued to expand its sales and
marketing organizations, with a particular emphasis on new employees dedicated
to the Brixton product line. Sales and marketing expenses increased 69% during
the three months ended March 31, 1996 when compared to the same period of 1995.
The increase is primarily attributable to an increase in compensation expense
and other costs associated with the continued expansion of the Company's sales
organization, including fringe benefits, travel, recruitment, and occupancy
costs. The Company anticipates that sales and marketing expenses will be higher
through the remainder of 1996 when compared to the same period of 1995 due to
the expense associated with the additional sales and marketing employees hired
in recent quarters.
Engineering and development costs, primarily consisting of compensation and
related fringe benefits, depreciation, and consulting expenses related to new
product development and enhancements to existing products increased
approximately 15% during the three months ended March 31, 1996, when compared to
the same period of 1995. The increase is primarily attributable to an increase
in expenditures for engineering prototype materials and supplies. Engineering
and development expenses, excluding the impact of the previously discussed
common equity put option, were approximately 15% of revenue for both the three
months ended March 31, 1996 and 1995. The Company anticipates investing
approximately 14% of total revenue on engineering and development in 1996,
(excluding the impact of the common equity put option) which includes
investments in current and future products. The Company believes a sustained
high level of investment is essential to customer satisfaction and future
revenue.
General and administrative expenses increased approximately 30% during the three
months ended March 31, 1996 as compared to the same period in 1995. The
increase primarily relates to higher contract labor, consulting, and shareholder
expenses. General and administrative expenses were 8% of total revenue for the
three months ended March 31, 1996, as compared to 7% of total revenue during the
same period of 1995.
The Company anticipates that general and administrative expenses will be
approximately 7% of revenue in 1996.
The Company recorded a provision for income taxes at an effective tax rate of
35% for the three months ended March 31, 1996, as compared to 39% during the
same period of 1995. The Company currently anticipates that its effective tax
for the remainder of 1996 will be approximately 35%.
10
NEW ACCOUNTING PRONOUNCEMENTS
Beginning in 1996, the Company has adopted the provisions of Statement of
Financial Accounting Standards No. 123 "Accounting for Stock Based Compensation"
("SFAS No. 123"). Under SFAS No. 123, companies are permitted to adopt a new
method of accounting for stock compensation awards which is based on recognition
of a charge equal to the estimated fair value of the award on the date of grant.
Alternatively, companies may continue using the methodology specified in APB No.
25, "Accounting for Stock Issued to Employees" to account for stock based
compensation, with expanded disclosure in the notes to the annual financial
statements of the pro forma effects on net income and earnings per share,
assuming application of the new accounting method outlined in SFAS No. 123.
Adoption of this new pronouncement has not had a significant impact on the
Company's financial position or results of operations.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its operations through the private and
public sales of equity securities, bank borrowings under lines of credit,
capital equipment leases, and cash generated from operations.
Cash, cash equivalents, and marketable securities at March 31, 1996 totaled
$29.2 million, an increase of $.8 million during the first three months of 1996.
This increase resulted from a $2.8 million increase due to cash provided by
operations, financing activities (primarily consisting of proceeds from the
exercise of employee stock options), and the effects of exchange rate changes,
partially offset by the cash used for investing in property and equipment, field
support spares and other assets of $2.0 million.
Expenditures for capital equipment and field support spares have been, and will
likely continue to be, a significant capital requirement. The Company plans to
continue to invest aggressively in productivity tools for its employees and in
its field support spares.
The Company believes that its current balances of cash, cash equivalents, and
marketable securities, when combined with anticipated cash flow from operations,
will be adequate to fund its operating plans and meet its currently anticipated
aggregate capital requirements, at least through 1996. However, if the Company
does not generate revenue as expected or incurs unanticipated expenses, or needs
additional investment funds to react to changes in its marketplace, it may need
additional capital earlier or in amounts greater than would otherwise be
required.
The Company believes that inflation has not had a material impact on its
operations or liquidity to date.
11
FORWARD LOOKING INFORMATION
The matters discussed in this Management's Discussion and Analysis of Financial
Condition and Results of Operations regarding future results and requirements
are forward looking statements. These statements involve risk and uncertainties
in addition to the factors discussed above, including market acceptance of the
Brixton products, the availability of new employees experienced in the Brixton
marketplace, growth and timing of new applications for the Company's Channelink
products, particularly in the area of network-based storage, uncertainties due
to the Company's recently announced management reorganization, including its
ability to retain a new Chief Executive Officer, changes in general economic
conditions, cost and availability of components, and fluctuations in foreign
exchange rates. In addition, the markets for the Company's products are
characterized by significant competition, and the Company's results may be
adversely affected by the actions of existing or future competitors, including
the development of new technologies, the introduction of new products, and the
reduction of prices by such competitors to gain or retain market share.
12
PART II. OTHER INFORMATION
Item 1-5. None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits are filed herewith.
Exhibit Description
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2A. Agreement and Plan of Merger among Computer Network Technology
Corporation, BRX Corp., Brixton Systems, Inc., and certain
Significant Shareholders of Brixton, dated February 4, 1994.
(Incorporated by reference to Exhibit 2 to current report on Form
8-K dated February 22, 1994.)
4A. Restated Articles of Incorporation of the Company, as amended.
(Incorporated by reference to Exhibit 2 to current report on Form
8-K dated June 22, 1992.)
4B. By-laws of the Company, as amended. (Incorporated by reference to
Exhibit 3B to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1991.)
10A. Master Lease Agreement by and between the Company and Comdisco,
Inc. dated September 7, 1990. (Incorporated by reference to
Exhibit 10B to Form S-2 Registration Statement No. 33-41985.)
10B. Lease Agreement dated November 30, 1990 by and between TOLD
Development Company, a general partnership, and Computer Network
Technology Corporation. (Incorporated by reference to Exhibit 10C
to Form S-2 Registration Statement No. 33-41985.)
10C. Computer Network Technology Corporation 401(k) Salary Savings Plan
effective January 1, 1991. (Incorporated by reference to Exhibit
10F to Form S-2 Registration Statement No. 33-41985.)
10D. Subscription Agreements of Kanematsu Electronics Ltd. and
Kanematsu USA Inc. dated October 22, 1990. (Incorporated by
reference to Exhibit 10G to Form S-2 Registration Statement No.
33-41985.)
10E. Amended and Restated Incentive Stock Option Plan (Incorporated by
reference to Exhibit 10A to Form S-8 Registration Statement,
Commission File No. 33-41986.)
10F. Amended 1986 Nonqualified Stock Option Plan. (Incorporated by
reference to Exhibit 10B to Form S-8 Registration Statement No.
33-41986.)
13
Exhibit Description
------- -----------
10G. Certificate of Resolutions contained in Minutes of Annual Meeting
of Shareholders on May 30, 1990 increasing shares reserved under
ISOP from 500,000 to 1,000,000. (Incorporated by reference to
Exhibit 10C to Form S-8 Registration Statement No. 33-41986.)
10H. Certificate of Resolutions contained in Minutes of Special Meeting
of the Board of Directors on April 25, 1991 increasing the number
of shares reserved under the NSOP from 1,100,000 to 1,600,000.
(Incorporated by reference to Exhibit 10D to Form S-8 Registration
Statement No. 33-41986.)
10I. 1992 Employee Stock Purchase Plan (Incorporated by reference to
Exhibit 28 to Form S-8 Registration Statement No. 33-48954.)
10J. 1992 Stock Award Plan (Incorporated by reference to Exhibit 28 to
Form S-8 Registration Statement No. 33-48944.)
10K. Sublease Agreement by and between ITT Consumer Financial
Corporation and Computer Network Technology Corporation dated
October 1, 1993. (Incorporated by reference to Exhibit 10X to
Annual Report on Form 10-K for the fiscal year ended December 31,
1993.)
10L. First Amendment to Sublease Agreement by and between ITT Consumer
Financial Corporation and Computer Network Technology Corporation
dated October 26, 1993. (Incorporated by reference to Exhibit 10Y
to Annual Report on Form 10-K for the fiscal year ended December
31, 1993.)
10M. Minutes of Annual Meeting of Shareholders on May 27, 1993
increasing shares reserved under the 1992 Stock Award Plan from
650,000 to 1,050,000 and increasing shares reserved under the 1992
Employee Stock Purchase Plan from 150,000 to 300,000.
(Incorporated by reference to Exhibit 10BB to Annual Report on
Form 10-K for the fiscal year ended December 31, 1993.)
10N. Amendment No. 1 to Sublease Agreement by and between ITT Consumer
Financial Corporation and Computer Network Technology Corporation
dated February 9, 1994. (Incorporated by reference to Exhibit 10CC
to Form 10Q for the quarterly period ended March 31, 1994.)
10O. March 10, 1994 Incentive Stock Option Agreements (Incorporated by
reference to Exhibit 28.2 to Form S-8 Registration Statement No.
33-83266.)
10P. March 10, 1994 Non-Qualified Stock Option Agreements (Incorporated
by reference to Exhibit 28.3 to Form S-8 Registration Statement
No. 33-83266.)
14
Exhibit Description
------- -----------
10Q. Amendment to 1992 Stock Award Plan increasing shares reserved from
1,050,000 to 3,250,000 (Incorporated by reference to Form S-8
Registration Statement No. 33-83262.)
10R. Amendment to Employee Stock Purchase Plan increasing shares
reserved from 300,000 to 400,000 (Incorporated by reference to
Form S-8 Registration Statement No. 33-83264.)
10S. Amendment to and Restatement of Employment Agreement by and
between the Company and C. McKenzie Lewis III. (Incorporated by
reference to Exhibit 10S to Annual Report on Form 10-K for the
fiscal year ended December 31, 1995).
10T. Severance Agreement by and between the Company and Eugene D.
Misukanis. (Incorporated by reference to Exhibit 10T to Annual
Report on Form 10-K for the fiscal year ended December 31, 1995).
10U. Severance Agreement by and between the Company and Franz
Corneille. (Incorporated by reference to Exhibit 10U to Annual
Report on Form 10-K for the fiscal year ended December 31, 1995).
10V. Independent Contractor Agreement by and between the Company and
Bruce T. Coleman. (Incorporated by reference to Exhibit 10V to
Annual Report on Form 10-K for the fiscal year ended December 31,
1995).
10W. Independent Contractor Agreement by and between the Company Erwin
A. Kelen. (Incorporated by reference to Exhibit 10W to Annual
Report on Form 10-K for the fiscal year ended December 31, 1995).
10X. Independent Contractor Agreement by and between the Company John
A. Rollwagen. (Incorporated by reference to Exhibit 10X to Annual
Report on Form 10-K for the fiscal year ended December 31, 1995).
11. Statement Re: Computation of Net Income per Common and Common
Equivalent Share.
27. Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter ended
March 31, 1996.
15
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized officers.
COMPUTER NETWORK TECHNOLOGY CORPORATION
(Registrant)
Date: May 12, 1996 By: /s/ John R. Brintnall
------------ --------------------------------
John R. Brintnall
Vice President of Finance
(Principal financial and accounting officer and
duly authorized signatory on behalf of the
Registrant.)
16
EXHIBIT INDEX
Exhibit Description Page
------- ----------- ----
2A. Agreement and Plan of Merger among Computer Network Technology
Corporation, BRX Corp., Brixton Systems, Inc., and certain
Significant Shareholders of Brixton, dated February 4, 1994.
(Incorporated by reference to Exhibit 2 to current report on Form
8-K dated February 22, 1994.)
4A. Restated Articles of Incorporation of the Company, as amended.
(Incorporated by reference to Exhibit 2 to current report on Form
8-K dated June 22, 1992.)
4B. By-laws of the Company, as amended. (Incorporated by reference to
Exhibit 3B to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1991.)
10A. Master Lease Agreement by and between the Company and Comdisco,
Inc. dated September 7, 1990. (Incorporated by reference to
Exhibit 10B to Form S-2 Registration Statement No. 33-41985.)
10B. Lease Agreement dated November 30, 1990 by and between TOLD
Development Company, a general partnership, and Computer Network
Technology Corporation. (Incorporated by reference to Exhibit 10C
to Form S-2 Registration Statement No. 33-41985.)
10C. Computer Network Technology Corporation 401(k) Salary Savings Plan
effective January 1, 1991. (Incorporated by reference to Exhibit
10F to Form S-2 Registration Statement No. 33-41985.)
10D. Subscription Agreements of Kanematsu Electronics Ltd. and
Kanematsu USA Inc. dated October 22, 1990. (Incorporated by
reference to Exhibit 10G to Form S-2 Registration Statement No.
33-41985.)
10E. Amended and Restated Incentive Stock Option Plan (Incorporated by
reference to Exhibit 10A to Form S-8 Registration Statement,
Commission File No. 33-41986.)
10F. Amended 1986 Nonqualified Stock Option Plan. (Incorporated by
reference to Exhibit 10B to Form S-8 Registration Statement No.
33-41986.)
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Exhibit Description Page
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10G. Certificate of Resolutions contained in Minutes of Annual Meeting
of Shareholders on May 30, 1990 increasing shares reserved under
ISOP from 500,000 to 1,000,000. (Incorporated by reference to
Exhibit 10C to Form S-8 Registration Statement No. 33-41986.)
10H. Certificate of Resolutions contained in Minutes of Special Meeting
of the Board of Directors on April 25, 1991 increasing the number
of shares reserved under the NSOP from 1,100,000 to 1,600,000.
(Incorporated by reference to Exhibit 10D to Form S-8 Registration
Statement No. 33-41986.)
10I. 1992 Employee Stock Purchase Plan (Incorporated by reference to
Exhibit 28 to Form S-8 Registration Statement No. 33-48954.)
10J. 1992 Stock Award Plan (Incorporated by reference to Exhibit 28 to
Form S-8 Registration Statement No. 33-48944.)
10K. Sublease Agreement by and between ITT Consumer Financial
Corporation and Computer Network Technology Corporation dated
October 1, 1993. (Incorporated by reference to Exhibit 10X to
Annual Report on Form 10-K for the fiscal year ended December 31,
1993.)
10L. First Amendment to Sublease Agreement by and between ITT Consumer
Financial Corporation and Computer Network Technology Corporation
dated October 26, 1993. (Incorporated by reference to Exhibit 10Y
to Annual Report on Form 10-K for the fiscal year ended December
31, 1993.)
10M. Minutes of Annual Meeting of Shareholders on May 27, 1993
increasing shares reserved under the 1992 Stock Award Plan from
650,000 to 1,050,000 and increasing shares reserved under the 1992
Employee Stock Purchase Plan from 150,000 to 300,000.
(Incorporated by reference to Exhibit 10BB to Annual Report on
Form 10-K for the fiscal year ended December 31, 1993.)
10N. Amendment No. 1 to Sublease Agreement by and between ITT Consumer
Financial Corporation and Computer Network Technology Corporation
dated February 9, 1994. (Incorporated by reference to Exhibit 10CC
to Form 10Q for the quarterly period ended March 31, 1994.)
10O. March 10, 1994 Incentive Stock Option Agreements (Incorporated by
reference to Exhibit 28.2 to Form S-8 Registration Statement No.
33-83266.)
10P. March 10, 1994 Non-Qualified Stock Option Agreements (Incorporated
by reference to Exhibit 28.3 to Form S-8 Registration Statement
No. 33-83266.)
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Exhibit Description Page
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10Q. Amendment to 1992 Stock Award Plan increasing shares reserved from
1,050,000 to 3,250,000 (Incorporated by reference to Form S-8
Registration Statement No. 33-83262.)
10R. Amendment to Employee Stock Purchase Plan increasing shares
reserved from 300,000 to 400,000 (Incorporated by reference to
Form S-8 Registration Statement No. 33-83264.)
10S. Amendment to and Restatement of Employment Agreement by and
between the Company and C. McKenzie Lewis III. (Incorporated by
reference to Exhibit 10S to Annual Report on Form 10-K for the
fiscal year ended December 31, 1995).
10T. Severance Agreement by and between the Company and Eugene D.
Misukanis. (Incorporated by reference to Exhibit 10T to Annual
Report on Form 10-K for the fiscal year ended December 31, 1995).
10U. Severance Agreement by and between the Company and Franz
Corneille. (Incorporated by reference to Exhibit 10U to Annual
Report on Form 10-K for the fiscal year ended December 31, 1995).
10V. Independent Contractor Agreement by and between the Company and
Bruce T. Coleman. (Incorporated by reference to Exhibit 10V to
Annual Report on Form 10-K for the fiscal year ended December 31,
1995).
10W. Independent Contractor Agreement by and between the Company Erwin
A. Kelen. (Incorporated by reference to Exhibit 10W to Annual
Report on Form 10-K for the fiscal year ended December 31, 1995).
10X. Independent Contractor Agreement by and between the Company John
A. Rollwagen. (Incorporated by reference to Exhibit 10X to Annual
Report on Form 10-K for the fiscal year ended December 31, 1995).
11. Statement Re: Computation of Net Income per Common and Common
Equivalent Share. ............................Electronically Filed
27. Financial Data Schedule. .....................Electronically Filed
(b) No reports on Form 8-K were filed during the quarter ended March
31, 1996.
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