EXHIBIT 99
(CNT LOGO (REGISTERED TRADEMARK))
NEWS RELEASE
FOR IMMEDIATE RELEASE
CNT REPORTS SECOND QUARTER RESULTS
Inrange Integration Proceeding on Plan
MINNEAPOLIS, AUGUST 26, 2003 -CNT (Nasdaq: CMNT)
CNT today reported financial results for the fiscal second quarter and six
months ended July 31, 2003. Second quarter revenue totaled $96.7 million,
compared to $48.9 million in the second quarter of 2002. Revenue for the six
months ended July 31, 2003 totaled $149.0 million, compared to $94.1 million in
the first six months of 2002. Revenues for the second quarter and first six
months of 2003 include the acquisition of Inrange Technologies from May 5, 2003.
On the basis of generally accepted accounting principles (GAAP), the company
reported a net loss for the fiscal second quarter of $25.8 million, or $.96 per
share, compared to a net loss of $2.1 million, or $.07 per share, in the
year-ago quarter. On a pro forma basis, the company reported net income of
$574,000 or $.02 per share in the fiscal second quarter. Pro-forma results for
the fiscal 2003 second quarter exclude a $19.7 million charge for in-process
research and development, integration charges of $5.0 million, and $1.7 million
of intangibles amortization associated with the recent acquisition of Inrange
Technologies. Pro forma results for the second quarter of 2002 exclude $211,000
of costs for an earn-out related to the BI-Tech acquisition and legal fees for
potential acquisitions. Pro-forma net income (loss) for the fiscal second
quarter of 2003 and 2002 include income taxes at a 34% effective rate.
On the basis of generally accepted accounting principles (GAAP), the company
reported a net loss for the six months ended July 31, 2003 of $27.9 million, or
$1.03 per share, compared to a net loss of $15.9 million, or $.54 per share, for
the same period of fiscal 2002. On a pro forma basis, the company reported a net
loss of $125,000 for the six months ended July 31, 2003. Pro-forma results for
the first six months of 2003 exclude the $19.7 million charge for in-process
research and development, integration charges related to the Inrange acquisition
of $5.0 million, and intangibles amortization of
(more)
$1.7 million associated with the recent acquisition of Inrange Technologies, and
$312,000 for the BI-Tech earn-out. Pro forma results for the first six months of
2002 exclude a $10.1 million charge for the cumulative effect of a change in
accounting principle, and $211,000 of costs for the BI-Tech earn-out and
potential acquisitions. Pro forma results for the first six months of 2003 and
2002 include income taxes at a 34% effective rate.
"On May 5, 2003, we completed our strategic acquisition of Inrange Technologies
for $190 million in cash. At that time, it was our plan to have the integration
substantially complete prior to the completion of our second quarter. We also
expected to deliver on annual cost savings of between $10-$15 million, to be
fully phased in by early 2004," commented Tom Hudson, CNT's chairman, president
and chief executive officer. "I am pleased to report that we have exceeded our
cose savings targets and made excellent progress on our integration of the two
companies. Specifically, the following progress on the integration of Inrange
since the May 5, 2003 acquisition:
o The sales and professional services organizations have been
fully integrated and the combined sales and consulting force
have been cross-trained on the new combined product offerings.
The combined company now has over 450 customer facing sales
and consulting personnel worldwide.
o The customer support groups, including the call center,
help-desk and logistics, have been consolidated. The combined
worldwide group now represents approximately 275 customer
facing support personnel.
o On July 7, 2003 the company switched over to the CNT
information technology systems. This integration was completed
in 53 days and included ERP, CRM, voice and e-mail systems.
o During the quarter we consolidated numerous sales and services
offices in the United States and Europe and are in the process
of sub-leasing excess facilities.
o On August 1, 2003 the transfer of manufacturing & purchasing
operations from Minneapolis to Lumberton commenced.
o During the quarter we announced the first fully integrated
SAN/MAN/WAN 256 part fibre channel director. This product has
laboratory and customer proven CNT technology that offers a
seamless, on demand, integrated solution for large customer
networks. This is achieved by providing the FC/9000 with
X-blades for FC to IP connectivity for wide area (WAN) and
wave division multiplexer blades for dark fibre metro area
(MAN) networks. We will start shipping in the third quarter.
(more)
o We announced the consolidation of the CNT and Inrange channel
extension and storage networking product offerings. One CNT
product family can now provide all of the same functionality
previously provided by four products. We will continue to
service all product lines to fulfill customer contracts and
commitments.
o Several of the non-core product offerings acquired from the
acquisition have been closed or divested and the company is in
the process of divesting several other non-core product
offerings."
"We have exceeded our integration targets established when we completed the
Inrange acquisition. The actions outlined above resulted in a net reduction of
approximately 150 employees and a reduction in the annual expense run-rate for
the combined entity which we estimate to be approximately $20 million,
significantly better than the $10-$15 million we originally targeted. Between
now and year-end, we expect the company will complete the integration, including
the complete migration of all manufacturing and supply chain functions to
Lumberton," Hudson added.
"In June we added integrated metropolitan area network (MAN) and wide area
network (WAN) capabilities to our FC/9000 Fibre Channel/FICON Director product.
With the addition of support for MAN and WAN environments, the FC/9000 is now
uniquely positioned to support long distance applications using high-speed
interfaces at virtually unlimited distances. This is another industry first for
the FC/9000 and builds on CNT's commitment to providing customers with asset
protection for their business continuity and storage networking solutions, for
all SAN, MAN and WAN environments," continued Hudson.
"Integration charges of $3.4 million included in operating expenses for the
second quarter primarily reflect wages and severance for terminated employees,
and extra travel costs for integration activities. We also recorded a $1.6
million charge for the write-down of inventory resulting from the integration of
the product strategies for the new combined entity," said Greg Barnum, CNT's
chief financial officer. "During the third quarter we expect to record an
additional integration charge of approximately $1.0 million primarily for wages
and severance. We are still in the process of finalizing the purchase price
allocation for the Inrange acquisition."
(more)
OUTLOOK
For the third quarter of 2003 we anticipate that revenues will be in
the range of $100 to $110 million and pro-forma earnings from continuing
operations will be in the range of $.03 to $.07 per share, excluding
amortization of intangibles, integration charges and any earn-out related to the
BI-Tech acquisition.
CONFERENCE CALL AND WEBCAST INFORMATION
CNT WILL HOLD A CONFERENCE CALL AND WEBCAST THIS AFTERNOON AT 4:30 PM CENTRAL
DAYLIGHT TIME, 5:30 PM DAYLIGHT STANDARD TIME, TUESDAY, AUGUST 26, 2003, TO
DISCUSS FISCAL SECOND QUARTER FINANCIAL RESULTS. THE WEBCAST IS AVAILABLE
THROUGH CNT'S WEB SITE AT HTTP://WWW.CNT.COM/CNT/FINANCIALS. TO PARTICIPATE VIA
TELEPHONE, DIAL 212-346-6399 AND ASK FOR THE CNT EARNINGS CALL. A ONE-WEEK
WEBCAST REPLAY WILL BE AVAILABLE AT HTTP://WWW.CNT.COM/CNT/FINANCIALS. A
RECONCILIATION OF PRO FORMA INFORMATION TO GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES ARE 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
21158213# AT THE RESERVATION NUMBER PROMPT
ABOUT CNT
CNT is one of the world's largest providers of comprehensive storage networking
solutions, products, and services. For 20 years, businesses around the world
have depended on us to deliver business continuity solutions that drive business
efficiencies, lowering costs and reducing IT risks across the enterprise. CNT
applies its expertise in storage architecture to help companies build end-to-end
solutions that include analysis, planning and design, multi-vendor integration,
connectivity, 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.
<Table>
FOR ADDITIONAL INFORMATION, CONTACT:
Greg Barnum, VP of Finance & CFO Jennifer Weidauer, Public Relations
763-268-6110; greg_barnum@cnt.com 763-268-8367; jennifer_weidauer@cnt.com
</Table>
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, gross margins, expenses, operating margins and
earnings per share, 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, activities
related to the integration of Inrange into our business 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,
although not all CNT forward-looking statements contain these identifying words.
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 generally and in various geographic markets; (iv)
relationships with our strategic partners; (v) unanticipated risks associated
with introducing new services, products and features; (vi) technological change
affecting our products; (vii) whether any delayed orders will be received;
(viii) whether we will be able to successfully and efficiently integrate
Inrange; and (ix) other events and other important factors disclosed previously
and from time to time in our filings with the U.S. Securities and Exchange
Commission. 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.
(more)
CNT
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
<Table>
<Caption>
Three months ended Six months ended
---------------------- ----------------------
JULY 31, JULY 31,
2003 2002 2003 2002
--------- --------- --------- ---------
REVENUE:
Product sales ........................................ $ 63,489 $ 33,128 $ 97,893 $ 62,882
Service fees ......................................... 33,224 15,738 51,150 31,196
--------- --------- --------- ---------
Total revenue .................................... 96,713 48,866 149,043 94,078
--------- --------- --------- ---------
COST OF REVENUE:
Cost of product sales ................................ 35,966 19,612 57,600 36,980
Cost of service fees ................................. 20,296 9,308 30,382 19,068
Amortization of developed technology ................. 1,055 -- 1,055 --
Integration Charge ................................... 1,607 -- 1,607 --
--------- --------- --------- ---------
Total cost of revenue ............................ 58,924 28,920 90,644 56,048
--------- --------- --------- ---------
GROSS PROFIT ........................................... 37,789 19,946 58,399 38,030
--------- --------- --------- ---------
OPERATING EXPENSES:
Sales and marketing .................................. 23,059 14,208 37,265 29,785
Engineering and development .......................... 11,682 6,591 17,602 13,259
General and administrative ........................... 4,121 2,694 6,677 5,207
Amortization of customer list and trademarks ......... 607 -- 607 --
In-process research and development charge ........... 19,706 -- 19,706 --
Integration charge ................................... 3,429 -- 3,429 --
--------- --------- --------- ---------
Total operating expenses ......................... 62,604 23,493 85,286 48,251
--------- --------- --------- ---------
LOSS FROM OPERATIONS ................................... (24,815) (3,547) (26,887) (10,221)
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Net gain on sale of marketable securities ............ -- -- 747 --
Other, net ........................................... (719) 373 (766) 1,429
--------- --------- --------- ---------
OTHER INCOME (EXPENSE), NET ....................... (719) 373 (19) 1,429
--------- --------- --------- ---------
LOSS BEFORE INCOME TAXES ............................... (25,534) (3,174) (26,906) (8,792)
PROVISION (BENEFIT) FOR INCOME TAXES ................... 288 (1,068) 998 (2,989)
--------- --------- --------- ---------
NET LOSS BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE ...................... (25,822) (2,106) (27,904) (5,803)
--------- --------- --------- ---------
Cumulative effect of change in accounting principle .... -- -- -- (10,068)
--------- --------- --------- ---------
NET LOSS ............................................... $ (25,822) $ (2,106) $ (27,904) $ (15,871)
========= ========= ========= =========
BASIC AND DILUTED LOSS PER SHARE:
NET LOSS BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE ........................... $ (.96) $ (.07) $ (1.03) $ (.20)
========= ========= ========= =========
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE .. $ -- $ -- $ -- $ (.34)
========= ========= ========= =========
NET LOSS ............................................. $ (.96) $ (.07) $ (1.03) $ (.54)
========= ========= ========= =========
SHARES ............................................... 26,979 28,466 26,973 29,437
========= ========= ========= =========
</Table>
(more)
CNT
CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
<Table>
<Caption>
Three months ended Six months ended
-------------------------- --------------------------
JULY 31, JULY 31,
2003 2002 2003 2002
----------- ----------- ----------- -----------
REVENUE:
Product sales ............................. $ 63,489 $ 33,128 $ 97,893 $ 62,882
Service fees .............................. 33,224 15,738 51,150 31,196
----------- ----------- ----------- -----------
Total revenue ......................... 96,713 48,866 149,043 94,078
----------- ----------- ----------- -----------
COST OF REVENUE:
Cost of product sales ..................... 35,966 19,612 57,600 36,980
Cost of service fees ...................... 20,296 9,290 30,251 19,050
----------- ----------- ----------- -----------
Total cost of revenue ................. 56,262 28,902 87,851 56,030
----------- ----------- ----------- -----------
GROSS PROFIT ................................ 40,451 19,964 61,192 38,048
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Sales and marketing ....................... 23,059 14,181 37,107 29,758
Engineering and development ............... 11,682 6,556 17,602 13,224
General and administrative ................ 4,121 2,563 6,654 5,076
----------- ----------- ----------- -----------
Total operating expenses .............. 38,862 23,300 61,363 48,058
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS ...................... 1,589 (3,336) (171) (10,010)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE), NET ............ (719) 373 (19) 1,429
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES ........... 870 (2,963) (190) (8,581)
PROVISION (BENEFIT) FOR INCOME TAXES ........ 296 (1,007) (65) (2,918)
----------- ----------- ----------- -----------
NET INCOME (LOSS) ........................... $ 574 $ (1,956) $ (125) $ (5,663)
=========== =========== =========== ===========
BASIC INCOME (LOSS) PER SHARE:
NET INCOME (LOSS) ......................... $ .02 $ (.07) $ -- $ (.19)
=========== =========== =========== ===========
SHARES .................................... 26,979 28,466 26,973 29,437
=========== =========== =========== ===========
DILUTED INCOME (LOSS) PER SHARE:
NET INCOME (LOSS) ......................... $ .02 $ (.07) $ -- $ (.19)
=========== =========== =========== ===========
SHARES .................................... 27,857 28,466 26,973 29,437
=========== =========== =========== ===========
</Table>
(more)
CNT
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
<Table>
<Caption>
JULY 31, January 31,
2003 2003
(UNAUDITED)
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents ....................... $ 51,545 $ 98,341
Marketable securities ........................... 8,644 111,143
Receivables, net ................................ 92,110 56,040
Inventories ..................................... 23,769 24,091
Other current assets ............................ 4,131 2,118
------------- -------------
Total current assets ........................ 180,199 291,733
------------- -------------
Property and equipment, net ......................... 41,761 22,566
Field support spares, net ........................... 11,202 6,009
Goodwill, net ....................................... 108,991 14,113
Other intangibles, net .............................. 36,638 1,669
Other assets ........................................ 3,306 3,079
------------- -------------
$ 382,097 $ 339,169
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................ $ 27,480 $ 16,889
Accrued liabilities ............................. 53,145 25,060
Deferred revenue ................................ 41,211 19,340
Current installments of capital lease ........... 290 708
------------- -------------
Total current liabilities .................... 122,126 61,997
------------- -------------
Convertible subordinated debt ....................... 125,000 125,000
Deferred tax liability .............................. 473 541
------------- -------------
Total liabilities ........................... 247,599 187,538
------------- -------------
Shareholders equity:
Preferred stock
Common stock, $.01 par value; authorized
100,000 shares, issued and outstanding
27,159 at July 31, 2003 and
26,921 at January 31, 2003 .................. 272 269
Additional paid-in capital ...................... 185,499 173,955
Unearned compensation ........................... (487) (675)
Accumulated deficit ............................. (50,850) (22,946)
Accumulated other comprehensive income (loss) ... 64 1,028
------------- -------------
Total shareholders' equity .................. 134,498 151,631
------------- -------------
$ 382,097 $ 339,169
============= =============
</Table>
(more)
CNT
CONSOLIDATED PRO FORMA PRODUCT AND SERVICE GROSS MARGINS
(in thousands, except per share data)
(unaudited)
<Table>
<Caption>
Three months ended Three months ended
JULY 31, 2003 July 31, 2002
---------------------------------------------- ----------------------------------------------
PRO FORMA As Pro forma
AS REPORTED ADJUSTMENTS PRO FORMA Reported Adjustments Pro forma
------------ ------------ ------------ ------------ ------------ ------------
REVENUE:
CNT product sales .......... $ 51,038 $ -- $ 51,038 $ 23,660 $ -- 23,660
Third party product sales .. 12,451 -- 12,451 9,468 -- 9,468
Maintenance fees ........... 22,018 -- 22,018 10,915 -- 10,915
Consulting fees ............ 11,206 -- 11,206 4,823 -- 4,823
------------ ------------ ------------ ------------ ------------ ------------
Total revenue .......... 96,713 -- 96,713 48,866 -- 48,866
------------ ------------ ------------ ------------ ------------ ------------
COST OF REVENUE:
Cost of CNT product sales .. 25,721 -- 25,721 12,360 -- 12,360
Cost of third party product
sales.................... 10,245 -- 10,245 7,252 -- 7,252
Cost of maintenance fees ... 11,377 -- 11,377 5,434 -- 5,434
Cost of consulting fees .... 8,919 -- 8,919 3,874(3) (18) 3,856
Amortization of developed
technology .............. 1,055(1) (1,055) -- -- -- --
Integration charge ......... 1,607(2) (1,607) -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total cost of revenue .. 58,924 (2,662) 56,262 28,920 (18) 28,902
------------ ------------ ------------ ------------ ------------ ------------
GROSS PROFIT ................. $ 37,789 $ 2,662 $ 40,451 $ 19,946 $ 18 19,964
============ ============ ============ ============ ============ ============
</Table>
<Table>
<Caption>
Six months ended Six months ended
JULY 31, 2003 July 31, 2002
------------------------------------------- -------------------------------------------
PRO FORMA As Pro forma
AS REPORTED ADJUSTMENTS PRO FORMA Reported Adjustments Pro forma
----------- ----------- ----------- ----------- ----------- -----------
REVENUE:
CNT product sales ............ $ 69,332 $ -- $ 69,332 $ 45,912 $ -- 45,912
Third party product sales .... 28,561 -- 28,561 16,970 -- 16,970
Maintenance fees ............. 32,856 -- 32,856 21,864 -- 21,864
Consulting fees .............. 18,294 -- 18,294 9,332 -- 9,332
----------- ----------- ----------- ----------- ----------- -----------
Total revenue ............ 149,043 -- 149,043 94,078 -- 94,078
----------- ----------- ----------- ----------- ----------- -----------
COST OF REVENUE:
Cost of CNT product sales .... 34,035 -- 34,035 23,324 -- 23,324
Cost of third party product
sales ...................... 23,565 -- 23,565 13,656 -- 13,656
Cost of maintenance fees ..... 16,779 -- 16,779 11,445 -- 11,445
Cost of consulting fees ...... 13,603(3) (131) 13,472 7,623(3) (18) 7,605
Amortization of developed
technology ................. 1,055(1) (1,055) -- -- -- --
Integration charge ........... 1,607(2) (1,607) -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total cost of revenue .... 90,644 (2,793) 87,851 56,048 (18) 56,030
----------- ----------- ----------- ----------- ----------- -----------
GROSS PROFIT ................... $ 58,399 $ 2,793 $ 61,192 $ 38,030 $ 18 38,048
=========== =========== =========== =========== =========== ===========
</Table>
(1) Amortization expense related to developed technology from the Inrange
acquisition
(2) Write-down of inventory resulting from integration of CNT and Inrange
product offerings
(3) Represents the expense related to the earn-out payable to the BI-Tech
employees.
(more)
CNT
CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
<Table>
<Caption>
Three months ended Three months ended
JULY 31, 2003 July 31, 2002
----------------------------------------- -----------------------------------------
PRO FORMA As Pro forma
AS REPORTED ADJUSTMENTS PRO FORMA Reported Adjustments Pro forma
----------- ----------- ---------- ---------- ----------- ----------
REVENUE:
Product sales ....................... $ 63,489 $ -- $ 63,489 $ 33,128 $ -- 33,128
Service fees ........................ 33,224 -- 33,224 15,738 -- 15,738
---------- ---------- ---------- ---------- ---------- ----------
Total revenue ................... 96,713 -- 96,713 48,866 -- 48,866
---------- ---------- ---------- ---------- ---------- ----------
COST OF REVENUE:
Cost of product sales ............... 35,966 -- 35,966 19,612 -- 19,612
Cost of service fees ................ 20,296 -- 20,296 9,308 (18) 9,290
Amortization of developed
technology ......................... 1,055(2) (1,055) -- -- -- --
Integration charge .................. 1,607(3) (1,607) -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total cost of revenue ........... 58,924 (2,662) 56,262 28,920 (18) 28,902
---------- ---------- ---------- ---------- ---------- ----------
GROSS PROFIT .......................... 37,789 2,662 40,451 19,946 18 19,964
---------- ---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES:
Sales and marketing ................. 23,059 -- 23,059 14,208 (27) 14,181
Engineering and development ......... 11,682 -- 11,682 6,591 (35) 6,556
General and administrative .......... 4,121 -- 4,121 2,694(8) (131) 2,563
Amortization of customer list
and trademarks .................... 607(4) (607) -- -- -- --
In-process research and development
charge ............................ 19,706(5) (19,706) -- -- -- --
Integration charge .................. 3,429(6) (3,429) -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses ........ 62,604 (23,742) 38,862 23,493 (193) 23,300
---------- ---------- ---------- ---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS ......... (24,815) 26,404 1,589 (3,547) 211 (3,336)
---------- ---------- ---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE), NET ...... (719) -- (719) 373 -- 373
---------- ---------- ---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES ..... (25,534) 26,404 870 (3,174) 211 (2,963)
PROVISION (BENEFIT) FOR INCOME TAXES .. 288(7) 8 296 (1,068)(7) 61 (1,007)
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) ..................... $ (25,822) $ 26,396 $ 574 $ (2,106) $ 150 (1,956)
========== ========== ========== ========== ========== ==========
BASIC INCOME (LOSS) PER SHARE:
NET INCOME (LOSS) ................... $ (.96) $ .98 $ .02 $ (.07) $ .01 $ (.07)
========== ========== ========== ========== ========== ==========
SHARES .............................. 26,979 26,979 26,979 28,466 28,466 28,466
========== ========== ========== ========== ========== ==========
DILUTED INCOME (LOSS) PER SHARE:
NET INCOME (LOSS) ................... $ (.96) $ .98 $ .02 $ (.07) $ .01 $ (.07)
========== ========== ========== ========== ========== ==========
SHARES .............................. 26,979 26,979 27,857 28,466 28,466 28,466
========== ========== ========== ========== ========== ==========
</Table>
(1) - REPRESENTS THE EXPENSE RELATED TO THE EARN-OUT PAYABLE TO THE BI-TECH
EMPLOYEES.
(2) - AMORTIZATION EXPENSE RELATED TO THE DEVELOPED TECHNOLOGY FROM THE
INRANGE ACQUISITION.
(3) - WRITE-DOWN OF INVENTORY RESULTING FROM INTEGRATION OF CNT AND INRANGE
PRODUCT OFFERINGS
(4) - AMORTIZATION EXPENSE RELATED TO THE CUSTOMER LIST AND TRADEMARKS FROM
THE INRANGE ACQUISITION
(5) - IN-PROCESS RESEARCH AND DEVELOPMENT CHARGE RELATED TO THE INRANGE
ACQUISITION.
(6) - INTEGRATION CHARGE RELATED TO THE INRANGE ACQUISITION, PRIMARILY
WAGES AND SEVERANCE.
(7) - TAX EXPENSE CALCULATED AT AN EFFECTIVE TAX RATE OF 34%
(8) - $122,000 LEGAL EXPENSES RELATED TO POTENTIAL ACQUISITIONS.
(MORE)
CNT
CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
<Table>
<Caption>
Six months ended Six months ended
JULY 31, 2003 July 31, 2002
----------------------------------------- -----------------------------------------
PRO FORMA As Pro forma
AS REPORTED ADJUSTMENTS PRO FORMA Reported Adjustments Pro forma
---------- ----------- ---------- ---------- ----------- ----------
REVENUE:
Product sales ........................ $ 97,893 $ -- $ 97,893 $ 62,882 $ -- 62,882
Service fees ......................... 51,150 -- 51,150 31,196 -- 31,196
---------- ---------- ---------- ---------- ---------- ----------
Total revenue .................... 149,043 -- 149,043 94,078 -- 94,078
---------- ---------- ---------- ---------- ---------- ----------
COST OF REVENUE:
Cost of product sales ................ 57,600 -- 57,600 36,980 -- 36,980
Cost of service fees ................. 30,382 (1) (131) 30,251 19,068 (1) (18) 19,050
Amortization of developed
technology ......................... 1,055 (2) (1,055) -- -- -- --
Integration charge ................... 1,607 (9) (1,607) -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total cost of revenue ............ 90,644 (2,793) 87,851 56,048 (18) 56,030
---------- ---------- ---------- ---------- ---------- ----------
GROSS PROFIT ........................... 58,399 2,793 61,192 38,030 18 38,048
---------- ---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES:
Sales and marketing .................. 37,265 (1) (158) 37,107 29,785 (1) (27) 29,758
Engineering and development .......... 17,602 -- 17,602 13,259 (1) (35) 13,224
General and administrative ........... 6,677 (1) (23) 6,654 5,207 (1) (131) 5,076
(8)
Amortization of customer list
and trademarks ..................... 607 (4) (607) -- -- -- --
In-process research and development
charge ............................. 19,706 (5) (19,706) -- -- -- --
Integration charge ................... 3,429 (3) (3,429) -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses ......... 85,286 (23,923) 61,363 48,251 (193) 48,058
---------- ---------- ---------- ---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS .......... (26,887) 26,716 (171) (10,221) 211 (10,010)
---------- ---------- ---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE), NET ....... (19) -- (19) 1,429 -- 1,429
---------- ---------- ---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES ...... (26,906) 26,716 (190) (8,792) 211 (8,581)
PROVISION (BENEFIT) FOR INCOME TAXES ... 998 (6) (1,063) (65) (2,989)(6) 71 (2,918)
---------- ---------- ---------- ---------- ---------- ----------
NET LOSS BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE ..... (27,904) 27,779 (125) (5,803) 140 (5,663)
---------- ---------- ---------- ---------- ---------- ----------
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE ............... -- -- -- (10,068)(7) 10,068 --
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) ...................... $ (27,904) $ 27,779 $ (125) $ (15,871) $ 10,208 (5,663)
========== ========== ========== ========== ========== ==========
BASIC & DILUTED LOSS PER SHARE:
NET INCOME (LOSS) BEFORE
CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE ......................... $ (1.03) $ 1.03 $ -- $ (.20) $ -- (.19)
========== ========== ========== ========== ========== ==========
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE ............ -- -- -- (.34) .34 --
========== ========== ========== ========== ========== ==========
NET INCOME (LOSS) .................... $ (1.03) $ 1.03 $ -- $ (.54) $ .35 $ (.19)
========== ========== ========== ========== ========== ==========
SHARES ............................... 26,973 26,973 26,973 29,437 29,437 29,437
========== ========== ========== ========== ========== ==========
</Table>
(1) - REPRESENTS THE EXPENSE RELATED TO THE EARN-OUT PAYABLE TO THE BI-TECH
EMPLOYEES.
(2) - AMORTIZATION EXPENSE RELATED TO THE DEVELOPED TECHNOLOGY FROM THE
INRANGE ACQUISITION
(3) - INTEGRATION CHARGE RELATED TO THE INRANGE ACQUISITION, PRIMARILY
WAGES AND SEVERANCE.
(4) - AMORTIZATION EXPENSE RELATED TO THE CUSTOMER LIST AND TRADEMARKS FROM
THE INRANGE ACQUISITION.
(5) - IN-PROCESS RESEARCH AND DEVELOPMENT CHARGE RELATED TO THE INRANGE
ACQUISITION.
(6) - TAX EXPENSE CALCULATED AT AN EFFECTIVE TAX RATE OF 34%.
(7) - CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR GOODWILL.
(8) - $122,000 LEGAL EXPENSES RELATED TO POTENTIAL ACQUISITIONS.
(9) - WRITE-DOWN OF INVENTORY RESULTING FROM INTEGRATION OF CNT AND INRANGE
PRODUCT OFFERINGS
###