<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
October 24, 1997
-----------------------------------------------------------
Date of Report (Date of earliest event reported)
Computer Network Technology Corporation
---------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 0-13994 41-1356476
- ------------------------ ------------------------ ---------------------
(State of Incorporation) (Commission file number) (I.R.S. Employer
Identification No.)
605 North Highway 169, Minneapolis, Minnesota 55441
- --------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Telephone Number: (612) 797-6000
---------------------------------
(Registrant's telephone number, including area code)
================================================================================
<PAGE>
This Form 8-K/A supplements Form 8-K filed on November 3, 1997 with the
Securities and Exchange Commission. The Form 8-K described the acquisition by a
wholly-owned subsidiary of the Registrant of the Internet Solutions Division
owned by Apertus Technologies Incorporated. Capitalized terms used but not
defined herein have the meaning assigned to them in the Form 8-K.
Item 7. Financial Statements, Pro Forma Information and Exhibits
- ------- --------------------------------------------------------
The following financial information is being filed in order to satisfy
the financial statement information requirement for the Form 8-K filed on
November 3, 1997.
(a) Financial Statements of Business Acquired
-----------------------------------------
Financial Statements of the Internet Solutions Division of Apertus
Technologies Incorporated
Report of Independent Auditors
Balance Sheets as of March 30, 1997, March 31 1996 and September
28, 1997 (Unaudited)
Statements of Operations for the Years Ended March 30, 1997,
March 31, 1996 and April 2, 1995 and for the Six Months Ended
September 28, 1997 and September 29, 1996 (Unaudited)
Statements of Cash Flows for the Years Ended March 30, 1997,
March 31, 1996 and April 2, 1995 and for the Six Months Ended
September 28, 1997 and September 29, 1996 (Unaudited)
Notes to Financial Statements
(b) Pro Forma Financial Information
-------------------------------
Unaudited Pro Forma Combined Financial Information of Computer
Network Technology Corporation and the Internet Solutions Division of
Apertus Technologies Incorporated
Description of the Unaudited Pro Forma Combined Financial Information
Unaudited Pro Forma Combined Balance Sheet as of September 30, 1997
Unaudited Pro Forma Combined Statement of Operations for the Year
Ended December 31, 1996
Unaudited Pro Forma Combined Statement of Operations for the Nine
Months Ended September 30, 1997
Notes to Unaudited Pro Forma Combined Financial Information
2
<PAGE>
(c) Exhibits
--------
10.1 Asset Purchase Agreement dated October 24, 1997, between CNT
Acquisition I Corporation, Computer Network Technology
Corporation and Apertus Technologies Incorporated and certain
of its subsidiaries (incorporated by reference to current
report on Form 8-K dated October 24, 1997).
23 Consent of Independent Auditors
Information contained herein may contain forward looking statements that involve
risks and uncertainties with respect to the fair value of assets acquired, the
amount of liabilities assumed, the allocation of the purchase price to the
tangible and intangible assets acquired, including purchased in-process research
and development, and otherwise. These forward looking statements include the
words "believes", "expects", "anticipates" and similar expressions. These
forward looking statements involve certain risks and uncertainties, including
those related to general economic and business conditions, changes in market
conditions and competitive pressures. In addition, the purchase price allocation
includes preliminary estimates based upon CNT's initial review of the assets
and liabilities acquired. The final allocation of the purchase price will be
based in part on an independent valuation. There can be no assurance that the
final purchase price allocation will be consistent with the allocation
reflected in the accompanying unaudited pro forma combined financial
information.
3
<PAGE>
Item 7(a). Financial Statements of Business Acquired
Report of Independent Auditors
The Board of Directors and Shareholders
Apertus Technologies Incorporated
We have audited the accompanying balance sheets of Internet Solutions Division
(a division of Apertus Technologies Incorporated) as of March 30, 1997 and March
31, 1996, and the related statements of operations and cash flows for the years
ended March 30, 1997, March 31, 1996 and April 2, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Internet Solutions Division at
March 30, 1997 and March 31, 1996, and the results of its operations and its
cash flows for the years ended March 30, 1997, March 31, 1996 and April 2, 1995
in conformity with generally accepted accounting principles.
Ernst & Young LLP
December 5, 1997
4
<PAGE>
INTERNET SOLUTIONS DIVISION
(A DIVISION OF APERTUS TECHNOLOGIES INCORPORATED)
BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
MARCH 30, March 31, September 28,
1997 1996 1997
-------------- ------------- ---------------
ASSETS (Unaudited)
<S> <C> <C> <C>
Current assets:
Accounts receivable, less
allowance for doubtful
accounts of $2,835 in
1997 and $1,439 in 1996 $ 8,655 $ 13,005 $ 8,279
Inventories 923 3,881 903
Installment receivable - current
portion, less allowance for
doubtful accounts of $250 in
1997 and $300 in 1996 420 1,018 453
Other 268 372 222
------------- ------------ --------------
Total current assets 10,266 18,276 9,857
------------- ------------ --------------
Property and equipment 11,972 11,644 11,980
Accumulated depreciation (9,717) (8,755) (10,018)
------------- ------------ --------------
Net property and equipment 2,255 2,889 1,962
Capitalized software - 4,916 -
Installment receivable - net of
current portion 539 1,310 234
Goodwill - net of accumulated
amortization of $453 in 1997 and
$205 in 1996 390 1,697 293
------------- ------------ --------------
929 7,923 527
------------- ------------ --------------
Total assets $ 13,450 $ 29,088 $ 12,346
============= ============ ==============
LIABILITIES
Current liabilities:
Accounts payable $ 2,239 $ 3,230 $ 1,233
Accrued expenses 1,835 3,190 1,498
Deferred revenue 3,564 3,173 3,191
------------- ------------ --------------
Total current liabilities 7,638 9593 5922
Inter-company payable 5,812 19,495 6,424
------------- ------------ --------------
Total liabilities $ 13,450 $ 29,088 $ 12,346
============= ============ ==============
</TABLE>
See accompanying notes.
5
<PAGE>
INTERNET SOLUTIONS DIVISION
(A DIVISION OF APERTUS TECHNOLOGIES INCORPORATED)
STATEMENTS OF OPERATIONS
(In Thousands)
<TABLE>
<CAPTION>
Year Ended Six Months Ended
-------------------------------------------- ------------------------------------
MARCH 30, March 31, April 2, September 28, September 29,
1997 1996 1995 1997 1996
----------- ----------- ---------- ------------ -------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
REVENUES
Sales $ 20,639 $ 30,173 $ 34,128 $ 8,983 $ 12,427
Services 9,195 10,506 7,841 3,864 5,090
----------- ----------- ---------- ------------ -----------
29,834 40,679 41,969 12,847 17,517
COSTS AND EXPENSES
Cost of sales 9,857 10,820 9,160 3,183 4,495
Cost of services 3,451 4,610 3,474 1,133 1,849
Research, development and
engineering 7,452 9,650 8,256 2,403 3,549
Selling, general and
administrative 16,520 17,425 14,477 4,946 8,330
Other charges 9,525 5,820 - - -
----------- ----------- ---------- ------------ -----------
46,805 48,325 35,367 11,665 18,223
----------- ----------- ---------- ------------ -----------
Income (loss) (16,971) (7,646) 6,602 1,182 (706)
Investment income 155 66 - 55 82
----------- ----------- ---------- ------------ -----------
Income (loss) before
income taxes (16,816) (7,580) 6,602 1,237 (624)
Income taxes (180) (100) (100) (9) (90)
----------- ----------- ---------- ------------ -----------
Net income (loss) $ (16,996) $ (7,680) $ 6,502 $ 1,228 $ 714
=========== =========== ========== ============ ===========
</TABLE>
See accompanying notes.
6
<PAGE>
INTERNET SOLUTIONS DIVISION
(A DIVISION OF APERTUS TECHNOLOGIES INCORPORATED)
STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Year Ended Six Months Ended
-------------------------------------------- ------------------------------------
MARCH 30, March 31, April 2, September 28, September 29,
1997 1996 1995 1997 1996
----------- ----------- ----------- ------------ --------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (16,996) $ (7,680) $ 6,502 $ 1,288 $ (714)
Adjustments to reconcile
net income (loss) to net
cash (used in) provided
by operating activities:
Depreciation 1,212 930 577 301 676
Amortization 1,971 2,399 3,461 97 1,386
Write-off of assets
due to impairment 5,910 - - - -
Accounts receivable 4,350 1,150 (1,032) 376 (2,427)
Installment
receivables 1,369 848 878 20 427
Inventories 2,958 (755) (34) 272 37
Other current assets 104 75 226 46 62
Accounts payable (991) 492 (533) (1,006) (225)
Accrued expenses (1,355) 58 (1,095) (337) 74
Deferred revenue 391 (97) 555 (373) (458)
----------- ----------- ----------- ------------ --------------
Net cash (used in)
provid-ed by operating
activities (1,077) (2,580) 9,505 624 (1,162)
INVESTING ACTIVITIES
Purchase of company - (4,531) - - -
Purchase of property and
equipment (703) (1,582) (587) (8) (413)
Capitalized software (1,533) (2,502) (1,903) - (785)
----------- ----------- ----------- ------------ --------------
Net cash used in
investing activities (2,236) (8,615) (2,490) (8) (1,198)
FINANCING ACTIVITIES
Inter-company payable 3,313 11,195 (7,015) (616) 2,360
----------- ----------- ----------- ------------ --------------
Net cash provided by
(used in) financing
activities 3,313 11,195 (7,015) (616) 2,360
----------- ----------- ---------- ------------ --------------
Net change in cash and
cash equivalents - - - - -
Cash and cash equivalents:
Beginning of period - - - - -
End of period - - - - -
----------- ----------- ---------- ------------ ---------------
$ - $ - $ - $ - $ -
=========== =========== ========== ============ ===============
</TABLE>
See accompanying notes.
7
<PAGE>
INTERNET SOLUTIONS DIVISION
(A DIVISION OF APERTUS TECHNOLOGIES INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands)
March 30, 1997
(Information as of September 28, 1997 and for the six months ended
September 28, 1997 and September 29, 1996 is unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUSINESS
BUSINESS
The Internet Solutions Division (ISD) of Apertus Technologies Incorporated
(Apertus) designs, develops, markets, distributes and services a variety of
products that help companies identify network connectivity solutions and that
provide for integration of information from IBM legacy environments with open
systems environments.
INTERIM FINANCIAL STATEMENTS
The accompanying unaudited financial statements as of September 28, 1997 and for
the six months ended September 28, 1997 and September 29, 1996 have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. Results for interim periods are not
necessarily indicative of results for the entire year.
FISCAL YEAR
ISD's fiscal year ends on the Sunday nearest March 31. Fiscal 1997, 1996 and
1995 were all 52-week years.
REVENUE RECOGNITION
Sales include direct sales to distributors and customers, sales-type lease
contracts, and commitment contracts. Sales are generally recorded when the
product is shipped, except that sales-type lease contracts are recorded as sales
when the products are accepted by the customer. Under commitment contracts, the
revenue attributable to the current fiscal year is recognized when the product
is shipped to the distributor. Any related costs are accrued at that time.
Equipment under all other lease contracts is accounted for under thc operating
method, and rental income is recognized during the period the equipment is on
lease. Service revenues are recognized over the period covered by the service
contract.
INVENTORY
Inventories are valued at the lower of cost or market with cost determined on a
first-in, first-out basis.
8
<PAGE>
INTERNET SOLUTIONS DIVISION
(A DIVISION OF APERTUS TECHNOLOGIES INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands)
March 30, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated on a straight-line
basis over three to ten years. Leasehold improvements are depreciated over the
lesser of the lease life or the life of the improvement.
CAPITALIZED SOFTWARE
ISD, in accordance with SFAS No. 86, capitalizes software development costs by
project. These capitalized costs are amortized on a straight-line basis over a
period of three years or the expected life of the product, whichever is less.
Research and development costs are charged to expense as incurred.
INCOME TAXES
ISD has been allocated a portion of the income tax expense recognized by Apertus
for each of the fiscal years.
IMPAIRMENT OF LONG-LIVED ASSETS
ISD records impairment losses on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
9
<PAGE>
INTERNET SOLUTIONS DIVISION
(A DIVISION OF APERTUS TECHNOLOGIES INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands)
March 30, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported on the financial statements and in the accompanying
notes. Actual results could differ from such estimates.
2. INVENTORIES
Inventories consisted of the following:
March 30, March 31, September 28,
1997 1996 1997
--------- --------- -------------
(Unaudited)
Raw material $ 390 $ 652 $ 423
Work-in-process 455 1,542 405
Finished goods 78 1,687 75
----- ------ -----
Total $ 923 $3,881 $ 903
===== ====== =====
3. PURCHASE OF BLUELINE SOFTWARE, INC.
Effective the close of business on June 30, 1995, Apertus purchased the stock of
BlueLine Software, Inc. (BlueLine). The acquisition was accounted for under the
purchase method of accounting and, accordingly, the operating results of
BlueLine were included in the operating results of Apertus since the date of
acquisition. The operating results of BlueLine have been allocated to ISD since
the date of acquisition. The balance sheets of ISD for fiscal 1997 and 1996
include the significant operating assets and liabilities of BlueLine. Pro forma
results of operations its if BlueLine had been acquired at the beginning of
fiscal 1995 are:
Unaudited
-------------------------
Fiscal 1996 Fiscal 1995
------------ -----------
Revenues $ 42,644 $49,048
Net income (loss) $(10,667) $ 6,589
10
<PAGE>
INTERNET SOLUTIONS DIVISION
(A DIVISION OF APERTUS TECHNOLOGIES INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands)
March 30, 1997
4. INSTALLMENT RECEIVABLES
Installment receivables are:
March 30, March 31,
1997 1996
---------- ----------
Payments to be received under sales-type leases $1,295 $ 2,824
Less:
Unearned income (86) (196)
Current portion (670) (1,318)
------ -------
Long-term portion $ 539 $ 1,310
====== =======
5. OTHER CHARGES
In the fourth quarter of fiscal 1997, Apertus recorded a charge of $10,655
against earnings for costs related to an exit plan whereby certain activities
related to older generation products had been optimized. ISD was allocated
$9,525 of that charge relating to write-off of capitalized software and
goodwill, additional bad debt reserves and costs associated with exposures on
facilities. In the first quarter of fiscal 1996, Apertus recorded a charge of
$5,820 against earnings related primarily to the write-off of purchased
research and development from the BlueLine acquisition and the closing of a
west coast location. The total charge has been allocated to ISD.
6. COMMITMENTS AND CONTINGENCIES
Apertus has various operating lease agreements which expire through the year
2014 for facilities located in Minnesota, New York and Western Europe. Some of
these leases related to facilities used entirely by ISD, most notably in New
York and Western Europe. The rental expense under all of the operating leases
is consolidated and an allocation made to ISD.
7. SUBSEQUENT EVENT
On October 31, 1997, Apertus completed the sale of all of the assets of ISD to a
third party for approximately $11.4 million. In addition, the third party also
assumed certain liabilities of ISD aggregating approximately $4.9 million
(unaudited) and took over certain commitments of ISD.
11
<PAGE>
ITEM 7(B). PRO FORMA FINANCIAL INFORMATION
COMPUTER NETWORK TECHNOLOGY CORPORATION ("CNT")
AND THE INTERNET SOLUTIONS DIVISION OF APERTUS INCORPORATED ("ISD")
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND FOR THE YEAR ENDED DECEMBER 31, 1996
The following unaudited pro forma combined financial information and notes
present the effect of the acquisition of ISD on CNT's historical financial
position and results of operations. The pro forma information has been prepared
utilizing the historical consolidated financial statements of CNT for the year
ended December 31, 1996 and the nine months ended September 30, 1997 and the
historical consolidated financial statements of ISD for the fiscal year ended
March 30, 1997 and the six months ended September 28, 1997. The pro forma
combined financial information is based on CNT's preliminary review of the
purchase price allocation and has been prepared and included as required by the
rules and regulations of the Securities and Exchange Commission. The pro forma
combined financial information does not purport to be indicative of the results
that actually would have been obtained if the acquisition had been effected on
the date indicated or of the results which may be obtained in the future.
The unaudited pro forma combined financial information has been prepared using
the purchase method of accounting.
The unaudited pro forma combined balance sheet at September 30, 1997 is based
on the historical consolidated balance sheet of CNT at September 30, 1997 and
the historical consolidated balance sheet of ISD at October 24, 1997 (closing
balance sheet date).
The allocation of the purchase price to the net assets of ISD for purposes of
the unaudited pro forma combined financial information is based on the estimated
fair values of the assets acquired and the liabilities assumed of ISD at October
24, 1997. The historical results of ISD for the quarterly period ended March 30
1997 consisting of total revenue of $5.9 million and a net loss of $13.7 million
have been included in the unaudited pro forma combined statement of operations
for both the year ended December 31, 1996 and the nine months ended September
30, 1997.
The unaudited pro forma combined balance sheet was prepared assuming the
acquisition took place on September 30, 1997. The unaudited pro forma combined
statement of operations for the year ended December 31, 1996 and the nine months
ended September 30, 1997 gives effect to the acquisition as if it took place at
the beginning of the respective reporting periods.
12
<PAGE>
COMPUTER NETWORK TECHNOLOGY CORPORATION ("CNT") AND
INTERNET SOLUTIONS DIVISION OF APERTUS TECHNOLOGIES INCORPORATED ("ISD")
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1997
(In Thousands)
<TABLE>
<CAPTION>
Historical
---------------------- Pro Forma Pro Forma
ASSETS CNT ISD Adjustments Combined
-------- -------- ------------- -----------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 10,083 $ - $ $ 10,083
Marketable securities 18,269 - (11,400) (B) 6,869
Receivables, net 18,552 8,092 (250) (C) 26,394
Inventories 12,087 1,082 13,169
Deferred tax asset 2,425 - 2,425
Other current assets 816 29 845
-------- -------- ------------- -----------
Total current assets 62,232 9,203 (11,650) 59,785
-------- -------- ------------- -----------
Property and equipment, net 11,727 1,949 (949) (C) 12,727
Field support spares, net 3,502 - 400 (C) 3,902
Deferred tax asset 1,052 - 1,052
Intangible and other assets 2,529 469 80 (A) 6,333
4,691 (B)
799 (C)
100 (D)
(2,335) (E)
-------- -------- ------------- -----------
$ 81,042 $ 11,621 $ (8,864) $ 83,799
======== ======== ============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,161 $ 737 $ 80 (A) $ 7,078
Accrued liabilities 7,969 1,252 100 (D) 9,281
Deferred revenue 7,711 2,923 - 10,634
Current installments of obligation under
capital lease 179 - 179
-------- -------- ------------- -----------
Total current liabilities 22,020 4,912 180 27,112
-------- -------- ------------- -----------
Obligation under capital lease, less current
installments 747 - - 747
Intercompany payable - 6,709 (6,709) (B) -
-------- -------- ------------- -----------
Total liabilities 22,767 11,621 (6,529) 27,859
-------- -------- ------------- -----------
Shareholders' equity:
Common stock, $.01 par value; authorized
30,000,000 shares, issued and
outstanding
22,283,939 at September 30, 1997 and 223 - - 223
23,408,064 at December 31, 1996
Additional paid-in capital 54,837 - - 54,837
Retained earnings 3,618 - (2,335) (E) 1,283
Cumulative translation adjustment (403) - - (403)
-------- -------- ------------- -----------
Total shareholders' equity 58,275 - (2,335) 55,940
-------- -------- ------------- -----------
$ 81,042 $ 11,621 $ (8,864) $ 83,799
======== ======== ============= ===========
</TABLE>
See accompanying notes.
13
<PAGE>
COMPUTER NETWORK TECHNOLOGY CORPORATION ("CNT") AND
INTERNET SOLUTIONS DIVISION OF APERTUS TECHNOLOGIES INCORPORATED ("ISD")
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(In Thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical
---------------------- Pro Forma Pro Forma
REVENUE: CNT ISD Adjustments Combined
-------- --------- ------------- -----------
<S> <C> <C> <C> <C>
Product sales $ 74,170 $ 20,639 $ - $ 94,809
Service fees 22,939 9,195 - 32,134
-------- --------- ------------- -----------
Total revenue 97,109 29,834 - 126,943
-------- --------- ------------- -----------
COST OF REVENUE:
Cost of product sales 25,843 9,857 400 (F) 36,100
Cost of service fees 17,269 3,451 150 (G) 20,870
-------- --------- ------------- -----------
Total cost of revenue 43,112 13,308 550 56,970
-------- --------- ------------- -----------
GROSS PROFIT 53,997 16,526 (550) 69,973
-------- --------- ------------- -----------
OPERATING EXPENSES:
Selling, general and administrative 37,329 16,520 200 (F)
(100) (G) 53,949
Engineering and development 13,996 7,452 (150) (G) 21,298
Other charges - 9,525 9,525
Purchased in process research
and development - - 3,735 (E) 3,735
Write-down of purchased technology 2,720 - - 2,720
-------- --------- ------------- -----------
Total operating expenses 54,045 33,497 3,685 91,227
-------- --------- ------------- -----------
LOSS FROM OPERATIONS (49) (16,971) (4,235) (21,254)
-------- --------- ------------- -----------
OTHER INCOME (EXPENSE):
Interest income 1,859 155 - 2,104
Interest expense (46) - - (46)
Other, net 259 - - 259
-------- --------- ------------- -----------
Other income 2,072 155 - 2,227
-------- --------- ------------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 2,024 (16,816) (4,235) (19,027)
PROVISION (BENEFIT) FOR INCOME TAXES 664 180 (7,979) (H) (7,135)
-------- --------- ------------- -----------
NET INCOME (LOSS) $ 1,360 $ 16,996 $ (3,744) $ (11,892)
======== ========= ============= ===========
NET INCOME (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE $ .06 $ (.51)
======== ===========
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES 23,557 (316) (I) 23,241
======== ============= ===========
</TABLE>
See accompanying notes.
14
<PAGE>
COMPUTER NETWORK TECHNOLOGY CORPORATION ("CNT") AND
INTERNET SOLUTIONS DIVISION OF APERTUS TECHNOLOGIES INCORPORATED ("ISD")
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
(In Thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical
----------------------- Pro Forma Pro Forma
REVENUE: CNT ISD Adjustments Combined
-------- --------- ------------- -----------
<S> <C> <C> <C> <C>
Product sales $ 46,042 $ 12,631 $ - $ 58,673
Service fees 20,211 6,137 - 26,348
-------- --------- ------------- -----------
Total revenue 66,253 18,768 - 85,021
-------- --------- ------------- -----------
COST OF REVENUE:
Cost of product sales 14,450 6,277 300 (F) 21,299
Cost of service fees 13,674 1,906 113 (G) 15,421
-------- --------- ------------- -----------
Total cost of revenue 28,124 8,183 413 36,720
-------- --------- ------------- -----------
GROSS PROFIT 38,129 10,585 (413) 48,301
-------- --------- ------------- -----------
OPERATING EXPENSES:
Selling, general and administrative 27,278 8,906 150 (F)
(75) (G) 36,259
Engineering and development 12,243 4,656 (113) (G) 16,786
Other charges - 9,525 9,525
Purchased in process research
and development - - 3,735 (E) 3,735
-------- --------- ------------- -----------
Total operating expenses 39,521 23,087 3,697 66,305
-------- --------- ------------- -----------
LOSS FROM OPERATIONS (1,392) (12,502) (4,100) (18,004)
-------- --------- ------------- -----------
OTHER INCOME (EXPENSE):
Interest income 1,316 109 - 1,425
Interest expense (39) (3) - (42)
Other, net (55) - - (55)
-------- --------- ------------- -----------
Other income 1,222 106 - 1,328
-------- --------- ------------- -----------
LOSS BEFORE INCOME TAXES (170) (12,396) (4,110) (16,676)
PROVISION (BENEFIT) FOR INCOME TAXES (62) 54 (6,246) (H) (6,254)
-------- --------- ------------- -----------
NET INCOME (LOSS) $ (108) $ (12,450) $ 2,136 $ (10,422)
======== ========= ============= ===========
NET LOSS PER COMMON AND COMMON EQUIVALENT
SHARE $ (.00) $ (.45)
======== ===========
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES 22,920 - (I) 22,920
======== ============= ===========
</TABLE>
See accompanying notes.
15
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
1. The following pro forma adjustments are reflected in the accompanying
unaudited pro forma combined balance sheet and statement of operations:
(A) Estimated direct costs relating to professional fees expected to be
incurred by CNT in connection with the acquisition.
(B) To record the purchase price paid by CNT for ISD which includes a cash
payment of $11.4 million, plus the assumption of liabilities totaling $4.9
million.
(C) Adjustment of accounts receivable, property and equipment and field support
spares acquired from ISD to estimated fair market value.
(D) Estimated cost to move ISD employees to CNT's existing facilities.
(E) To record the allocation of a portion of the purchase price to in-process
research and development activities of ISD which have not reached
technological feasibility. The amount so allocated has been immediately
charged to expense upon the close of the acquisition and will be reflected
as an operating expense in CNT's 1997 fourth quarter results.
(F) To record the amortization expense for the other tangible assets acquired
from ISD as if the acquisition took place at the beginning of the
respective reporting periods.
(G) To reflect the change in depreciation expense due to the adjustments
discussed in (C) above assuming the acquisition took place at the beginning
of the respective reporting periods.
(H) The provision for income taxes has been adjusted to reflect the approximate
income tax provision that would have been required based upon the pro forma
combined results and an effective income tax rate of 37.5%.
(I) Pro forma net income (loss) per common and common equivalent share was
computed by dividing pro forma net income (loss) by CNT's weighted average
number of common and common equivalent shares outstanding. The effect of
CNT's outstanding stock options and warrants for 1996 and the nine months
ended September 30, 1997 were excluded due to their antidilutive effect.
2. In connection with the acquisition, CNT anticipates that it will incur a
charge in its 1997 fourth quarter associated with the integration of ISD's
business. Pursuant to the rules of the Securities and Exchange Commission,
this charge has not been reflected in the accompanying unaudited pro forma
combined financial information. In addition, the purchase price allocation
includes preliminary estimates based upon CNT's initial review of the
assets and liabilities acquired. The final allocation of the purchase
price will be based in part on an independent valuation. There can be no
assurance that the final purchase price allocation will be consistent with
the allocation reflected in the accompanying unaudited pro forma combined
financial information.
16
<PAGE>
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 hereto duly authorized.
COMPUTER NETWORK TECHNOLOGY CORPORATION
---------------------------------------
(Registrant)
Date: January 7, 1998 By: /s/ Gregory T. Barnum
----------------------
Gregory T. Barnum
Chief Financial Officer
(Principal financial officer)
By: /s/ Jeffrey A. Bertelsen
-------------------------
Jeffrey A. Bertelsen
Corporate Controller
(Principal accounting officer)
17
<PAGE>
INDEX TO EXHIBITS
Exhibit Description Page
- ------- ----------- ----
10.1 Asset Purchase Agreement dated October 24, 1997,
between CNT Acquisition I Corporation, Computer
Network Technology Corporation and Apertus
Technologies Incorporated and certain of its
subsidiaries (incorporated by reference to current
report on Form 8-K dated October 24, 1997)........Electronically Filed
23 Consent of Independent Auditors...................Electronically Filed
<PAGE>
Exhibit 23
Consent of Independent Auditors
We consent to incorporation by reference in the Reigstration Statements on
Form S-8 (Nos. 33-6862, 33-28367, 33-42750, 33-41985, 33-41596, 33-48944, 33-
48954, 33-68356, 33-68372, 33-83262, 33-83264, 33-83266, 33-31853 and 33-
31851) of Computer Network Technology Corporation of our report dated December
5, 1997 relating to the financial statements of the Internet Solutions
Division of Apertus Technologies Incorporated, included in the Current Report
on Form 8-K/A of Computer Network Technology Corporation dated January 7,
1998, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
January 7, 1997
