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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

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FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
COMMISSION FILE NUMBER: 0-13994

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 or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)

605 NORTH HIGHWAY 169, MINNEAPOLIS, MINNESOTA 55441
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(Address of Principal Executive Offices) (Zip Code)

(612) 797-6000
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(Registrant's telephone number, including area code)

Securities registered pursuant to
Section 12(b) of the Act: NONE
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Securities registered pursuant to
Section 12(g) of the Act: COMMON STOCK $.01 PAR VALUE
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(Title of Class)

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 such filing
requirements for the past 90 days.

YES [X] NO [_]

Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of common stock held by non-affiliates of the
Registrant as of March 23, 1998 was approximately $98,879,000, based on a
closing price of $4.56 per share as reported by the Nasdaq National Market on
such date.

As of March 23, 1998, Registrant had 22,104,390 shares of Common Stock
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of Computer Network Technology Corporation's definitive Proxy Statement
for the Annual Meeting of Shareholders to be held on May 19, 1998 are
incorporated by reference into Part III of this Form 10-K.

Portions of the Annual Report to Shareholders for the fiscal year ended December
31, 1997 are incorporated by reference into Parts I and II of this Form 10-K.

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TABLE OF CONTENTS

PART 1

Item 1 Business . ...................................................................................1
Overview ..................................................................................1
Markets ...................................................................................2
Products ..................................................................................4
Customer Services .........................................................................8
Marketing and Sales .......................................................................8
Revenue Recognition Policy ................................................................9
Engineering and Development ...............................................................9
Manufacturing and Suppliers ...............................................................10
Competition ...............................................................................10
Intellectual Property Rights ..............................................................11
Employees .................................................................................11
Item 2 Properties....................................................................................12
Item 3 Legal Proceedings.............................................................................12
Item 4 Submission of Matters to Vote of Security Holders.............................................12
Item 4.A Executive Officers of the Company.............................................................13

PART II

Item 5. Market for the Registrant's Securities and Related Shareholders Matters.......................16
Item 6. Selected Consolidated Financial Information...................................................16
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.........16
Item 8. Consolidated Financial Statements and Supplementary Data......................................16
Item 9. Changes in and Disagreements with Accountants and Financial Disclosure........................16

PART III

Item 10. Directors and Executive Officers..............................................................17
Item 11. Executive Compensation........................................................................17
Item 12. Security Ownership of Certain Beneficial Owners and Management................................17
Item 13. Certain Relationships and Related Transactions................................................17

PART IV

Item 14. Exhibits, Consolidated Financial Statement Schedules, and Reports on Form 8-K.................18

SIGNATURES.............................................................................................28

PART I

ITEM 1. BUSINESS

OVERVIEW

Computer Network Technology Corporation ("CNT" or the "Company") designs,
manufactures, markets and supports a range of enterprise-wide information
management connectivity, access and storage networking hardware and software
products designed to meet the complex needs of large organizations. These
products are marketed by CNT under the UltraNet(R), Channelink(R),
FileSpeed(TM), Enterprise/Connect, Enterprise/View, Enterprise/View Pro,
Enterprise Access, Enterprise/Access Development Studio, Enterprise/Access
System Monitor and Enterprise Integrator trade names.

Effective October 24 1997, the Company acquired the Internet Solutions Division
of Apertus Technologies Incorporated. The Company anticipates that the
acquisition will increase its presence in the markets for enterprise
connectivity between Internet and intranet users and IBM hosts. (See Note 3 to
the Company's Consolidated Financial Statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations for further
information regarding the Company's acquisition of the Internet Solutions
Division of Apertus Technologies Incorporated.)

CNT's connectivity and UltraNet storage and Channelink systems create
high-speed, wide area enterprise networks that connect traditional data centers
to peripherals and remote users by integrating open systems with traditional
mainframes. These products also allow data centers to be interconnected to
enable access to stored mission-critical information, and full business recovery
in case of disasters. The UltraNet products allow users to move and share data
among diverse servers and storage systems and support applications such as disk
mirroring, backup and restore, and data migration.

CNT's access products enable desktop computer and terminal users operating
different networking protocols (i.e. TCP/IP and SNA) to share the same physical
networks and to access applications and data on different types of mainframe and
open systems servers. In addition, they provide access to mainframe databases
and applications (such as those based on IBM products CICS or DB2) from the
Internet or an intranet using a Web-based browser.

CNT markets its products and services in North America primarily through a
direct sales force and internationally through wholly-owned subsidiaries and
distributors. Select hardware and software products are also remarketed by
original equipment manufacturers ("OEMs") under other trade names.

CNT emphasizes comprehensive customer support and training designed to maximize
quality and customer satisfaction. CNT believes that its customer service
programs provide significant added value to its customer base, enhance the
reputation of the Company, and accelerate selling products and services to
prospective customers.

CNT is a successor to a Minnesota corporation organized in 1979, and has been
engaged it its present business since 1983. CNT's corporate offices are located
at 605 North Highway 169, Minneapolis, Minnesota 55441 and its telephone number
is 612-797-6000. Its World Wide Web site is http://www.cnt.com. Unless the
context otherwise requires, "CNT" or the "Company" refers to Computer Network
Technology Corporation and its subsidiaries.

This annual report includes trade names, trademarks and registered trademarks of
companies other than CNT.

Certain statements included in the products section of this Form 10-K constitute
"forward-looking statements," including the dates of general availability and
planned features for new products. All forward-looking statements involve risks
and uncertainties, and actual results may be materially different. The timely
completion of required engineering activities and unforeseen technological
barriers and expense may cause the Company's actual results to be materially
different from those set forth in any such forward-looking statements.

MARKETS

CNT designs high-performance networking solutions that seamlessly integrate a
heterogeneous mix of technology, architectures, vendors and communication
standards that allow enterprises to preserve their investments in traditional
mainframe data processing systems and today's open systems to create
enterprise-wide networks and intranets.

Networking Solutions

The Company's traditional networking solutions facilitate data center
consolidation and centralization, while enabling certain input and output
peripherals to be more conveniently housed with geographically dispersed
regional customer operations. Increasingly, these new solutions are being
constructed by customers in conjunction with business process changes being
driven for cost efficiencies, improved customer services, or the penetration of
new markets with new services. Reducing the total number of data centers while
interconnecting the remaining centers for stability and workload sharing has
extended the life of legacy systems while deferring costly investments in these
centers as new, distributed computing systems are brought online.

CNT's UltraNet, Channelink and FileSpeed products enable data centers and
remotely located peripherals to communicate over wide areas without significant
degradation of performance. LAN gateways enable communications for a wide range
of LAN-based workstations and servers with large-scale, channel-based systems
used in enterprise-wide networks. Channel networking applications have accounted
for a substantial majority of CNT's historical revenue and the Company will
continue to emphasize supporting and servicing this important market.

A Storage Area Network (SAN) is a high-speed network that establishes a direct
connection between storage devices, thereby externalizing storage from the
server and allowing information to be shared among multiple `host' servers
without affecting performance of the primary network. Making the SAN concept a
reality requires networking equipment of a high order of

connectivity, performance, and manageability, and the UltraNet product family
provides these capabilities.

The Company's Channelink products provide high performance extended distance
data archival and retrieval from remote DASD and tape storage facilities that
allow customers to employ new strategies for storing and accessing
mission-critical data, including data duplexing for disaster protection and
enterprise-wide data sharing, while reducing associated storage costs. The
Company's FileSpeed product is designed to provide users with a business
continuation and disaster recovery capability by providing for very high speed
bulk data transfer between mainframes and open systems for backup, database
updates, and other data transfer applications. In addition, FileSpeed can also
be used to quickly back up open systems server data to the same central data
repository used by the mainframe to facilitate data recovery and synchronization
of open systems and mainframe databases.

Today's global approach to business requires that data centers be open for
business twenty-four hours a day. Large organizations require data processing
services as a key part of their service or product offerings and thereby require
non-stop operation. Customers who require non-stop operations typically deploy
duplicate hardware and software to ensure continuous availability. The Company
develops and provides products that facilitate using public recovery centers or
other customer data centers as a recovery asset. In addition, gathering routine
data backup copies is exacerbated by the shortening window of time required for
full copy backups during enforced periods of inactivity. The Company provides
solutions which enable backups to occur simultaneously with normal transaction
processing activities.

Internet Solutions

Customers deploying the distributed and Internet/intranet model of computing
desire to provide access to both old and new applications from both legacy SNA
3270 networks and, in parallel, the customer's intranet or the public Internet.
Proprietary SNA networks connect Enterprise class IBM OS/390 computers and
midrange IBM AS/400 computers to proprietary IBM 3270 and 5250 terminals. While
performing 3270 and 5250 emulation using personal computers has been available
since 1983, these systems continue to limit efficient growth by requiring
proprietary dedicated SNA networks. Similarly, even after several years of
migration from legacy data bases to client-server application architectures,
practical and operational limits require that mainframe-based data remain
resident in centralized "Information Warehouses."

These markets are also characterized by the desire to deploy open systems which
can leverage past investments in personal computers and can exploit emerging
Internet and intranet Web-based computing architectures. By linking networks of
personal computers, UNIX-based distributed servers, and legacy data centers,
together with the Internet, data center operating processes and procedures,
perfected by 25 years of experience, can be combined with fresh approaches
fueled by the explosion and creativity engendered in the Internet. Market
expansion in the legacy - open systems interconnect market is being driven by
the significant transition from mainframe-based general accounting applications
to client-server, data-centric integrated business management systems.

CNT serves this market, represented by almost all of the 2,000 largest
organizations world-wide, by linking personal computers to legacy mainframes in
a fashion that reduces the number of physical mainframe connections required,
replaces SNA with open TCP/IP protocols, and facilitates the combination and
sharing of expensive data communication channels with voice and other data
networks. Similarly, the Company's products connect common web browsers such as
the Netscape Navigator(R) and Microsoft's Internet Explorer(R) to legacy IBM
mainframe transaction systems based on CICS, IMS, and DB/2. The Company's
products reduce the need for mainframe computing resources by performing
expensive protocol conversion and compression activities in specialized hardware
and software.

PRODUCTS

UltraNet

In 1997, CNT introduced its Storage Area Network (SAN) strategy and the UltraNet
product family.

Today's businesses depend on the network to provide high-speed, reliable and
secure access to mission-critical stored information, whether it is centralized
or remote, from a variety of systems. CNT's UltraNet product family - the
UltraNet Storage Director, the UltraNet Storage Gateway, and the UltraNet
Storage Multiplexer - reduces IT managers' resource expense for storage
management by connecting to any transport protocol on any platform, using any
operating system in any network.

The SAN is a high-speed network that establishes a direct connection between
storage devices and servers, thereby externalizing storage from the server and
allowing information to be shared among multiple `host' servers without
impacting system performance or the primary network.

Storage Area Networks provide an infrastructure for a wide variety of
applications such as data protection, data vaulting, data migration and disaster
recovery that solve widespread business problems such as data warehousing and
business resumption. CNT's UltraNet family supports these applications by
enabling external and centralized storage as well as remote clustering.

Today, electronic information is truly a corporate asset. It is distributed
across many locations on desktops, servers and data centers. Its volumes are
growing at record rates, and managing all of this information so it is
accessible and continuously available is a major challenge and expense. By
providing a SAN solution with the UltraNet product family, CNT is leading the
market in addressing vital customer requirements for lower total cost of
ownership for integrated networks, more timely business recovery, and
cost-effective, shared access to information across the entire enterprise.

The UltraNet Family

UltraNet offers superior price/performance for storage applications that are
increasingly important in distributed enterprise networks. The UltraNet family
includes both single-board and

multi-slot chassis products that are driven and managed by UltraNet SAN Software
(USS). This software resides at the core of the three UltraNet products,
providing high-level functionality and management, critical in meeting
customers' growing requirements.

The UltraNet Storage Director is a high-speed switching platform that allows
users to move and share data among diverse servers and storage systems. It
optimizes WAN circuit utilization, and enables cost-effective server and storage
consolidation among IBM's OS/390, Microsoft's Windows NT, and open systems
(UNIX) storage systems platforms. The UltraNet Storage Director is designed to
support a wide range of high performance channel interfaces including Fibre
Channel, SCSI, ESCON along with traditional network interfaces such as ATM, DS3,
FDDI and Ethernet.

The UltraNet Storage Gateway is a low-cost, high-performance product that
provides much of the functionality of the Storage Director on a smaller
platform. This entry-level product, which is expected to be generally available
in April 1998, addresses bulk data movement between mainframes and open systems,
and enables data mirroring over wide area networks (WANs).

The UltraNet Storage Multiplexer is a product that allows multiple servers to
share up to 15 storage devices. Primary interfaces will be SCSI-to-SCSI (Small
Computer System Interface) with Fiber Channel and extension capabilities
available in June 1998.

Channelink

CNT's traditional product line has been the Channelink family of network
processors and software for enterprise networking and connectivity. Channelink
products support a variety of mainframes and peripheral devices, including disk
drives, optical storage devices, magnetic tape controllers, printers, check
sorters, document processors, imaging systems, microfiche recorders, terminal
and graphic controllers, plotters, database computers and front-end processors.
The Company configures and installs Channelink networks to meet the specific
geographic and interface requirements of each customer's information movement
applications.

Channelink continues to be a key product for CNT and is complementary to the
UltraNet products. The Channelink product focuses on mainframe data center
applications and is uniquely suited to support applications that involve
bus-and-tag data channels and T1/E1 network interfaces. Channelink is
interoperable with the UltraNet product family over both ATM and FDDI networks.

For managing and monitoring channel networks, the Company offers network
management software for legacy and open systems. CNT's Host Monitor Facility
software interfaces to IBM's NetView or other mainframe-based network management
subsystems. CNT's CMF is a PC-based network management system with a user
interface that connects to any network node and allows system-wide monitoring
and control facilities for Channelink networks. The Company also offers network
management software for Simple Network Management Protocol ("SNMP"), an industry
standard management protocol used by many LAN and workstation users in the
management of their networks.

FileSpeed

FileSpeed is a software solution that works over CNT UltraNet and Channelink
product lines. It is well positioned to solve key data sharing and
backup/restore problems in both the open systems and enterprise environments.
FileSpeed's Application Programming Interface (API) can be used to move database
records between two heterogeneous databases even if one exists on a mainframe
and the other on an open system (Unix or NT). Its ability to move data to/from
open systems to mainframe disk or tape devices at high speeds solves many
problems encountered in backup and recovery at most enterprise sites.

FileSpeed works over both OS/390 ESCON and bus-and-tag channels and SCSI
channels. It can be configured to provide multiple data paths between systems
and data integrity features, such as, checkpoint/restart and CRCs. Thus, data is
moved between a mainframe using an ESCON channel and an open system using a SCSI
channel (direct ESCON connections are also supported) with its integrity
constantly being monitored. Data rates over a single ESCON line have reached
nearly 15MB/sec. Given its high speed and ability to interface with databases,
many enterprises are interested in FileSpeed's capability to solve data movement
problems in the data warehousing industry.

CNT Application Re-Engineering Environment (CARE)

CARE provides a comprehensive set of products that takes users through each
level of Web-to-host integration.

Enterprise/Connect

Enterprise/Connect is a complete, easy-to-implement inter-operability package
that provides the necessary network infrastructure to connect any standard Web
browser to legacy system applications and data. Enterprise/Connect is a complete
IP-to-SNA connectivity solution, with all the components to enable 3270/5250
emulators or Web browsers to access applications on IBM mainframe and midrange
computers. With Enterprise/Connect, an intuitive point-and-click interface
provides universal, centralized management access. Superior load-balancing
technology ensures guaranteed access to business-critical access, and Java-based
client software enables browsers to function as universal clients for
interactive access to mainframe terminal, file transfer, and print services.

Enterprise/Connect provides complete TN3270/3270E and TN5250 terminal access to
IBM host computers with maximum flexibility and performance in connecting
diverse networks and communications environments. It supports a wide range of
SNA host connections and LAN connectivity. Simplifying mainframe printing,
Enterprise/Connect allows you to send SNA print jobs to local or TCP/IP network
printers without any special hardware or software on your PC or browser.

Enterprise/View

Enterprise/View is a Java-based 3270/5250 emulator that provides traditional,
uncustomized "green screen" access to legacy applications without additional
software on the desktop. The emulator is downloaded from the server when you
connect, simplifying software distribution and maintenance and off-loading
processing from the server. With Enterprise/View, access to mobile and remote
users is simplified, providing a consistent interface that is completely
independent of desktop configurations. Session encryption and support ensures
that user sessions and legacy data are secure.

Enterprise/View Pro

Enterprise/View Pro is a Java-based rescreening tool that creates a customized
GUI (Graphical User Interface) interface on a Web browser for legacy
applications. It dynamically creates visually appealing tables, turns function
keys into buttons, and integrates graphics. Because Enterprise/View Pro provides
an "out of the box" Java GUI to mainframe applications and data from a standard
Java-enabled Web browser, your legacy applications can be deployed more widely
without programming.

Enterprise/Access

Enterprise/Access is a powerful set of tools for re-engineering legacy
applications to open networking environments. Based on open systems and
object-oriented technologies, Enterprise/Access allows you to integrate your
front-end applications and networks with your back-end corporate applications
and data, with no changes to existing applications, security, or business logic.
This non-intrusive approach reduces time, cost, and risk while increasing
performance.

With Enterprise/Access, users get the scalability, manageability, and security
they need to easily extend corporate applications and data into new content-rich
environments. Enterprise/Access is server-based and can easily be deployed on
multiple, connected servers to support large networks. It supports a variety of
standard protocols, insulating users from the communications details and
eliminating the need to program communications code.

The Enterprise/Access Development Studio enables users to easily encapsulate and
extend the functionality of application systems. The Code Generator
automatically and rapidly produces stored interfaces. Host screen changes are
activated in production without having to modify or regenerate the interface
code. Enterprise/Access has also been integrated with the leading Web
development tools, includes Java and CGI interfaces, and automatically generates
C code and HTML templates. In addition, Enterprise/Access includes a 32-bit DLL
and ActiveX library for integration into Windows-based GUI applications.

The Enterprise/Access System Monitor has a graphical interface that supports
centralized configuration, performance, and fault management. Enterprise/Access
operates behind the Web server and leverages any security schemes the Web
clients use.

CNT's Enterprise/Integrator provides a set of all-Java development tools to
create new business applications that incorporate legacy system access. It
provides native Java access to mainframe data, allowing faster application
development and deployment with a "completely Java" approach. With its
GreenBeans technology, users can leverage industry-standard JavaBean components
and development environments. That means the user can easily create and reuse
software as they roll out solutions for different groups.

CUSTOMER SERVICES

The Company has developed a comprehensive support strategy designed to maximize
quality and customer satisfaction. A high level of continuing customer service
is integral to the Company's commitment to developing long-term, 100 percent
satisfied, customer relationships. The Company supports the commitment of its
employees to achieve this strategy through extensive training and the delegation
of authority and responsibility. CNT's employees are skilled in the design and
support of high-speed, wide-area networks for large data centers. CNT networks
incorporate state-of-the-art technology for robust and dynamic routing to ensure
continuous operations.

The Company's support services group becomes involved with end users during
initial presales activities by analyzing their requirements, developing proposed
solutions, and providing project management guidance during implementation, or
enhancement of the customer's enterprise-wide computing network.

CNT uses remote diagnostic tools to support customer networks. One of the
company's service options provides customers with seven days per week, 24 hours
per day technical support through the unique ability to dial into these networks
worldwide and perform on-line troubleshooting. In the majority of cases opened,
the Company provides timely resolution to customer problems without having to
visit the customer's site. In over 45 percent of the cases, customers depend on
CNT to diagnose problems that are ultimately identified as other vendor's
hardware and/or communications issues. Our software products come with on-line
help, comprehensive documentation, and diagnostic tools to allow users to
monitor their lines. When necessary, CNT dispatches trained field service
personnel, through third party maintenance providers, to provide repairs at the
customer's facility.

MARKETING AND SALES

The Company, along with its subsidiaries, markets its products in the United
States, Canada, the United Kingdom, France, Germany, Australia, Hong Kong and
Japan primarily through a direct sales force, and also through Original
Equipment Manufacturers, systems integrators, and value-added resellers. Outside
of these countries, CNT markets its products through independent distributors.

The Company derived approximately $27.2 million, $25.2 million, and $23.6
million, or 28%, 26%, and 30%, of its revenue from operations outside of the
United States and Canada for the years ended December 31, 1997, 1996, and 1995,
respectively. International operations are subject to various risks common to
international businesses, including exposure to currency

fluctuations, political and economic instability, the greater difficulty of
administering business internationally, and the need to comply with a wide
variety of U.S. export and foreign import laws and regulations. No single
customer accounted for more than 10% of the Company's revenue in 1997 or 1995.
Sales to IBM and its multiple divisions accounted for 18% of the Company's total
revenue in 1996. See note 14 to the Company's Consolidated Financial Statements
for additional information regarding the Company's operations by geographic
region and major customers.

The Company manufactures its products based on a schedule of forecasted orders.
The Company's customers generally place orders for immediate delivery and
generally not in advance of need. Customers may generally cancel or reschedule
orders without penalties. Accordingly, the Company believes that backlog is
generally not meaningful for purposes of predicting its revenue for any fiscal
period.

The Company expects continued quarter-to-quarter fluctuations in revenue in both
domestic and international markets. The timing of sizable orders, because of
their relative impact on total quarterly sales, may contribute to such
fluctuations. In addition, the alienation of any major customer could have a
material effect on revenue. The level of product revenue reported by the Company
in any given period will continue to be affected by the receipt and fulfillment
of sizable new orders from OEMs and others.

REVENUE RECOGNITION POLICY

Revenue from product sales is generally recognized by the Company upon shipment
or signed customer acceptance depending on the terms of the contract or purchase
order. Revenue from software license agreements with OEMs for redistribution to
the OEMs customers is recognized when the OEM reports delivery of the software
to their customer.

Service fees are recognized as revenue when earned, which is generally on a
straight-line basis over the contracted service period.

ENGINEERING AND DEVELOPMENT

The computer networking industry is characterized by rapidly changing
technology, new standards, and changing customer requirements. The Company
believes that its long-term success in the marketplace depends upon its
continuing ability to develop and integrate advanced network hardware and
software technologies.

During the past year, the Company completed development and announced its
UltraNet Storage Director with support for SCSI, Fibre Channel and ESCON device
connections, as well as ATM and T3/E3 wide area network (WAN) interfaces.

To meet the future networking demands of its customers, the Company expects to
continue to: (i) increase the compatibility and interoperability of its products
with the products of other vendors; (ii) emphasize the flexible and modular
architecture of its products to permit the

introduction of new capabilities in a manner that can be used within existing
networks and to provide a framework for existing customers to incorporate and
install new CNT products, features, and functions; (iii) continue to focus on
providing sophisticated diagnostic support tools to help deliver both high
network availability and, in the event of failure, rapid return to service; and
(iv) develop additional products to meet the demands of its customers. Excluding
the impact of special items, engineering and development expense was equal to
18% of CNT's total revenue in 1997, compared to approximately 15% of total
revenue in 1996 and 1995. The Company currently intends to continue to apply a
significant portion of its resources to product enhancements and new product
development for the foreseeable future.

MANUFACTURING AND SUPPLIERS

The Company manufactures its products and systems from subassemblies, parts, and
components, such as integrated circuits, printed circuit boards, power supplies,
and metal parts manufactured by other vendors. Certain items manufactured by
suppliers are made to the Company's specific design criteria. In-house
manufacturing activities for the Company's products primarily involve quality
assurance testing of subassemblies and final system assembly, integration, and
quality assurance testing. Since 1993, CNT has been certified under ISO 9002, an
international standard of quality, for the manufacture and support services of
high-electronic communications devices and computer networking systems.

The Company believes that it currently possesses adequate supply channels.
Components and subassemblies used in the Company's products and systems are
generally available from a number of different suppliers; however, certain key
components in the Company's products are currently purchased from only one
source or from a limited number of sources. The Company does not anticipate any
difficulty in obtaining an adequate supply of required components. An
interruption in its existing supplier relationships or delays by some suppliers,
however, could result in production delays and have an adverse effect on the
Company.

COMPETITION

The networking industry is highly competitive. It is characterized by rapidly
advancing technology and evolving industry standards, resulting in frequent
product and feature introductions and improvements in the relative
price/performance of products. CNT competes with several companies that have
greater engineering and development resources, marketing resources, financial
resources, manufacturing capability, customer support resources, and name
recognition than those of the Company.

The principal competitive factors affecting the markets for the Company's
products include customer service, flexibility, price/performance, reliability,
ease of use, and functionality. In many situations, the potential customer has
an installed base of a competitor's products, which can be difficult to
dislodge. IBM, Microsoft, and others can significantly influence customers and
control technology in the Company's markets.

Rapid change, new technologies and worldwide deregulation of the
telecommunications industry are generally positive developments for the Company
because they should have the impact of reducing carrier costs and increasing
bandwidth speeds and capacity. However, the many and unpredictable nature of the
changes also carries with it some risk of dislocation for CNT.

There can be no assurance that the Company can compete successfully with its
current competitors or with competitors that may subsequently enter the market,
particularly the software market, which is characterized by low barriers to
entry. There also can be no assurance that CNT will affect technological changes
necessary to maintain its competitive position.

INTELLECTUAL PROPERTY RIGHTS

The Company relies on a combination of trade secret, copyright, patent, and
trademark law, nondisclosure agreements, and technical measures to establish and
protect its proprietary rights to its products. Such protection may not preclude
competitors from developing products with features similar to the Company's
products. Because of the rapid pace of technological change in data
communications and in the computer and networking industries, the Company
believes that patent and copyright protection are less significant to the
Company's competitive position than factors such as the effectiveness and
quality of its support services; the knowledge, experience, and ability of the
Company's employees; and the frequency of product enhancements.

The Company has from time to time received, and may in the future receive,
communications from third parties asserting patents against the Company which
may relate to certain of the Company's products. Although the Company believes
that it possesses all required proprietary rights to the technology involved in
its products and that its products, trademarks, and other intellectual property
rights do not infringe upon the proprietary rights of third parties, there can
be no assurance that others will not claim a proprietary interest in all or a
part of such technology or assert claims of infringement. Any such claim,
regardless of its merits, could involve the Company in costly litigation and
have a material adverse effect on the Company.

Because of the existence of a large number of patents in the networking field
and the rapid rate of issuance of new patents, it is not economically practical
to determine in advance whether a product infringes patent rights of others. The
Company believes that, based upon industry practice, any necessary license or
rights under such patents may be obtained on terms that would not have a
material adverse effect on the Company's consolidated financial position or
results of operations; however, there can be no assurance in this regard.

EMPLOYEES

As of December 31, 1997, the Company had 625 full-time employees, including 65
full-time employees of its wholly-owned foreign subsidiaries. The Company
considers its ability to attract and retain qualified employees and to motivate
such employees to be essential to the future success of the Company. Competition
for such highly skilled personnel is particularly intense in the computer and
data communications industry, and no assurance may be given that the Company
will continue to attract and retain qualified employees.

ITEM 2. PROPERTIES

The Company's principal administrative offices, manufacturing, engineering, and
development functions are located in leased facilities in the Minneapolis
suburbs of Maple Grove and Plymouth, Minnesota. The Company also leases space in
Westborough, Massachusetts and New York City, primarily related to the
manufacturing, development and support of its Internet Solutions software
products. The Company's subsidiaries lease office space in England, France,
Germany, Australia, Hong Kong and Japan. The Company leases sales offices for
its direct sales staff and systems consultants in a number of locations
throughout the United States and Canada. The Company believes that its
facilities are adequate to meet its current needs.

ITEM 3. LEGAL PROCEEDINGS

The Company is not a party to any legal proceedings that could have a material
adverse effect on the Company or its business.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

None.

ITEM 4.A EXECUTIVE OFFICERS OF THE COMPANY

The following table contains certain information regarding the current executive
officers of the Company.

Name Position Served Age

Thomas G. Hudson President, Chief Executive Officer, and Director 51

Gregory T. Barnum Vice President of Finance, Chief Financial Officer and 43
Corporate Secretary

Jeffrey A. Bertelsen Corporate Controller and Treasurer 35

Richard E. Carlson Vice President of Manufacturing 60

William C. Collette Vice President of Engineering 54

Peter Dixon Vice President of Worldwide Distribution 48

Martin G. Hahn General Manager - Internet Solutions Division 40

Mark R. Knittel Vice President of Marketing and Business Development 43

Kristine E. Ochu Vice President of Human Resources 36

Julie C. Quintal Vice President of Customer Support 39

Thomas G. Hudson has been President and Chief Executive Officer since June 1996
and a director since August 1996. From 1993 to June 1996, Mr. Hudson was Senior
Vice President of McGraw Hill Companies, a leading information services
provider, serving as General Manager of its F.W. Dodge Division, and as Senior
Vice President, Corporate Development. From 1968 to 1993, Mr. Hudson served in a
number of management positions at IBM Corporation, most recently as Vice
President Services Sector Division. Mr. Hudson's IBM career included varied
product development, marketing and strategic responsibilities for IBM's
financial services customers and extensive international and large systems
experience. He is a graduate of the University of Notre Dame and New York
University. He attended the Harvard Advanced Management Program in 1990.

Gregory T. Barnum was appointed Vice President of Finance, Chief Financial
Officer and Corporate Secretary in July 1997. From September 1992 to July 1997,
Mr. Barnum served as Senior Vice President of Finance and Administration, Chief
Financial Officer and Corporate Secretary at Tricord Systems, Inc., a
manufacturer of enterprise servers. From May 1988 to September 1992, Mr. Barnum
served as the Executive Vice President, Finance, Chief Financial Officer,
Treasurer and Corporate Secretary for Cray Computer Corporation, a development
stage company engaged in the design of supercomputers. Prior to that, Mr. Barnum
served in various accounting and financial management capacities for Cray
Research, Inc., a leading manufacturer of supercomputers. He is a graduate of
the University of St. Thomas.

Jeffrey A. Bertelsen was appointed Corporate Controller and Treasurer in
December 1996. Mr. Bertelsen served as the Company's Controller from March 1995
to December 1996. From 1985 to March 1995, Mr. Bertelsen was employed by KPMG
Peat Marwick, most recently as a Senior Audit Manager. He is a graduate of the
University of Minnesota.

Richard E. Carlson was appointed Vice President of Manufacturing in January
1992. Mr. Carlson served as Director of Manufacturing from August 1990 to
January 1992. From 1981 to 1990, Mr. Carlson was employed by Zycad Corporation,
a manufacturer of special purpose computers, most recently as Vice President of
Product Development and Operations. Mr. Carlson holds a bachelor of science
degree in mechanical engineering from the University of Minnesota.

William C. Collette was appointed Vice President of Engineering in December
1995. Mr. Collette served as Director of Future Software Development and as a
Software Development Manager from June 1993 to December 1995. From 1990 to 1993,
Mr. Collette was employed by SuperComputer Systems, Inc. as a Senior Software
Engineer, where he worked with Steve Chen to design the networking for the SS1
Supercomputer. Mr. Collette holds a bachelors degree in business management from
Metro State University.

Peter Dixon was appointed Vice President of Worldwide Distribution in March
1998. Mr. Dixon served as Vice President of International from January 1990 to
March 1998. He served as Vice President of Strategic Account Marketing from
January 1989 to January 1990 and as Director of Distribution Marketing and Sales
from February 1988 to January 1989. From 1985 to 1988, Mr. Dixon served as an
Account Manager with National Advanced Systems Canada, Inc. and its predecessor,
Sand Technology Systems, Inc., companies involved in the marketing of mainframe
peripherals.

Martin G. Hahn was appointed General Manager of the Internet Solutions Division
in October 1997. Mr. Hahn served as President of the Internet Solutions Division
at Apertus Technologies Inc., prior to its acquisition by the Company, from
June 1995 to October 1997. He also held a variety of executive marketing and
sales positions at Apertus Technologies Inc. from July 1987 to May 1995. Prior
to that, he served as Assistant Vice President of the Corporate Finance and
Development Business Unit at First Bank Systems. He is a graduate of the
University of Minnesota and University of Chicago Graduate School of Business
(MBA).

Mark R. Knittel was appointed Vice President of Marketing and Business
Development in May 1997. Mr.Knittel served as Vice President of Architecture and
Business Development from March 1997 to May 1997. From July 1977 to March 1997,
Mr. Knittel was employed with IBM where he held several development executive
positions for both hardware and software networking products, as well as
multiple strategy positions. Most recently, Mr. Knittel held the position of
Director of Campus Product Marketing within the Network Hardware Division of
IBM. Mr. Knittel has a masters degree in philosophy from the University of
Chicago.

Kristine E. Ochu was appointed Vice President of Human Resources in March 1996,
and served as Director of Human Resources from May 1995 to March 1996. From
January 1994 to May 1995, Ms. Ochu was employed by Data Systems and Management,
a software development company, as Manager of Human Resources. From 1991 to
1994, Ms. Ochu was employed as a Director of Human Resources by DataCard, Inc.,
a diversified high technology manufacturing company. Ms. Ochu holds a bachelors
degree in psychology and a masters degree in industrial relations from the
University of Minnesota. She attended the University of Michigan Advanced Human
Resources Executive Program in 1996.

Julie C. Quintal was appointed Vice President of Customer Support in May 1993.
From 1985 until May 1993, Ms. Quintal was employed by Dataserv Inc., a computer
service company, most recently as Division Vice President of Custom Solutions.
Ms. Quintal holds a bachelor of science degree in business administration,
management, and industrial relations from Mankato State University.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S SECURITIES AND RELATED SHAREHOLDERS MATTERS

The information set forth under the captions "Price Range of the Company's
Common Stock" and "Dividends" on page 35 of the 1997 Annual Report to
Shareholders is incorporated herein by reference.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL INFORMATION

The information set forth under the captions "Selected Consolidated Statements
of Operations Data" and "Selected Consolidated Balance Sheet Data" on page 14 of
the 1997 Annual Report to Shareholders is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The information set forth under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 15 through
20 of the 1997 Annual Report to Shareholders is incorporated herein by
reference.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements and the accompanying Notes to Consolidated
Financial Statements on pages 21 through 33 of the 1997 Annual Report to
Shareholders is incorporated herein by reference. The information set forth
under the caption "Quarterly Financial Data" on page 34 of the 1997 Annual
Report to Shareholders is incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

The information set forth under the captions "Election of Directors" and
"Section 16(a) Beneficial Ownership Reporting Compliance" in the definitive
Proxy Statement for the Annual Meeting of Shareholders to be held on May 19,
1998, to be filed with the Securities and Exchange Commission (the "Commission")
on or before April 30, 1998, is incorporated herein by reference. For
information concerning the executive officers, see Item 4.A. of this Annual
Report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

The information set forth under the captions "Summary Compensation Table",
"Option Tables", "Employment Agreements" and "Election of Directors -
Compensation of Directors" in the definitive Proxy Statement for the Annual
Meeting of Shareholders to be held on May 19, 1998, to be filed with the
Commission on or before April 30, 1998, is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the definitive Proxy Statement for the
Annual Meeting of Shareholders to be held on May 19, 1998, to be filed with the
Commission on or before April 30, 1998, is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

PART IV

ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.

(a) 1. CONSOLIDATED FINANCIAL STATEMENTS OF REGISTRANT

The following consolidated financial statements of the Company are incorporated
by reference to the 1997 Annual Report to Shareholders.
Pages in 1997
Annual Report to
SHAREHOLDERS
-----------------
Consolidated Statements of Operations for the
Years Ended December 31, 1997, 1996 and 1995 ........ 21

Consolidated Balance Sheets as of December 31,
1997 and 1996 ....................................... 22

Consolidated Statements of Shareholders' Equity for the
Years Ended December 31, 1997, 1996 and 1995 ........ 23

Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995 .................... 24

Notes to Consolidated Financial Statements............... 25-32

Independent Auditors' Report ............................ 33

(a) 2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULE OF REGISTRANT

Independent Auditors' Report on Consolidated Financial Statement
Schedule

Schedule II: Valuation and Qualifying Accounts for the
years ended December 31, 1997, 1996 and 1995.

All other schedules are omitted as the required information is
inapplicable or is presented in the consolidated financial
statements or related notes thereto.

(a) 3. EXHIBITS

Of the exhibits listed below, the following are management contracts
or compensatory plans or arrangements with the Company:

EXHIBIT DESCRIPTION
------- -----------
10B. Computer Network Technology Corporation 401(k) Salary Savings
Plan effective January 1, 1991. (Incorporated by reference to
Exhibit 10F Form S-2 Registration Statement No. 33-41985.)

10D. Amended and Restated Incentive Stock Option Plan (Incorporated by
reference to Exhibit 10A Form S-8 Registration Statement File No.
33-41986.)

10E. Amended 1986 Nonqualified Stock Option Plan. (Incorporated by
reference to Exhibit 10B Form S-8 Registration Statement No.
33-41986.)

10F. 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 Form S-8 Registration Statement No. 33-41986.)

10G. 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 Form S-8
Registration Statement No. 33- 41986.)

10H. 1992 Employee Stock Purchase Plan. (Incorporated by reference to
Exhibit 28 Form S-8 Registration Statement No. 33-48954.)

10I. 1992 Stock Award Plan. (Incorporated by reference to Exhibit 28
Form S-8 Registration Statement No. 33-48944.)

10L. 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 Annual Report on Form
10-K for the fiscal year ended December 31, 1993.)

10N. March 10, 1994 Incentive Stock Option Agreements. (Incorporated
by reference to Exhibit 28.2 Form S-8 Registration Statement No.
33-83266.)

10O. March 10, 1994 Non-Qualified Stock Option Agreements.
(Incorporated by reference to Exhibit 28.3 Form S-8 Registration
Statement No. 33-83266.)

10P. 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.)

10Q. 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.)

10R. Amendment to and Restatement of Employment Agreement by and
between the Company and C. McKenzie Lewis, III. (Incorporated by
reference to Exhibit 10S Annual Report on Form 10-K for the
fiscal year ended December 31, 1995.)

10S. Severance agreement by and between the Company and Eugene D.
Misukanis. (Incorporated by reference to Exhibit 10T Annual
Report on Form 10-K for the fiscal year ended December 31, 1995.)

10T. Amendment No. 1 to Severance Agreement by and between the Company
and Eugene D. Misukanis. (Incorporated by reference to Exhibit
10Y Form 10-Q for the quarterly period ended June 30, 1996.)

10U. Employment Agreement by and between the Company and Thomas G.
Hudson as amended. (Incorporated by reference to Exhibit 10Z Form
10-Q for the quarterly period ended June 30, 1996.)

10W. Minutes of Annual Meeting of Shareholders on May 17, 1996
increasing shares reserved under the 1992 Stock Award Plan from
3,250,000 to 4,350,000; to provide for the automatic grant of
certain stock options to nonemployee directors upon initial
election or appointment to the Executive Committee of the Board
and upon initial election as Chairman or Vice Chairman of the
Board; and to increase the maximum number of shares subject to
options that can be awarded to any single employee during any
calendar year to 750,000; and increasing shares reserved under
the 1992 Employee Stock Purchase Plan from 400,000 to 450,000 and
to limit the number of shares that may be purchased thereunder to
5,000 per Participant for any annual Purchase Period.
(Incorporated by reference to Exhibit 10W Annual Report on Form
10-K for fiscal year ended December 31, 1996.)

10X. Minutes of Annual Meeting of Shareholders on May 15, 1997 to
amend the 1992 Stock Award Plan to increase the number of shares
authorized for issuance thereunder from 4,350,000 to 5,400,000.
To amend the 1992 Employee Stock Purchase Plan to increase the
number of shares authorized for issuance thereunder from 450,000
to 500,000 and to modify the definition of "affiliate" as used in
the Plan to allow the Board of Directors discretion in
determining which affiliates of the Company (and, therefore,
their employees) will be eligible to participate in the Plan.
(Incorporated by reference to Exhibit 10A Form 10-Q for the
quarterly period ended June 30, 1997.)

10Y. Description of Success Sharing Bonus Plan.

10Z. Executive Deferred Compensation Plan.

10AA. Employment Agreement by and between the Company and Mark Knittel

The following exhibits are filed herewith:

EXHIBIT DESCRIPTION
------- -----------
2A. Agreement and Plan of Merger among Computer Network Technology
Corporation, BRX Corp., Brixton Systems, Inc., and certain
Significant Shareholders of Brixton Systems, Inc. dated as of
February 4, 1994. (Incorporated by reference to Exhibit 2 to
current report on Form 8-K dated February 22, 1994.)

2B. Asset Purchase Agreement by and between CNT Acquisition I
Corporation, Computer Network Technology Corporation and Apertus
Technologies Incorporated dated October 24, 1997. (Incorporated
by reference to Exhibit 2.1 to current report on Form 8-K dated
October 24, 1997.)

3A. 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.)

3B. By-laws of the Company, as amended. (Incorporated by reference to
Exhibit 3B Annual Report on Form 10-K for fiscal year ended
December 31, 1991.)

10A. 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
Form S-2 Registration Statement No. 33-41985.)

10B. Computer Network Technology Corporation 401(k) Salary Savings
Plan effective January 1, 1991. (Incorporated by reference to
Exhibit 10F Form S-2 Registration Statement No. 33-41985.)

10C. Subscription Agreements of Kanematsu Electronics Ltd. and
Kanematsu USA Inc. dated October 22, 1990. (Incorporated by
reference to Exhibit 10G Form S-2 Registration Statement No.
33-41985.)

10D. Amended and Restated Incentive Stock Option Plan. (Incorporated
by reference to Exhibit 10A Form S-8 Registration Statement No.
33-41986.)

10E. Amended 1986 Nonqualified Stock Option Plan. (Incorporated by
reference to Exhibit 10B Form S-8 Registration Statement No.
33-41986.)

10H. 1992 Employee Stock Purchase Plan. (Incorporated by reference to
Exhibit 28 Form S-8 Registration Statement No. 33-48954.)

10I. 1992 Stock Award Plan. (Incorporated by reference to Exhibit 28
Form S-8 Registration Statement No. 33-48944.)

10J. Sublease Agreement by and between ITT Consumer Financial
Corporation and Computer Network Technology Corporation dated
October 1, 1993. (Incorporated by reference to Exhibit 10X Annual
Report on Form 10-K for fiscal year ended December 31, 1993.)

10K. 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
Annual Report on Form 10-K for fiscal year ended December 31,
1993.)

10M. 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 Form 10Q for the quarterly period ended March 31, 1994.)

10N. March 10, 1994 Incentive Stock Option Agreements. (Incorporated
by reference to Exhibit 28.2 Form S-8 Registration Statement No.
33-83266.)

10O. March 10, 1994 Non-Qualified Stock Option Agreements.
(Incorporated by reference to Exhibit 28.3 Form S-8 Registration
Statement No. 33-83266.)

10P. 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.)

10Q. 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.)

10R. Amendment to and Restatement of Employment Agreement by and
between the Company and C. McKenzie Lewis III. (Incorporated by
reference to Exhibit 10S Annual Report on Form 10-K for fiscal
year ended December 31, 1995.)

10S. Severance Agreement by and between the Company and Eugene D.
Misukanis. (Incorporated by reference to Exhibit 10T Annual
Report on Form 10-K for fiscal year ended December 31, 1995.)

10T. Amendment No. 1 to Severance Agreement by and between the Company
and Eugene D. Misukanis. (Incorporated by reference to Exhibit
10Y Form 10-Q for the quarterly period ended June 30, 1996.)

10U. Employment Agreement by and between the Company and Thomas G.
Hudson as amended. (Incorporated by reference to Exhibit 10Z Form
10-Q for the quarterly period ended June 30, 1996.)

10V. Lease Agreement between Teachers Realty Corporation and Computer
Network Technology Corporation. (Incorporated by reference to
Exhibit 10AA Form 10-Q for the quarterly period ended June 30,
1996.)

10Y. Description of Success Sharing Bonus Plan.

10Z. Executive Deferred Compensation Plan.

10AA. Employment Agreement by and between the Company and Mark Knittel

11. Statement Re: Computation of Net Income (Loss) per Basic and
Diluted Share.

13. Annual Report to Shareholders for the fiscal year ended December
31, 1997. (Only those portions specifically incorporated by
reference herein shall be deemed filed with the Commission.)

21. Subsidiaries of the Registrant.

23. Independent Auditors' Consent.

27.1 Financial Data Schedule 1997 (12 months)

27.2 Restated Financial Data Schedule 1997 (9 months).

27.3 Restated Financial Data Schedule 1997 (6 months).

27.4 Restated Financial Data Schedule 1997 (3 months).

27.5 Restated Financial Data Schedule 1996 (12 months).

27.6 Restated Financial Data Schedule 1996 (9 months).

27.7 Restated Financial Data Schedule 1996 (6 months).

27.8 Restated Financial Data Schedule 1996 (3 months).

27.9 Restated Financial Data Schedule 1995 (12 months).

(b) REPORTS ON FORM 8-K.

During the 1997 fourth quarter, a Current Report on Form 8-K dated
October 24, 1997 was filed regarding the Company's acquisition of the
Internet Solutions Division of Apertus Technologies Incorporated.

SCHEDULE II

COMPUTER NETWORK TECHNOLOGY CORPORATION

Valuation and Qualifying Accounts

Years ended December 31, 1997, 1996 and 1995
(in thousands)

Additions
-----------------------
Balance at Charged to Charged to Balance at
Beginning costs & other end of
Description of period expenses account Deductions period
- ------------------------------------ ------------ ---------- ---------- ---------- ----------

Year ended December 31, 1997
Allowance for doubtful accounts
and sales returns (1) $ 899 121 2,354 (395) $2,979

Year ended December 31, 1996
Allowance for doubtful accounts
and sales returns $1,131 -- -- (232) $ 899

Year ended December 31, 1995
Allowance for doubtful accounts
and sales returns $ 692 489 -- (50) $1,131

(1) In connection with its acquisition of the Internet Solutions Division of
Apertus Technologies Incorporated the Company recorded an allowance for
doubtful accounts and sales returns in the amount of $2,354.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

COMPUTER NETWORK TECHNOLOGY CORPORATION

Dated: March 26, 1998 By: /s/ Thomas G. Hudson
---------------------------------------
Thomas G. Hudson, President and Chief
Executive Officer,
(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

/s/ Thomas G. Hudson President and Chief Executive
- --------------------------- Officer (Principal Executive
Thomas G. Hudson Officer) and Director March 26, 1998

/s/ Gregory T. Barnum Vice President of Finance, Chief
- --------------------------- Financial Officer and Secretary
Gregory T. Barnum (Principal Financial Officer) March 26, 1998

/s/ Jeffrey A. Bertelsen Corporate Controller and Treasurer
- --------------------------- (Principal Accounting Officer)
Jeffrey A. Bertelsen March 26, 1998

/s/ Patrick W. Gross
- --------------------------- Director March 26, 1998
Patrick W. Gross

/s/ Erwin A. Kelen
- --------------------------- Director March 26, 1998
Erwin A. Kelen

/s/ Lawrence Perlman
- --------------------------- Director March 26, 1998
Lawrence Perlman

/s/ John A. Rollwagen
- --------------------------- Director March 26, 1998
John A. Rollwagen

INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE

The Board of Directors and Shareholders
Computer Network Technology Corporation:

Under the date of January 27, 1998, we reported on the consolidated balance
sheets of Computer Network Technology Corporation and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1997, as contained in the 1997 annual
report to shareholders. These consolidated financial statements and our report
thereon are incorporated by reference in the annual report on Form 10-K for the
year 1997. In connection with our audits of the aforementioned consolidated
financial statements, we also have audited the related financial statement
schedule as listed in the accompanying index. This financial statement schedule
is the responsibility of the Company's management. Our responsibility is to
express an opinion on the financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.

KPMG Peat Marwick LLP

Minneapolis, Minnesota
January 27, 1998

INDEX TO EXHIBITS

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 Systems, Inc. dated February
4, 1994. (Incorporated by reference to Exhibit 2 to current
report on Form 8-K dated February 22, 1994.)

3A. 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.)

3B. By-laws of the Company, as amended. (Incorporated by reference
to Exhibit 3B Annual Report on Form 10-K for fiscal year ended
December 31, 1991.)

10A. 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 Form S-2 Registration Statement No. 33-41985.)

10B. Computer Network Technology Corporation 401(k) Salary Savings
Plan effective January 1, 1991. (Incorporated by reference to
Exhibit 10F Form S-2 Registration Statement No. 33-41985.)

10C. Subscription Agreements of Kanematsu Electronics Ltd. and
Kanematsu USA Inc. dated October 22, 1990. (Incorporated by
reference to Exhibit 10G Form S-2 Registration Statement No.
33-41985.)

10D. Amended and Restated Incentive Stock Option Plan. (Incorporated
by reference to Exhibit 10A Form S-8 Registration Statement No.
33-41986.)

10E. Amended 1986 Nonqualified Stock Option Plan. (Incorporated by
reference to Exhibit 10B Form S-8 Registration Statement No.
33-41986.)

10F. 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 Form S-8 Registration Statement No.
33-41986.)

10H. 1992 Employee Stock Purchase Plan. (Incorporated by reference to
Exhibit 28 Form S-8 Registration Statement No. 33-48954.)

10I. 1992 Stock Award Plan. (Incorporated by reference to Exhibit 28
Form S-8 Registration Statement No. 33-48944.)

10J. Sublease Agreement by and between ITT Consumer Financial
Corporation and Computer Network Technology Corporation dated
October 1, 1993. (Incorporated by reference to Exhibit 10X
Annual Report on Form 10-K for fiscal year ended December 31,
1993.)

10K. 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 Annual Report on Form 10-K for fiscal year ended
December 31, 1993.)

10M. 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 Form 10Q for the quarterly period ended March
31, 1994.)

10N. March 10, 1994 Incentive Stock Option Agreements. (Incorporated
by reference to Exhibit 28.2 Form S-8 Registration Statement No.
33-83266.)

10O. March 10, 1994 Non-Qualified Stock Option Agreements.
(Incorporated by reference to Exhibit 28.3 Form S-8 Registration
Statement No. 33-83266.)

10P. 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.)

10Q. 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. Severance Agreement by and between the Company and Eugene D.
Misukanis. (Incorporated by reference to Exhibit 10T Annual
Report on Form 10-K for fiscal year ended December 31, 1995.)

10T. Amendment No. 1 to Severance Agreement by and between the
Company and Eugene D. Misukanis. (Incorporated by reference to
Exhibit 10Y Form 10Q for the quarterly period ended June 30,
1996.)

10U. Employment Agreement by and between the Company and Thomas G.
Hudson as amended. (Incorporated by reference to Exhibit 10Z
Form 10Q for the quarterly period ended June 30, 1996.)

10V. Lease Agreement between Teachers Realty Corporation and Computer
Network Technology Corporation. (Incorporated by reference to
Exhibit 10AA Form 10Q for the quarterly period ended June 30,
1996.)

10W. Minutes of Annual Meeting of Shareholders on May 17, 1996
increasing shares reserved under the 1992 Stock Award Plan from
3,250,000 to 4,350,000; to provide for the automatic grant of
certain stock options to nonemployee directors upon initial
election or appointment to the Executive Committee of the Board
and upon initial election as Chairman or Vice Chairman of the
Board; and to increase the maximum number of shares subject to
options that can be awarded to any single employee during any
calendar year to 750,000; and increasing shares reserved under
the 1992 Employee Stock Purchase Plan from 400,000 to 450,000
and to limit the number of shares that may be purchased
thereunder to