<PAGE>
 
================================================================================

                     SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549


                                  FORM 10-Q

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
     September 30, 1997 OR
     ------------------   

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________
     TO ________________


                      COMMISSION FILE NUMBER:  0-13994
                                              ---------


                    Computer Network Technology Corporation
                    ---------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


           Minnesota                                      41-1356476
      ----------------------                ----------------------------------
     (State of Incorporation)              (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)



Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days.   Yes   X    No
                                                  ------    ------

As of November 5, 1997 the registrant had 22,273,939 shares of $.01 par value
common stock issued and outstanding.

================================================================================
<PAGE>
 
                   COMPUTER NETWORK TECHNOLOGY CORPORATION

                                   INDEX
                                   -----



PART I.     FINANCIAL INFORMATION                                      Page
                                                                       ----

 Item 1.    Financial Statements
 
 
            Consolidated Balance Sheets as of September 30, 1997 and
             December 31, 1996.........................................  3
 
            Consolidated Statements of Operations for the three and
             nine months ended September 30, 1997 and 1996.............  4
 
            Consolidated Statements of Cash Flows for the nine
             months ended September 30, 1997 and 1996..................  5
 
            Notes to Consolidated Financial Statements.................  6
 

 Item 2.    Management's Discussion and Analysis of
 
            Results of Operations......................................  8
            Financial Condition........................................ 12
 
PART II.    OTHER INFORMATION.......................................... 14

 Item 1-5.  None

 Item 6.    Exhibits and Reports on Form 8-K


SIGNATURES............................................................. 15

                                       2
<PAGE>
 
                                COMPUTER NETWORK TECHNOLOGY CORPORATION
                                      CONSOLIDATED BALANCE SHEETS
                                 (in thousands, except per share data)
 
<TABLE>
<CAPTION>
                                                                SEPTEMBER 30              December 31
                                                                    1997                     1996
                                                            -----------------         ----------------
ASSETS                                                          (UNAUDITED)
<S>                                                       <C>                       <C>
Current assets:
    Cash and cash equivalents                             $            10,083        $           4,847
    Marketable securities                                              18,269                   30,218
    Receivables, net                                                   18,552                   18,189
    Inventories                                                        12,087                   10,451
    Deferred tax asset                                                  2,425                    2,425
    Other current assets                                                  816                      822
                                                            -----------------         ----------------
        Total current assets                                           62,232                   66,952
                                                            -----------------         ----------------
 
Property and equipment, net                                            11,727                    9,113
Field support spares, net                                               3,502                    3,836
Deferred tax asset                                                      1,052                    1,052
Goodwill, net                                                             618                      641
Other assets                                                            1,911                      785
                                                            -----------------         ----------------
                                                          $            81,042        $          82,379
                                                            =================         ================
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                      $             6,161        $           3,833
    Accrued liabilities                                                 7,969                    9,064
    Deferred revenue                                                    7,711                    5,321
    Current installments of obligation under capital   
     lease                                                                179                      -
                                                            -----------------         ----------------
        Total current liabilities                                      22,020                   18,218
                                                            -----------------         ----------------
 
Obligation under capital lease, less current 
 installments                                                             747                      -
                                                            -----------------         ----------------
        Total liabilities                                              22,767                   18,218
                                                            -----------------         ----------------
 
Shareholders' equity:
    Common stock, $.01 par value; authorized
        30,000,000 shares, issued and outstanding
        22,283,939 at September 30, 1997 and
        23,408,064 at December 31, 1996                                   223                      234
    Additional paid-in capital                                         54,837                   60,372
    Retained earnings                                                   3,618                    3,726
    Cumulative translation adjustment                                    (403)                    (171)
                                                            -----------------         ----------------
        Total shareholders' equity                                     58,275                   64,161
                                                            -----------------         ----------------
                                                          $            81,042        $          82,379
                                                            =================         ================
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       3
<PAGE>
 
                                      COMPUTER NETWORK TECHNOLOGY CORPORATION
                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                                    (unaudited)
                                       (in thousands, except per share data)
 

<TABLE>
<CAPTION>
                                                  Three months ended                       Nine months ended
                                                     September 30                            September 30
                                           --------------------------------         ------------------------------
                                                1997                1996                 1997               1996
                                           -----------         ------------         -----------         ----------
<S>                                      <C>                 <C>                  <C>                 <C>
REVENUE:
  Product sales                          $      16,846       $       18,020       $      46,042       $     55,355
  Service fees                                   6,964                5,956              20,211             16,524
                                           -----------         ------------         -----------         ----------
      Total revenue                             23,810               23,976              66,253             71,879
                                           -----------         ------------         -----------         ----------
 
COST OF REVENUE:
  Cost of product sales                          5,508                5,753              14,450             19,148
  Cost of service fees                           4,577                4,534              13,674             12,697
                                           -----------         ------------         -----------         ----------
      Total cost of revenue                     10,085               10,287              28,124             31,845
                                           -----------         ------------         -----------         ----------
 
GROSS PROFIT                                    13,725               13,689              38,129             40,034
                                           -----------         ------------         -----------         ----------
 
OPERATING EXPENSES:
  Sales and marketing                            7,764                7,275              22,817             22,531
  Engineering and development                    4,188                3,645              12,243             10,002
  General and administrative                     1,567                1,713               4,461              5,546
                                           -----------         ------------         -----------         ----------
      Total operating expenses                  13,519               12,633              39,521             38,079
                                           -----------         ------------         -----------         ----------
 
INCOME (LOSS) FROM OPERATIONS                      206                1,056              (1,392)             1,955
                                           -----------         ------------         -----------         ----------
 
OTHER INCOME (EXPENSE):
  Interest income                                  392                  510               1,316              1,355
  Interest expense                                 (23)                  (8)                (39)               (25)
  Other, net                                        23                  104                 (55)               221
                                           -----------         ------------         -----------         ----------
      Other income                                 392                  606               1,222              1,551
                                           -----------         ------------         -----------         ----------
 
INCOME (LOSS) BEFORE INCOME TAXES                  598                1,662                (170)             3,506
 
PROVISION (BENEFIT) FOR INCOME TAXES               225                  585                 (62)             1,230
                                           -----------         ------------         -----------         ----------
 
NET INCOME (LOSS)                        $         373       $        1,077       $        (108)      $      2,276
                                           ===========         ============         ===========         ==========
 
NET INCOME (LOSS) PER COMMON
AND COMMON EQUIVALENT SHARE              $         .02       $          .05       $        (.00)      $        .10
                                           ===========         ============         ===========         ==========
 
WEIGHTED AVERAGE NUMBER
OF COMMON AND COMMON
EQUIVALENT SHARES                               22,812               23,691              22,920             23,618
                                           ===========         ============         ===========         ==========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       4
<PAGE>
 
                               COMPUTER NETWORK TECHNOLOGY CORPORATION
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                             (unaudited)
                                            (in thousands)

<TABLE>
<CAPTION>
                                                              Nine months ended September 30
                                                      ----------------------------------------------
                                                             1997                          1996
                                                      ----------------              ----------------
 
<S>                                                 <C>                          <C>
OPERATING ACTIVITIES:
  Net income (loss)                                 $             (108)          $             2,276
  Depreciation and amortization                                  5,192                         6,056
  Compensation expense                                             -                             125
 
  CHANGES IN OPERATING ASSETS AND LIABILITIES:
    Receivables                                                   (363)                         (600)
    Inventories                                                 (2,178)                         (262)
    Other current assets                                             6                         1,048
    Accounts payable                                             2,328                           153
    Accrued expenses                                            (1,095)                         (696)
    Deferred revenue                                             2,390                         2,065
                                                      ----------------              ----------------
      Cash provided by operating activities                      6,172                        10,165
                                                      ----------------              ----------------
 
INVESTING ACTIVITIES:
  Additions to property and equipment                           (4,728)                       (2,780)
  Additions to field support spares                             (1,243)                       (1,447)
  Redemption of marketable securities                           11,949                        (1,818)
  Other                                                         (1,073)                         (213)
                                                      ----------------              ----------------
    Cash provided by (used in) investing                         4,905                        (6,258)
     activities
                                                      ----------------              ----------------
 
FINANCING ACTIVITIES:
  Principal payments under capital lease 
   obligation                                                      (63)                          -
  Proceeds from issuance of common stock                           474                         1,632
  Payments for repurchases of common stock                      (6,020)                          -
                                                      ----------------              ----------------
    Cash provided by (used in) financing 
     activities                                                 (5,609)                        1,632
                                                      ----------------              ----------------
 
Effects of exchange rate changes                                  (232)                          (33)
                                                      ----------------              ----------------
 
NET INCREASE IN CASH AND CASH EQUIVALENTS                        5,236                         5,506
 
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                  4,847                         5,960
                                                      ----------------              ----------------
 
CASH AND CASH EQUIVALENTS - END OF PERIOD           $           10,083           $            11,466
                                                      ================              ================
 
NON-CASH INVESTING AND FINANCING ACTIVITY:
  Property acquired under capital lease             $              989           $               -
                                                      ================              ================
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       5
<PAGE>
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  BASIS OF PRESENTATION

The accompanying consolidated financial statements, which are unaudited except
for the balance sheet as of December 31, 1996, have been prepared in accordance
with instructions to Form 10-Q and do not include all the information and notes
required by Generally Accepted Accounting Principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. These consolidated financial statements should be read in conjunction
with the financial statements and accompanying notes incorporated by reference
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996 filed with the Securities and Exchange Commission.

(2)  INVENTORIES

Inventories, stated at the lower of cost (first-in, first-out method) or market,
consist of:

                                          (in thousands)
                                     SEPTEMBER 30  December 31
                                         1997         1996
                                     ------------  -----------
     Components and subassemblies    $      5,655  $     3,769
     Work in process                        1,400        2,324
     Finished goods                         5,032        4,358
                                     ------------  -----------
                                     $     12,087  $    10,451
                                     ============  ===========

(3)  COMMON STOCK EQUIVALENTS

For the three months ended September 30, 1997 and the three and nine months
ended September 30, 1996, net income per common and common equivalent share was
determined by dividing net income by the weighted average number of common and
common equivalent shares outstanding during the period. Common equivalent
shares, primarily resulting from dilutive stock options and warrants, were
converted using the treasury stock method. For the nine months ended September
30, 1997, net loss per common share was computed using the weighted average
number of common shares outstanding. Common equivalent shares were excluded due
to their antidilutive effect.

(4)  COMMON EQUITY PUT OPTION

In connection with a severance agreement entered into with a former officer and
director during the fourth quarter of 1995, the Company agreed to repurchase up
to 280,000 shares of its common stock on the last trading day of calendar year
1997 for a price of $8.50 per share (see notes to the consolidated financial
statements incorporated by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996).

During the second quarter of 1996, the former officer and director sold on the
open market 182,600 common shares which were subject to the repurchase
obligation. As a result, at September 30, 1997, the Company's remaining
obligation with respect to the common equity put 

                                       6
<PAGE>
 
option is for the potential repurchase of up to 97,400 shares of its common
stock. The obligation will expire if the former officer and director sells the
remaining shares on the open market prior to the last trading day of calendar
year 1997, or, subject to certain exceptions, if for any five consecutive
trading days prior to the last trading day of calendar year 1997, the closing
market price for the Company's common stock equals or exceeds $8.50 per share.

For the three and nine months ended September 30, 1997 and the nine months ended
September 30, 1996, engineering and development expense has been reduced by
$97,000, $49,000, and $853,000, respectively, and increased by $134,000 for
the three months ended September 30, 1996 to reflect fluctuations in the
market price of the Company's common stock and a reduction in the number of
shares subject to repurchase. The Company will continue to adjust engineering
and development expense and its related accrual for this obligation in future
periods until such time as it has no remaining obligation to repurchase stock
from the former officer and director (see notes to the consolidated financial
statements incorporated by reference to the Company's Annual Report on Form 10-
K for the fiscal year ended December 31, 1996).

(5)  COMMON STOCK REPURCHASE

On March 10, 1997, the Company's board of directors authorized the repurchase of
up to 2,000,000 shares of the Company's common stock. As of September 30, 1997,
the Company had repurchased 1,247,539 shares of its common stock pursuant to
this authorization for approximately $6.0 million.

(6)  ACQUISITION

On October 31, 1997, the Company acquired substantially all of the assets of
the Internet Solutions Division of Apertus Technologies Incorporated
(Apertus). The Internet Solutions Division provides Internet - to - Mainframe
connectivity products and web access to legacy applications. The purchase
price consists of $11.4 million in cash plus the assumption of liabilities.
The acquisition will be accounted for under the purchase method of accounting.
The Company is currently evaluating the allocation of the purchase price to
the assets acquired (principally accounts receivable, inventory, fixed assets
and intellectual property) and liabilities assumed (principally accounts
payable, accrued expenses and obligations under maintenance and other
contracts). The Company currently believes the fair value of the tangible
assets acquired and liabilities assumed to be approximately $11.6 million and
$4.9 million, respectively. The purchase price will be reduced on a dollar for
dollar basis if the historical book value of the net assets transferred does
not exceed $6.7 million. A portion of the purchase price may be allocated to
in process research and development that will be written-off in the fourth
quarter and goodwill which will be amortized over the benefit period. In
connection with the acquisition, the Company expects a charge against earnings
in the fourth quarter for consolidation and transition related expenses in an
amount to be determined.

                                       7
<PAGE>
 
Item 2.   Managements Discussion and Analysis of Financial Condition and Results
          of Operations

                                 ACQUISITION

On October 31, 1997, the Company completed the acquisition of the Internet
Solutions Division of Apertus Technologies Incorporated (see note 6 to the
consolidated financial statements included in this Form 10-Q filing). A
portion of the purchase price may be allocated to in process research and
development that will be written-off in the fourth quarter. The Company also
expects a charge against earnings in the fourth quarter for consolidation and
transition related expenses in an amount to be determined. The Company
anticipates that the acquisition will increase its engineering and sales
capabilities and expand its customer base in the market for enterprise
connectivity between Internet and intranet users and IBM hosts. The Company
also believes that it can achieve synergy and improve economies of scale by
combining the Internet Solutions Division with its existing businesses.

                             RESULTS OF OPERATIONS

As an aid to understanding the Company's operating results, the following table
sets forth certain information derived from the Consolidated Statements of
Operations of the Company.   (All amounts are expressed as a percentage of total
revenue except gross profit which is expressed as a percentage of the related
revenue.)

<TABLE>
<CAPTION>
                                                   Three months ended                     Nine months ended
                                                      September 30                           September 30
                                           -------------------------------        -------------------------------
                                                 1997              1996                 1997              1996
                                            ------------      ------------         ------------      ------------
<S>                                          <C>               <C>                  <C>               <C>
Revenue:
   Product sales                                    70.8%             75.2%                69.5%             77.0%
   Service fees                                     29.2              24.8                 30.5              23.0
                                           -------------     -------------        -------------     -------------
      Total revenue                                100.0             100.0                100.0             100.0
                                           -------------     -------------        -------------     -------------
 
GROSS PROFIT:
   Product sales                                    67.3              68.1                 68.6              65.4
   Service fees                                     34.3              23.9                 32.3              23.2
                                           -------------     -------------        -------------     -------------
      Total gross profit                            57.6              57.1                 57.6              55.7
                                           -------------     -------------        -------------     -------------
 
OPERATING EXPENSES:
   Sales and marketing                              32.6              30.3                 34.5              31.4
   Engineering and development                      17.6              15.2                 18.5              13.9
   General and administrative                        6.6               7.2                  6.7               7.7
                                           -------------     -------------        -------------     -------------
      Total operating expenses                      56.8              52.7                 59.7              53.0
                                           -------------     -------------        -------------     -------------
INCOME (LOSS) FROM OPERATIONS                         .8               4.4                 (2.1)              2.7
   Other income                                      1.7               2.5                  1.8               2.2
                                           -------------     -------------        -------------     -------------
INCOME (LOSS) BEFORE INCOME TAXES                    2.5               6.9                  (.3)              4.9
   Provision (benefit) for income taxes               .9               2.4                  (.1)              1.7 
                                           -------------     -------------        -------------     -------------
NET INCOME (LOSS)                                    1.6%              4.5%                 (.2)%             3.2%
                                           =============     =============        =============     =============
</TABLE>

                                       8
<PAGE>
 
REVENUE

The Company's revenue primarily includes the licensing, sale and support of
products for high performance enterprise networking and connectivity, enterprise
access and enterprise information management and recovery that integrates
traditional legacy data processing systems with open systems to create
enterprise-wide networks.

Revenue from product sales totaled $16.8 million and $46.0 million for the three
and nine months ended September 30, 1997, respectively, reductions of 7% and
17%, respectively, when compared to the same periods of 1996. The decrease can
be attributed to an approximately 28% decline in the sale of the Company's
traditional enterprise networking and connectivity products and reductions in
product revenue from the Company's OEM partners for the three and nine months
ended September 30, 1997 of $.7 million and $5.3 million, respectively, when
compared to the same periods of 1996. During the three months and nine months
ended September 30, 1997, the Company recognized revenue from OEM product sales
to IBM, Bay Networks, Sun Microsystems and others of $1.8 million and $4.3
million, respectively, compared to revenue from OEM products sales of $2.5
million and $9.7 million for the same periods of 1996.

The decrease in product revenue for the three and nine months ended September
30, 1997 resulting from a reduction in the sale of the Company's traditional
enterprise networking and connectivity products and reduced sales to OEM
partners, was partially offset by sales of the Company's ATM, DS 3 Compression
and SRDF products and initial sales of the Company's new UltraNet Storage
Director products.

Revenue from service fees, which reflect maintenance, professional services and
network reconfiguration services from the Company's technical support personnel,
increased 17% and 22% during the three and nine months ended September 30, 1997,
respectively, when compared to the same periods of 1996.  The increase in
service revenue is primarily due to the growing base of customers using the
Company's enterprise-wide networking products.

The Company derived 30% and 28% of its revenue from international customers for
the three and nine months ended September 30, 1997, respectively, as compared to
23% and 25%, respectively for the same periods of 1996. The percentage of
revenue derived from international customers for any given period is subject
to fluctuation because of the variable timing of sizable orders from customers
both internationally and in North America.

During the third quarter, the Company announced its new Storage Area Network
(SAN) strategy and related family of UltraNet products.  This new product suite
provides high speed connectivity between storage devices and servers from
anywhere anytime.  The sale of these new products accounted for approximately
$2.2 million of product revenue for the three months ended September 30, 1997.

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.  The level of product revenue reported by the Company in any given
period will continue to be effected by the timing of new product introductions
and the receipt and fulfillment of sizable new orders from OEMs and others.

                                       9
<PAGE>
 
GROSS PROFIT

For the three and nine months ended September 30, 1997, the gross profit margins
from product sales were 67% and 69%, respectively, as compared to 68% and 65%,
respectively, for the same periods of 1996.  The increase in gross profit
margins from product sales for the nine months ended September 30, 1997, when
compared to the same period of 1996, primarily resulted from a decline in lower
margin OEM sales of the Company's channel connectivity controller to IBM and
lower charges for inventory obsolescence.

Actual gross profit margins on product sales for the balance of 1997 will
depend on a number of factors, including the mix of products sold, market
acceptance of new products, the ability to obtain manufacturing cost
efficiencies with respect to new products , the relative amount of products
sold through indirect distribution sources, including OEMs and the level of
continuing price competition.

For the three and nine months ended September 30, 1997, gross profit margins
from service fees were 34% and 32%, respectively, as compared to 24% and 23%,
respectively, for the same periods of 1996.  The increase can be attributed to
the steadily increasing installed base of CNT products that has allowed the
Company to better leverage the infrastructure of its technical support
organization and to improve its economies of scale.  At the present time, the
Company believes that any improvement resulting from economies of scale for the
balance of 1997 will be offset by additional investment the Company expects to
make in its service business to support new product introductions.

SPECIAL CHARGES

For the three and nine months ended September 30, 1997 and the nine months ended
September 30, 1996, engineering and development expense has been reduced by
$97,000, $49,000, and $853,000, respectively, and increased by $134,000 for the
three months ended September 30, 1996, due to adjustments in the Company's
recorded accrual for its remaining common equity put obligation (see notes to
the consolidated financial statements included in this Form 10-Q and
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996).

OPERATING EXPENSES

Sales and marketing expense increased by 7% and 1% for the three and nine months
ended September 30, 1997, respectively, when compared to the same periods of
1996.  The increases are primarily due to marketing expenses associated with the
launch of the Company' s new UtraNet family of products and investments the
Company has made in its marketing organization to identify new market
opportunites for the Company's products.  Improving the productivity of the
Company's investments in sales and marketing and controlling sales and marketing
expense as a percentage of revenue represent key objectives for the Company.

Engineering and development expense primarily consists of compensation and
related fringe benefits, depreciation, and consulting expenses related to new
product development and 

                                       10
<PAGE>
 
enhancements to existing products. Excluding the impact of the previously
discussed common equity put option, engineering and development expense
increased during the three and nine months ended September 30, 1997 by 22% and
13%, respectively, when compared to the same periods of 1996. The increase for
both periods is primarily attributable to costs associated with continued
development of new products.

Engineering and development expenses, excluding the impact of the common equity
put option, were 18% and 19% of total revenue for the three and nine months
ended September 30, 1997, respectively, as compared to 15% and 14% of total
revenue for the same periods of 1996.  The Company believes a sustained high
level of engineering and development investment in current and future products
is essential to customer satisfaction and future revenue.

General and administrative expenses decreased by 9% and 20% during the three and
nine months ended September 30, 1997, respectively, when compared to the same
periods of 1996. The decrease for both periods was attributable to incremental
costs incurred in 1996 for employee severance and costs associated with the
management reorganization that occurred at the end of 1995. General and
administrative expenses were 7% of total revenue for the three and nine months
ended September 30, 1997, respectively, as compared to 7% and 8% of total
revenue during the same periods of 1996.

The Company recorded an income tax provision at an effective rate of
approximately 37% for the three and nine months ended September 30, 1997, as
compared to approximately 35% for the three and nine months ended September 30,
1996.  The Company's United States income tax returns for the years 1993 to 1995
are currently under examination.  Management believes adequate provision for
income taxes has been provided for all periods through September 30, 1997.

NEW ACCOUNTING PRONOUNCEMENTS

Beginning in the fourth quarter of 1997, the Company will be required to adopt
the provisions of Statement of Financial Accounting Standards No. 128 "Earnings
per Share" (SFAS No. 128).  Under SFAS No. 128, companies are required to
present basic and diluted earnings per share instead of primary and fully
diluted earnings per share as required by Accounting Principles Board Opinion
No. 15 "Earnings per Share" (APB No. 15).  Basic earnings per share is computed
by dividing income available to common stockholders by the weighted average
number of common shares outstanding during the period.  Diluted earnings per
share is computed in the same manner as basic earnings per share except that the
weighted average number of common shares outstanding is increased to include the
number of additional common shares that would have been outstanding if all
potentially dilutive common shares had been issued using the treasury stock
method.

                                       11
<PAGE>
 
                              FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically financed its operations through the private and
public sales of equity securities, bank borrowings under lines of credit,
capital equipment leases and cash generated from operations.

Cash, cash equivalents and marketable securities at September 30, 1997 totaled
$28.4 million, a decrease of $6.7 million during the first nine months of
1997, primarily due to the Company's repurchase of 1.2 million shares of its
common stock. Cash used for investing in property and equipment, field support
spares and other assets of $7.0 million was partially offset by cash provided
by operations, net of the effect of exchange rate changes, of $5.9 million and
proceeds from common stock issuances of $.4 million. Expenditures for capital
equipment and field support spares have been and will likely continue to be a
significant capital requirement. On March 10, 1997, the Company's board of
directors authorized the repurchase of up to 2,000,000 shares of the Company's
common stock. As of September 30, 1997, the Company had repurchased 1,247,539
shares of its common stock for approximately $6.0 million pursuant to this
authorization. In addition, on October 31, 1997, the Company paid $11.4 million
to acquire the Internet Solutions Division of Apertus.

The Company believes that its current balances of cash, cash equivalents and
marketable securities, when combined with anticipated cash flow from operations,
will be adequate to fund its operating plans and meet its currently anticipated
aggregate capital requirements, at least through 1997.

The Company believes that inflation has not had a material impact on its
operations or liquidity to date.

FORWARD LOOKING STATEMENTS

Certain statements in this Form 10-Q and in the Company's press release, and
oral statements made by or with the approval of the Company's executive
officers constitute or will constitute "forward-looking statements". All
forward-looking statements involve risks and uncertainties, and actual results
may be materially different. The following factors are among those that could
cause the Company's actual results to differ materially from those set forth
in such forward-looking statements. The requirement to make additional
investments in the Company's service business to support new product
introductions will be impacted by the level of new product sales, changes in
service levels required by the marketplace, and unexpected service related
expenses. The Company's ability to generate revenue as presently expected, the
costs associated with the integration of the Apertus Internet Solutions
Division into the Company's existing businesses,

                                       12
<PAGE>
 
unexpected expenses and the need for additional funds to react to changes in the
marketplace, including unexpected increases in personnel and product development
expense, may affect whether the Company has sufficient cash resources to fund
its operating plans and capital requirements through at least 1997.

Other factors that could cause the results of the Company to differ materially
from those contained in any such forward-looking statements include general
economic conditions, costs and availability of components and fluctuations in
exchange rates. In addition, the markets for the Company's products are
characterized by significant competition, and the Company's results may be
adversely affected by the actions of existing and future competitors, including
the development of new technologies, the introduction of new products and the
reduction of prices by such competitors to gain or retain market share.  
Furthermore, the integration of the Internet Solutions Division into the 
Company includes significant commitments of management, engineering, 
financial and marketing resources and there can be no assurance that such 
integration will be successful. The Company assumes no obligation to publicly
release the result of any revision or updates to these forward-looking
statements to reflect future events or unanticipated occurrences.

                                       13
<PAGE>
 
                          PART II.   OTHER INFORMATION

Item 1-5.  None

Item 6.    Exhibits and Reports on Form 8-K

           (a)  Exhibits filed herewith.

                2A.  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 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 to the Annual Report on Form 10-k
                     for the fiscal year ended December 31, 1991.)

                11.  Statement Re: Computation of Net Income (Loss) per Common
                     and Common Equivalent Share.

                27.  Financial Data Schedule.

           (b)  No reports on Form 8-K were filed during the quarter ended
                September 30, 1997.
  
                                       14
<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 duly authorized officers.



                    COMPUTER NETWORK TECHNOLOGY CORPORATION
                                 (Registrant)



Date: November 13, 1997          By: /s/  Gregory T. Barnum
                                     ----------------------
                                 Gregory T. Barnum
                                 Chief Financial Officer
                                 (Principal financial officer)

                                 By:  /s/  Jeffrey A. Bertelsen
                                      -------------------------
                                 Jeffrey A. Bertelsen
                                 Corporate Controller and Treasurer
                                 (Principal accounting officer)

                                       15
<PAGE>
 
                                 EXHIBIT INDEX


Exhibit   Description                                                       Page
-------   -----------                                                       ----

2A.       Asset purchase agreement by and between CNT Aquisition I
          Corporation, Computer Network Technology Corporation and Apertus
          Technologies Incorporated dated October 24, 1997 (Incorporated by
          reference 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 to the Annual Report on Form 10-k for the fiscal year 
          ended December 31, 1991.)

11.       Statement Re:  Computation of Net (Loss) Income per Common
          and Common Equivalent Share.....................  Electronically Filed
 
27.       Financial Data Schedule.........................  Electronically Filed