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NETWORK SYSTEMS PREVAILS IN COURT DECISION ON IRS LAWSUIT

 MINNEAPOLIS, Feb. 22 /PRNewswire/ -- Network Systems Corporation (NASDAQ-NMS: NSCO) announced today that it has won a lawsuit brought by the Internal Revenue Service (IRS) against the company. In a decision filed on Friday, February 19, 1993, by Judge Rosenbaum, the Federal District Court ruled that the IRS had improperly applied the accumulated earnings tax to Network Systems for 1983 through 1985. The decision awards Network Systems the return of $10,966,042 -- the penalty tax it had previously paid to the IRS -- plus interest and court costs. This award will have no impact on earnings.
 In this lawsuit, in a related administrative action involving 1986 through 1988, and in audits for 1989 and 1990, the IRS has asserted that the accumulated earnings tax should be applied to Network Systems because of its significant cash reserves. The court's decision did not deal with issues raised by the IRS regarding accumulated earnings penalty taxes for 1986 through 1990.
 Michael J. Fitzpatrick, president and CEO of Network Systems stated, "We are obviously very pleased with the court's favorable decision and its understanding of the issues. It's a very important decision for Network Systems and the high technology industry. We are hopeful that the IRS will now drop its suit for the remaining years, thereby saving the government, Network Systems and our shareholders the considerable expense of further litigation."
 Network Systems, based in Minneapolis, makes and markets computer networking systems.
 -0- 2/22/93
 /CONTACT: Michael Ashby, 612-424-4888, or Julia Samsal, 612-424-1649, both of Network Systems/
 (NSCO)


CO: Network Systems Corporation ST: Minnesota IN: CPR SU:

KH -- MN004 -- 8818 02/22/93 09:05 EST
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Publication:PR Newswire
Date:Feb 22, 1993
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