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NETWORK SYSTEMS ANNOUNCES FOURTH QUARTER EARNINGS OF $.20 PER SHARE BEFORE RESTRUCTURING CHARGE

 MINNEAPOLIS, Feb. 8 /PRNewswire/ -- Network Systems Corporation (NASDAQ-NMS: NSCO), a manufacturer of high-performance data communications systems, today announced results for the three- and 12-month periods ended Dec. 31, 1992.
 Revenues for the fourth quarter were $58.9 million, with earnings per share of $.20, before restructuring charge. After the restructuring charge, the company recorded a loss for the quarter of $1.65 per share. Network Systems had previously announced that it would book a charge in the fourth quarter to cover a partial writedown of the goodwill and other intangible assets related to the acquisition of Vitalink Communications Corporation, and for the costs of restructuring both the Vitalink and European operations. In view of the continued poor performance of Vitalink during the quarter, the company has decided to writedown the entire amount of the remaining goodwill and other intangible assets on the books as of Dec. 31, 1992. The total restructuring charge booked in the fourth quarter amounted to $60.3 million.
 For the year ended Dec. 31, 1992, Network Systems had record level revenues of $219.1 million, and a profit of $.53 per share prior to the restructuring charge. After the restructuring charge, a loss of $1.31 per share was recorded for the year.
 The poor performance at Vitalink has been a big disappointment to us," said Michael Fitzpatrick, president and CEO. "On the other hand, Network Systems' other business segments had a strong year and offset some of the shortfall. Vitalink has now been fully integrated, and I believe that the new organization is well positioned for growth in 1993. I am confident that 1993 will show greatly improved performance, particularly with respect to earnings."
 Network Systems also announced that the board has authorized the company to buy back up to 5 percent of the outstanding stock. This amounts to approximately 1.5 million shares. "The board of directors feels that the current stock price does not accurately reflect the improvements being made in the company and the earnings outlook that these improvements represent," Fitzpatrick said. "I believe management is taking the required steps to position the company for future growth in both revenues and income."
 Network Systems Corporation, based in Minneapolis, makes high- performance networking systems. The company's stock is traded on the NASDAQ National Market System.
 NETWORK SYSTEMS CORPORATION
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands except per share data)
 (Unaudited)
 Three Months Ended 12 Months Ended
 12/31/92 12/31/91 12/31/92 12/31/91
 Revenues
 Product $41,968 $50,182 $152,606 $142,602
 Service 16,970 15,147 66,512 56,126
 Total revenues 58,938 65,329 219,118 198,728
 Cost of revenues
 Product 15,567 22,502 59,368 57,428
 Service 10,888 10,685 43,361 38,877
 Total cost of revenues 26,455 33,187 102,729 96,305
 Gross profit 32,483 32,142 116,389 102,423
 Operating expenses
 Research and development 6,624 6,016 24,997 21,417
 Marketing, general,
 and administrative 17,454 18,680 69,338 62,214
 Costs of acquisition -- -- -- 3,974
 Amortization of intangibles 814 840 3,257 1,960
 Restructuring charge 60,310 -- 60,310 --
 Total operating expenses 85,202 25,536 157,902 89,565
 Income (loss)
 from operations (52,719) 6,606 (41,513) 12,858
 Interest income, net of
 interest and other expense 1,796 2,145 7,429 10,546
 Income (loss) before
 income taxes (50,923) 8,751 (34,084) 23,404
 Income taxes (970) 3,170 5,590 8,190
 Net income (loss) $(49,953) $5,581 $(39,674) $15,214
 Net income (loss)
 per share $(1.65) $.18 $(1.31) $.50
 Common and common
 equivalent shares
 used in the calculation
 of net income per share 30,324 31,295 30,313 30,686
 NETWORK SYSTEMS CORPORATION
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands)
 (Unaudited)
 12/31/92 12/31/91 (a)
 Assets:
 Cash and short-term investments
 and marketable securities $58,183 $68,533
 Trade receivables, net 56,518 64,962
 Other receivables 3,755 3,673
 Inventories 17,445 25,051
 Other current assets 11,869 10,387
 Total current assets 147,770 172,606
 Net property, plant, and equipment 36,847 37,082
 Marketable securities 69,711 52,494
 Goodwill and other
 intangible assets, net -- 51,658
 Other assets 40,186 28,971
 -- $294,514 $342,811
 Liabilities and stockholders' equity:
 Current liabilities $46,539 $44,578
 Long-term debt 1,000 2,822
 Other long-term liabilities 5,451 6,677
 Deferred revenue 1,500 3,500
 Deferred compensation 10,328 8,151
 Deferred income taxes 2,940
 Total stockholders' equity 229,696 274,143
 -- $294,514 $342,811
 (a) The balance sheet at Dec. 31, 1991, has been condensed from the audited statements.
 -0- 2/8/93
 /CONTACT: M. F.G. Ashby of Network Systems, 612-424-4888/
 (NSCO)


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

AL -- MN014 -- 4253 02/08/93 16:06 EST
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Date:Feb 8, 1993
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