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NETWORK SYSTEMS ANNOUNCES REORGANIZATION

 MINNEAPOLIS, Nov. 16 ~PRNewswire~ -- Network Systems(R) Corporation (NASDAQ: NSCO) today announced a major restructuring of the company, in order to streamline the organization, reduce ongoing expenses, and improve services to customers. The company is combining the duplicate support functions of Vitalink and Network Systems, consolidating manufacturing at the Minneapolis facility, and integrating the overseas Vitalink operations into Network Systems' International Operations. At the same time, the International Operations of Network Systems have been divided into Europe and Asia~Pacific, with new management teams in place to expand the company's considerable presence in those regions.
 The combined changes will result in a net reduction in force of approximately 65 employees, or 4.5 percent of the work force. The company intends to book a one-time special charge during the fourth quarter to cover the cost of this reorganization, amounting to about $40 million. This charge is composed primarily of a write-down of a large portion of the goodwill and other intangible assets relating to the acquisition of Vitalink, as well as the cost of the restructuring itself. The intangible assets remaining on the books will amount to approximately $14 million and will be amortized over the remainder of a 10-year life.
 Michael J. Fitzpatrick, president and chief executive officer, said that "We recognized that with this reorganization we could better serve our customers and shareholders. The markets served by Network Systems and Vitalink are converging, and a more integrated approach to these markets is essential. Further, we have made significant gains in efficiency in our Minneapolis manufacturing facility, enabling us to consolidate all product manufacturing at one location and reduce overhead expenses."
 Fitzpatrick went on to note that the changes are a part of a comprehensive reorganization of the company begun earlier this year. "These changes are designed to enhance our current success in the internetworking market and serve our customers better through both direct and indirect sales channels. In International Operations, we have made a number of personnel changes and established a European headquarters in the United Kingdom, to better manage our continued growth in Europe.
 "I am very pleased with our growth in both the channel networking and internetworking business to date," he continued. "This reorganization positions us well to build on that performance and become a major vendor in the total networking market. We will thereby provide increased value for our customers and our shareholders.
 Network Systems, based in Minneapolis, is a leading provider of integrated networking solutions.
 -0- 11~16~92
 ~CONTACT: Michael Ashby, 612-424-1992, or Don Flanagan, 612-424-1555, both of Network Systems~
 (NSCO)


CO: Network Systems, Inc. ST: Minnesota IN: CPR SU:

AL -- MN004 -- 1504 11~16~92 17:16 EST
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Date:Nov 16, 1992
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