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NETWORK SYSTEMS REPORTS 33 PERCENT INCREASE IN FIRST-QUARTER 1993 EARNINGS

 MINNEAPOLIS, April 29 /PRNewswire/ -- Network Systems Corporation (NASDAQ-NMS: NSCO), a manufacturer of high-performance computer networking products, today announced unaudited results for the three months ended March 31, 1993.
 Earnings per share increased by 33 percent from 6 cents per share, in the first quarter of 1992, to 8 cents per share for the latest quarter. Revenues for the first quarter were $46,046,000, down 5 percent compared with the same period in the prior year.
 Michael Fitzpatrick, president and CEO said, "We have gone through a lot of necessary restructuring of the company over the last two quarters, and it has had some impact on our revenues in the first quarter. The many changes, together with the loss of some former Vitalink sales personnel, disrupted our sales momentum and meant that we were not able to achieve the revenue we had expected. However, the actions taken over the last two quarters have repositioned the company, significantly reducing our costs and expenses. As a result, we are able to report an increase in earnings despite lower revenues.
 "Looking forward, the cost and expense reductions have lowered our break-even point, and with the organization stabilizing, we expect to see improvement in both revenue and earnings each quarter during the remainder of the year. Recent product improvements in both the channel extension and internetworking segments of our business, together with some pricing actions that we have been able to take as a result of our improvements in manufacturing, combine to make us very competitive, and should translate into improving revenues as the year progresses. However, 1993 continues to be a year of transition as we upgrade our existing product lines, continue development on our next generation products scheduled for mid-1994, and continue to strengthen the organization."
 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 INCOME
 (In thousands, except per-share amounts)
 (Unaudited)
 Months Ended
 3/31/93 3/31/92
 Revenues
 Product $30,505 $32,914
 Service 15,542 15,797
 Total revenues 46,047 48,711
 Cost of revenues
 Product 12,454 13,211
 Service 10,339 10,461
 Total cost of revenues 22,793 23,672
 Gross profit 23,254 25,039
 Operating expenses
 Research and development 6,581 5,947
 Marketing, general
 and administrative 15,276 16,897
 Amortization of intangibles -- 814
 Total operating expenses 21,857 23,658
 Income from operations 1,397 1,381
 Interest income, net of
 interest and other expense 2,385 1,561
 Income before income taxes 3,782 2,942
 Income taxes 1,390 1,130
 Net income $2,392 $1,812
 Net income per share $.08 $.06
 Common and common equivalent
 shares used in the calculation
 of net income per share 30,415 31,385
 NETWORK SYSTEMS CORPORATION
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands)
 3/31/93 12/31/92(a)
 Assets: (Unaudited)
 Cash and short-term investments
 and marketable securities $87,037 $58,183
 Trade receivables, net 50,351 56,519
 Other receivables 3,536 3,755
 Inventories 18,696 17,445
 Other current assets 12,290 11,989
 Total current assets 171,910 147,891
 Net property, plant, and equipment 35,925 36,847
 Marketable securities 38,068 69,711
 Other assets 39,879 38,976
 -- $285,782 $293,425
 Liabilities and stockholders' equity:
 Total current liabilities $38,894 $45,197
 Long-term debt 1,000 1,000
 Other long-term liabilities 6,740 5,451
 Deferred revenue 1,000 1,500
 Deferred compensation 10,664 10,328
 Total stockholders' equity 227,484 229,949
 -- $285,782 $293,425
 (a) The balance sheet at December 31, 1992, has been condensed from
 the audited statements.
 -0- 4/29/93
 /CONTACT: M. F.G. Ashby, 612-424-1992, or J. Samsal, 612-424-1649, both of Network Systems/
 (NSCO)


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

KH -- MN008 -- 2878 04/29/93 16:59 EDT
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Date:Apr 29, 1993
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