8-K

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington D.C. 20549

                                  -------------

                                    Form 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


Date of Report (date of earliest
       event reported):            December 30, 1994


                           NETWORK SYSTEMS CORPORATION
- -------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


Delaware                           0-9691                        41-1231031
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(State of                (Commission File Number)                (IRS
Employer                                                    Identification No.)
Incorporation)


                 7600 Boone Avenue North, Minneapolis, MN 55428
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                    (Address of principal executive offices)

                                  (612)424-4888
                         -------------------------------
                         (Registrant's telephone number)





Item 5.   OTHER EVENTS.
   
Expense Reduction Plan:
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On December 19, 1994, Network Systems' Board of Directors approved an expense
reduction plan in an effort to reduce costs to a level supportable by
anticipated revenues.  The plan is expected  to result in a single line item
charge during the fourth quarter of 1994 of approximately $8 million. Network
Systems expects to carry out this expense reduction plan regardless of whether
the contemplated merger with Storage Technology Corporation proceeds.
    
The significant components of the expected fourth quarter charge include an
accrual of approximately $3.4 million for the severance of approximately 140
employees; an accrual of approximately $1.9 million for future lease
commitments, net of estimated future sublease rental income, associated with
excess lease space; a writedown of approximately $2.4 million associated with
equipment, leasehold improvements and repair parts to be abandoned and
$0.3 million of other miscellaneous exit costs.  Stockholders' equity will be
correspondingly reduced by $8.0 million as of December 31, 1994.

The plan is expected to result in reduced operating expenses of approximately
$9.8 million in 1995, consisting of reduced payroll, lease and depreciation
expense of $8.0 million, $1.3 million and $0.5 million, respectively.  The plan
is expected to result in reduced operating expenses of $10.4 million in 1996
consisting of reduced payroll, lease and depreciation expense of $8.6 million,
$1.3 million and $0.5 million, respectively.

The majority of the $3.4 million of severance accruals are expected to be paid
during the first quarter of 1995.  With respect to the expected long-term
effects of the expense reduction plan on Network System's cash flows, the plan
is expected to result in cash savings of approximately $5.5 million and
$7.7 million in 1995 and 1996 respectively, principally in the form of reduced
payroll, net of the estimated severance payments.

The above estimates of expense reductions and cash savings are estimated based
on the available information and certain assumptions that Network Systems
believes are reasonable in the circumstances.  There can be no assurance,
however, that these savings can be achieved.
   
Other Matter:
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In December 1994, a female employee of the Company made a complaint to the
Company concerning alleged inappropriate sexual conduct on the part of a senior
company official.  The Company is at a very  preliminary stage of investigating
this complaint, and the complaint has not made a specific demand for damages
in connection with this matter.  There is not currently any litigation pending
with respect to these allegations.  Because of the early stage of this matter,
the Company currently is unable to ascertain whether this complaint will have
a material adverse effect on the Company's future financial condition or
results of operations.
    



Item 7.   EXHIBITS.

1.   Press Release dated December 30, 1994.




                                    SIGNATURE


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


                                   NETWORK SYSTEMS CORPORATION



Date: January 6, 1995             By   /s/ Malcom D. Reid
                                      -----------------------------------------
                                        Malcolm D. Reid
                                        Vice President, Secretary
                                        and General Counsel

EX-7.1

NETWORK SYSTEMS CORPORATION

FOR IMMEDIATE RELEASE

     Contacts:      Julia Samsal or     Paul JJ Payack
                    800-672-7670        612/424-1555
                    612/424-1649        Internet: pjjpayack@network.com

     Internet: julie.samsal@network.com
     Web Server: HTTP://www.network.com

        NSC[Registered Trademark] ANNOUNCES EXPENSE REDUCTION ACTIONS
               TO REDUCE OPERATING COSTS IN THE FIRST QUARTER

Minneapolis, December 30 -- Network Systems Corporation[Registered Trademark]
(NSC), a leader in the high-performance internetworking marketplace, today
announced plans for expense reduction actions to reduce operating costs in the
first quarter of 1995.

"We will take a provision in the current quarter for actions that will be taken
in 1995, with the majority of those actions taking place in the first quarter,"
said Michael F.G. Ashby, chief operating officer. "These measures are necessary
in order to bring our operating expenses in line with those of our competition."

"As previously reported, the third quarter fell short of our expectations. We
now expect a shortfall in both revenue and earnings in the fourth quarter,"
Ashby continued, "These measures will help keep NSC lean, and our cost saving
measures together with our revitalized product line will enable us to compete
more effectively in the months ahead."

During the last quarter of 1994 NSC has announced a suite of products that are
expected to be shipped early in 1995 that address some of the fastest-growing
segments of the internetworking marketplace. These products include the
Enterprise Routing Switch[TM] (ERS), the Bytex 7700 Port-Switching Hub, and the
Security Router[TM].

Expense reduction actions include a worldwide workforce reduction on the order
of 10%, and the cost of the abandonment of certain fixed assets and leases
related to these actions; the Company expects to take a fourth quarter charge
of up to $8 million.

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Network Systems Corporation (NASDAQ: NSCO) is a leader in providing high
performance, heterogeneous, secure Networks-on-Demand[TM], creating virtual
networks across the enterprise from the data center to the desktop. Network
Systems Corporation and Storage Technology Corporation have entered into an
agreement to merge. NSC consists of the Network Systems Corporation, Bytex
[Registered Trademark], Bus-Tech[Registered Trademark], and TMD[Registered
Trademark], Bus-Tech and Bytex were acquired during 1993, and TMD Software,
which was acquired in 1994. Network Systems and TMD are headquartered in
Minneapolis; Bytex (with switching hub technology) and Bus-Tech (with channel
expertise) in Boston. NSC has 11 international subsidiaries and sales and
service in more than 30 countries. Network Systems, an ISO 9001-certified
company, posted 1993 revenues of $215 million.

Note to Editors: Network Systems, Bytex, BUS-TECH, and TMD are registered
trademarks of the Network Systems Corporation.

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