SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to section 13 of 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 13, 1999
Network Six, Inc.
(Exact name of registrant as specified in its charter)
Commission File No. 0-21038
Rhode Island 05-036-6090
(State or other jurisdiction of (I.R.S. Employer
Identification No.)
incorporation or organization)
475 Kilvert Street, Warwick, Rhode Island 02886
(Address of principal executive offices, including zip code)
(401) 732-9000
(Registrant's telephone number, including area code)
Item 5. Other Events
The May 13, 1999 Press Release of the Registrant attached
hereto as EXHIBIT 99 is incorporated herein by reference.
Item 7 (c) Exhibits
99 Press Release, dated May 13,1999, of Network Six, Inc.
SIGNATURES
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 thereunto duly authorized.
Network Six, Inc.
-----------------------
(Registrant)
Date: May 13, 1999 By: /s/ Dorothy M. Cipolla
Dorothy M. Cipolla
Chief Financial Officer
Network Six, Inc.
Current Report on Form 8-K
Dated May 13, 1999
Exhibit Index
Exhibit
No. Exhibits
99 Press Release dated May 13, 1999
EXHIBIT 99
NETWORK SIX SETTLES HAWAII LITIGATION
Kenneth C. Kirsch, President and CEO
Or
Dorothy M. Cipolla, CFO and Treasurer
May 13, 1999
Warwick, RI: Network Six, Inc. announced today that it has signed an
agreement with the State of Hawaii ("the State") to settle its long-
standing litigation related to the implementation of an automated child
support enforcement system. Network Six also announced that it has
signed an agreement with Complete Business Solutions, Inc. ("CBSI") to
settle its litigation related to the same project. Both agreements are
subject to judicial approval, which the parties expect, and both have
been approved by Network Six's Board of Directors.
In 1993, Network Six signed a $20 million contract with the State to
install an automated child support enforcement system. In November
1996, the State filed a lawsuit against Network Six for unspecified
damages alleging breach of contract. In January 1997, Network Six
filed a counterclaim against the State asserting that the State had
breached the contract by demanding that Network Six build a system
beyond the scope of the contract. Network Six filed third party
complaints against CBSI, a subcontractor to Network Six on the project,
and MAXIMUS, Inc., the contract monitor on the project, alleging
several contract and tort claims against these third parties in
connection with the project.
The terms of the agreement between Network Six and the State require
Network Six to pay the State $1 million over four years. The agreement
between Network Six and CBSI covers the Hawaii litigation and related
litigation pending in Rhode Island and requires CBSI to pay Network Six
$300,000 immediately. Network Six's agreements with both the State and
CBSI contain provisions whereby no party admits any liability.
To facilitate this settlement, Lockheed Martin IMS Corporation
("Lockheed"), also a subcontractor to Network Six on the project,
agreed to modify certain aspects of a promissory note issued to it by
Network Six in 1997. Lockheed agreed to extend the note's maturity
several years, to reschedule favorably certain principal payments and
to reduce the interest rate on the remaining principal (about
$742,000).
Prior to the settlement, Network Six had assets related to the Hawaii
project of $3.46 million and liabilities of $856,000. After tax
considerations are taken into effect, the settlement will result in a
reduction of net assets of $1.87 million. Network Six's after tax
earnings, therefore, will be reduced by a one-time charge of $1.87
million, or $2.42 per basic and diluted share. Network Six expects to
reflect this in its second quarter financial statements.
Kenneth C. Kirsch, President and CEO commented, "We are very pleased to
settle our differences with the State of Hawaii and with CBSI.
Moreover, we appreciate Lockheed's agreeing to more flexible terms and
amending our note. We have not released MAXIMUS from the litigation
and intend to continue to pursue our significant claims against them."
Kirsch further stated, "Although our position on the merits of the case
is unchanged, it became evident that, with a trial unlikely to take
place before the middle of next year, at the earliest, settling the
case at this juncture made a lot of sense. By putting the case behind
us, we have not only been relieved of significant attorney's fees and
the inherent risks involved in litigation, we believe that we can now
turn our undivided attention to implementing our growth strategy. We
are hopeful that this settlement will unlock shareholder value which,
we believe, has suffered since Network Six's dispute with the State was
announced despite our continued growth in earnings over the last two
years."
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Network Six is a full service systems integrator, providing information
technology solutions that enable its customers to become more effective
and efficient. Network Six's services include strategic planning,
management consulting, network design, network and application
implementation, training, outsourcing, maintenance and support. Network
Six's stock is traded on the NASDAQ SmallCap Market under the symbol
NWSS. Its website is http://www.networksix.com.
The words "believe", "expect", "intend", "anticipate" and "project" and
similar expressions identify forward-looking statements, which speak
only as of the date the statement was made. This report contains
forward-looking statements reflecting the Company's expectations or
beliefs concerning future events that could materially affect Company
performance in the future. All forward-looking statements are subject
to the risks and uncertainties inherent with predictions and forecasts.
Please refer to the Company's 10Q for March 31, 1999 or the 10K for
December 31, 1998 for more discussion and information.