Item 5
NETWORK SIX REPORTS FOURTH QUARTER AND
FULL YEAR INCREASES IN REVENUES AND NET INCOME AND
COMMENCES ITS 25TH YEAR RE-FOCUSED ON CORE BUSINESS
Kenneth C. Kirsch, President and CEO
Or
James J. Ferry, Vice President of Finance &
Administration, CFO and Treasurer
February 8, 2001
Warwick, RI: Network Six, Inc. (NASDAQ: NWSS) reported contract revenue earned
for the quarter ending December 31, 2000 of $2,528,228, up 5%, or $116,510, from
$2,411,718 the same period a year ago. Net income for the period was $215,631,
or $0.15 per share, up 158%, or $131,931, from the same period a year ago when
the Company posted net income of $83,700 or $0.00 per share.
For the full year, contract revenue earned was $11,008,158, up 8%, or $782,482,
from the previous year's total of $10,225,676. Full year 2000 net income was
$653,868, or $.37 per share, compared to last year's net loss of $1,221,615.
The 1999 results include a one-time pre-tax charge of approximately $3.1 million
($1.8 million after-tax) related to the Company settling its long-standing
litigation with the State of Hawaii. Without the settlement charge, net income
for 1999 would have been $623,117 or $.38 per share. Net income for 2000
increased 5% from 1999 levels excluding the Hawaii charge.
Kenneth C. Kirsch, President and CEO commented, "Considering the recent
deceleration of the national economy, we are pleased with the increases in
revenues and net income for both the quarter and the year 2000. During the
year, we renewed all three of our major state government contracts: (1) the
State of Rhode Island's InRHODES support contract with the Department of Human
Services and the Department of Administration; (2) the State of Rhode Island's
RICHIST support contract with the Department of Children, Youth and Families;
and (3) the MACWIS support contract with the State of Maine's Department of
Human Services.
As we enter our 25th year of operations, we are re-focusing the Company back to
its core business of providing high quality information technology ("IT")
services and solutions to state governments, where we have differentiated
ourselves from many other IT firms historically. State governments continue to
have IT needs, funds to expend on certain initiatives and a strong desire to
improve their service levels. Whereas several years ago, only a few states were
taking advantage of the power of the Internet, today almost all states are
committed to web-enabling many of their applications and embracing some form of
e-government. For this reason, we are cautiously optimistic about several
upcoming applications development and support opportunities in the state
government arena."
James J. Ferry, Vice President of Finance & Administration, CFO and Treasurer
added, "Our financial position continues to strengthen due to solid cash flows.
During 2000, we generated cash of $1.0 million, paid down long-term debt by $0.5
million, and ended the year with $3.5 million in cash and short-term investments
on hand. We have continued to accrue our preferred dividend payable, which is
now at $1.5 million."
********************************************************************************
Network Six is a full service provider of information technology services and
solutions to government and industry that enables its customers to operate more
efficiently and effectively. Network Six's services include applications
development and implementation, e-commerce planning and technology consulting.
Network Six's stock is traded on the NASDAQ SmallCap Market under the symbol
NWSS. Its website is http://www.networksix.com.
-------------------------
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. They
are necessarily speculative statements, and unforeseen factors and unpredictable
variables, such as competitive pressures, litigation, and regulatory changes and
state funding changes, could cause results to differ materially from any that
may be expected. Please refer to the company's forthcoming 10K for December 31,
2000 or 10Q's for March 31, 2000, June 30, 2000 or September 30, 2000 for more
discussion and information.
The following is a recap of Network Six's balance sheet and operating results:
Network Six, Inc.
Condensed Balance Sheets
Assets Dec. 31, 2000 Dec. 31, 1999
--------------- ---------------
Current assets:
Cash and cash equivalents $ 1,650,959 $ 2,453,935
Short term investments 1,803,387
Contract receivables, less allowance for
doubtful accounts of $49,000 at December 31,
2000 and December 31, 1999 1,094,142 1,561,255
Costs and estimated earnings in excess of
billings on contract 843,021 759,891
Refundable taxes on income - 150,640
Deferred taxes 268,177 287,083
Other current assets 66,273 151,933
--------------- ---------------
Total current assets 5,725,959 5,364,737
--------------- ---------------
Property and equipment:
Computers and equipment 639,258 590,124
Furniture and fixtures 162,606 162,606
Leasehold improvements 20,190 20,191
--------------- ---------------
822,054 772,921
Less: accum. depreciation and amortization 659,097 578,015
--------------- ---------------
Net property and equipment 162,957 194,906
Deferred taxes 59,555 513,795
Other assets 47,007 86,750
--------------- ---------------
Total assets $ 5,995,478 $ 6,160,188
=============== ===============
Dec. 31, 2000 Dec. 31, 1999
--------------- ---------------
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt:
Vendors $ 100,000 $ 100,000
Others 354,018 349,141
Accounts payable 31,023 202,195
Accrued salaries and benefits 389,158 508,193
Other accrued expenses 93,021 107,913
Billings in excess of costs and
estimated earnings on contracts 19,048 124,458
Preferred stock dividends payable 1,473,612 1,119,468
--------------- ---------------
Total current liabilities 2,459,880 2,511,368
Long-term debt, less current portion:
Vendors 442,239 542,239
Others 416,618 775,636
--------------- ---------------
Total Liabilities 3,318,737 3,829,243
--------------- ---------------
Stockholders' equity:
Series A convertible preferred stock,
$3.50 par value. Authorized 857,142.85
shares; issued and outstanding 714,285.71
shares at December 31, 2000 and December 31,
1999; liquidation of $3.50 per share
plus unpaid and accumulated dividends 2,235,674 2,235,674
Common stock, $.10 par value. Authorized
4,000,000 shares; issued 825,684 shares
at December 31, 2000 and 794,306 at
December 31, 1999 82,568 79,430
Additional paid-in capital 1,947,767 1,888,652
Treasury stock recorded at cost, 11,843 shares
at December 31, 2000 and 8,081 shares at
December 31, 1999 (44,360) (28,179)
Retained earnings (accumulated deficit) (1,544,908) (1,844,632)
--------------- ---------------
Total stockholders' equity 2,676,741 2,330,945
--------------- ---------------
Total Liabilities & Stockholders' Equity $ 5,995,478 $ 6,160,188
=============== ===============
Network Six, Inc.
Condensed Statements of Income
Three months Three months Twelve months Twelve months
ended 12/31/00 ended 12/31/99 ended 12/31/00 ended 12/31/99
---------------- ---------------- ---------------- ----------------
Contract revenue earned $ 2,528,228 $ 2,411,718 $ 11,008,158 $ 10,225,676
Cost of revenue earned 1,655,018 1,405,890 7,157,821 6,178,286
---------------- ---------------- ---------------- ----------------
Gross profit 873,210 1,005,828 3,850,337 4,047,390
Selling, general & administrative expenses 535,309 908,944 2,778,360 2,920,352
Litigation settlement - (50,000) - 3,126,665
---------------- ---------------- ---------------- ----------------
Income (loss) from operations 337,901 146,884 1,071,977 (1,999,627)
Other deductions (income)
Interest expense 20,664 34,253 129,732 153,765
Interest earned (49,759) (30,653) (164,623) (88,777)
---------------- ---------------- ---------------- ----------------
Income (loss) before income taxes 366,996 143,284 1,106,868 (2,064,615)
Provision (credit) for income taxes 151,365 59,584 453,000 (843,000)
---------------- ---------------- ---------------- ----------------
Net income (loss) $ 215,631 $ 83,700 $ 653,868 ($1,221,615)
================ ================ ================ ================
Net income (loss) per share:
Basic $ 0.15 $ 0.00 $ 0.37 ($1.96)
================ ================ ================ ================
Diluted $ 0.15 $ 0.00 $ 0.37 ($1.96)
================ ================ ================ ================
Shares used in computing net income (loss) per
share:
Basic 813,841 794,123 805,809 787,638
================ ================ ================ ================
Diluted 813,841 794,123 805,809 787,638
================ ================ ================ ================
Preferred dividends declared $ 91,371 $ 83,493 $ 354,144 $ 323,476
================ ================ ================ ================