NETWORK SIX REPORTS INCREASED REVENUES
AND EARNINGS FOR ITS FIRST QUARTER
Kenneth C. Kirsch, President and CEO
Or
James J. Ferry, Vice President of Finance &
Administration, CFO and Treasurer
April 26, 2001
Warwick, RI: Network Six, Inc. (NASDAQ: NWSS) reported contract revenue earned
for the quarter ending March 31, 2001 of $2,946,953, up 3%, or $90,915 from
$2,856,038 for the same period a year ago. Net income for the period was
$216,969, or $0.16 per share, up 8%, or $16,585, from the same period a year ago
when it reported net income of $200,384 or $0.15 per share.
Kenneth C. Kirsch, President and CEO commented, "We are pleased with the
increases in revenues and net income for the quarter. More importantly, we have
made significant progress re-focusing the Company back to its core business of
providing high quality information technology services ("IT") to state
governments and remain cautiously optimistic about several future opportunities.
Despite weakness in the overall economy, states are continuing to spend money
improving their information systems."
James J. Ferry, Vice President of Finance & Administration, CFO and Treasurer
added, "We ended the quarter with $3.5 million in cash and short-term
investments on hand which gives us the flexibility to pursue new opportunities
in the state government IT services market. We have continued to accrue our
preferred dividend payable, which is now at $1.6 million."
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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.
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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 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
Mar. 31, 2001 Dec. 31, 2000
ASSETS (unaudited)
Current assets:
---------------- ---------------
Cash $ 2,215,173 $ 1,650,959
Short term investments 1,237,387 1,803,387
Contract receivables, less allowance for
doubtful accounts of $49,000 at March 31,
2001 and December 31, 2000 1,408,075 1,094,142
Costs and estimated earnings in excess of
billings on contracts 791,721 843,021
Deferred taxes 128,014 268,177
Other current assets 126,619 46,127
---------------- ---------------
Total current assets 5,906,989 5,705,813
---------------- ---------------
Property and equipment
Computers and equipment 636,474 639,258
Furniture and fixtures 162,606 162,606
Leasehold improvements 20,191 20,190
---------------- ---------------
819,271 822,054
Less: accum. depreciation and amortization 673,624 659,097
---------------- ---------------
Net property and equipment 145,647 162,957
Deferred taxes 59,555 79,701
Other assets 35,161 47,007
---------------- ---------------
Total Assets $ 6,147,352 $ 5,995,478
================ ===============
Mar. 31, 2001 Dec. 31, 2000
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
---------------- ---------------
Current liabilities:
Current portion of long-term debt:
Vendors $ 100,000 $ 100,000
Others 355,311 354,018
Accounts payable 85,407 31,023
Accrued salaries and benefits 267,831 389,158
Other accrued expenses 134,047 93,021
Billings in excess of costs and
estimated earnings on contracts - 19,048
Preferred stock dividends payable 1,562,996 1,473,612
---------------- ---------------
Total current liabilities 2,505,592 2,459,880
---------------- ---------------
Long-term debt, less current portion:
Vendors 442,239 442,239
Others 389,795 416,618
---------------- ---------------
Total Liabilities 3,337,626 3,318,737
Stockholders' equity:
Series A convertible preferred stock,
$3.50 par value. Authorized 857,142.85
shares; issued and outstanding 714,285.71
shares at March 31, 2001 and December 31,
2000; 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 March 31, 2001 and 825,684 at
December 31, 2000 82,568 82,568
Additional paid-in capital 1,941,318 1,947,767
Treasury stock recorded at cost 8,693 shares
at March 31, 2001 and 11,843 shares at
December 31, 2000 (32,511) (44,360)
Retained earnings (accumulated deficit) (1,417,323) (1,544,908)
---------------- ---------------
Total stockholders' equity 2,809,726 2,676,741
---------------- ---------------
Total Liabilities & Stockholders' Equity $ 6,147,352 $ 5,995,478
================ ===============
NETWORK SIX, INC.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED 3/31/01 ENDED 3/31/00
--------------- ---------------
Contract revenue earned $ 2,946,953 $ 2,856,038
Cost of revenue earned 1,892,908 1,783,529
--------------- ---------------
Gross profit 1,054,045 1,072,509
Selling, general & administrative expenses 708,566 730,822
--------------- ---------------
Income from operations 345,479 341,687
--------------- ---------------
Other deductions (income)
Interest expense 26,231 37,386
Interest earned (48,546) (35,334)
--------------- ---------------
Income before income taxes 367,794 339,635
Income taxes 150,825 139,251
--------------- ---------------
Net income $ 216,969 $ 200,384
=============== ===============
Net income per share:
Basic $ 0.16 $ 0.15
=============== ===============
Diluted $ 0.16 $ 0.15
=============== ===============
Shares used in computing net income per share:
Basic 814,891 795,725
=============== ===============
Diluted 814,891 795,725
=============== ===============
Preferred dividends $ 89,384 $ 84,144
=============== ===============