EXHIBIT 99
NETWORK SIX REPORTS THIRD
QUARTER RESULTS
Kenneth C. Kirsch, President and CEO
Or
James J. Ferry, Vice President of Finance &
Administration, CFO and Treasurer
October 25, 2000
Warwick, RI: Network Six, Inc. (NASDAQ: NWSS) reported contract revenue earned
for the quarter ending September 30, 2000 of $2,619,519, up 2%, or $44,327, from
$2,575,192 the same period a year ago. Net income for the period was $100,779,
or $0.01 per share, down $48,948, or 33%, from the same period a year ago when
it reported net income of $149,727 or $0.09 per share.
Contract revenue earned for the nine months ending September 30, 2000 was
$8,479,930, up 9%, or $665,972, from $7,813,958 the same period a year ago. Net
income for the period was $438,237, or $0.22 per share, up $1,743,552 from the
same period a year ago when the Company reported a net loss of $1,305,315, or
($1.97) per share. The previous year's figures include a one-time pre-tax charge
of $3.2 million ($1.9 million after-tax) related to the Company settling its
litigation with the State of Hawaii. Net income for the nine months ending
September 30, 1999, not considering this one-time charge, would have been
$568,917, or $0.42 per share.
Kenneth C. Kirsch, President and CEO commented, "Our state government business
continues to remain solid and we are pleased that all three of our major
customers have renewed our contracts for another year. Development of our
private sector business, on the other hand, continues to take longer than
expected. We are seeing some discretionary IT spending delayed as companies
re-evaluate their own e-business plans. At the same time, we are excited about
our recently announced acceptance into Allaire Corporation's Alliance Partner
program and believe it will lead to new e-business opportunities in the months
ahead."
James J. Ferry, Vice President of Finance & Administration, CFO and Treasurer
added, "Our financial position continues to improve as a result of strong cash
flow. For the nine months ending September 30, 2000, we generated $719,832 of
cash flow, reduced long-term debt by $328,916 and finished the quarter with $3.2
million of cash on hand."
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Network Six is a full service provider of information technology solutions that
enable its customers to operate more efficiently and effectively. Network Six's
services include e-commerce planning and implementation, technology consulting,
applications development and support. 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. Please
refer to the company's 10Q for June 30, 2000 or 10K for December 31, 1999 for
more discussion and information.
The following is a recap of Network Six's operating results and balance sheet:
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NETWORK SIX, INC.
CONDENSED BALANCE SHEETS
ASSETS Sep. 30, 2000 Dec. 31, 1999
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Current assets: (unaudited)
<S> <C> <C>
Cash and cash equivalents $ 3,173,767 $ 2,453,935
Contract receivables, less allowance for
doubtful accounts of $49,000 at September 30,
2000 and December 31, 1999 1,389,746 1,561,255
Costs and estimated earnings in excess of
billings on contract 698,159 759,891
Refundable taxes on income - 150,640
Deferred taxes - 287,083
Other current assets 91,965 151,933
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Total current assets 5,353,637 5,364,737
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Property and equipment:
Computers and equipment 632,178 590,124
Furniture and fixtures 162,606 162,606
Leasehold improvements 20,191 20,191
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814,975 772,921
Less: accum. depreciation and amortization 636,326 578,015
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Net property and equipment 178,649 194,906
Deferred taxes 479,096 513,795
Other assets 35,889 86,750
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Total assets $ 6,047,271 $ 6,160,188
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Sep. 30, 2000 Dec. 31, 1999
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LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited)
<S> <C> <C>
Current liabilities:
Current portion of long-term debt:
Vendors $ 100,000 $ 100,000
Others 352,756 349,141
Accounts payable 96,959 202,195
Accrued salaries and benefits 409,504 508,193
Other accrued expenses 111,004 107,913
Billings in excess of costs and
estimated earnings on contracts 55,056 124,458
Preferred stock dividends payable 1,382,242 1,119,468
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Total current liabilities 2,507,521 2,511,368
Long-term debt, less current portion:
Vendors 542,239 542,239
Others 443,105 775,636
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Total Liabilities 3,492,865 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 September 30, 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 September 30, 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, 11,163 shares
at September 30, 2000 and 8,081 shares at
December 31, 1999 (42,434) (28,179)
Retained earnings (accumulated deficit) (1,669,169) (1,844,632)
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Total stockholders' equity 2,554,406 2,330,945
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Total Liabilities & Stockholders' Equity $ 6,047,271 $ 6,160,188
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NETWORK SIX, INC.
Condensed Statements of Income
(Unaudited)
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED 9/30/00 ENDED 9/30/99 ENDED 9/30/00 ENDED 9/30/99
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Contract revenue earned $ 2,619,519 $ 2,575,192 $ 8,479,930 $ 7,813,958
Cost of revenue earned 1,759,561 1,632,648 5,502,803 4,772,396
--------------- --------------- --------------- ---------------
Gross profit 859,958 942,544 2,977,127 3,041,562
Selling, general & administrative expenses 707,231 655,048 2,243,051 2,011,408
Litigation settlement (note 3) - - - 3,176,665
--------------- --------------- --------------- ---------------
Income (loss) from operations 152,727 287,496 734,076 (2,146,511)
Other deductions (income)
Interest expense 29,465 60,147 109,068 119,512
Interest earned (44,648) (26,426) (114,864) (58,124)
--------------- --------------- --------------- ---------------
Income (loss) before income taxes 167,910 253,775 739,872 (2,207,899)
Provision (credit) for income taxes 67,131 104,048 301,635 (902,584)
--------------- --------------- --------------- ---------------
Net income (loss) $ 100,779 $ 149,727 $ 438,237 ($1,305,315)
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Net income (loss) per share:
Basic $ 0.01 $ 0.09 $ 0.22 ($1.97)
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Diluted $ 0.01 $ 0.09 $ 0.22 ($1.97)
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Shares used in computing net income (loss) per
share:
Basic 825,584 792,881 813,609 785,476
=============== =============== =============== ===============
Diluted 825,584 792,881 813,609 785,476
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Preferred dividends declared $ 91,369 $ 81,918 $ 262,773 $ 239,983
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