ITEM 5
NETWORK SIX REPORTS INCREASED FIRST
QUARTER REVENUES
Kenneth C. Kirsch, President and CEO
Or
James J. Ferry, Vice President of Finance & Administration, CFO and
Treasurer
April 25, 2000
Warwick, RI: Network Six, Inc. (NASDAQ: NWSS) reported contract revenue earned
for the quarter ending March 31, 2000 of $2,856,038, up 6%, or $167,638 from
$2,688,400 the same period a year ago. Net income for the period was $200,384,
or $0.15 per share, down $56,814, or 22%, from the same period a year ago when
it reported net income of $257,198 or $0.23 per share.
Kenneth C. Kirsch, President and CEO commented, "We made excellent progress on a
number of initiatives in the first quarter. Revenue increases were driven by
our recent addition of the State of Rhode Island, Department of Children, Youth
and Families maintenance and support contract known as RICHIST. We also started
a couple of smaller projects for the Commonwealth of Massachusetts and provided
additional services to some of our existing customers. We strengthened our
management and technical teams by adding a number of people with demonstrated
e-commerce strategy and implementation skills. For this reason, we now have the
talent to provide 'end-to-end' e-commerce services to both existing and new
customers."
James J. Ferry, Vice President of Finance & Administration, CFO and Treasurer
added, "We are pleased with the increases in contract revenue. Net income as a
percent of contract revenue earned, however, was 7%, down from 10% a year ago
mainly due to anticipated startup costs on the RICHIST contract and increased
staffing in sales and marketing. Overall, our financial position remains
strong, providing a foundation to support future growth."
********************************************************************************
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 and network design and implementation.
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. Please
refer to the company's forthcoming 10Q for March 31, 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:
<PAGE>
<TABLE>
<CAPTION>
NETWORK SIX, INC.
Condensed Statements of Income
(Unaudited)
THREE MONTHS THREE MONTHS
ENDED 3/31/00 ENDED 3/31/99
--------------- ---------------
<S> <C> <C>
Contract revenue earned $ 2,856,038 $ 2,688,400
Cost of revenue earned 1,783,529 1,574,522
--------------- ---------------
Gross profit 1,072,509 1,113,878
Selling, general & administrative expenses 730,822 661,920
--------------- ---------------
Income from operations 341,687 451,958
Other deductions (income)
Interest expense 37,386 29,956
Interest earned (35,334) (13,927)
--------------- ---------------
Income before income taxes 339,635 435,929
Income taxes 139,251 178,731
--------------- ---------------
Net income $ 200,384 $ 257,198
=============== ===============
Net income per share:
Basic 0.15 0.23
=============== ===============
Diluted 0.15 0.23
=============== ===============
Shares used in computing net income per share:
Basic 795,725 774,975
=============== ===============
Diluted 795,725 774,975
=============== ===============
Preferred dividends declared $ 84,144 $ 78,596
=============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NETWORK SIX, INC.
CONDENSED BALANCE SHEETS
Mar. 31, 2000 Dec. 31, 1999
ASSETS (unaudited)
<S> <C> <C>
Current assets:
---------------- --------------
Cash $ 2,549,072 $ 2,453,935
Contract receivables, less allowance for
doubtful accounts of $49,000 at March 31,
1999 and December 31, 1999 1,100,813 1,561,255
Costs and estimated earnings in excess of
billings on contracts 1,189,628 759,891
Refundable taxes on income 154,720 150,640
Deferred taxes 147,833 287,083
Other current assets 147,900 151,933
---------------- --------------
Total current assets 5,289,966 5,364,737
Property and equipment
Computers and equipment 620,802 590,124
Furniture and fixtures 162,606 162,606
Leasehold improvements 20,191 20,191
---------------- --------------
803,599 772,921
Less: accum. depreciation and amortization 600,460 578,015
---------------- --------------
Net property and equipment 203,139 194,906
Deferred taxes 513,795 513,795
Other assets 64,933 86,750
---------------- --------------
$ 6,071,833 $ 6,160,188
================ ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Mar. 31, 2000 Dec. 31, 1999
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
---------------- ---------------
Current liabilities:
Current installment of obligations
under capital leases $ 0 $ 8,132
Current portion of long-term debt:
Vendors 100,000 100,000
Others 350,317 349,141
Accounts payable 110,722 202,195
Accrued salaries and benefits 342,739 508,193
Accrued subcontractor expense 59,833 12,843
Other accrued expenses 79,775 86,938
Billings in excess of costs and
estimated earnings on contracts 93,407 124,458
Preferred stock dividends payable 1,203,612 1,119,468
---------------- ---------------
Total current liabilities 2,340,405 2,511,368
Long-term debt, less current portion:
Vendors 542,239 542,239
Others 750,107 775,636
---------------- ---------------
Total Liabilities 3,632,751 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 March 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 796,184 shares
at March 31, 2000 and 794,306 at
December 31, 1999 79,618 79,430
Additional paid-in capital 1,894,615 1,888,652
Treasury stock recorded at cost 11,163 shares
at March 31, 2000 and 8,081 shares at
December 31, 1999 (42,434) (28,179)
Retained earnings (accumulated deficit) (1,728,391) (1,844,632)
---------------- ---------------
Total stockholders' equity 2,439,082 2,330,945
---------------- ---------------
Total Liabilities & Stockholders' Equity $ 6,071,833 $ 6,160,188
================ ===============
</TABLE>
<PAGE>
