C O M P U T E R U S A G E C O M P A W Y . I N C m

-.A. 4 . . . . . .

4 W M UAlt k EPO f0 % f q p the rear crrded Septern&er3 0 , 1 8 6 8

A N W U A L RRIPORT for the wmmr sndrd S e p t s m b m r 88.

O F F I C E R S

JgBm C.ml@'*. .,.,..... Prd&mt md Tlwamer

f*' m'm-.i.ri L",*- . -* . - i ' . r . . lvi~PmMmt

i.hl.+ .- . -; .+ ie.6 .Vim MdT~nt

Wd& 33, *NWBi&,;. ...... ........V h Sreddla~lt

Im&e B.Gm&ne.,..........8emetary and CvntroIIrar

r n 0 A R P O m D 1 u I O T O n s

Elmer C. KnbSe

r h n W.Sheldon

EPwae fm-baa Par t?m yem was @&2Q~,~Btll ~ H U~2mpaadwi& iWi,BdP far t h ~ prior. Net

b e 1?089; 'to W7,$34, or bB,cx&a par &am, ~ g a - 0 . d&I $10,W4, or fE oerpts @hare,1mt yaw. OUE

e m h a h m d f h n W m$gpimbmW, 10W to f i 4 an3wpbtmbtx 10, $W.b e k l ~ gfuz dpisand

p m m &ma waa appmxbatdy $B@,Ol[bB as af atrptmbrcrr 3.0, isBS cpmpwd to 84@6,000om

VsaF priorq

19e0, W C P d i@ICammte ThIw ww m* far the pnqmRk3 af baying a d s d h g

OORWP&~E C&- hh pFtSBSd9g l i d h h ~ .The aOlllJ#&ly i l l ~ ~ t a dappl'dUUt81~ClEl d€tChd(3

$sS,Qaa diniq 3- 4 app~)wlmatelyWtoOBndnring @@;ria &wting tb &w. TI& iawwbmi

re~amatahitid aperaw losses ef the diviaian. l$m f01sg113j13 were wholly expamd d'lZPi$gea& yaw

they act-, Computt~~ is now mpertifiq .at a nm8W pm$&Tinw Wes I)livl-sl~tl

InmpoPt9ng me fmmBSPirmx',we mprt d p thsl e w e * paFtim Df Camptttm T h e Wes

Dfvi$ilontsmmm. 2 % ~7wts acid binearnil:d y the U - o e between saleprim af m a b e time we

mU and tbts a t d thmaahk~time we buy, Chu ritatmwzt&brefm, meentidy r~fle&h a m e ma-mai~dby aeI?olm p e g a e H m a a ss of m a d h a th-m khmmgb CTB mates both s

4 ~ a b E eand a payable 0x1 tlhe G U ~ P C T ~ ~ I ~ ~ ~ md pqthlas shrrwf dmpJxahae akwt, b t b ~~Ywab lm

fJYm€mm~WBE pxtw yBm.

h tbe B p h g 6f 1861 CUC began W%st [=oi8st q~#rnt&~m Tha mmpanfi asirin Larr &gdm

fortuaate to ahlab &e wmiaw ab Mr. 1%Varr;mh ta mmqp ib basfn98s inW

mVks&a h had a 10% suomrpsfial mmer in data pmcemhgLbdng formm&~employd by'@ #llq~>@

data Coqrsmtin, Bum~tyjbs~ q m t i o n Iand Bandbs: Gmporatfaa B d w j- tZK&Rdr. b a t h -

wmi WwtazP RqijianJ M a n w sf 3+ Compte-~mvbi~n.

The B o d of Directora elected two additional vice pmaidmts durfng the yea. Dr.htm Tafum,

who has h e n reapansible far salea activities ~ince1987 waa dected Vice President for marketing and

I& Walter B. Nelson, who has managed the Wmhington, TI. C, office since its inception, b s also bwm

macis a Vice President of the company.

To pmdde~for further expandon of facilities, all New York operations, including corporate head-

-E&, ~amme to 656 Avmrte ea~lyh 19&2.

12 L &s iatmt d.qmnagemantto canthue expaasion of CUCw& maintginixrgour quality of service^

4 &bnnt wddy ea* pofits. Eqm~ionwfll be ia the form of sdarghg exieths seEvicee md

fet&ties ss well 1 6 ~ l . haddition li)& others. Belicaf~sethe cast of thfs expansion ia treated as r m m t ex-

pense, it will dilute n 3 lricgme, F@hegmow in @ Bald as highly, fetec$nical as computer usage, extr~naa

csra must be sxextsetl inpr6vlding,ajWtw $,prd%88fonalpersonnelwMchw3U m d t ih continuedhi&

standards of pdormanc1e. B iq managemetn$b belief tbat our rate of expanalon ahodd bp oontroUed in

order to rnahtafn our quality of services and'%a~ B U Wwona able p r o h even darfng periads d growth.

Tom B O d of I3fSectom would 1Zke to thank the S~eokholdersfor their support during the year, and

to w e e shca~eapprdatim to the emp10yms and their f a d e s who haw& mnMbuted somuch to the

December 11,l @ S l

BTBAR themost impmtnmt aetMtg UP GUCis the d t -anm it pEOYldQII)in developing appliwffom of dec-

data prmmahg @pm%rlt This service, which we a d ogmgmtm pmgmmhg and I ~ I I ~ ~ B J T B ,is the functfoa for deb tb cclpmpaay waa orgahd in IN& the hem%d baeintm. Weand It mm&m m mmi4atWmmimbUg.b~@mdp82irrsaa, namidj! adenti& applbiona, brtsloesa apgtlicationa, and pxa- systems.

Dttrfag the $m sclfetiklfb p;fofwta Incl~dedwork in mob m m as motor physim, ufl msarvoir enghmr-iog, & m e d ~ s i s r fbw,oavipr&onal aaalJr-~ @ m o n i ~ eia, and space Qkology. Of spedal btmmP was the company's ade of a

mmpuier pro~gmfar pdi&ing orbits of &dal satdlitee- This propam wMcZl w a ~developed on a pmpdetaq bWa by the company, cantaim techniqnas by what& hlsbf?p- acGurab predicttons: of psaitfon and velmdty uttn be a d w e d at vem rapid camputer qwde. A typical ~asedm ~ ~ . t f o nof m e manEhls behavior of a ~atellitein approximately five mterrteS;, wdag the IBM 7mO oornpnter.

P m g a and andyeis services were pedafmed d m the p a r In came~tfonwifh nuoh hminm ap-pBeattom as cmt anaIy&, inventoq oonml, data & v a t s fmw marfrat gnal5r~h,q ~ d i t y~o~1- t h e w pgmmhg, and salea aaalyd~.

Ume &@&ormnt apphatbn wm the madom of a e~r~temby whtch test d t e for over arm quarter mil-b&*& -@ OD-~B tlrrr PlQ~easeddgily

to reveal any change in phygicd char~ckrbdce.In %&iftion,weekly atePIstiGd reporta are gmmatd to expose trends fn groupm of components, Indudad £n the ayetern is a data retrieval capab111iy allawingrepid a d and extraction of f h history of q e d c mm-ponentn fnrm a file of over ten d o n component &toEf~8.

Tbsr taat few y a m have seen aa explmf~n.in the Be-vlelapheat of prngpmming systems for the my&d af

~&mplttMS~S~BFBBbeing devdoped. Tbw p* @mudng qetem (apmarody d a d "raftww$"'aUmv mare oonvrmtmt utilization of equipment by the pro-Fp:mmerwiddng to apply themachine to 8 p d e uses. The ~ompany:was v q in &ti Beld during the paat year. It did much wo* on r o h m , ipm

oompiIgra, assembly systems, sisnpletars, and exeat-tfve maSinr88.

!I'Jm campmy snocesddly mm&ted, dmhg the par, the Algebraic Compiler for the Honqwd 800. Qn thrt biasrs of our psrfomance wfth thls projlect, Mb~apolfsHanaywell awarded swbatanktal ad&#md contracts to WC, fgcludIag a contract to par€idpaW in the development of COBOL [COnmoo: Bmin& QrimtsdLangnage] for both €heir Pfc800 aad H-aQ machtnea.

Another intemstiog dwd.ol,mt was fh@c~eatim sf an impmvsd memory print routine for the BfY$403 system. The company deoaloped f& &thaat ~ ~ B S O E

ship. Altho@ it was r &+&ttiv

CUC therefera aBmd It to i461 hatdadam £ma of charge. To data ovez niaa hmhd *apl'b@ of *'@ro-

haw be- slMfg mpmw W 8 ~ t s .

Compntar The Sales fEivTsian

la 1980W C astabwed&e Compmter Time Sdtw Mvf-ston, w$Ech is under the direction of Mr.Emanad Chaerrts. This diviaion purchgsae machine tbm from dents who have t h e fn excess of neds 8nd p a e l l s it to other dents dmMq use of that type d tquipmwt. The ilbjwtivas of thls activity are:

1. To pmdde, ta thesewof mchinie ltrkle, oper&% a-a&@. a d Bsrlwl adstance m the$hrr cim effmtb4y mducar I&data proamh coatg by.& ingemts mitddndtfihawithbut ~ % w h g m Z @ t tntaq4usw d lxtwMlIm'c)r*alafP.

the'

3. To p&& to W C a mW@of f m i & m ~aha! assurfsg eeonomtod a u p f d h d a w h h e :t.!tib aesdd for development of eohputer p r o m m. me tmetk$.

4. ~o broaden mca idumce in the compute ser~-i ~ o ~ new Iirms to the m m p qm~~kBt,,iatroducing and thereby md&g thwn ~ognfiantd d omvices wv oSEar*

Thia a&&@ now ha$ mdw oontract a oomplex of sell-ing tnstana00m ira the New Y Q E ~area, pmvidlng maahbe time crfr the followhtg vat-:

Pour fSM 7Oflb Two 1$M 7090's

Two mi TWi3

CUC Officee

NgW YO- NWrY Porn M a q e r : Mr. Robert H.Glaser

Our NBWYork office wlgtaim our 1 q m t staff and corporate headquartess. It homes more than ninety oomputer 8peciahts and supporting pm-aonnd Next January tbls office wflP be moved to f%B Madison Avenue, w h about W per cent additional apace wiU be prodded.

WABHTN@TON, R Cb M-E: Mr,Wdtm 8. Nelson

0-w Wabfngtan office waa formed in late 3969. Its pr&smt staff coasigts of mom than twanty-av@c.ompUlw qa~lefdbbaad s u p p h g pmm-neb Jh+hg the h s t f f s d year the ~ompany Zwd ald5tianalaparre within the bnflAinn. em-dprat to allow &B staff to double in dm.

LOSdiIwEUm-m Mauager: Mr.Gem@ f . Vosatka

Tha Los Angele~offirre wa8 formed in the *ring of $#I,Its presrent staff conshta of eight corn pukr spedaliets and nupporthg pemmd.

GDMFUTE$C UOAGIZ GOMPdk5rlYaS

S S I W E A R S O F P R O Q R a S S

Thousands of dallars

To the ~ckholders, hmf,uter B m Company, hc,:

+-- W e have ex&@hedthe ~ m & e r a ~ w )balap~eshag& of COMPUTER USAm COMJP&?lY, ,IMC. as of September 30,$Bet and l@60 and the

I relatd c o m ~ d v esetatementa df h o m e and earned snrplus for the-

gi4uwerr &en &&.Ortr ~ x m b d o nwaa mgde in accordance 4th gen-d y acce@+$.e* and ac~~~zdinglystmd&ri, included such testa of the am--, m o d s and' each 0th ee wep r o c d u r ~ ~ c d d e m d necessarg i the drmmstaces.

In om opbnlon, th. .aomp8nyhg b h e sheets and &tements of Iincome and wmed nuplw present f a g the ~~ position of C Computm UsageComnpaay, Inc. at September 30, lgsl and 1960and the resdtu of its opezatikrae for the yeam then ended, in confoEmity with generally accepted aooountimgprindples applied on e consistent basis,

I'

New York, October 81,issi.

f -;-, , , 4 . . 1.) ;. . - I.' ~ - ,.-,-.-A-~yd-*-~s* . _-.<- -++-.& -~&--&ii-+:- ++- .--s.~-&.-b.--.)'

Contracts in p ~ # l bat wet .....,.............

Oftlea fmdhm and ~ulpmmt,at cost .............. Lees, Allowance for depreciation ................

OaochrrW, at wet lem amortization (Note 1) .........

D m f d rewar& and dwelopmmt and other asseta ...............................

60,671

[15,127]

2,000

23,087

I 4,000

25,7?4-

I

8687,242 \ I

dWW304 t

Computer Usage Company, Inc.

am¶-Current LiabiWea

Notes payable to bank ......................... $

Accounts payable and accrued expenses ......... 203-

Accrued federal income taxes .................. -Total current liabitities ......... SS;W%- .

Capital:

Common stock, par value 254 per ahare, aathorked 500,000 shares; Issued.: IS61, 203,2b shams; 1960, 197,388 shares (Notee 2 and 8) ....... ..W#m

Additional pdd-in capital (Notes 2 and S] .......- $g@$4f

Earned surplus, as annexed ..................... g@&@gf~-Total capital ................... a.01

Computer Usage Campany, Inc.

for the y m a ended September30, lssland ZBLaeO

G W 'sf! mLa4m u r r m r ~ . r * I r r r - r r r . p I r * 4 ~ . E * n 1 r r

Earning per share (b~eedon average number of shares outstanding in each year] ...................... @SB -

for she pear8 mdad &ppsmXI~r90,28#1 and I ~ S O

Balance at begInnfng of year ...................... $ 86,1304

Net haam%...................................... $7,234

B b o e at end of year ............. $ 1f33flm-The acwmpmying notes are an int& port af the fh~tmdd&menfs

1. Gadwill fs brdq amortized at the mte of @,ODO per year over a four-y- perid rradfngf9khl6Z.

ah AAprU, I=,p m ~ mothaf thapr offinem and mployw~wme granted optSw, to p$.u&qm 8,000 ~hareaof tbe Cbmpany'a commoe ntock at &.w pW ah- In the peaz d e d September so, 1 ~ ~ 1 ,options wMa raep& f& &&MI eh~aarweEe WK-ed. The m a d n h g aptims, -wbi& 'Wm k =BF&~,a ~ p hb xg86.

b Dm@i&c&$I-, the ~~o~ approwd a stock aptiQn plan, UQY-

eriq 2fi$llil d@~m02 thP Company's unismd common sbck, whWl nm& gpmwailj! jEor te%mmaed stack optzooa to end other ~~at r gEiwr && to kt taut W e of the fair market value

on the da5o imtudiatelg preaaBfnS &lit date the option fa granted. Op-ti- to'p.lyltbaae 12f5W)sham were granted dmhg the year at prices mqing tn W.60pm skate. Ths optloma beeme axercisab8e in latkl and learpint ia16e7. At September 80, fsSI, the ranahins12,500 shares were re~erydfor flmm option8.

a,AddiGonal pafd-in capid incmased b74,m~ZI Z ~ S Oand $28,026 h 11~82 mpmsentfng, respectively, the sxaws of the p m c d s fFom saIea of 47,000 and slsWJ aharea of common stock (the l a m s,m shares &old mder option agwm~tlt53over the par v h thereaf.

W A S H I W Q T O W

1825Cgnneckimrt Avenue, N.W., Washington 8, D.G. / Nth& 7-7228