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<br />CONTROL �yATA CORPORAT�ON AND SUBSIDIARY
<br />�, _ N�tes to fi�anciai Statements
<br />June 30, �960
<br />(Y) Receivables: and unallowable cost�, xf any, which may be
<br />,.. Sales and earnings on long-term Govern- determined will not hav� a material effe�t on
<br />�,;� ' merrt contracts and sub-contracts are accounted the consolidated financial position as of June
<br />for on the basis of percentage of c�mpletion. 30, 1960.
<br />�> At June 30, 1960, costs and estimated earnings The Company i� a defendant in a pending
<br />,� on such contracts and sub-contracts aggregated suit whereunder plaintiff alleges that the
<br />$9,164,983 against which progress payments cQmpany has appropriated certain of plaintiff's
<br />2�• of $8,996,441 had been received, leaving trade secrets and requests thatit be enjoined
<br />�, ' $2,156,642 unreimbursed. from using such claimed secrets. The Com-
<br />>�' (2) Inventories: pany's answer filed in the action denies the ap-
<br />Raw materials and purchased garts are propriation of any trade secrets by itself or
<br />�` - valued at the Iower of average cost or replace- any of its employees.
<br />; ment market. Work in process is valued at The Company is also a defendant in a ser-
<br />��' avexage cost, not in exce�s oi realizable values, ies of suits for damages amounting tu appro��-
<br />�`�� :_ based on engineers estimates of cost to com-
<br />' �: plete. mately $134,000 instituted by a former ofircer
<br />and director of the Company. The Company
<br />{� ' (3) Stock options: has interposed a counier claim of �pproxi-
<br />� x: ,A.t June 30, 1960, 199,220 shares of the com- mately $250 000 At J n 30 19
<br />� r ;:, an > , � . u e , 60, $268,068 of
<br />�f�� p y s authorized and unissued common stock the Campany s cash was subject to the lien of
<br />�4 ;�, , :• were xeserved for issuance under the Employee a garnishment summons in connection with
<br />���;; ;; ;Stock Qption Plan. Options to puxchase 123,77� these suits.
<br />;,;� f, �: shalres; were outstar�ding at June 30, 1960 at
<br />r� ; base •option prices ranging from �1.d0 to �b) Subsidiary:
<br />�� Control Corporation was acquired as a
<br />1' �. $33 626; per share (fair value at dateg of Subsidiary April 1., 1960 in exchange for
<br />s,, �� ; , grant) ,Options:an 28,40U of these shares were 68,149 shares of common stock of Control Data ��
<br />�;�` ;;rs ; -� exercisable at June 30, 1960 and options on Corporation. The transaction has been ac-
<br />*; �,� � 37,32b shares. will bQcome exercisable in the counted for as a pooling of interests. Retained
<br />�`� `� 4 ear endin June 30 19G1.. One-fourth of each g p p.
<br />��' t�> y g ' earnin s and additional aid-in ca ital of Con-
<br />��, r�;;F .� opt�on becomes exercisable one year after date trol Corporation at date of acquisition are in- �
<br />f;^ 7;� t� of issue` and one-fourth in each of the three cluded in consolidated retained earnin s and `
<br />r� v? �� succeedi�g years. �'dr all o tions ranted` rior paid-in capital, respectively. The
<br />„ � ; p g P additional
<br />r;y�,� 3r = ,to Nlarch 31; `1960; the exercisable price is excess of the par value of the capital stock of
<br />�,�,rr '�� `14��0 of base.;option price durin the second
<br />�t� %�,��� � � the subsidiary over par value of the stock of �
<br />�,���� year after grant and increases by bgn each ysar Control Data Corporation issued therefor is
<br />th;ereaftex to 146% in the tenth and final year included in consolidated additional paid-in ''
<br />�'� � � pf:, the 'option.` 0 tions �:.
<br />�s ,: �,� p� granted . subse uent to capital, Earnings of the subsidiary since ac-
<br />Mareh 31 196Q are : exercismble at t�e base
<br />.��. ��`t ; '. quisition are included in the consolidated state-
<br />��;� �k �` ,� pr�as During. the yeair ended June 30, 1960 op- rnent of earnings; earnings of $9,412 for the
<br />;r � k,� � tions were,.:exerc�sed for 16,030 shares at an period; from July 1, 1959 to March 31, 1960
<br />�� ��r �verage pxfce of $1.44 pex s%are. are not so inclucied. -
<br />-� , � � � _ ° . .,
<br />��. ;� (4�„Cpritingerit liabilitiea: (G) Income taxes:
<br />��'�� N� ,v' S�}bstant�al portions of saIes for the year . Taxes ior the year ended June 30, 1959
<br />�,����` � s'"� -� ended �1une 30;',1969.':and 1964 are subject to were reduced by �90,OOQ As a result of an ',
<br />� �, , <
<br />���.�..�i ��`� y F statutory renegotiation, certain contxacts are operating loss carried forward from .1958.
<br />�����; �' _� ' , s��,�ect , to price redetermination and costs on Earnin s er share far 1969 befo: e the effect
<br />� �{�, � . g p ,.
<br />��4�xt� �,�r,-, j cpasZ plus=f;uted-fee �contracts are subject to : of; this .non-recurring tax reductic�n were $0.23 '
<br />��,k;%x}, tfi�� KU�f� In',the opi�ion of the `Company, refunds ' per share. �j
<br />r �y��� r � � �_
<br />��{ '� is.(� q , }
<br />��,�,,�� i , , .ACCOUNTANTS' REPORT ` �'�
<br />�' �.�� >�`fy,; � `x ` The 6oatd ot Diroctors; . �
<br />��-'��'�k�, t�� Z � =Corotro� Qata Coiparnilan:
<br />�� ��75+� , } f � :J , ` ,:: . , , '
<br />We haye examinedthe consol{dated baIance -sheet of Control Data Corporation and '
<br />���x f��` sulisidaary .as of June 30; 1960 and-the related statem�nts of earnings, additional Faid-
<br />`
<br />;��',� �`tA�, kY ` : ; in capital;'and;,retained e�►rnings for the year then ,ended. Our examination tivas made irr
<br />����� _: 8ccordance-_with;;genexally accep�ed auditing standards;. and accordin 1 ` i
<br />��,��,3-�� s : tests�; of ,�he accounting recor.ds and :such other auditfn , g Y included: such = '
<br />�� � ,7� , � „ � � g procedures: as we considered ' � �;
<br />����;f i FS �� ���Ix1s ury oninian � uch sf �anc al statements present fa jr
<br />1}Y�,.� t.�' . , t ' . � . " �. .. ... . ..
<br />�; � � , � irly . the consolidated financial , ,
<br />�{ � F� � ' posat�ion o� Coritr�il Data .Corro, ration :and siihsidiary at June :30, 1980 and the results of �i
<br />�'�e����` '' � ` the�r;operatiaris for the,�year�then.ended, in;,c4nformity with generally'accepted account- �
<br />�-s���. ,���s ,
<br />'�'"� �'` �� '�'� xng princ�ples applied on"a basis eonsistenf, �yith that of the preceding year: ��
<br />t£�+�,�.��,^��� . ?s n �
<br />£�i'�G,�'Lh�3'�� .i� fE .. :� ." :. : . . . .
<br />� �� � t '� ` . PEAT, MARWICK, MITCiiELL 8i C0. ' `
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