I ,!h doax,' ~hak$hold&s:, I, , ' / I i l 1 1 I I 8 1 I l l ! , ' i ' , l , ' I t ,', ,I ,:!', ',',I ,yi,

' # I ' I ' , I ( 1 :, ' . ~ r o s , ~ ~ ~ ~ e b ~ ~ i t r n ~ ~ i ~ & ~ y e s r ~ i ~ ' j l ~ ~ ~ . , ~ ' ~ t ~ & ~ + ~ ~ ~ : ~ ~ . ' ~ ,

: \ 09% while profits ifiar&ksq ZT?, .' 'The rate olP gkLnlwas' .,, r m a k e than aouple the em ' 1 cos~pomiaea gain &: 36%,.!&6 . . sawenqao andl 13% f n i p c g schis.bed during t past;, ; { , 1 , a J , f i.re p9.r.. AGG ' pkaf i $ s weke, qf iy ieaf .to /,inee~~pll$, .; j,, I f&&~e We $1.7 mVI&df ,$ncr&ase in 1,974' revenues 5 and '' ,

itill 4$1& it, ta pvr@ue;, vardaus I qe&vtgi.ei wk&p& w ~ ~ l d , : 11'' i l l 9 r g v e its! prbiitaqil ity wxile ,a~$ue$nq greab* % a b i ~ f i p i.,(

1 , * '1 I I 1 1 , I ,,( , I \,;*!, ': 4 r ' !, ) I

I 1 ' W S ' c&&c& ~ ~ ' i z e ~ ~ i t i e ; v e 8 hontinu~n~ , ta en joy ,. , I ! ' p r ~ f ftable gmwikh during the ,eatly mqnkhs. ,of' I.975. 'The ' '

I ( , s 8 ~ f e w q ~ e aoaslcrlt&ag, g-u@ 'AS aelrv2nq a broad$& i $ s t af

, ,c$ianbd as we$l 'ha ' klindling snbskantial on-c@iag a&d I , rppea~t. h a i nesq w i k+h f o m r cu$tumers, , The &Awat&orr ,

1' ' , dYvSef c& i s ' , nay ~f f eh&$ -traf nlhg aaariaqp?anoqk and , , icdlltm, @ewlLo epy p~nrtder). " Bhese' sereit!!&. are I ': :

I

Mid al an f nd%vi !? qal , intbr-eompahy* bas i s M aoagZe~hkl '1 "ha f o w r 6ntqa*conpanY ~.ddk&a~etd off e ~ i n b s . ~evehs 1 ' '

' ( < ' 8yruMs has, rspeivd (I !sCdapd contract. fkgm ,k& New .. ,

1 1 I l a r s & $ &rpikgi ' for a t o l l pi l~edtt ' ion systezq aqd has I *

I ' blrpa~ded Yts d~aT~etiiig activieie. to' era?& contra& ,!' ayp.tems fbp Ipqaa cjoaernqtenkjs,; ," ' , ' , , I , , . 1 , . , + ) I ( I l ~ ' ! I

I ' I 1 I , ~ ' I I t I 1 ' I ! t

AGS COMPUTERS, INC. and SUBSIBURY

CONSOLIDATED STATEMENTS QF INCOME and IlETAIWED EARNINGS

for the years ended December 31, 1974 and 1973

Sales of services and products (Note 1)

Costs and expenses: Cost of 8ervices and products

Selling, gene+ and a&infstrativa

Income before provision for income taxes

Pr~visian for ineome taxes: Federal

State and local

L Net income

Retained earnings, (def kit) beginning of year

Retained earndng s end of year

Net income per average share of common stoek outstanding (common stock equivalents not materially dilutive) $ .32

The accompanying notes are an integral part of these consolidated financial statements.

AGS GWUTERS, IN^“ and ~ T B S ~ M U CURSQLfI).Al'ED B~L&CE SHEETB, De&amtrer 3k, 1974 and 1919 '

ASSETS:

Current Assets: Cash Cer t i f ica tes of aepoait Accounts receivable Municipal bands, a t coat

(approximates market) Prepaid expenses

Tatal current asse t s

Fixed assets , a t cost (Note 1) : Furniture and equipment Leasehold improvements Automobiles

Less, Accumulated depreciation and amortization

Investment i n municipal bonds , a t cost (approximate market $34,000) 50,250

Other k a ~ e t s 29,150

LIABILITIES AND STOCmLDERS' EQUITY:

Current Liabilf ties: Accounts payable and accrued expenses Accrued tneonne taxes

Tota1,current l i a b i l i t i e s

Comitments (Note 3)

Stockholders' equity (Note 4 ) : Common stock, par value $.I0 per share8 authorized 2,000,000 shares, issued 439,500 shares 43,950

Paid-in capi ta l , no change during year 341,115

Retained earnings, a s annexed

Less, 4350 shares of treasury stock, a t cost

Total stockholdersv equity 3

The accompanying notes a re an in tegra l pa r t of these consolidated f inancial statements.

CONSOLIDATED STATEMEWTS of CHANGES i n FINANCIAL POSITION for the years ended December 31, 1974 and 1973

Source of funds: N e t h o m e $138,242 Depreriation and amortization 22,291

,Write ,off of aan-current nate receivable 9, QOO Working cap i t a l provided

from oparat2ons 169,533

Applioat ion of f undsr Reeless i f icat ion of invesment in nruateipal bond6

Purchase of Treasury stock 'Additions t o fbd asse t s , net of

d~tspoarttioas of $1,369 l a 1974 Iaerearse (dec~wse) i n other etssets

Increase in wrking capgtal

. I Increaaw ( d ~ ~ r a ~ e s ' ) ip t he I , , ebmpw~Into af wax1Pdng ~ap;Lta1 are @ ; as %*lair:

, Cash a 1 Fertif fcatrzlrr o f ,depqsit

I Acaoumt e rqa;a$ylile ?@n&eip.asi Wsil'ds frepagd ~eAA@n@a@ Y C - U B ~ ; ~ p r ~ i + ~ ~ e ,813:d aaesritned

eatp~rnsed Aec*d' iaeosse tw$~.

The aocmnpaq9ing aocm. a r e an in tegra l p a r t o.rP th&e wns01Xdated f inancia1 statements

NOTES t o CONSOLIDATED FINANCIAL STATEMENTS

I. The f inanc ia l statements include the accounts of the Company and a wholly owned subsidiary. Revenue with respect t o profi%ssianal services related ta information systems i n the coaputer software f i e l d is recarded and expenses a r e charged t o operations as serv9ces a r e performed. Business forms sa les , cost of goods sold and t he r e l a t e3 s e l l i ng expense are recorded *hen the foms a r e delivered t o the customer by the manufacturer.

Deprecfation of f u rn i t u r e and equipment is computed on t he s t ra igh t - l ine methad based on three to ten-year estimated useful l ives . Leasehold h p r o v e w n t s a r e mor t ixed aver the l i f e of t he lease. Any investment tax c r ed i t on puichased aase t s is re f lec ted a s a xeductian of federal inqome tax expense i n the year real ized, The amount of such c r ed i t f o r 1974 and 1973 w a s insfgnif%cant.

2. The Company has a p r o f i t sharing plan eave rhg dl entployeas with one gear of contitpuous employment. The annual contribution under the plan, a9 determioed by yke Board of Dlrectors, cannot exceed t h e m a x i m u m amount peqndsstble as a deduction f o r She Ccnnpany under the applicable regulations .of t he Inte$nal Revenue Code. The Company charged $40,000 and $25,000 ta dnco;me for t he p a r s ended December 32, 1974'ilnd 1973,. rs~pe~tively.

3. The Company leasas premises under agreaimants t ha t provide f o r the payatent of m h f t n a , a m m l reataxe, excluding provis.ion% f o r esccllarion based on oerea3n i nc swses tn costs i scurre4 by tke l e ssors , aggregating approximately $59,0"00 through June 30, 1975 and $33,601) the reaf te r through June 30, 1979. One of these premises is sublet a t an annual r en t a l of approximately $14,200 through June 3t3, 1975, and another ¶,a suble t on a month by month b a i a . £ o r $600 per =oath, Rental expense f o r the years a d & December 31, 1974 and 2973 approximately $37,000 and $26,000 ,, respectively, a f t e r deducting sublease income of $22,0630 and $28,000, respectively,

4. In 1914, t h e stockholders approved a qual i f ied stock option p2aq undef which aptions t o pu~chose an cl-ggregate of 30,000 shares of m3mBEod stock may be '

granted up t o March 12, 1984 t6 o f f i c e r s and employees a t p r ices not lower than t h e f a i r m a k e r via5118 at dates aptions a r e granted. Tn accordance with terns ftfreid by the Baazd of Airec,tors, optsons became exe'~:cisable in three eqxial awual i~@tal.lmtern.t.a c ~ m e n c i n g m e year fro@ da te of grant end i n a l l eases expire f ive years from da te of grant.

A t Decual>er 31, 197,4, agt5bas t o purchase 8,3019 shares a t $1.25 per share were ourse.~ndi.ng, of which no opttons were e x e r c i ~ a b l e . A t Decmber 31, 1974, 21,700 ahare& were raoerved faz t he granting of Zirture optfons.

Tlue Cmpaap. her a amqual i f i ed etock optitm plan under which 3O1,05)U shares of commda-e%od% a r e resewed $or issuance t o Company o f f i c e r s and employees at pr ioes not less than 75% of the f a i r llaarket value on da te of grant. Optlons become sx.errierable i n th ree equal annual instal lments commencing os1.e year from da te of grant i n accordance with t e rn fixed by t he Board of Directors, but i n 411 cases expbre ten years from da te of grant .

A t December 31, 1974, options t o purchase 19,700 shares a t prices rangitlg: from $1.00 t o $2.00 per share were outstanding, of which options f o r 14,333 sharks were exercisable. A t December 31, 1974+, 10,300 shares were reserved f o r the granting of future options.

A t D e c d e r 31, 1974, under a similar qualif ied stock option plan, which ezpioed. in 1933,, op t ions t for 12,BQQ qhares were outstanding at exercise pf i ces of 81.25 t o 94.50. '+se options, of wuch 9,350 are exercisatile, expizelruo l a t e r than 1978.4' . pur14& (L974 and 1973 no options were evercised. No charges were m&de t o idcoG $n copnec-tion wifh the aforementioned etock option plans since the modti' ,qf re2at.d *pompengation, was not material.

' e

'Ta' dodnlection with? a pubxlc .&tack offering i n 1969, warrants t o purchase " 15,000 share? of Gammon stock a t , is pr ice of' $3.89 ~ e r share were issued to the. und8td%-tierr and nthera. The wqmaaite expired May 21, 1974.+

,

1

I

,

To 'the' arid' ob Pd$~eta$s a-bd Staockbolderal bf: Cdmputers, I+c . :

I 1 ' : . I , ! W= @We aumfhed the ~ckinsolldated balance sheet of AGS Computers, Ine.

and ~ p b e i d i s r ~ ,qs od p e c s b e r 31, 1974 and the re la ted s ta tmehtb of ineom= and rp2a%ned,edrninge &d abanges td fini~leltal, ,posit ion f o r the year then

in~t%on wm m&e, ia ~gccardanee with generally, hccepted ~d ' a~cot'dihgly inctubeqi such tests bf the accounting,

records quld aucb other avddting prd~edures as' we considered necsesary i n tlie' cir~asrgadqaeu Qe p r & ~ l h d y exatdined and reported' upon the j?ffancial , gta tFenfB f q r the year ended! ~bcember 31, 1973.

I ' , 1 1 ' Xf i d&p op+n&on, the aforementioned consolidated f ina-nciql etarepents

pr&ent S a i r l y tbe f inancial doeleion of AGS Computers, Xqc. and Subsidiary st ~ c e h b e t ' 3 4 , ,f974 &d 1973 and t i e r e su l t s of t h e e qpbrations atid the chan&d,fn theb;r*f i~wneiaI posit ion f o r t he fears then ended, i n conformity wifh gedera~ly! gacbptetl accounting* pr inciples applied on a consisrent basis.

I ' ' ; ' I 1 , '

I ,~evsrit, . ~ e r s a y , COOPERS & LYBRAWD

AQS COMPUTERS, INC.

, I

SareWfy & Dire~tor

........................................ David 8. Levine Vice-President ..... ~Victo,: L. Lurie ......... , ..................... .'Direotar

Greanbaum, Wolff & Ernst

REGISTRAR & TRANSFER AGENT Registrar & Transfer Company

CORPORATE OFF ICE ' @05 Route 22 - Union, New Jersey 07083

BRANCH ORFICES: 292 Madison Ave. - New Ygrk, New York 1001 7 120 West John St., Hicksville, Long Island. N. Y. 11802

AGS SYSTEM FORMS, INC. 21MS Route 22 - Union, New Jersey 07083 John E. Kridel, President

agscomputers.annual_report.1974.102659915.fc.src.tifagscomputers.annual_report.1974.102659915.p01.src.tifagscomputers.annual_report.1974.102659915.p02.src.tifagscomputers.annual_report.1974.102659915.p03.src.tifagscomputers.annual_report.1974.102659915.p04.src.tifagscomputers.annual_report.1974.102659915.p05.src.tifagscomputers.annual_report.1974.102659915.p06.src.tifagscomputers.annual_report.1974.102659915.bc.src.tif