Communications Systems, Inc. Reports Third Quarter 2012 Results

       Communications Systems, Inc. Reports Third Quarter 2012 Results

PR Newswire

MINNETONKA, Minn., Nov. 7, 2012

MINNETONKA, Minn., Nov. 7, 2012 /PRNewswire/ --Communications Systems, Inc.
(NASDAQ: JCS) today reported financial results for its third quarter ending
September 30, 2012 and for the first nine months of 2012.

For the three months ended September 30, 2012, net income was $1,119,000 or
$0.13 per diluted share, on revenue of $28,688,000 compared to net income of
$3,730,000 or $0.44 per diluted share, on revenue of $41,985,000 in the 2011
third quarter. For the nine months ended September 30, 2012, net income was
$2,146,000 or $0.25 per diluted share, on revenue of $78,493,000 compared to
net income of $10,372,000 or $1.22 per diluted share, on revenue of
$118,437,000 in the 2011 nine-month period.

William Schultz, President and CEO of Communications Systems, Inc. commented:
"This quarter reflects the results from the execution of the business strategy
implemented beginning of the fourth quarter 2011, and demonstrates improvement
over Q2 2012. The significant decrease in the quarterly earnings from the
2011 third quarter is primarily due to a large one-time 2011 project in our
Transition Networks business unit. Excluding this one-time project, our
Transition Networks business unit revenue declined 4% from Q3 2011, while our
overall Company revenues were flat from Q3 2011, reflecting improvement in our
Suttle business unit.

"As we noted in connection with our reporting of 2011 interim and full year
results, our strong 2011 financial performance was bolstered by large projects
in our Transition Networks and JDL business units, making year-over-year
comparisons more challenging. Due primarily to lower government spending, the
2012 economic environment has continued to be challenging for Transition
Networks and JDL. Our Suttle business unit has increased its third quarter
revenue 16% over Q3 2011 due to an improving housing market, especially for
multi-tenant dwelling units.

Schultz continued: "As we mentioned in our second quarter press release, we
implemented several cost-savings initiatives beginning in the 2011 fourth
quarter, and are continuing to realize savings from these initiatives,
resulting in lower selling, general and administrative costs than in the
second quarter of 2012. We continue to monitor expenditures while still
making investments in critical areas such as engineering and product

"As we announced in our October 23, 2012 press release, our JDL Technologies
business unit was selected as one of the partners for a project with the
Miami-Dade County Public School District ("M-DCPS"), the fourth largest public
school district in the United States. As part of the district's "Bringing
Wireless to the Classroom" initiative, M-DCPS applied for and has been granted
federal funding under the E-Rate program to expand wireless connectivity for
students and staff. JDL Technologies has been selected to provide the
hardware and wiring for 232 district schools as part of the project. We
expect this wireless connectivity project to launch in the fourth quarter of
2012 for completion by year-end 2013, and to contribute up to $23 million in
revenue to JDL Technologies. While this project will contribute to CSI's
overall profitability, the M-DCPS project is primarily hardware; therefore the
Company's margins from this project will be significantly lower than the
margins from JDL's historical projects, which have included a significant
value-added service component. JDL continues its efforts on expanding its
services offering into small- and medium-sized businesses to implement new
technologies such as virtualization and migration to the cloud as well as
growing business in the education market.

"We are encouraged by the continued strength in the multi-tenant dwelling unit
construction and Suttle's strong position within its customer base to take
advantage of this growth with its structured wiring products. Suttle is also
having success penetrating new opportunities with copper and fiber
connectivity products within its existing customer base as well as gaining new
customers internationally. Suttle added a sales representative in the Middle
East during the quarter and will target new opportunities in this market as
well as Latin America and Europe.

"Despite a slow-down in government spending Transition Networks continues to
focus on its target markets, which include the service provider, enterprise,
and industrial Ethernet markets. We see growth opportunities in these markets
and continue to invest in product development to support them.

Mr. Schultz closed: "Despite some near-term economic uncertainty in some areas
such as government spending, we remain optimistic about our long-term
prospects and will continue to invest in areas that will allow us to be
successful in our target markets. We are encouraged by the new business
opportunities for JDL with the Miami-Dade County Public School District and
growth at Suttle with the housing market rebound and opportunities in copper
and fiber connectivity. Transition Networks remains our largest business unit
and continues to focus on growth in its core markets."

Further Information

Further information regarding the Company's results and related matters will
be provided in the Company's Form 10-Q report for the quarter ended September
30, 2012, which will be filed on November 8, 2012.

Cautionary Statement

From time to time, in reports filed with the Securities and Exchange
Commission, in press releases, and in other communications to shareholders or
the investing public, the Communications Systems Inc. may make forward-looking
statements concerning possible or anticipated future financial performance,
business activities or plans which are typically preceded by the words
"believes," "expects," "anticipates," "intends" or similar expressions. For
these forward-looking statements, the Company claims the protection of the
safe harbor for forward-looking statements contained in federal securities
laws. Shareholders and the investing public should understand that these
forward-looking statements are subject to risks and uncertainties, including
those disclosed in our periodic filings with the SEC, which could cause actual
performance, activities or plans after the date the statements are made to
differ significantly from those indicated in the forward-looking statements
when made.

About Communications Systems

Communications Systems, Inc. provides physical connectivity infrastructure and
services for global deployments of broadband networks. Focusing on innovative,
cost-effective solutions, CSI provides customers the ability to deliver,
manage, and optimize their broadband network services and architecture. From
the integration of fiber optics in any application and environment to
efficient home voice and data deployments to optimization of data and
application access, CSI provides the tools for maximum utilization of the
network from the edge to the user. With partners and customers in over 50
countries, CSI has built a reputation as a reliable global innovator focusing
on quality and customer service.

Selected Income Statement Data
                                  Unaudited                     Unaudited
                     Three Months   ThreeMonths    Nine Months   Nine Months
                     Ended                                        Ended
                                    Ended           Ended
                     September      September 30,
                     30,                            September     September
                                    2011            30, 2012      30, 2011
Sales              $ 28,687,687   $ 41,984,570    $ 78,492,866  $ 118,437,057
Gross margin         10,759,873     16,555,270      31,364,383    48,339,344
Operating income     1,706,709      6,483,862       3,194,756     17,877,980
Income before        1,663,440      6,574,906       3,202,469     18,000,051
income taxes
Income taxes         544,098        2,845,269       1,056,316     7,627,910
Net income         $ 1,119,342    $ 3,729,637     $ 2,146,153   $ 10,372,141
Basic net income   $ 0.13         $ 0.44          $ 0.25        $ 1.23
per share
Diluted net        $ 0.13         $ 0.44          $ 0.25        $ 1.22
income per share
Cash dividends     $ 0.16         $ 0.15          $ 0.48        $ 0.45
per share
Average basic
shares               8,520,469      8,460,625       8,505,571     8,442,812
Average dilutive
shares               8,532,534      8,530,187       8,528,523     8,500,022
Selected Balance Sheet Data
                                    December 31,
                     30,            2011

Total assets       $ 111,283,628  $ 116,658,916
Cash , cash
equivalents and      36,366,875     46,034,821
Property, plant
and equipment,       14,447,206     14,019,019
Long-term            3,543,688      3,740,710
Stockholders'        96,784,014     97,530,560

SOURCE Communications Systems, Inc.

Contact: William G. Schultz, President and Chief Executive Officer, or David
T. McGraw, Vice President - Finance and Chief Financial Officer,
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