inc. annual of - communications systems,...

Communications Systems, Inc

infrastructure & services for global communications

Welcome to Communications Systems, Inc. Annual Meeting of Shareholders

2014



2013 Performance

• Exceptional revenue and adjusted operating profit performance– 2013 full year revenue of $131,300,000, a 26% increase– 2013 full year adjusted operating profit of $7,006,000– 2013 full year net loss of ($958,000)

• JDL – record year for revenue– Strong performance driven primarily by Broward services and Miami

Dade hardware sales• Transition Networks business contracted due to a decline in Federal

Government sales and legacy product salability– Management team focused on repositioning the product franchise for

growth with new products• Suttle – Strong year with an improved economy and key account

performance– 21% increase in sales and 110% increase in operating income



Business Process Improvement

• New ERP system (IFS) implementation rollout is proceeding without significant problems.– Offers improvements in product development, manufacturing and customer service

• Transition Networks has operated more than one year since implementing the new ERP system with minimal problems.– Now looking to gain business advantage with implementation throughout the business operations

• Suttle on track to go live in the first quarter of 2015.• “Steady as you go” implementation has reduced risk and enhanced implementation.



Restructuring Our Approach to Corporate Management

• Formed the “Office of the Chair” in September 2013• Appointed business presidents for Transition Networks, JDL and Suttle

• Improved decision making and shortened lines of authority

• Looking Ahead– Corporate Scientist– Interim CEO



George WakilehVice President of Global Business & Technology Development

Appointed

Corporate ScientistFor outstanding technical and business development contributions.

George Wakileh joined Suttle, in 2009, to implement a strategic innovation process, re‐structure the product roadmap, and lead the company's business development efforts.

He holds a BS in Electronics Engineering Technology from Mankato State University, and has been engaged in the telecommunications industry for over 20 years.

Highlights of his telecommunications career:

• Senior Systems Engineer at ADC.

• Engineering Manager and Director of Product Development and Engineering for Americable /APA Optics (now Clearfield), where he developed the company's Fiber‐To‐The‐Home product lines.

• Engineering Director and Director of Product Management and Innovation Strategy at Emerson Network Power. In this role, George directed an $85M business for Emerson's FTTX programs into Tier 1 and Tier 2 US Communication Service Providers.

George is highly respected in the telecom industry as a strategic thinker and innovator, and for expanding the Intellectual Property offering and Patent Portfolio for each of his employers.



Interim CEO

• Interim CEO responsibility passes to Roger Lacey• Strategic levers will remain in place

– Business portfolio future options assessment– Focus on corporate costs and productivity– Rebuilding the entrepreneurial spirit and focus on shareholder returns

• Office of the Chair remains intact– Curt Sampson– Roger Lacey– Ed Freeman

• Appointment of new CEO will depend on portfolio assessment



Q1 2014

• Q1 2014 was challenging as individual businesses build for future growth and profitability.

• Continued to build our strong financial position.– $32.7 mil cash and investments and $63 mil in working capital

• Made people investments with long‐term growth horizon.– Engineering, Sales, Marketing

• Future– Opportunities in each business unit– New products and services, global expansion

• Maintained excellent dividend.



Strong Dividend Yield

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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Price $

Year

Stock Price, Dividend and Dividend Yield 1993 ‐ 2013

Stock Dividend yield (Dividend/Share Price)

Outstanding record of dividend payments



Public Company Since 1981 Listed on the NASDAQ Stock symbol: JCS Revenues $131,320,000 Total Assets (12/31/13) $103,533,000 Adjusted Operating Income $7,006,000 Net Loss* ($958,000) Earnings Per Share ($0.11) Dividends Per Share $0.64 Stockholders Equity (12/31/13) $88,622,000 Market Cap (12/31/13) $95,284,000 Shares Outstanding (12/31/13) 8,553,320* Includes $5.8 million goodwill impairment charge

Financial Results2013 Annual Figures



Public Company Since 1981 Listed on the NASDAQ Stock symbol: JCS Revenues $25,198,000 52 Week Range (3/31/14) $9.55 - $13.92 Total Assets (3/31/14) $101,073,000 Net Loss ($141,000) Earnings Per Share ($0.02) Dividends Per Share $0.16 Stockholders Equity (3/31/14) $87,448,000 Market Cap (3/31/14) $83,703,000 Shares Outstanding (3/31/14) 8,600,247

Financial ResultsQ1 2014 Figures



JDL Technologies



Enabling Your IT to do MORE

June 4, 2014Shareholders Meeting



JDL Technologies IncServices Organization

Education CommercialInfrastructure

SalesProfessionalServices

ManagedServices

• Wireless Networks

• Servers• Storage• End Compute• Software• Virtualization

• Virtualization• Networking• Microsoft Stack• Assessments

o HIPAA o Network

• IT Managed Services

• Application Support

• Staff Augmentation

• IaaS• BaaS• AaaS

• eRate• Wired/Wireless Networking• Core Infrastructure• Bring Your Own Device

• Broward School• Network Operations

Center (NOC)• Technical Staffing

Infrastructure Sales / Service Contract Services



JDL Technologies Inc

Education

• eRate• Wired/Wireless Networking• Core Infrastructure• Bring Your Own Device

• Broward School• Network Operations

Center (NOC)• Technical Staffing

Infrastructure Sales / Service Contract Services



JDL Technologies IncHealthcare

CommercialInfrastructure


ManagedServices




o HIPAA o Network





HIPAA Regulations & Meaningful Use; Driving Opportunity



JDL Technologies Inc

Other Principal Verticals

• Legal & Financial• Business

Services/Manufacturing/Logistics

CommercialInfrastructure


ManagedServices




o HIPAA o Network





Leveraging Existing Clients – Building Niche Messaging / Vertical Offerings



Transition NetworksAnnual Shareholders Meeting

June 4, 2014Minnetonka, MN



TN Transformation• Focus on Organizational Excellence• Business Stability• Support channel model while building direct capabilities

• Take advantage of current opportunities in Fed and Enterprise segments

• Strengthen relationships with service providers• Refine product roadmap



Customer Solution Space

Ethernet Connectivity

Carrier Ethernet

HardenedEquipment

SecurityHardened Solutions for Security

Applications

Data Security

Service Providers

Power Utilities

Surveillance Integrators

Government Integrators



Carrier Ethernet Solutions• Why Carrier Ethernet

– Standardized Services– Scalability– Reliability– Quality of Service

• Carrier Ethernet Differentiators– Rapid service turn‐up– Performance guarantees

– Flexible, on‐demand, dynamic bandwidth allocation

S3280

Cu

Fiber

Macro Cell

Multiple Carrier Opportunities, domestic and abroad



• Remote Outdoor Environments• Hazardous environments

Power Utility Wastewater Mining Oil Exploration

Airports Sea Ports Gas Distribution Grain Processing

Supports domestic and global applications

Hardened Ethernet



Data Security SolutionsVulnerable Copper• Hackers can tap connections

and detect electrical signals• Breach undetected• Compromised data

Secure Fiber• Properties of fiber provide

needed security• Try to tap into fiber . . .

– Fiber will break– Links will go down– Network managers alerted

Cu

Fiber

Serves Federal Government and Enterprise Channels



• Access Security – Locks, Card Readers…

• Surveillance & MonitoringPoE Camera morethan 100M away

Indoor PoE Camera within 100M

Legacy CCTV Camera

Emergency IP Phone within 100M

PoE+ Media Converter

IP Video Encoder

Media Player

PTZ Control

Copper

Fiber

PoE+ Switch

COAX

Composite Video

Addresses enterprise data security concerns

Physical Security



Delivering Innovative, Customer‐Centric SolutionsSuttle Customer Engagement Model

Innovative Customer‐Centric Solutions

Operational Capabilities

Knowledge of Customer Business Strategies

Customer RelationshipsSales & Mktg

Strategic Partners

Technology & Market Expertise

Prism

FIOS

U‐verse



The Ultrafast Broadband EraMarket Forces

• One Gigabit Broadband Build Drive for Higher Speeds

• Internet of Things Growth in Connected Devices

The new FutureLinkTM brand is Suttle’s next generation of fiber and high-speed copper connectivity solutions, which meet market demands at a lower cost of ownership from the Central Office all the way into the Premise.



Enabling Truly Connected Home

High Speed Copper‐Fiber‐Wireless 1Gigabit Broadband Distribution



Thank YouQuestions and Answers.

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