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Communications Systems Inc Reports Operating Results (10-K)

March 15, 2011 | About:

Communications Systems Inc (NASDAQ:JCS) filed Annual Report for the period ended 2010-12-31.

Communications Systems Inc. has a market cap of $119 million; its shares were traded at around $14.16 with a P/E ratio of 12.2 and P/S ratio of 1. The dividend yield of Communications Systems Inc. stocks is 4.2%. Communications Systems Inc. had an annual average earning growth of 16.5% over the past 10 years.

Highlight of Business Operations:

Suttle manufactures and markets connectors and wiring devices for voice, data and video communications under the Suttle brand name in the United States (U.S.) and internationally. Suttle also manufactures and markets a line of residential structured wiring products under the SOHO (Small Office Home Office) Access brand name. Suttle also markets a line of DSL (Digital Subscriber Line) filters for the telecommunications market. Approximately 59% of Suttles products are manufactured at its plants in Hector, Minnesota (Suttle Apparatus Minnesota Division) and San Jose, Costa Rica (Suttle Costa Rica, S.A.). The other 41% are purchased from offshore contract manufacturers. Segment sales were $36,562,000 (30% of consolidated revenues) in 2010 and $42,867,000 (39% of consolidated revenues) in 2009.

Other customers include smaller telephone companies, electrical/low voltage contractors, home builders, original equipment manufacturers (OEM), and retailers. These customers are served primarily through distributors but are also served directly by Suttles sales staff. Sales to cable customers and OEMs are made through a nationwide network of distributors and through the Suttle sales staff. Sales to OEMs and other distributors were 14% of Suttles sales in 2010 and 16% in 2009. Sales to international customers and other customers represented 16% of Suttles sales in 2010 and 13% in 2009.

Transition Networks, Inc. (Transition or Transition Networks) is based in Minnetonka, Minnesota and also maintains an engineering, procurement and marketing center in Shanghai, China. Transition designs, assembles and markets Network Interface Devices (NIDs), media converters, network interface cards (NICs), Ethernet switches, Small Form factor Pluggable modules (SFP)s, and other connectivity products under the Transition Networks and MILAN brand names. Transition sells its product through distributors, resellers, integrators, and OEMs. These Network Interface Devices, media converter and Ethernet Switch products permit voice and data networks to move information between copper-wired equipment and fiber-optic cable. Sales by Transition Networks were $67,782,000 (56% of consolidated sales) in 2010 compared to $55,098,000 (50% of consolidated sales) in 2009. International sales accounted for 17% of Transitions sales, or $11,358,000 in 2010, compared to $9,886,000, or 18% of Transitions sales in 2009.

JDL Technologies, Inc., located in Fort Lauderdale, FL (JDL), provides IT solutions focused on network design and integration IT service management, network security, desktop virtualization, and managed network operation center services. JDLs 2010 sales were $12,712,000 (11% of consolidated sales) compared to 2009 sales of $8,765,000 (8% of consolidated sales). Project revenue totaled $11,612,000 in 2010 or 91% of JDL sales compared to $7,594,000 in 2009 or 87% of JDL sales. Managed services revenues were $1,100,000 and $1,171,000 in 2010 and 2009, respectively.

At its plant in Bethesda, the Company designs and manufactures external metal cabinets and internal metal boxes to industry standards and to customer specifications and procures other products from offshore sources. All manufacturing and supply line products are supported to ISO: 9001:2000 approved standards to guarantee customer quality, consistency and reliability. Approximately 62% and 72% of Austin Taylor sales were to U.K. customers in 2010 and 2009.

Our customer base is somewhat concentrated, with our top ten customers accounting for 70%, 72% and 60% of net sales for fiscal 2010, 2009 and 2008, respectively. One of our largest customers, Verizon, accounted for 6%, 9% and 5% of our net sales for the fiscal years 2010, 2009 and 2008. The merger of AT&T and BellSouth in our fiscal 2007 created another large customer for us. In fiscal 2010, 2009 and 2008, this combined company accounted for approximately 9%, 12% and 12% of our sales, respectively. If we lose a significant customer for any reason, our sales and gross profit will be impacted negatively.

Read the The complete Report

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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