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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 6, 2003
Communications Systems, Inc.
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(Exact name of Registrant as specified in its charter)
Minnesota 0-10355 41-0957999
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(State or other (Commission (IRS Employer
jurisdiction File Number) Identification
of incorporation) No.)
213 South Main Street
Hector, Minnesota 55342
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(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (320) 848-6231
Item 9. Regulation FD Disclosure.
The following information is furnished pursuant to Item 12, "Results of
Operations and Financial Condition."
On August 6, 2003, Communications Systems, Inc. (the "Company") reported
its financial results for its second fiscal quarter ended June 30, 2003. See the
Company's press release dated August 6, 2003, which is furnished as Exhibit 99
and incorporated by reference in this Current Report on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Communications Systems, Inc.
Date: August 7, 2003 By /s/ Paul N. Hanson
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Paul N. Hanson
Vice President and Chief Financial Officer
No. Exhibit Manner of Filing
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99 Press Release dated August 6, 2003. Filed Electronically
For Immediate Release:
Contact: Curtis A. Sampson, Chairman and Chief Executive Officer
Jeffrey K. Berg, President and Chief Operating Officer
Paul N. Hanson, Vice President - Finance
Communications Systems Announces
Second Quarter 2003 Operating Results.
Hector, MN ---- August 6, 2003----- Communications Systems, Inc. (AMEX: JCS)
today reported net income of $628,000 or $0.08 per diluted share for the second
quarter ended June 30, 2003 compared to a net loss of $1,042,000 or $0.13 per
diluted share for the second quarter of 2002. The Company recorded a writedown
for excess inventory of $1,500,000 in the second quarter of 2002. Second quarter
2003 revenues totaled $24,869,000 compared to revenues of $27,175,000 in the
second quarter of 2002. Six-month revenues through June 30, 2003 were
$51,444,000 compared to $51,095,000 in the same period in 2002. Net income for
the six months ended June 30, 2003 was $1,351,000 or $.17 per diluted share
compared to a net loss of $572,000 or $.07 per diluted share through six months
in 2002. The 2003 six-month revenues include $6,800,000 in sales contributed
from the MiLAN business unit, which was acquired March 25, 2002, compared to
MiLAN sales of $2,900,000 in the first six months of 2002.
Effective May 31, 2003, the Company has closed its final manufacturing facility
in Puerto Rico. Severance and other related closing costs incurred in the second
quarter were approximately $150,000. Additionally, the Company realized a net
gain on disposal of assets of approximately $280,000 in the second quarter,
which was recorded as other income.
Austin Taylor the company's UK business unit, continues to experience weak
market conditions and reported a $267,000 after tax loss in the second quarter
adding to the $408,000 after tax loss in the first quarter.
Jeffrey K. Berg, President and COO said, " The Company continues to adjust our
expenses in the UK to be aligned with the current revenue stream while sourcing
additional products from the Asia Pacific region. These efforts will strengthen
Austin Taylor's position in their markets."
Curtis A Sampson, Chairman and CEO commented, " We continue to remain profitable
in a very difficult industry environment. Our business units providing broadband
products and services are driving our revenue and earnings, while our
traditional business of copper and wiring connecting devices continues to
decline."
About Communications Systems
Communications Systems, Inc. provides physical connectivity infrastructure and
services for cost-effective broadband solutions and is a leading supplier of
voice-grade connecting devices and wiring systems. CSI serves the broadband
network market as the world's leading supplier of media conversion technology,
which permits networks to deploy fiber optic technology, while retaining the
copper-based infrastructure already embedded in the network. In addition, CSI
supplies copper wire and fiber optic structured wiring systems for broadband
networks, as well as line filters for digital subscriber line service. CSI also
provides network design, training and management services.
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 Company 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 such
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 such
forward-looking statements are subject to risks and uncertainties which could
cause actual performance, activities or plans to differ significantly from those
indicated in the forward-looking statements. Such risks and uncertainties
include, but are not limited to: lower sales to RBOCs and other major customers;
competitive products and technologies; our ability to successfully reduce
operating expenses at certain business units; the general health of the telecom
sector; profitability of recent acquisitions; delays in new product
introductions; higher than expected expense related to new sales and marketing
initiatives; availability of adequate supplies of raw materials and components;
fuel prices; and other factors discuss from time to time in the Company's
filings with the Securities and Exchange Commission.
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CSI CONSOLIDATED SUMMARY OF EARNINGS
Three Months Ended June 30
2003 2002
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Revenues $ 24,868,683 $ 27,174,589
Gross Margin 7,414,651 4,634,706
Operating Income (Loss) 746,045 (1,529,050)
Income Before Income Taxes 998,202 (1,532,216)
Income Taxes 370,000 (490,000)
Net Income (Loss) 628,202 (1,042,216)
Basic Net Income (Loss) Per Share $ .08 $ (.13)
Diluted Net Income (Loss) Per Share $ .08 $ (.13)
Average Shares Outstanding:
Average Common Shares Outstanding 8,161,216 8,287,147
Dilutive Effect of Stock Options Outstanding 15,593 3,159
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8,176,809 8,290,306
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Six Months Ended June 30
2003 2002
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Revenues $ 51,443,833 $ 51,094,929
Gross Margin 14,820,440 11,011,317
Operating (Loss) Income 1,929,943 (877,701)
Income (Loss) Before Income Taxes 2,171,273 (897,360)
Income Taxes 820,000 (325,000)
Net (Loss) Income 1,351,273 (572,360)
Basic Net (Loss) Income Per Share $ .17 $ (.07)
Diluted Net (Loss) Income Per Share $ .17 $ (.07)
Average Shares Outstanding:
Average Common Shares Outstanding 8,160,931 8,284,676
Dilutive Effect of Stock Options Outstanding 13,475 6,182
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8,174,406 8,290,858
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