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UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
X OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-10355
COMMUNICATIONS SYSTEMS, INC.
...............................................................................
(Exact name of registrant as specified in its charter)
MINNESOTA 41-0957999
...............................................................................
(State or other jurisdiction of (Federal Employer
incorporation or organization) Identification No.)
213 South Main Street, Hector, MN 55342
...............................................................................
(Address of principal executive offices) (Zip Code)
(320) 848-6231
...............................................................................
Registrant's telephone number, including area code
...............................................................................
(Former name, address, and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES ___ NO ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.
CLASS Outstanding at October 31, 1996
- ----------------------------------- -------------------------------
Common Stock, par value 9,226,309
$.05 per share
Total Pages (12) Exhibit Index at (NO EXHIBITS)
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COMMUNICATIONS SYSTEMS, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Stockholders' Equity 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II. Other Information 12
2
PART I. FINANCIAL INFORMATION
COMMUNICATIONS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30 December 31
Assets: 1996 1995
____________ ____________
Current assets:
Cash $14,892,182 $11,703,536
Marketable securities 859,890 899,469
Receivables, net 11,121,364 8,501,117
Inventories - Note 3 13,211,397 14,828,534
Prepaid expenses 618,163 345,004
Deferred income taxes 869,000 869,000
____________ ____________
Total current assets 41,571,996 37,146,660
Property, plant and equipment 23,744,102 22,295,204
less accumulated depreciation (15,044,851) (13,637,184)
____________ ____________
Net property, plant and equipment 8,699,251 8,658,020
Net assets of and advances to discontinued
Zercom operations 8,364,379 9,255,016
Other assets:
Investments in mortgage backed
and other securities 4,643,194 5,398,316
Excess of cost over net assets acquired 3,173,596 659,264
Deferred income taxes 354,044 354,044
Other assets 293,744 473,285
____________ ____________
Total other assets 8,464,578 6,884,909
____________ ____________
Total Assets $67,100,204 $61,944,605
____________ ____________
____________ ____________
Liabilities and Stockholders' Equity:
Current liabilities:
Notes payable $66,715
Accounts payable $3,157,698 3,181,684
Accrued expenses 2,260,664 1,957,429
Dividends payable 740,278 642,838
Income taxes payable 2,615,638 2,020,363
____________ ____________
Total current liabilities 8,774,278 7,869,029
Stockholders' Equity 58,325,926 54,075,576
____________ ____________
Total Liabilities and Stockholders' Equity $67,100,204 $61,944,605
____________ ____________
____________ ____________
See notes to consolidated financial statements.
3
COMMUNICATIONS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Sept. 30 Nine Months Ended Sept. 30
____________________________ ____________________________
1996 1995 1996 1995
____________ ____________ ____________ ____________
Revenues from continuing operations:
Sales $18,390,779 $16,441,140 $50,618,464 $51,057,478
Costs and expenses:
Cost of sales 12,529,048 11,730,923 35,504,434 37,111,694
Selling, general and
administrative expenses 2,869,937 2,085,447 7,884,875 6,095,290
____________ ____________ ____________ ____________
Total costs and expenses 15,398,985 13,816,370 43,389,309 43,206,984
____________ ____________ ____________ ____________
Operating income from
continuing operations 2,991,794 2,624,770 7,229,155 7,850,494
Other income and (expenses):
Investment income 175,506 197,472 490,719 698,150
Interest expense (4,492) (7,578) (16,499) (26,129)
____________ ____________ ____________ ____________
Other income, net 171,014 189,894 474,220 672,021
Income from continuing operations
before income taxes 3,162,808 2,814,664 7,703,375 8,522,515
Income taxes (Note 4) 730,000 615,000 1,600,000 1,835,000
____________ ____________ ____________ ____________
Income from continuing operations 2,432,808 2,199,664 6,103,375 6,687,515
Discontinued operations (Note 2):
Income (loss) from discontinued Zercom
operations, net of income taxes (27,846) (44,291) (355,124) 285,547
Loss on disposal of Zercom operations,
including provision of $30,000 for
operating losses during disposal
period (net of income tax
benefit of $133,000) (393,000) (393,000)
____________ ____________ ____________ ____________
Net income $2,011,962 $2,155,373 $5,355,251 $6,973,062
____________ ____________ ____________ ____________
____________ ____________ ____________ ____________
Net income per share:
Continuing operations $.26 $.24 $.65 $.73
Discontinued operations (.05) (.01) (.08) .03
____________ ____________ ____________ ____________
$.21 $.23 $.57 $.76
____________ ____________ ____________ ____________
____________ ____________ ____________ ____________
Average common and common
equivalent shares outstanding 9,371,000 9,318,000 9,393,000 9,214,000
____________ ____________ ____________ ____________
____________ ____________ ____________ ____________
See notes to consolidated financial statements.
4
COMMUNICATIONS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(unaudited)
Additional Cumulative
Common Stock Paid in Retained Advances Translation
Shares Amount Capital Earnings to ESOP Adjustment Total
__________________________________________________________________________________________________
BALANCE at December 31, 1994 8,986,523 $449,326 $18,001,322 $27,519,954 ($72,000) ($332,161) $45,566,441
Net Income 9,084,153 9,084,153
Shareholder dividends (2,463,672) (2,463,672)
Issuance of common stock under
Employee Stock Option Plan 173,311 8,666 1,267,846 1,276,512
Tax benefit from nonqualified
employee stock options 243,000 243,000
Issuance of common stock under
Employee Stock Purchase Plan 23,567 1,178 193,957 195,135
Issuance of common stock to
Welsh Development Agency 20,142 1,007 219,325 220,332
Purchase of Communications Systems
Inc. common stock (20,142) (1,007) (219,325) (220,332)
Cumulative translation adjustment 102,007 102,007
Repayment of advances to ESOP 72,000 72,000
_____________ _____________ _____________ _____________ _____________ ___________ ____________
BALANCE at December 31, 1995 9,183,401 459,170 19,706,125 34,140,435 0 (230,154) 54,075,576
Net Income 5,355,251 5,355,251
Shareholder dividends (2,139,570) (2,139,570)
Issuance of common stock under
Employee Stock Purchase Plan 14,346 717 157,806 158,523
Issuance of common stock under
Employee Stock Option Plan 50,381 2,519 449,652 452,171
Purchase of Communications Systems
Inc. common stock (107,330) (5,366) (252,551) (1,068,495) (1,326,412)
Issuance of common stock to acquire
Automatic Tool and Connector Co. 112,676 5,634 1,712,675 1,718,309
Cumulative translation adjustment 32,078 32,078
_____________ _____________ _____________ _____________ _____________ ____________ ____________
BALANCE at September 30, 1996 9,253,474 $462,674 $21,773,707 $36,287,621 0 ($198,076) $58,325,926
_____________ _____________ _____________ _____________ _____________ ____________ ____________
_____________ _____________ _____________ _____________ _____________ ____________ ____________
See notes to consolidated financial statements.
5
COMMUNICATIONS SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended September 30
___________________________
1996 1995
____________ ____________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income from continuing operations $6,103,375 $6,687,515
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,832,389 1,526,599
Adjustment to marketable securities reserve 39,579 (79,175)
Changes in assets and liabilities:
Decrease in marketable securities 80,000
Increase in accounts receivable (2,101,972) (683,280)
Decrease (increase) in inventory 2,078,504 (2,041,979)
Increase in prepaid expenses (260,366) (57,721)
Decrease in accounts payable (786,495) (657,368)
Increase in accrued expenses 304,049 232,257
Increase (decrease) in income taxes payable 591,591 (592,688)
____________ ____________
Net cash provided by operating activities 7,800,654 4,414,160
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,576,342) (1,970,799)
Decrease in mortgage backed and
other investment securities 755,171 15,324
Decrease in other assets 190,377 487,924
Changes in assets and liabilities of
discontinued operations 142,513 (1,041,335)
Payment for purchase of Austin Taylor
Communications, Ltd. (135,131)
Payment for purchase of Automatic Tool and
Conector Company, Inc., net of cash acquired (1,178,008)
____________ ____________
Net cash used in investing activities (1,801,420) (2,508,886)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable (58,969) (117,780)
Dividends paid (2,042,130) (1,718,040)
Proceeds from issuance of common stock 610,694 1,503,566
Purchases of Communications Systems, Inc.
common stock (1,326,412) (220,331)
____________ ____________
Net cash used in financing activities (2,816,817) (552,585)
____________ ____________
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH 6,229 32,677
____________ ____________
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,188,646 1,385,366
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 11,703,536 8,746,070
____________ ____________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $14,892,182 $10,131,436
____________ ____________
____________ ____________
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Income taxes paid $1,004,628 $2,607,380
Interest paid 16,499 26,129
See notes to consolidated financial statements.
6
COMMUNICATIONS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS
The balance sheet and statement of stockholders' equity as of September 30,
1996, the statements of income for the three and nine month periods ended
September 30, 1996 and 1995, and the statements of cash flows for the nine month
periods ended September 30, 1996 and 1995 have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
position, results of operations, and cash flows at September 30, 1996 and 1995
have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested these condensed financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's December 31, 1995 Annual Report to
Shareholders. The results of operations for the periods ended September 30 are
not necessarily indicative of the operating results for the entire year.
NOTE 2 - DISCONTINUED OPERATIONS
On November 4, 1996, the Company completed the sale of its contract
manufacturing subsidiary, Zercom Corporation, to Nortech Systems, Inc. (Nasdaq
National Market: NSYS). Nortech Systems acquired all the assets of Zercom,
except cash and accounts receivable, in exchange for $1.5 million cash and a
$5.0 million term note secured by Zercom's assets. Loss on disposal of the
segment was $393,000, net of a tax benefit of $133,000.
The Company's financial statements have been restated to separate the net assets
and operating results of Zercom Corporation from the Company's continuing
operations. Zercom's operating results were as follows:
Three Months Ended Nine Months Ended
September 30 September 30
_______________________ ________________________
1996 1995 1996 1995
___________ __________ ___________ ____________
Sales $3,033,690 $3,764,491 $11,846,815 $15,820,117
Costs and expenses 3,077,965 3,846,392 12,401,679 15,383,195
Interest income, net 11,429 17,610 24,740 28,625
___________ __________ ___________ ____________
Income before income taxes (32,846) (64,291) (530,124) 465,547
Income taxes (benefit) (5,000) (20,000) (175,000) 180,000
___________ __________ ___________ ____________
Income (loss) from operations (27,846) (44,291) (355,124) 285,547
Loss on disposal of discontinued
operations,including provision
of $30,000 for operating losses
during disposal period net of
income tax benefit of $133,000 (393,000) (393,000)
___________ __________ ___________ ____________
Net loss ($420,846) ($44,291) ($748,124) $285,547
___________ __________ ___________ ____________
___________ __________ ___________ ____________
7
COMMUNICATIONS SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 (continued)
Net assets of discontinued Zercom operations consist of:
September 30 December 31
1996 1995
____________ ____________
Property, plant and equipment $2,335,302 $2,257,288
Inventory 3,965,741 4,694,429
Other working capital 2,157,130 1,957,334
Other assets 299,206 345,965
Accrued loss on disposal, net of tax (393,000)
____________ ____________
Net assets of discontinued operations $8,364,379 $9,255,016
____________ ____________
____________ ____________
NOTE 3 - INVENTORIES
Inventories summarized below are priced at the lower of first-in, first-out cost
or market:
September 30 December 31
1996 1995
Finished Goods $3,287,774 $4,231,990
Raw Materials 9,923,623 10,596,544
------------------- --------------------
Total $13,211,397 $14,828,534
=================== ====================
NOTE 4 - INCOME TAXES
Income taxes are computed based upon the estimated effective rate applicable to
operating results for the full fiscal year. For the periods ended September 30,
1996 and 1995 income taxes do not bear a normal relationship to income before
income taxes, primarily because income from Puerto Rico operations are taxed at
rates lower than the U.S. rate.
NOTE 5 - NET INCOME PER COMMON SHARE
Net income per share is based on the weighted average number of common and
common equivalent shares outstanding during the periods. Common equivalent
shares reflect the dilutive effect of outstanding stock options. Primary and
fully diluted earnings per share are substantially the same.
NOTE 6 - ACQUISITION OF AUTOMATIC TOOL AND CONNECTOR CO., INC.
Effective January 4, 1996, the Company acquired Automatic Tool and Connector
Co., Inc., a Union, New Jersey based manufacturer of fiber optic connectors, in
exchange for $1,373,000 in cash and 112,676 shares of Communications Systems,
Inc. common stock (market value of $1,718,000 at January 4, 1996). The
acquisition was accounted for as a purchase and the purchase price was allocated
to the assets acquired. Excess of cost over net assets acquired was $2,760,000,
which is being amortized over ten years on a straight line basis. Results of
Automatic Tool, which were not material to the Company's financial results, are
included in Company operations beginning January 4, 1996.
8
COMMUNICATIONS SYSTEMS, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Nine Months Ended September 30, 1996 Compared to
Nine Months Ended September 30, 1995
Revenues from continuing operations decreased $439,000 or 1% from the 1995
period. Suttle Apparatus sales to domestic (U.S. and Puerto Rico) customers
decreased $696,000 or 2%. Sales to the Big 8 telephone companies (the seven
Regional Bell Operating Companies and GTE) increased $468,000 or 2% due to
increased third quarter shipments of CorroShield products, which offset lower
first half shipments attributed to customer inventory overstocks. These sales
gains were offset by lower sales to other customer segments. Sales to electrical
distributors and original equipment manufacturers decreased $1,074,000 or 24%.
Sales to retailers decreased $475,000 or 11%. Sales of fiber optic connectors by
Automatic Tool and Connector Co., which the Company acquired in January, 1996,
were $3,570,000 in the first nine months of 1996.
Sales to international customers decreased $3,313,000 or 25%. Sales by Austin
Taylor, the Company's United Kingdom based subsidiary, decreased $2,454,000 or
23% due to the phase-out of certain products previously sold to British Telecom.
The Company believes sales to British Telecom have been adversely affected by
that company's reaction to privatization and deregulation of the U.K.
telecommunications market. As a result of deregulation, British Telecom has
reduced its administrative staff by more than 50% and centralized its purchasing
around a small number of large suppliers. This has made it difficult for smaller
companies such as Austin Taylor to compete for this market. Sales to British
Telecom accounted for only 6% of Austin Taylor's sales in the 1996 period,
compared to 15.6% of sales in 1995 and 28.4% of sales in 1994. U.S. export sales
decreased $819,000 or 44%. Sales in Canada decreased $40,000 or 5%.
Gross margin as a percentage of sales was 30% compared to 27% in the 1995
period. Margin percentages improved in U.S. plants due to reduction in
manufacturing overheads, freight charges and payroll overtime premiums. Margins
earned on Austin Taylor products declined to 18% from 20% in the 1995 period due
to increased raw material costs and unfavorable overhead absorption caused by
reduced production volume.
Selling, general and administrative expenses increased $1,790,000 or 29% from
the 1995 period. The increase was due to selling and administrative expenses
associated with the newly acquired Automatic Tool and Connector Co. operations
and increased international sales expenses associated with efforts to develop
export markets for telephone station apparatus products.
Operating income from continuing operations decreased $621,000 or 8%. Net other
income decreased $198,000 from the 1995 period due to fluctuations in the value
of the Company's marketable securities portfolio. The Company's effective income
tax rate was 21% compared to 22% in the 1995 period. The Company's tax rate is
lower than the full U.S. rate due to tax exemptions and benefits received by the
Company's Puerto Rico operations. Income from continuing operations decreased
$584,000, or 9%.
9
COMMUNICATIONS SYSTEMS, INC. AND SUBSIDIARIES
Three Months Ended September 30, 1996 Compared to
Three Months Ended September 30, 1995
Revenues from continuing operations increased $1,950,000 or 12% from the 1995
period. Telephone station apparatus sales to domestic (U.S. and Puerto Rico)
customers increased $1,421,000 or 12%. Sales to the Big 8 telephone companies
(the seven Regional Bell Operating Companies and GTE) increased $747,000 or 8%.
Sales to retailers increased $175,000 or 14%. Sales to electrical distributors
and original equipment manufacturers decreased $280,000 or 21%. Sales to other
customers (principally distributors serving non-RBOC customers) increased
$422,000 or 35%. Sales of fiber optic connectors by Automatic Tool and Connector
Co., which the Company acquired in January, 1996, were $1,489,000 in the 1996
period.
Sales of telephone station apparatus to international customers decreased
$960,000 or 21%. Sales by Austin Taylor, the Company's United Kingdom based
subsidiary, decreased $498,000 or 14% due to the phase-out of certain products
previously sold to British Telecom. U.S. export sales decreased $357,000 or 47%.
Sales in Canada fell $105,000 or 38%.
Gross margin as a percentage of sales was 32% compared to 29% in the third
quarter of 1995. Margin percentages improved in U.S. plants due to reduction in
manufacturing overheads, freight charges and payroll overtime premiums. Margins
earned on Austin Taylor products declined from 22% to 20% in the 1996 period due
to increased raw material costs and unfavorable overhead absorption caused by
reduced production volume.
Selling, general and administrative expenses increased $784,000 or 38% from the
1995 period. The increase was due to selling and administrative expenses
associated with the newly acquired Automatic Tool and Connector Co. operations
and increased international sales expenses in the Company's telephone station
apparatus business.
Operating income from continuing operations increased $367,000 or 14%. Net other
income decreased $19,000 from the 1995 period due to fluctuations in the value
of the Company's marketable securities portfolio. The Company's effective income
tax rate was 23% compared to 22% in the 1995 period. The Company's tax rate is
lower than the full U.S. rate due to tax exemptions and benefits received by the
Company's Puerto Rico operations. Income from continuing operations increased
$233,000, or 11%.
Discontinued Operations
During 1996, the Company's Board of Directors concluded that the contract
manufacturing business was no longer a strategic fit with the Company's plans
for its domestic and international telecommunications business. Accordingly, the
Company agreed to sell the assets (except cash and accounts receivable which
totaled $2,818,000 at September 30, 1996) of Zercom Corporation (its contract
manufacturing unit) to Nortech Systems, Inc. in exchange for $1,500,000 cash and
a $5,000,000 five-year note. The transaction was completed November 4, 1996.
Contract manufacturing revenues for the nine month period ended September 30,
1996 declined $3,973,000 or 25% from the same period in 1995. The loss before
income tax benefits for the 1996 nine months was $530,000 compared to income
before taxes of $466,000 in 1995. The 1996 loss includes a $650,000 pre-tax
charge against slow-moving electronic fishing products inventory.
10
COMMUNICATIONS SYSTEMS, INC. AND SUBSIDIARIES
Discontinued Operations (continued)
Revenues for the three month period ended September 30, 1996 declined $731,000
or 19% from the same period in 1995. Loss before income tax benefits for the
1996 three months was $33,000 compared to a $64,000 loss in 1995.
The Company has established a reserve for operating losses and losses on
disposal of assets it expects to incur in the disposal of the segment. The total
loss reserve established, net of associated income tax benefits of $133,000, is
$393,000, which includes expected operating losses in the disposal period of
$30,000.
Liquidity and Capital Commitments
At September 30, 1996 the Company's continuing operations held approximately
$14,892,000 of cash compared to $11,704,000 at December 31, 1995. Working
capital was $32,798,000 compared to $29,278,000 at December 31, 1995. The
Company's current ratio was 4.7 to 1, unchanged from year end 1995.
Net cash provided by operating activities was $7,801,000 compared to $4,414,000
in the first nine months of 1995. Cash was utilized during the period to pay
current liabilities, purchase new plant and equipment, pay dividends, purchase
common stock and acquire Automatic Tool and Connector Co., Inc.
The Company's balance sheet remains strong, with stockholders' equity of
$58,326,000 and no long-term debt. The Company has available a $2,000,000 bank
line of credit. Management believes, based on the Company's current financial
position and projected future expenditures, that sufficient funds are available
to meet the Company's anticipated needs.
On August 5, 1996, the Company's Board of Directors authorized the purchase and
retirement, from time to time, of up to 500,000 shares of the Company's common
stock on the open market, or in private transactions consistent with overall
market and financial conditions. The Company's cash reserves will be utilized to
make the purchases. If all 500,000 shares are purchased and retired, it would
reduce the number of the Company's currently outstanding shares by 5%. At
September 30, 1996, the Company had purchased and retired 107,330 shares of
common stock at a cost of $1,326,000.
On January 4, 1996, the Company acquired Automatic Tool and Connector Co., Inc.
of Union, New Jersey, in exchange for $1,373,000 in cash and 112,676 shares of
common stock. Automatic Tool and Connector Co. (ATC) is a manufacturer of high
performance fiber optic connectors, interconnect devices and coaxial cable
assemblies for the telecommunications, medical electronics, computer and other
markets. The acquisition represents the Company's entrance into the market for
fiber optic connectors, which is the fastest growing segment in the
telecommunications connector market. ATC's sales for its 1995 fiscal year were
approximately $3,200,000.
The acquisition of Automatic Tool and Connector Co. and the disposition of
Zercom Corporation as well as other acquisitions and dispositions the Company
has made over the past several years have served to expand and focus the
Company's telecommunications product offerings and customer base in both U.S.
and international markets. The Company is seeking to position itself in the
marketplace as a growth oriented manufacturer of telecommunications connecting
devices. The Company is continuing to search for acquisition candidates which
fit the Company's target markets.
11
COMMUNICATIONS SYSTEMS, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Items 1 - 6. Not Applicable
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 thereto duly authorized.
Communications Systems, Inc.
By Paul N. Hanson
Paul N. Hanson
Vice President and
Chief Financial Officer
Date: November 12, 1996
12