Suttle

          Suttle achieved strong growth in fiscal 2013 posting sales of $54.3 million, a 21% increase over fiscal 2012. Sales to large telecommunications customers increased 29% to $43.3 million in 2013 from $33.6 million in 2012 due to the fulfillment of new product contracts and accounted for 80% of 2013 sales. The growth is attributed to the successful launch of high speed copper connectivity and fiber connectivity platforms for FTTX and Enhanced networks. Sales of structured cabling products increased 49% over 2013 due to an increase in new multi-dwelling unit construction in the U.S. housing market. As a result of increased efficiencies associated with the higher sales level and favorable product mix, Suttle’s gross margin increased to 29% in 2013 compared to 27% in 2012.

Transition Networks

          Transition Networks’ fiscal 2013 sales decreased 19% to $43.9 million compared to $53.8 million in 2012. North America sales decreased 22% or $8.7 million in 2013 from 2012 due to declines in Federal government spending and program delays, as well as the maturation of its enterprise/traditional media conversion products for North America commercial markets. International sales decreased $1.3 million in 2013 or 9% compared to 2012, due to currency fluctuations, project timing and continuing economic problems in some markets. Gross margins generally remained steady in 2013, dropping to 51% in 2013 as compared to 52% in 2012. Transition Networks is focused on developing new products for key growth markets. However revenue from the introduction of these new products has, to date, not been sufficient to offset existing market declines.

JDL Technologies

          JDL Technologies’ fiscal 2013 sales were $ 33.1 million compared to $5.4 million in 2012 due to substantially increased sales to its two South Florida school district customers. In 2013 JDL recognized $23.0 million of revenue from its participation in the Miami-Dade County Public School District (M-DCPS) “Bringing Wireless to the Classroom” initiative and $7.9 million in revenue from the School Board of Broward County (SBBC). JDL Technologies’ gross margin dollars increased 336% in 2013 to $6.7 million driven by the revenue increase. However, its gross margin percentage decreased to 20% from 28% in 2012, because a higher portion of its 2013 revenue was hardware-based in contrast to its more traditional value-added services. Although JDL Technologies will continue to aggressively pursue opportunities at both M-DCPS and SBBC, it has substantially completed the present phase of its work on the “Bringing Wireless to the Classroom” initiative and other projects, and currently has a substantially lower backlog for future projects. Because federal and local funding for investments in IT infrastructure and services for K-12 schools varies substantially from year to year, there have been large swings in JDL’s annual revenues. We expect this volatility in JDL’s annual revenues to continue in 2014 and future years. Accordingly, in order to reduce its dependence on government funding, JDL continues to aggressively pursue opportunities to provide managed services, migration to the cloud, virtualization and other network services for small and medium sized commercial businesses with a focus on healthcare, legal and financial services markets. Its revenue from these commercial businesses increased to $2.2 million in 2013 from $1.3 million in 2012.