Message From President & CEO, William G. Schultz

Letter To Our Shareholders

On May 19, 2011 Jeff Berg formally retired as President and CEO of Communications Systems, Inc. (CSI). We want to thank Jeff for his 21 years of dedication and service to the organization. He will continue to serve the organization as a member of the Board of Directors. Also on May 19, 2011 I became the new President and CEO of CSI. It is a tremendous honor for me to be just the third CEO in CSI’s history and I would like to thank our Chairman Curt Sampson and Board of Directors for the opportunity to lead this great organization.

We had strong performance in 2010 with an increase in revenues of 9% and an increase of operating income of 53% over 2009 led by strong performance in our Transition Networks and JDL business units. Transition Networks had strong sales in North America, South America, and Asia while the EMEA region was flat. Two areas of growth for Transition Networks were sales to the US Federal Government and the Telco market with sales of media converters and network interface devices. JDL was bolstered by their long-term customer Broward County Schools and a large network project in their district.

Our Suttle division declined year-over-year with a continued decline in land line business and the problems that plague the housing market. We have a tremendous customer base with our Suttle group however, and continue to invest in new product development so we can replace the legacy products. As a company CSI had strong performance in 2010 and we continue to work to support our business units so they can continue to deliver great products and services to our customers.

A key to our long-term success and ability to continue to perform for our shareholders will be prudent investments in developing new products and becoming more efficient in our operations. In 2011 we will continue to invest in our people, software, and equipment to grow our organization’s capabilities. In our markets we face a rapid pace of change and in order to remain relevant to our current customers and grow in new markets we need to invest in new product development.

We also want to become the most efficient at bringing products and services to market, provide those products and services at a competitive price, and deliver best-in-class customer service. To help achieve these goals we will be investing in a new Enterprise Resource Planning (ERP) System. This new system will help enable our business units to improve and streamline their product development cycles and provide outstanding customer service.

In addition to helping our business units grow organically we will continue to search for strategic acquisitions that will be accretive to CSI and help bring new products, customers and our markets to our business units.

CSI has great employees who work hard for you every day. Our management team works hard to support them and grow this company for longer term success. We will endeavor to be the strong financial steward that CSI has historically been for our investors. I want to thank you, our shareholders, for investing with our company. CSI has great customers and as we continue to keep our customers delighted, we will also keep you our shareholders delighted.

Sincerely,

William G. Schultz