Message From Vice President & CFO, David T. McGraw

2010 IN REVIEW
We are pleased to announce that 2010 was another record year for Communications Systems, Inc. We continued to strengthen our position in the industry by meeting, and most often surpassing, our financial objectives and corporate goals.

Sales in 2010 were $120,072,000, up 9% from 2009. Net Income for 2010 was $9,715,000 or $1.15 per diluted share versus $6,044,000 or $.72 per diluted share in 2009. Operating Income before taxes increased 53% to $15,614,000 compared to $10,219,000 for 2009. The current ratio remained strong at 6.8 to 1. In addition, we closed the year with approximately $43,075,000 in cash while using approximately $4,858,000 in cash for dividends during the year.

2011 TO-DATE
The financial successes we achieved in 2010 are continuing in 2011. For the three months ended March 31, 2011 consolidated sales increased 20% to $31,023,000 compared to $25,882,000 for the same period in 2010 while net income increased to $2,558,000 or $0.30 per diluted share, compared to $1,331,000, or $0.16 per diluted share in the same period of 2010.

RUSSELL 3000
Communications Systems, Inc. was again added to the broad-market Russell 3000 Index whose annual indexes capture the 4,000 largest US stocks as of the end of May, ranking them by total market capitalization. Membership in the Russell 3000 means automatic inclusion in the small-cap Russell 2000 Index and inclusion in other Russell indexes, including appropriate growth and value style indexes. The Russell indexes are broadly recognized as key tools for investors to track market performance and trends. We believe inclusion in the Russell 3000 will result in increased visibility for Communications Systems, Inc. within the investment community. We are proud to have been selected once again for this prestigious recognition.

Sincerely,

David T. McGraw