Segment Reporting and Geographic Information

6 Months Ended

Jun. 30, 2011

Segment Reporting and Geographic Information [Abstract]

Segment Reporting Disclosure [Text Block]

Segment Reporting and Geographic Information

MRV operates its business in two segments: the Network Equipment group and the Network Integration group. The Network Equipment group designs, manufactures and distributes optical networking solutions and Internet infrastructure products, and the Network Integration group provides value-added integration and support services for customers' networks.

The accounting policies of the segments are the same as those described in the summary of significant accounting polices disclosed in MRV's 2010 Form 10-K. MRV evaluates segment performance based on revenues, gross profit and operating income of each segment. As such, there are no separately identifiable Statements of Operations data below operating income.

The following table summarizes revenues by segment, including intersegment revenues, (in thousands):

	Three months ended						Six months ended
	June 30,						June 30,
	2011			2010			2011			2010
Network Equipment group	$	33,699		$	29,266		$	65,006		$	59,778
Network Integration group	38,374			31,665			73,728			62,632
Before intersegment adjustments	72,073			60,931			138,734			122,410
Intersegment adjustments	(3,875		)	(3,727		)	(8,574		)	(6,071		)
Total	$	68,198		$	57,204		$	130,160		$	116,339

Network Equipment revenue primarily consists of Metro Ethernet equipment, optical transport equipment, out-of-band network equipment, defense and aerospace network applications, the related service revenue and fiber optic components sold as part of system solutions. Network Integration revenue primarily consists of value-added integration and support service revenue, related third-party product sales (including third-party product sales through distribution) and fiber optic components sold as part of system solutions.

One customer accounted for $22.3 million and $20.6 million of revenue in the Network Integration group, or 17% and 18% of total revenue for the six months ended June 30, 2011, and 2010, respectively.

As of June 30, 2011, amounts due from one customer in the Network Integration group accounted for 16% of accounts receivable. The same customer accounted for 16% of accounts receivable as of December 31, 2010.

The following table summarizes external revenue by geographic region (in thousands):

	Three months ended				Six months ended
	June 30,				June 30,
	2011		2010		2011		2010
Americas	$	20,552	$	14,148	$	36,732	$	27,631
Europe	45,183		40,620		88,773		83,472
Asia Pacific	2,455		2,434		4,642		5,225
Other regions	8		2		13		11
Total	$	68,198	$	57,204	$	130,160	$	116,339

The following table summarizes long-lived assets, consisting of property and equipment, by geographic region (in thousands):

	June 30, 2011		December 31, 2010
Americas	$	2,293	$	2,273
Europe	6,557		6,157
Asia Pacific	57		31
Total	$	8,907	$	8,461

The following table provides selected Statement of Operations information by business segment (in thousands):

	Three months ended						Six months ended
	June 30,						June 30,
	2011			2010			2011			2010
Gross profit
Network Equipment group	$	18,885		$	17,329		$	35,865		$	35,137
Network Integration group	10,667			8,698			19,198			18,970
Before intersegment adjustments	29,552			26,027			55,063			54,107
Corporate unallocated and intersegment adjustments (1)	(150		)	18			(591		)	1
Total	$	29,402		$	26,045		$	54,472		$	54,108
Depreciation expense
Network Equipment group	$	411		$	468		$	826		$	893
Network Integration group	123			92			248			174
Corporate	55			14			82			28
Total	$	589		$	574		$	1,156		$	1,095
Operating income (loss)
Network Equipment group	$	2,782		$	3,580		$	5,159		$	6,448
Network Integration group	4,403			2,836			7,241			6,358
Before intersegment adjustments	7,185			6,416			12,400			12,806
Corporate unallocated operating loss and adjustments (1)	(3,609		)	(4,716		)	(7,256		)	(7,267		)
Total	$	3,576		$	1,700		$	5,144		$	5,539

(1) Adjustments reflect the elimination of intersegment revenue and profit in inventory.

The following tables provide selected Balance Sheet and Statement of Cash Flow information by business segment (in thousands):

	Six Months Ended
	June 30,
	2011		2010
Additions to Fixed Assets
Network Equipment group	$	1,095	$	1,525
Network Integration group	258		517
Corporate	201		22
Discontinued operations	15		5,767
Total	$	1,569	$	7,831

	June 30, 2011		December 31, 2010
Total Assets
Network Equipment group	$	88,203	$	82,913
Network Integration group	106,347		105,117
Corporate and intersegment eliminations	128,496		134,710
Discontinued operations	—		4,126
Total	$	323,046	$	326,866

	June 30, 2011		December 31, 2010
Goodwill
Network Equipment group	$	14,488	$	12,829
Network Integration group	13,303		12,400
Total	$	27,791	$	25,229