Segment Reporting and Geographic Information

9 Months Ended

Sep. 30, 2011

Segment Reporting [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						Nine months ended
	September 30,						September 30,
	2011			2010			2011			2010
Network Equipment group	$	31,455		$	32,202		$	96,461		$	91,980
Network Integration group	34,380			37,699			108,108			100,331
Before intersegment adjustments	65,835			69,901			204,569			192,311
Intersegment adjustments	(3,380		)	(3,781		)	(11,954		)	(9,852		)
Total	$	62,455		$	66,120		$	192,615		$	182,459

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 $31.7 million and $32.1 million of revenue in the Network Integration group, or 16% and 18% of total revenue, for the nine months ended September 30, 2011, and 2010, respectively. The same customer accounted for $11.5 million, or 17%, of revenue for the three months ended September 30, 2010. Another customer accounted for $6.4 million, or 10%, of revenue for the three months ended September 30, 2010.

As of September 30, 2011, amounts due from one customer in the Network Integration group accounted for 20% of accounts receivable. The same customer accounted for 17% of accounts receivable as of December 31, 2010.

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

	Three months ended				Nine months ended
	September 30,				September 30,
	2011		2010		2011		2010
Americas	$	19,961	$	16,575	$	56,693	$	44,206
Europe	40,952		46,991		129,725		130,463
Asia Pacific	1,541		2,509		6,183		7,734
Other regions	1		45		14		56
Total	$	62,455	$	66,120	$	192,615	$	182,459

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

	September 30, 2011		December 31, 2010
Americas	$	2,208	$	2,273
Europe	6,391		6,157
Asia Pacific	54		31
Total	$	8,653	$	8,461

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

	Three months ended						Nine months ended
	September 30,						September 30,
	2011			2010			2011			2010
Gross profit
Network Equipment group	$	16,178		$	17,513		$	52,043		$	52,650
Network Integration group	8,954			10,233			28,152			29,203
Before intersegment adjustments	25,132			27,746			80,195			81,853
Corporate unallocated and intersegment adjustments (1)	(45		)	(257		)	(636		)	(256		)
Total	$	25,087		$	27,489		$	79,559		$	81,597
Depreciation expense
Network Equipment group	$	412		$	469		$	1,238		$	1,362
Network Integration group	106			80			354			254
Corporate	50			14			132			42
Total	$	568		$	563		$	1,724		$	1,658
Operating income (loss)
Network Equipment group	$	2,580		$	2,649		$	7,739		$	9,097
Network Integration group	3,702			4,859			10,943			11,217
Before intersegment adjustments	6,282			7,508			18,682			20,314
Corporate unallocated operating loss and adjustments (1)	(2,779		)	(2,116		)	(10,035		)	(9,383		)
Total	$	3,503		$	5,392		$	8,647		$	10,931

(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):

	Nine Months Ended
	September 30,
	2011		2010
Additions to Fixed Assets
Network Equipment group	$	1,493	$	1,978
Network Integration group	351		760
Corporate	201		36
Discontinued operations	15		8,890
Total	$	2,060	$	11,664

	September 30, 2011		December 31, 2010
Total Assets
Network Equipment group	$	84,069	$	82,913
Network Integration group	101,941		105,117
Corporate and intersegment eliminations	128,801		134,710
Discontinued operations	—		4,126
Total	$	314,811	$	326,866

	September 30, 2011		December 31, 2010
Goodwill
Network Equipment group	$	13,452	$	12,829
Network Integration group	12,427		12,400
Total	$	25,879	$	25,229