Discontinued Operations

12 Months Ended

Dec. 31, 2011

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

On May 6, 2011, the Company sold all of the issued and outstanding capital stock of TurnKey. Prior to its disposition, TurnKey was part of the Network Integration segment. The historical financial results of TurnKey prior to its sale have been reclassified as discontinued operations for all periods presented. The Company recorded losses from discontinued operations from TurnKey, net of income tax expense, of $3.4 million and $1.7 million for the years ended December 31, 2011 and 2010, respectively and income from discontinued operations, net of income tax expense, of $0.8 million for the year ended December 31, 2009. The loss from discontinued operations for the year ended December 31, 2011 includes $3.2 million for the loss on the sale of TurnKey.

Results of TurnKey included in discontinued operations in the accompanying Statement of Operations consisted of (in thousands):

Years ended December 31:	2011			2010			2009
Revenue	$	1,907		$	7,930		$	13,948
Income before income taxes	(240		)	(1,699		)	800
Provision for income taxes	20			1			8
Income (loss) from operations of discontinued operations	(260		)	(1,700		)	792
Loss on sale of TurnKey	(3,154		)	—			—
Net income (loss) from discontinued operations, net of income taxes	$	(3,414	)	$	(1,700	)	$	792

The assets and liabilities of TurnKey are reflected as assets and liabilities from discontinued operations in the Consolidated Balance Sheets as of December 31, 2010 and consisted of (in thousands):

December 31:	2010
Cash and cash equivalents	$	568
Time deposits	104
Accounts receivable, net	1,060
Inventories	255
Other current assets	787
Total current assets	2,774
Property and equipment, net	80
Goodwill	1,272
Total assets	$	4,126
Accounts payable	$	659
Accrued liabilities	708
Other current liabilities	9
Non-current liabilities	462
Total liabilities	$	1,838

On October 26, 2010, the Company sold all of the issued and outstanding capital stock of its wholly-owned subsidiaries Source Photonics, Inc. and Source Photonics Santa Clara, Inc. (together "Source Photonics”) to Magnolia Source B.V., an entity owned and controlled by affiliates of Francisco Partners, pursuant to a Stock Purchase Agreement dated as of October 26, 2010.  The purchase agreement provided for the payment from the buyer to the Company of cash proceeds of approximately $117.8 million, as well as the assumption of debt of approximately $32.9 million, less a payment of approximately $4.6 million directly to Source Photonics for payment of management bonuses triggered by the transaction, and certain restricted stock unit settlements. 

The Purchase Agreement contained customary representations, warranties and covenants, as well as customary mutual indemnification obligations.  For reporting purposes, 26 operating days that reflect contributions from Source Photonics are included in discontinued operations in the Company’s fourth quarter 2010 results in the accompanying Consolidated Statement of Operations.

Results of Source Photonics included in discontinued operations in the accompanying Statement of Operations consisted of (in thousands):

Years ended December 31:	2010		2009
Revenue	$	195,132	$	205,786
Income before income taxes	7,006		(10,090		)
Provision for income taxes	728		1,178
Income from operations of discontinued operations	6,278		(11,268		)
Gain on sale of Source Photonics	37,528		—
Net income (loss) from discontinued operations, net of income taxes	$	43,806	$	(11,268	)

On December 24, 2009, the Company entered into an agreement to divest its 90% ownership of EDSLan, a communication equipment distribution company located in Milan, Italy. The purchase agreement provided for the following: a) the payment from EDSLan to MRV of a dividend of two million euro; b) the sale of the Company's shares of EDSLan for six million euro; c) payment by the buyers of 250,000 euros of the investment banker's fees; and d) the cancellation of a put option requiring MRV to pay $917,000 to a member of EDSLan management to acquire 3.33% of EDSLan by December 31, 2009. The sale was completed on January 7, 2010. The results of operations of EDSLan for the seven day period ended January 7, 2010 were not included in the Company's 2010 results because they were not material. The Company has reflected the results of this business as discontinued operations in the consolidated statement of operations for all years presented. EDSLan was historically recorded in the Network Integration segment. The Company recorded a loss of $6.9 million in 2009 to write down the assets of EDSLan to their net realizable value, including a goodwill impairment of $2.4 million.

Results of EDSLan included in discontinued operations in the accompanying Statement of Operations consisted of (in thousands):

Years ended December 31:	2009
Revenue	$	61,560
Income before income taxes	2,038
Provision for income taxes	927
Income from operations of discontinued operations	1,111
Write-down to estimated net realizable value	(3,818		)
Net income (loss) from discontinued operations, net of income taxes	$	(2,707	)