Segment Reporting and Geographic Information

12 Months Ended

Dec. 31, 2011

Segment Reporting [Abstract]

Segment Reporting and Geographical Information

Segment Reporting and Geographical Information

MRV divides and operates its business based on 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. On October 26, 2010, MRV sold Source Photonics. Source Photonics, together with Appointech, another small business unit, comprised the Optical Components group. Following the disposition of Source Photonics, Appointech was aggregated with the Network Equipment group. The historical financial information in these consolidated financial statements has been reclassified to reflect Source Photonics as a discontinued operation and to reflect Appointech in the Network Equipment segment for all periods presented.

The accounting policies of the segments are the same as those described in the summary of significant accounting polices in Note 2. MRV evaluates segment performance based on revenues, gross profit and operating income of each segment. As such, there are no separately identified segment statements of operations data below operating income.

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

Years ended December 31:	2011			2010			2009
Network Equipment group	$	130,809		$	125,950		$	105,977
Network Integration group	151,478			143,345			129,397
All others	—			—			310
	282,287			269,295			235,684
Intersegment adjustment	(15,534		)	(13,263		)	(7,176		)
Total	$	266,753		$	256,032		$	228,508

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 generated $45.5 million, $44.8 million, and $36.5 million of revenue in the Network Integration group, or 17%, 18%, and 16% of total revenue for the years ended December 31, 2011, 2010, and 2009, respectively.

As of December 31, 2011, amounts due from one customer in the Network Integration group accounted for 19% of accounts receivables. The same customer accounted for 22% of accounts receivables as of December 31, 2010.

The following table summarizes segment revenues, excluding intersegment sales, by geographical region (in thousands):

Years ended December 31:	2011		2010		2009
Network Equipment group:
United States	$	71,217	$	56,063	$	47,010
Americas, excluding the United States	6,357		8,916		4,203
Europe	32,118		37,747		39,882
Asia Pacific	5,555		9,879		7,682
Other regions	28		82		294
Total Network Equipment	115,275		112,687		99,071
Network Integration group:
Europe	151,478		143,345		129,397
Total Network Integration	151,478		143,345		129,397
All others:			—		40
Total	$	266,753	$	256,032	$	228,508

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

December 31:	2011		2010
Americas	$	2,150	$	2,273
Europe	7,158		6,157
Asia Pacific	52		31
Total	$	9,360	$	8,461

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

Years ended December 31:	2011			2010			2009
Gross profit:
Network Equipment group	$	69,546		$	71,884		$	57,097
Network Integration group	38,454			39,035			38,400
All others	—			—			190
	108,000			110,919			95,687
Corporate unallocated and intersegment adjustments(1)	(408		)	(199		)	61
Total gross profit	$	107,592		$	110,720		$	95,748
Depreciation expense:
Network Equipment group	$	1,806		$	1,806		$	1,684
Network Integration group	508			545			129
All others	—			—			11
Corporate	180			59			51
Total depreciation expense	$	2,494		$	2,410		$	1,875
Operating income (loss):
Network Equipment group	$	9,810		$	12,204		$	(1,467	)
Network Integration group	7,805			13,914			12,994
All others	—			—			(1,453		)
	17,615			26,118			10,074
Corporate unallocated operating loss and adjustments(1)	(14,291		)	(11,778		)	(14,657		)
Total operating income (loss)	$	3,324		$	14,340		$	(4,583	)

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(1) Adjustments represent the elimination of profit in inventory

The following table provides selected balance sheet information by business segment (in thousands):

December 31:	2011		2010
Additions to property and equipment:
Network Equipment group	$	2,277	$	2,424
Network Integration group	614		998
Corporate	212		52
Discontinued operations	15		9,644
Total property and equipment	$	3,118	$	13,118
Total assets:
Network Equipment group	$	86,205	$	82,913
Network Integration group	93,557		105,117
Optical Components group	—		—
All others	—		—
Corporate and intersegment eliminations	50,927		134,710
Discontinued operations	—		4,126
Total assets	$	230,689	$	326,866
Goodwill:
Network Equipment	$	12,843	$	12,829
Network Integration	5,156		12,400
Total goodwill	$	17,999	$	25,229