Discontinued Operations

On October 16, 2012, the Company completed the sale of its subsidiary, Pedrena. Pedrena is the parent company of Interdata, which is in turn, the parent company of J3TEL. The sale was completed pursuant to a Share Purchase Agreement, dated as of August 1, 2012 (the "Interdata Purchase Agreement") with IJ Next, a French "société par actions simplifiée," as purchaser. The purchaser was a wholly-owned subsidiary of the French company Holding Baelen Gaillard ("HBG").

The purchase price was 14.6 million euros ($19.0 million) and was paid in cash at closing by HBG to the Company. Cash proceeds to the Company were subject to closing costs of approximately $0.8 million. In addition to the Interdata Purchase Agreement, the Company and purchaser entered into a Representations and Warranties Agreement on August 1, 2012 (the "Representation and Warranties Agreement") related to the transaction which included customary representations, warranties, covenants and indemnification obligations. The Interdata Purchase Agreement, Representations and Warranties Agreement and sale of Interdata were approved by the Company's stockholders at the Company's annual meeting of stockholders held on October 11, 2012.

The statements of operations for the years ended December 31, 2012, 2011 and 2010 that would have been included if Pedrena had not been sold and the assets and liabilities of Interdata that are reflected in the balance sheet as of December 31, 2011 consisted of (in thousands):



Year ended December 31:	2012			2011		2010
Revenue		$27,602			$38,282		$33,507
Income (loss) before income taxes	(3,175		)	3,432		3,070
Provision for income taxes	(244		)	2,045		1,011
Income (loss) from operations of discontinued operations	(2,931		)	1,387		2,059
Gain on sale of Interdata, net of income taxes of $623	5,542			—		—
Net income from discontinued operations, net of income taxes		$2,611			$1,387		$2,059



Year ended December 31:	December 31, 2011
Cash and cash equivalents		$6,370
Accounts receivable, net	13,173
Inventories	1,554
Other current assets	1,115
Total current assets	22,212
Property and equipment, net	2,369
Goodwill	2,057
Other assets	260
Total assets		$26,898
Accounts payable		$4,191
Accrued liabilities	3,942
Other current liabilities	3,382
Non-current liabilities	380
Total liabilities		$11,895

In connection with the sale of Interdata the Company entered into a channel partner agreement with the buyer whereby the Company will continue to sell its products to Interdata. The amount of intercompany revenues that were previously eliminated from the Company's financial statements in consolidation consisted of (in thousands):



Year ended December 31:	2012	2011	2010
Revenues attributed to intercompany activities	$4,249	$6,630	$5,906

On October 12, 2012, the Company completed the sale of all of the shares of its wholly-owned subsidiary Alcadon pursuant to a Stock Purchase Agreement, dated as of September 11, 2012 (the "Alcadon Purchase Agreement") with Deltaco Aktiebolag, a public corporation organized under the laws of Sweden (“Deltaco”). The Alcadon Purchase Agreement and sale of Alcadon were approved by the Company's stockholders at the Company's annual meeting of stockholders held on October 11, 2012.

The purchase price paid at closing to the Company by Deltaco was $6.5 million plus estimated net cash as of September 30, 2012 of $1.2 million for an aggregate of $7.7 million. The cash proceeds received were subject to an escrow amount of $0.8 million and approximately $0.3 million in closing costs. The escrow fund was released on December 28, 2012, subject to a 'true-up' adjustment of $0.7 million. Prior to the closing, Alcadon paid a cash dividend to MRV in the amount of $3.7 million. Total net cash proceeds to the Company were $10.6 million inclusive of the $3.7 million dividend and net of the true-up and other closing costs.

The statements of operations for the years ended December 31, 2012, 2011 and 2010 that would have been included if Alcadon had not been sold and the assets and liabilities of Alcadon that are reflected in the balance sheet as of December 31, 2011 consisted of (in thousands):



Year ended December 31:	2012			2011			2010
Revenue		$24,320			$36,760			$29,628
Income (loss) before income taxes	(1,088		)	(2,479		)	3,305
Provision for income taxes	643			1,271			920
Income (loss) from operations of discontinued operations	(1,731		)	(3,750		)	2,385
Gain on sale of Alcadon, net of income taxes of $1,341	6,182			—			—
Net income (loss) from discontinued operations, net of income taxes		$4,451			($3,750	)		$2,385



Year ended December 31:	2011
Cash and cash equivalents		$6,392
Time deposits	101
Accounts receivable, net	3,912
Inventories	5,169
Other current assets	409
Total current assets	15,983
Property and equipment, net	660
Goodwill	3,737
Total assets		$20,380
Accounts payable		$1,988
Accrued liabilities	2,101
Other current liabilities	1,854
Non-current liabilities	599
Total liabilities		$6,542

In connection with the sale of Interdata the Company entered into a channel partner agreement with the buyer whereby the Company will continue to sell its products to Alcadon. The amount of intercompany revenues that were previously eliminated from the Company's financial statements in consolidation consisted of (in thousands):



Year ended December 31:	2012	2011	2010
Revenues attributed to intercompany activities	$3,931	$8,111	$6,251

On March 29, 2012, the Company completed the sale of all of the issued and outstanding capital stock of its wholly-owned subsidiary CES. The sale was completed pursuant to a Stock Purchase Agreement (the "CES Purchase Agreement"), dated as of December 2, 2011, with CES Holding SA, as purchaser, represented for purpose of the Agreement by Vinci Capital Switzerland SA. The CES Purchase Agreement and sale of CES were approved by the Company's stockholders at the Company's annual meeting of stockholders held on January 9, 2012. The purchase price for CES paid on closing to the Company was CHF 25.8 million, or U.S. $28.4 million, with CHF 2.6 million, or U.S. $2.8 million of the proceeds going into an indemnification escrow account to be released in one year to the Company (subject to any indemnification claims that may be brought by the purchaser). Cash proceeds to the Company were $24.2 million upon closing net of the escrowed funds and $1.2 million in other closing costs.

The historical financial results of CES prior to its sale have been reclassified as discontinued operations for all periods presented. The Company recorded net income of $5.8 million and $2.3 million from discontinued operations, net of income tax expense, for the years ended December 31, 2012 and 2011, respectively. The net income from discontinued operations for the year ended December 31, 2012 includes an $6.5 million gain partially offset by a $0.1 million operating loss and $0.4 million in withholding tax expense.

The statements of operations for the years ended December 31, 2012, 2011 and 2010, that would have been included if CES had not been sold and the assets and liabilities of CES that are reflected in the balance sheet as of December 31, 2011 consisted of (in thousands):



Year ended December 31:	2012			2011		2010
Revenue		$6,829			$34,643		$29,436
Income (loss) before income taxes	(135		)	4,758		4,581
Provision for income taxes	556			2,454		1,197
Income (loss) from operations of discontinued operations	(691		)	2,304		3,384
Gain on sale of CES, net of income taxes of $1,668	6,470			—		—
Net income from discontinued operations, net of income taxes		$5,779			$2,304		$3,384



Year ended December 31,	2011
Cash and cash equivalents		$12,364
Time deposits	1,281
Accounts receivable, net	5,310
Inventories	4,029
Other current assets	1,826
Total current assets	24,810
Property and equipment, net	2,571
Goodwill	12,843
Other assets	(119		)
Total assets		$40,105
Accounts payable		$705
Accrued liabilities	1,802
Other current liabilities	729
Non-current liabilities	467
Total liabilities		$3,703

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 a net loss of $3.4 million from discontinued operations, net of income tax expense for the year ended December 31, 2011.

The statements of operations for the years ended December 2011 and 2010 that would have been included if TurnKey had not been sold consisted of (in thousands):



Year ended December 31:	2011			2010
Revenue		$1,907			$7,930
Income (loss) before income taxes	(240		)	(1,699		)
Provision for income taxes	20			1
Income (loss) from operations of discontinued operations	(260		)	(1,700		)
Loss on sale of TurnKey net of income taxes of $0	(3,154		)	—
Net income (loss) from discontinued operations, net of income taxes		($3,414	)		($1,700	)

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.



Year ended December 31,	2010
Revenue		$195,132
Income (loss) before income taxes	7,006
Provision (benefit) for income taxes	728
Income from operations of discontinued operations	6,278
Gain on sale of Source Photonics net of income taxes of $0	37,528
Net income (loss) from discontinued operations, net of income taxes		$43,806