Segment Reporting and Geographic Information

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Segment Reporting and Geographic Information

Segment Reporting and Geographic Information

MRV operates its business in two segments: Network Equipment and Network Integration. Network Equipment designs, manufactures, distributes and services optical networking solutions and Internet infrastructure products, and Network Integration distributes network solutions and Internet infrastructure products and 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's2012Form 10-K. MRV evaluates segment performance based on revenues, gross profit and operating income (loss) of each segment. As such, there are no separately identifiable Statements of Operations data below operating income (loss).

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

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2013			2012			2013			2012
Network Equipment		$22,806			$23,310			$64,852			$65,248
Network Integration	15,585			13,816			50,701			48,892
Before intersegment adjustments	38,391			37,126			115,553			114,140
Intersegment adjustments	(6		)	(2,460		)	(88		)	(8,433		)
Total		$38,385			$34,666			$115,465			$105,707

Network Equipment revenue primarily consists of optical communication systems that include Metro Ethernet equipment, optical transport equipment, lab automation equipment, out-of-band network equipment, and 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. All Network Integration's sales are within Italy.

One customer accounted for $32.5 million and $25.6 million of revenue in Network Integration revenue, or 28% and 24% of total revenue, for the nine months ended September 30, 2013 and 2012, respectively. Another customer accounted for $12.9 million and $11.7 million of revenue in Network Integration revenue, or 11% of total revenue, for both the nine months ended September 30, 2013 and 2012, respectively.

The same customer in Network Integration accounted for 12% and 21% of net accounts receivable as of September 30, 2013, and December 31, 2012, respectively. Another Network Integration customer accounted for 16% and 9% of accounts receivable as of September 30, 2013, and December 31, 2012, respectively.

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

	Three months ended				Nine months ended
	September 30,				September 30,
	2013		2012		2013		2012
United States		$15,010		$10,223		$40,811		$33,042
Americas (Excluding the U.S.)	972		1,638		3,452		4,702
Europe	21,276		17,234		66,565		60,140
Asia Pacific	1,127		5,571		4,637		7,823
Total		$38,385		$34,666		$115,465		$105,707

Revenue from external customers attributed to Italy totaled $16.0 million and $13.9 million for the three months ended September 30, 2013 and September 30, 2012 respectively, and $51.5 million and $49.5 million for the nine months ended September 30, 2013 and September 30, 2012 respectively.

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

	September 30, 2013		December 31, 2012
Americas		$3,007		$2,099
Europe	2,132		1,590
Asia Pacific	38		46
Total		$5,177		$3,735

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

	Three months ended						Nine months ended
	September 30,						September 30,
	2013			2012			2013			2012
Gross profit
Network Equipment	$	12,041		$	12,306		$	33,990		$	32,342
Network Integration	2,934			2,261			7,378			7,923
Total before intersegment adjustments	14,975			14,567			41,368			40,265
Corporate unallocated and intersegment adjustments(1)	(1		)	(195		)	5			100
Total	$	14,974		$	14,372		$	41,373		$	40,365
Depreciation expense
Network Equipment	$	406		$	286		$	988		$	745
Network Integration	54			57			159			173
Corporate	45			48			141			143
Total	$	505		$	391		$	1,288		$	1,061
Operating income (loss)
Network Equipment	$	87		$	2,163		$	(1,328	)	$	396
Network Integration (1)	1,525			(168		)	2,891			2,509
Total before intersegment adjustments	1,612			1,995			1,563			2,905
Corporate unallocated operating loss and adjustments (2)	(1,573		)	(4,115		)	(6,072		)	(9,914		)
Total	$	39		$	(2,120	)	$	(4,509	)	$	(7,009	)

(1) Includes a write-down of goodwill for the three and nine months ended September 30, 2012.

(2) 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,
	2013		2012
Additions to Fixed Assets
Network Equipment	$	2,679	$	542
Network Integration	53		58
Corporate	6		81
Discontinued operations	—		1,425
Total	$	2,738	$	2,106

	September 30, 2013		December 31, 2012
Total Assets
Network Equipment		$51,301		$44,445
Network Integration	49,458		47,400
Corporate and intersegment eliminations	25,390		36,720
Total		$126,149		$128,565