Segment Reporting and Geographic Information

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Segment Reporting and Geographic Information

Segment Reporting and Geographic Information

MRV operates its business in two segments: the Network Equipment segment and the Network Integration segment. The Network Equipment segment designs, manufactures, distributes and services optical networking solutions and Internet infrastructure products, and the Network Integration segment 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 set forth in Note 2, Summary of Significant Accounting Policies. 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):

Years Ended December 31,	2013			2012			2011
Network Equipment segment		$90,711			$87,727		$	96,166
Network Integration segment	75,636			72,421			76,436
Before intersegment adjustments	166,347			160,148			172,602
Intersegment adjustments	(146		)	(8,487		)	(15,534		)
Total		$166,201			$151,661		$	157,068

Network Equipment revenue primarily consists of optical communication systems that include Metro Ethernet equipment, optical transport equipment and out-of-band network equipment, and related service revenue and fiber optic components which are 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 $46.6 million, $43.4 million and $44.2 million of revenue in the Network Integration segment, or 28%, 28% and 28% of total revenue, for the years ended December 31, 2013, 2012 and 2011.

The same customer accounted for 22%, 21% and 14% of accounts receivable as of December 31, 2013, 2012 and 2011 respectively. Another customer in the Network Integration segment accounted for 27%, 9% and 30% of total accounts receivable as of December 31, 2013, 2012 and 2011, respectively.

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

Years Ended December 31,	2013		2012		2011
United States		$55,071		$47,250	$	51,076
Americas (Excluding the U.S.)	4,200		6,008		6,357
Europe	98,843		88,868		94,317
Asia Pacific	8,087		9,521		5,296
Other regions	—		14		22
Total		$166,201		$151,661	$	157,068

Revenue from external customers attributed to Italy totaled $76.6 million, $73.1 million, and $77.0 million for the years ended December 31, 2013, 2012 and 2011 respectively. No other individual foreign country accounted for more than 10% of consolidated revenue. The Company's revenue by geographical area is based on the customer's country of domicile.

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

	December 31, 2013		December 31, 2012
Americas		$3,326		$2,099
Europe	2,194		1,590
Asia Pacific	35		46
Total		$5,555		$3,735

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

Years ended December 31,	2013			2012			2011
Gross profit
Network Equipment segment	$	47,069		$	43,325		$	49,423
Network Integration segment	10,917			11,832			12,659
Before intersegment adjustments	57,986			55,157			62,082
Corporate unallocated and intersegment adjustments (1)	7			(5		)	(408		)
Total	$	57,993		$	55,152		$	61,674
Depreciation expense
Network Equipment segment	$	1,417		$	1,022		$	843
Network Integration segment	219			234			243
Corporate	197			192			180
Total	$	1,833		$	1,448		$	1,266
Operating income (loss)
Network Equipment segment	$	(1,699	)	$	1,096		$	4,539
Network Integration segment	4,620			4,514			6,036
Before intersegment adjustments	2,921			5,610			10,575
Corporate unallocated operating loss and adjustments (1)	(7,302		)	(15,457		)	(14,292		)
Total operating income (loss)	$	(4,381	)	$	(9,847	)	$	(3,717	)
Provision (benefit) for income taxes
Network Equipment segment	$	(38	)	$	(2,468	)	$	(3,289	)
Network Integration segment	1,546			1,455			2,098
Corporate	—			—			—
Total	$	1,508		$	(1,013	)	$	(1,191	)

(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):

December 31:	2013		2012
Additions to Fixed Assets
Network Equipment segment	$	3,329	$	1,296
Network Integration segment	104		85
Corporate	229		86
Discontinued operations	—		1,442
Total	$	3,662	$	2,909
Total Assets
Network Equipment segment	$	48,955	$	44,445
Network Integration segment	54,625		47,400
Corporate and intersegment eliminations	24,367		36,720
Discontinued operations	—		—
Total	$	127,947	$	128,565