Segment Reporting and Geographic Information

6 Months Ended

Jun. 30, 2014

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's2013Form 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   June 30,						Six Months Ended   June 30,
	2014			2013			2014			2013
Network Equipment	$	21,833		$	21,100		$	44,152		$	42,046
Network Integration	21,355			17,135			41,408			35,117
Before intersegment adjustments	43,188			38,235			85,560			77,163
Intersegment adjustments	(64		)	(60		)	(118		)	(83		)
Total	$	43,124		$	38,175		$	85,442		$	77,080

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 $23.6 million and $22.2 million of revenue in Network Integration revenue, or 28% and 29% of total revenue, for the six months endedJune 30, 2014 and 2013, respectively. Another customer accounted for $14.2 million and $9.0 million of Network Integration revenue, or 17% and 12% of total revenue, for the six months endedJune 30, 2014 and 2013, respectively.

One customer accounted for $12.6 million and $10.8 million of revenue in Network Integration revenue, or 29% of total revenue, for the three months endedJune 30, 2014 and 2013, respectively. Another customer accounted for $7.7 million and $4.1 million of Network Integration revenue, or 18% and 11% of total revenue, for the three months endedJune 30, 2014 and 2013, respectively.

One customer in Network Integration accounted for 25% and 22% of total net accounts receivable as of June 30, 2014, and December 31, 2013, respectively. Another Network Integration customer accounted for 28% and 27% of total net accounts receivable as of June 30, 2014, and December 31, 2013, respectively.

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

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
United States	$	13,555	$	13,676	$	26,411	$	25,801
Americas (Excluding the U.S.)	126		855		682		2,480
Europe	26,522		21,869		53,101		45,290
Asia Pacific	2,921		1,775		5,248		3,509
Total	$	43,124	$	38,175	$	85,442	$	77,080

Revenue from external customers attributed to Italy totaled $21.4 million and $17.3 million for the three months ended June 30, 2014 and June 30, 2013 respectively. Revenue from external customers attributed to Italy totaled $41.8 million and $35.4 million for the six months endedJune 30, 2014 and June 30, 2013 respectively.

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

	June 30, 2014		December 31, 2013
Americas	$	3,199	$	3,326
Europe	2,017		2,194
Asia Pacific	32		35
Total	$	5,248	$	5,555

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

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Gross profit
Network Equipment	$	11,185		$	11,183		$	21,944		$	21,949
Network Integration	3,598			2,187			6,088			4,444
Total before intersegment adjustments	14,783			13,370			28,032			26,393
Corporate unallocated and intersegment adjustments(1)	(1		)	2			1			6
Total	$	14,782		$	13,372		$	28,033		$	26,399
Depreciation expense
Network Equipment	$	433		$	283		$	969		$	583
Network Integration	51			52			100			105
Corporate	20			48			59			96
Total	$	504		$	383		$	1,128		$	784
Operating income (loss)
Network Equipment	$	(1,503	)	$	(296	)	$	(4,343	)	$	(1,415	)
Network Integration	1,704			675			2,550			1,366
Total before intersegment adjustments	201			379			(1,793		)	(49		)
Corporate unallocated operating loss and adjustments (1)	(1,327		)	(914		)	(3,182		)	(4,499		)
Total	$	(1,126	)	$	(535	)	$	(4,975	)	$	(4,548	)

(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):

	Six months ended
	June 30,
	2014		2013
Additions to Fixed Assets
Network Equipment	$	1,019	$	2,064
Network Integration	74		46
Corporate	83		6
Total	$	1,176	$	2,116

	June 30, 2014		December 31, 2013
Total Assets
Network Equipment	$	44,798	$	48,955
Network Integration	65,288		54,625
Corporate and intersegment eliminations	19,053		24,367
Total	$	129,139	$	127,947