Segment Reporting and Geographic Information

12 Months Ended

Dec. 31, 2014

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 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 set forth in Note 2, Summary of Significant Accounting Policies. Management evaluates segment performance based on revenues, gross profit and operating income (loss) of each segment. As such, there are no separately identifiable Consolidated Statements of Operations data below operating income (loss).

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

Years Ended December 31,	2014			2013			2012
Network Equipment segment	$	86,705		$	90,711		$	87,727
Network Integration segment	85,518			75,636			72,421
Before intersegment adjustments	172,223			166,347			160,148
Intersegment adjustments	(167		)	(146		)	(8,487		)
Total	$	172,056		$	166,201		$	151,661

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 $41.0 million, $46.6 million and $43.4 million of revenue in the Network Integration segment, or 24%, 28% and 29% of total revenue for the years ended December 31, 2014, 2013 and 2012. The same customer accounted for 5%, 22% and 20% of total accounts receivable before allowance for doubtful accounts as of December 31, 2014, 2013 and 2012 respectively. Another customer accounted for $27.6 million, $22.7 million, and $19.1 million of revenue in the Network Integration segment, or 16%, 14%, and 13% of total revenue for the years ended December 31, 2014, 2013 and 2012. The same customer in the Network Integration segment accounted for 29%, 27% and 9% of total accounts receivable before allowance for doubtful accounts as of December 31, 2014, 2013 and 2012, respectively.

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

Years Ended December 31,	2014		2013		2012
United States	$	51,036	$	55,071	$	47,250
Americas (Excluding the U.S.)	1,507		4,200		6,008
Europe	105,996		98,843		88,868
Asia Pacific	13,517		8,087		9,521
Other regions	—		—		14
Total	$	172,056	$	166,201	$	151,661

Revenue from external customers attributed to Italy totaled $86.3 million, $76.6 million, and $73.1 million for the years ended December 31, 2014, 2013 and 2012 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, 2014		December 31, 2013
Americas	$	3,078	$	3,326
Europe	1,786		2,194
Asia Pacific	26		35
Total	$	4,890	$	5,555

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

Years ended December 31,	2014			2013			2012
Gross profit
Network Equipment segment	$	42,601		$	47,069		$	43,325
Network Integration segment	13,176			10,917			11,832
Before intersegment adjustments	55,777			57,986			55,157
Corporate unallocated and intersegment adjustments (1)	1			7			(5		)
Total	$	55,778		$	57,993		$	55,152
Depreciation expense
Network Equipment segment	$	1,759		$	1,417		$	1,022
Network Integration segment	204			219			234
Corporate	134			197			192
Total	$	2,097		$	1,833		$	1,448
Operating income (loss)
Network Equipment segment	$	(7,074	)	$	(1,699	)	$	1,096
Network Integration segment	5,562			4,620			4,514
Before intersegment adjustments	(1,512		)	2,921			5,610
Corporate unallocated operating loss and adjustments (1)	(6,238		)	(7,302		)	(15,457		)
Total operating income (loss)	$	(7,750	)	$	(4,381	)	$	(9,847	)
Provision (benefit) for income taxes
Network Equipment segment	$	1,873		$	(38	)	$	(2,468	)
Network Integration segment	2,430			1,546			1,455
Total	$	4,303		$	1,508		$	(1,013	)

(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:	2014		2013
Additions to Fixed Assets
Network Equipment segment	$	1,230	$	3,329
Network Integration segment	178		104
Corporate	83		229
Total	$	1,491	$	3,662
Total Assets
Network Equipment segment	$	40,664	$	48,955
Network Integration segment	56,921		54,625
Corporate and intersegment eliminations	16,987		24,367
Total	$	114,572	$	127,947