Segment Reporting and Geographic Information

3 Months Ended

Mar. 31, 2015

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. The Network Integration segment 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's2014Form 10-K. Management 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   March 31,
	2015			2014
Network Equipment	$	22,276		$	22,319
Network Integration	16,588			20,053
Before intersegment adjustments	38,864			42,372
Intersegment adjustments	(91		)	(54		)
Total	$	38,773		$	42,318

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 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 $8.3 million and $11.0 million of revenue in the Network Integration segment, or 21% and 26% of total revenue, for the three months endedMarch 31, 2015, and 2014, respectively. The same customer accounted for 7% and 5% of total accounts receivable before allowance for doubtful accounts as of March 31, 2015, and December 31, 2014, respectively. Another customer accounted for $4.7 million and $6.5 million of revenue in the Network Integration segment, or 12% and 15% of total revenue, for the three months endedMarch 31, 2015, and 2014, respectively. The same customer accounted for 24% and 29% of total accounts receivable before allowance for doubtful accounts as of March 31, 2015, and December 31, 2014, respectively. Additionally, one customer accounted for $4.4 million and $1.4 million of revenue in the Network Equipment segment, or 11% and 3% of total revenue, for the three months endedMarch 31, 2015, and 2014, respectively. The same customer accounted for 11% and 9% of total accounts receivable before allowance for doubtful accounts as of March 31, 2015, and December 31, 2014, respectively.

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

	Three months ended
	March 31,
	2015		2014
United States	$	10,251	$	12,856
Americas (Excluding the U.S.)	2,763		556
Europe	20,818		26,579
Asia Pacific	4,941		2,327
Total	$	38,773	$	42,318

Revenue from external customers attributed to Italy totaled $17.2 million and $20.4 million for the three months ended March 31, 2015 and 2014, respectively. Revenue from external customers attributed to Australia totaled $4.4 million and$1.4 million for the three months ended March 31, 2015 and 2014, respectively.

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

	March 31, 2015		December 31, 2014
Americas	$	2,909	$	3,078
Europe	1,674		1,786
Asia Pacific	25		26
Total	$	4,608	$	4,890

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

	Three months ended
	March 31,
	2015			2014
Gross profit
Network Equipment	$	11,544		$	10,759
Network Integration	2,331			2,490
Total before intersegment adjustments	13,875			13,249
Corporate unallocated and intersegment adjustments(1)	1			2
Total	$	13,876		$	13,251
Depreciation and amortization expense
Network Equipment	$	471		$	536
Network Integration	30			49
Corporate	29			39
Total	$	530		$	624
Operating income (loss)
Network Equipment	$	(198	)	$	(2,839	)
Network Integration	505			845
Total before intersegment adjustments	307			(1,994		)
Corporate unallocated operating loss and adjustments (1)	(1,118		)	(1,855		)
Total	$	(811	)	$	(3,849	)

(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):

	Three months ended
	March 31,
	2015			2014
Additions (write-offs) of property and equipment
Network Equipment	$	228		$	239
Network Integration	42			33
Corporate	(6		)	80
Total	$	264		$	352

	March 31, 2015		December 31, 2014
Total Assets
Network Equipment	$	42,723	$	40,664
Network Integration	47,604		56,921
Corporate and intersegment eliminations	9,854		16,987
Total	$	100,181	$	114,572