DELAWARE | 001-11174 | 06-1340090 | ||
(State or other jurisdiction of | (Commission file number) | (I.R.S. employer | ||
incorporation or organization) | identification number) |
Date: November 4, 2015 | ||
MRV COMMUNICATIONS, INC. | ||
By: | /s/ Stephen G. Krulik | |
Stephen G. Krulik | ||
Chief Financial Officer |
• | Executed an agreement for the sale of Tecnonet S.p.A., with the closing expected to occur shortly after the special meeting of stockholders which is scheduled for December 1st. Consistent with the agreement, Tecnonet has repaid an intercompany loan of €4.0 million (approximately $4.5 million) to MRV with the proceeds of external financing which will be assumed by the buyer at closing. In addition, at closing, MRV will receive the cash purchase price of €15.6 million (approximately $17.7 million). The closing is subject to customary closing conditions, including stockholder approval, and the final consideration is subject to a post-closing adjustment. |
• | Continued to gain traction with OptiDriver®, increasing to 77 cumulative customers, more than half of which are new optical transport customers for MRV. |
• | Implemented OptiPacket® in a regional carrier network, completing the first full deployment of MRV’s packet and optical solution suite and validating the company’s end-to-end solutions model. |
• | Enhanced capabilities with significant releases for all major products, including: |
◦ | Two single slot 100G transponder modules for OptiDriver enabling MRV to double the density for 100G applications, such as data center interconnect; |
◦ | New software for OptiPacket enabling the new 100G/10G combination interface module, as well as support for additional Carrier Ethernet and high availability features; and |
◦ | A major Pro-Vision® release enhancing support for OptiPacket, providing full-service orchestration across the MRV portfolio and adding new optical monitoring tools. |
• | Consolidated: Network Equipment, Network Integration and Corporate |
◦ | Total revenue was $37.3 million, compared to $43.2 million. The decline is attributable to the Network Integration business including the negative impact of foreign exchange rates on Tecnonet’s business in Italy. When calculated on a constant currency basis total revenue would have been $40.1 million. |
◦ | Total GAAP net income improved $1.9 million to $0.9 million, or $0.13 per diluted share, from a net loss of $1.0 million, or $0.14 per share. |
◦ | Total non-GAAP net income improved $2.4 million to $1.7 million, or $0.25 per diluted share, from a non-GAAP net loss of $0.7 million, or $0.09 per share. |
• | Network Equipment (NE) |
◦ | NE revenue of $22.9 million increased 4.5%, compared to $21.9 million. |
◦ | NE gross margin increased to 52.7% from 50.3%, reflecting a favorable product and geographical mix, plus the positive impacts of supply chain optimization. |
◦ | NE operating expenses decreased to $10.8 million, or 47.2% of revenue, from $12.0 million, or 54.7% of revenue, reflecting improved efficiencies while maintaining the ongoing commitment to develop, market and support a differentiated product road map. |
◦ | NE GAAP operating income improved $2.2 million to $1.3 million, from an operating loss of $0.9 million. |
◦ | NE non-GAAP operating income improved by $2.3 million to $1.5 million, from an operating loss of $0.8 million. |
◦ | NE GAAP net income improved by $2.0 million to $1.2 million, from a net loss of $0.8 million. |
◦ | NE non-GAAP net income improved by $2.1 million to $1.5 million, from a net loss of $0.6 million. |
• | Consolidated: Network Equipment, Network Integration and Corporate |
◦ | Total revenue was $118.8 million, compared to $128.6 million. Total revenue would have been $129.6 million when calculated on a constant currency basis. |
◦ | Total GAAP net loss improved by $7.1 million to $0.5 million, or $0.07 per share, from $7.5 million, or $1.03 per share. |
◦ | Total non-GAAP net income improved by $7.2 million to $1.5 million, or $0.21 per diluted share, compared to a net loss of $5.7 million, or $0.78 per share. |
• | Network Equipment (NE) |
◦ | NE revenue of $69.6 million increased 5.5%, compared to $66.0 million. |
◦ | NE GAAP net income improved by $6.3 million to $1.1 million, from a net loss of $5.2 million. |
◦ | NE non-GAAP net income improved by $6.1 million to $1.8 million, from a net loss of $4.3 million. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenue: | |||||||||||||||
Product revenue | $ | 26,850 | $ | 31,196 | $ | 86,337 | $ | 93,411 | |||||||
Service revenue | 10,425 | 11,974 | 32,425 | 35,201 | |||||||||||
Total revenue | 37,275 | 43,170 | 118,762 | 128,612 | |||||||||||
Cost of Revenue: | |||||||||||||||
Cost of product | 14,969 | 20,560 | 52,804 | 60,672 | |||||||||||
Cost of services | 7,627 | 7,894 | 22,311 | 25,191 | |||||||||||
Total cost of revenue | 22,596 | 28,454 | 75,115 | 85,863 | |||||||||||
Gross profit | 14,679 | 14,716 | 43,647 | 42,749 | |||||||||||
Operating expenses: | |||||||||||||||
Product development and engineering | 4,900 | 5,060 | 15,335 | 16,030 | |||||||||||
Selling, general and administrative | 8,593 | 10,080 | 27,134 | 32,118 | |||||||||||
Total operating expenses | 13,493 | 15,140 | 42,469 | 48,148 | |||||||||||
Operating Income (loss) | 1,186 | (424 | ) | 1,178 | (5,399 | ) | |||||||||
Interest expense | (52 | ) | (116 | ) | (151 | ) | (306 | ) | |||||||
Other income (expense), net | 202 | 227 | (99 | ) | (160 | ) | |||||||||
Income (loss) before provision for income taxes | 1,336 | (313 | ) | 928 | (5,865 | ) | |||||||||
Provision for income taxes | 450 | 727 | 1,390 | 1,659 | |||||||||||
Net Income (loss) | $ | 886 | $ | (1,040 | ) | $ | (462 | ) | $ | (7,524 | ) | ||||
Net income (loss) per share — basic | $ | 0.13 | $ | (0.14 | ) | $ | (0.07 | ) | $ | (1.03 | ) | ||||
Net income (loss) per share — diluted | $ | 0.13 | $ | (0.14 | ) | $ | (0.07 | ) | $ | (1.03 | ) | ||||
Weighted average number of shares: | |||||||||||||||
Basic | 6,978 | 7,362 | 7,032 | 7,335 | |||||||||||
Diluted | 7,014 | 7,362 | 7,032 | 7,335 |
September 30, 2015 | December 31, 2014 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 19,914 | $ | 22,422 | |||
Restricted time deposits | 190 | 235 | |||||
Accounts receivable, net | 36,930 | 43,513 | |||||
Other receivables | 9,596 | 11,012 | |||||
Inventories, net | 20,070 | 21,683 | |||||
Income taxes receivable | 251 | 558 | |||||
Deferred income taxes | 689 | 535 | |||||
Other current assets | 5,595 | 5,454 | |||||
Total current assets | 93,235 | 105,412 | |||||
Property and equipment, net | 4,603 | 4,890 | |||||
Deferred income taxes | 1,871 | 2,105 | |||||
Intangible assets, net | 1,214 | 1,364 | |||||
Other assets | 678 | 801 | |||||
Total assets | $ | 101,601 | $ | 114,572 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Short-term debt | $ | 2,887 | $ | 5,402 | |||
Deferred consideration payable | 233 | 233 | |||||
Accounts payable | 22,006 | 24,327 | |||||
Accrued liabilities | 13,854 | 14,545 | |||||
Deferred revenue | 13,317 | 13,527 | |||||
Other current liabilities | 235 | 297 | |||||
Total current liabilities | 52,532 | 58,331 | |||||
Other long-term liabilities | 4,603 | 5,271 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Preferred Stock, $0.01 par value: Authorized — 1,000 shares; no shares issued or outstanding | — | — | |||||
Common Stock, $0.0017 par value: | |||||||
Authorized — 16,000 shares | |||||||
Issued — 8,330 shares in 2015 and 8,242 shares in 2014 | |||||||
Outstanding — 6,972 shares in 2015 and 7,386 in 2014 | 270 | 270 | |||||
Additional paid-in capital | 1,285,409 | 1,284,483 | |||||
Accumulated deficit | (1,220,954 | ) | (1,220,492 | ) | |||
Treasury stock — 1,359 shares in 2015 and 856 shares in 2014 | (15,355 | ) | (10,412 | ) | |||
Accumulated other comprehensive loss | (4,904 | ) | (2,879 | ) | |||
Total stockholders' equity | 44,466 | 50,970 | |||||
Total liabilities and stockholders' equity | $ | 101,601 | $ | 114,572 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenue | |||||||||||||||
Network Equipment | $ | 22,974 | $ | 21,979 | $ | 69,787 | $ | 66,131 | |||||||
Network Integration | 14,343 | 21,237 | 49,126 | 62,644 | |||||||||||
Total before intersegment adjustments | 37,317 | 43,216 | 118,913 | 128,775 | |||||||||||
Intersegment adjustments | (42 | ) | (46 | ) | (151 | ) | (163 | ) | |||||||
Total | $ | 37,275 | $ | 43,170 | $ | 118,762 | $ | 128,612 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Gross profit | |||||||||||||||
Network Equipment | $ | 12,113 | $ | 11,062 | $ | 35,616 | $ | 33,007 | |||||||
Network Integration | 2,567 | 3,654 | 8,031 | 9,742 | |||||||||||
Total before intersegment adjustments | 14,680 | 14,716 | 43,647 | 42,749 | |||||||||||
Intersegment adjustments | (1 | ) | — | — | — | ||||||||||
Total | $ | 14,679 | $ | 14,716 | $ | 43,647 | $ | 42,749 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Operating Expenses | |||||||||||||||
Network Equipment | $ | 10,836 | $ | 12,016 | $ | 34,017 | $ | 38,302 | |||||||
Network Integration | 1,313 | 1,892 | 4,739 | 5,431 | |||||||||||
Total before intersegment adjustments | 12,149 | 13,908 | 38,756 | 43,733 | |||||||||||
Corporate unallocated operating expenses and adjustments | 1,344 | 1,232 | 3,713 | 4,415 | |||||||||||
Total | $ | 13,493 | $ | 15,140 | $ | 42,469 | $ | 48,148 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Operating Income (loss) | |||||||||||||||
Network Equipment | $ | 1,277 | $ | (953 | ) | $ | 1,599 | $ | (5,296 | ) | |||||
Network Integration | 1,254 | 1,762 | 3,292 | 4,311 | |||||||||||
Total before intersegment adjustments | 2,531 | 809 | 4,891 | (985 | ) | ||||||||||
Corporate unallocated operating loss and adjustments | (1,345 | ) | (1,233 | ) | (3,713 | ) | (4,414 | ) | |||||||
Total | $ | 1,186 | $ | (424 | ) | $ | 1,178 | $ | (5,399 | ) |
Consolidated amounts | Network Equipment | Network Integration | ||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
Revenue: | ||||||||||||||||||||
GAAP revenue | $ | 37,275 | $ | 43,170 | $ | 22,932 | $ | 21,933 | $ | 14,343 | $ | 21,237 | ||||||||
Cost of revenue | ||||||||||||||||||||
GAAP cost of revenue | 22,596 | 28,454 | 10,820 | 10,871 | 11,776 | 17,583 | ||||||||||||||
Stock-based charges | (35 | ) | (34 | ) | (35 | ) | (34 | ) | — | — | ||||||||||
Non-GAAP adjusted cost of revenue | $ | 22,561 | $ | 28,420 | $ | 10,785 | $ | 10,837 | $ | 11,776 | $ | 17,583 | ||||||||
Gross profit: | ||||||||||||||||||||
GAAP gross profit | $ | 14,679 | $ | 14,716 | $ | 12,112 | $ | 11,062 | $ | 2,567 | $ | 3,654 | ||||||||
Stock-based charges | 35 | 34 | 35 | 34 | — | — | ||||||||||||||
Non-GAAP adjusted gross profit | $ | 14,714 | $ | 14,750 | $ | 12,147 | $ | 11,096 | $ | 2,567 | $ | 3,654 | ||||||||
Operating expenses: | ||||||||||||||||||||
GAAP Product development and engineering | $ | 4,900 | $ | 5,060 | $ | 4,900 | $ | 5,060 | $ | — | $ | — | ||||||||
Stock-based charges | (68 | ) | (49 | ) | (68 | ) | (49 | ) | — | — | ||||||||||
Non-GAAP Product development and engineering | $ | 4,832 | $ | 5,011 | $ | 4,832 | $ | 5,011 | $ | — | $ | — | ||||||||
GAAP Selling, general & administrative | 7,247 | 8,848 | 5,934 | 6,956 | 1,313 | 1,892 | ||||||||||||||
Stock-based charges | (89 | ) | (87 | ) | (80 | ) | (81 | ) | (9 | ) | (6 | ) | ||||||||
Severance | (63 | ) | 4 | (63 | ) | 4 | — | — | ||||||||||||
Litigation costs | (44 | ) | — | — | — | (44 | ) | — | ||||||||||||
Divestiture costs | (45 | ) | — | — | — | (45 | ) | — | ||||||||||||
Non-GAAP Selling, general & administrative | $ | 7,006 | $ | 8,765 | $ | 5,791 | $ | 6,879 | $ | 1,215 | $ | 1,886 | ||||||||
GAAP Corporate charges (1) | 1,346 | 1,232 | — | — | — | — | ||||||||||||||
Stock-based charges | (133 | ) | (61 | ) | — | — | — | — | ||||||||||||
Severance | — | (136 | ) | — | — | — | — | |||||||||||||
Litigation costs | — | — | — | — | — | — | ||||||||||||||
Divestiture costs | (385 | ) | — | — | — | — | — | |||||||||||||
Non-GAAP Corporate charges | $ | 828 | $ | 1,035 | $ | — | $ | — | $ | — | $ | — | ||||||||
GAAP operating expenses | $ | 13,493 | $ | 15,140 | $ | 10,834 | $ | 12,016 | $ | 1,313 | $ | 1,892 | ||||||||
Non-GAAP operating expenses | $ | 12,666 | $ | 14,811 | $ | 10,623 | $ | 11,890 | $ | 1,215 | $ | 1,886 | ||||||||
GAAP operating income (loss) (1) | $ | 1,186 | $ | (424 | ) | $ | 1,278 | $ | (954 | ) | $ | 1,254 | $ | 1,762 | ||||||
Stock-based charges | 325 | 231 | 183 | 164 | 9 | 6 | ||||||||||||||
Severance | 63 | 132 | 63 | (4 | ) | — | — | |||||||||||||
Litigation costs | 44 | — | — | — | 44 | — | ||||||||||||||
Divestiture costs | 430 | — | — | — | 45 | — | ||||||||||||||
Non-GAAP adjusted operating income (loss) | $ | 2,048 | $ | (61 | ) | $ | 1,524 | $ | (794 | ) | $ | 1,352 | $ | 1,768 | ||||||
Consolidated amounts | Network Equipment | Network Integration | ||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
Net Income (loss) (1) | ||||||||||||||||||||
GAAP net income (loss) | $ | 886 | $ | (1,040 | ) | $ | 1,212 | $ | (785 | ) | $ | 838 | $ | 801 | ||||||
Stock-based charges | 325 | 231 | 183 | 164 | 9 | 6 | ||||||||||||||
Severance | 63 | 132 | 63 | (4 | ) | — | — | |||||||||||||
Litigation costs | 44 | — | — | — | 44 | — | ||||||||||||||
Divestiture costs | 430 | — | — | — | 45 | — | ||||||||||||||
Income tax impact | (18 | ) | — | — | — | (18 | ) | — | ||||||||||||
Non-GAAP adjusted net income (loss) | $ | 1,730 | $ | (677 | ) | $ | 1,458 | $ | (625 | ) | $ | 918 | $ | 807 | ||||||
Weighted average number of shares - Basic | 6,978 | 7,362 | ||||||||||||||||||
GAAP EPS - Basic | $ | 0.13 | $ | (0.14 | ) | |||||||||||||||
Non-GAAP EPS - Basic | $ | 0.25 | $ | (0.09 | ) | |||||||||||||||
Weighted average number of shares - Diluted | 7,014 | 7,362 | ||||||||||||||||||
GAAP EPS - Diluted | $ | 0.13 | $ | (0.14 | ) | |||||||||||||||
Non-GAAP EPS - Diluted | $ | 0.25 | $ | (0.09 | ) |
(1) | Consolidated amounts presented in the above tables include corporate unallocated operating expenses and intersegment adjustments which are not reflected in Network Equipment or Network Integration, therefore amounts may not total. |
Consolidated amounts | Network Equipment | Network Integration | ||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
Revenue: | ||||||||||||||||||||
GAAP revenue | $ | 118,762 | $ | 128,612 | $ | 69,636 | $ | 65,968 | $ | 49,126 | $ | 62,644 | ||||||||
Cost of revenue | ||||||||||||||||||||
GAAP cost of revenue | 75,115 | 85,863 | 34,020 | 32,961 | 41,095 | 52,902 | ||||||||||||||
Stock-based charges | (90 | ) | (87 | ) | (90 | ) | (87 | ) | — | — | ||||||||||
Non-GAAP adjusted cost of revenue | $ | 75,025 | $ | 85,776 | $ | 33,930 | $ | 32,874 | $ | 41,095 | $ | 52,902 | ||||||||
Gross profit: | ||||||||||||||||||||
GAAP gross profit | $ | 43,647 | $ | 42,749 | $ | 35,616 | $ | 33,007 | $ | 8,031 | $ | 9,742 | ||||||||
Stock-based charges | 90 | 87 | 90 | 87 | — | — | ||||||||||||||
Non-GAAP adjusted gross profit | $ | 43,737 | $ | 42,836 | $ | 35,706 | $ | 33,094 | $ | 8,031 | $ | 9,742 | ||||||||
Operating expenses: | ||||||||||||||||||||
GAAP Product development and engineering | $ | 15,335 | $ | 16,030 | $ | 15,335 | $ | 16,030 | $ | — | $ | — | ||||||||
Stock-based charges | (161 | ) | (122 | ) | (161 | ) | (122 | ) | — | — | ||||||||||
Non-GAAP Product development and engineering | $ | 15,174 | $ | 15,908 | $ | 15,174 | $ | 15,908 | $ | — | $ | — | ||||||||
GAAP Selling, general & administrative | 23,421 | 27,703 | 18,682 | 22,272 | 4,739 | 5,431 | ||||||||||||||
Stock-based charges | (215 | ) | (217 | ) | (191 | ) | (203 | ) | (24 | ) | (14 | ) | ||||||||
Severance | (312 | ) | (468 | ) | (312 | ) | (468 | ) | — | — | ||||||||||
Litigation costs | (519 | ) | (82 | ) | — | (82 | ) | (519 | ) | — | ||||||||||
Divestiture costs | (45 | ) | — | — | — | (45 | ) | — | ||||||||||||
Non-GAAP Selling, general & administrative | $ | 22,330 | $ | 26,936 | $ | 18,179 | $ | 21,519 | $ | 4,151 | $ | 5,417 | ||||||||
GAAP Corporate charges (1) | 3,713 | 4,415 | — | — | — | — | ||||||||||||||
Stock-based charges | (316 | ) | (280 | ) | — | — | — | — | ||||||||||||
Severance | (37 | ) | (136 | ) | — | — | — | — | ||||||||||||
Litigation costs | (4 | ) | (96 | ) | — | — | — | — | ||||||||||||
Divestiture costs | (443 | ) | — | — | — | — | — | |||||||||||||
Warrant revaluation charges | — | (406 | ) | — | — | — | — | |||||||||||||
Non-GAAP Corporate charges | $ | 2,913 | $ | 3,497 | $ | — | $ | — | $ | — | $ | — | ||||||||
GAAP operating expenses | $ | 42,469 | $ | 48,148 | $ | 34,017 | $ | 38,302 | $ | 4,739 | $ | 5,431 | ||||||||
Non-GAAP operating expenses | $ | 40,417 | $ | 46,341 | $ | 33,353 | $ | 37,427 | $ | 4,151 | $ | 5,417 | ||||||||
GAAP operating income (loss) (1) | $ | 1,178 | $ | (5,399 | ) | $ | 1,599 | $ | (5,295 | ) | $ | 3,292 | $ | 4,311 | ||||||
Stock-based charges | 782 | 706 | 442 | 412 | 24 | 14 | ||||||||||||||
Severance | 349 | 604 | 312 | 468 | — | — | ||||||||||||||
Litigation costs | 523 | 178 | — | 82 | 519 | — | ||||||||||||||
Divestiture costs | 488 | — | — | — | 45 | — | ||||||||||||||
Warrant revaluation charges | — | 406 | — | — | — | — | ||||||||||||||
Non-GAAP adjusted operating income (loss) | $ | 3,320 | $ | (3,505 | ) | $ | 2,353 | $ | (4,333 | ) | $ | 3,880 | $ | 4,325 | ||||||
Consolidated amounts | Network Equipment | Network Integration | ||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
Net Income (loss) (1) | ||||||||||||||||||||
GAAP net income (loss) | $ | (462 | ) | $ | (7,524 | ) | $ | 1,083 | $ | (5,214 | ) | $ | 2,046 | $ | 1,696 | |||||
Stock-based charges | 782 | 706 | 442 | 412 | 24 | 14 | ||||||||||||||
Severance | 349 | 604 | 312 | 468 | — | — | ||||||||||||||
Litigation costs | 523 | 178 | — | 82 | 519 | — | ||||||||||||||
Divestiture costs | 488 | — | — | — | 45 | — | ||||||||||||||
Warrant revaluation charges | — | 406 | — | — | — | — | ||||||||||||||
Income tax impact | (209 | ) | (71 | ) | — | (33 | ) | (208 | ) | — | ||||||||||
Non-GAAP adjusted net income (loss) | $ | 1,471 | $ | (5,701 | ) | $ | 1,837 | $ | (4,285 | ) | $ | 2,426 | $ | 1,710 | ||||||
Weighted average number of shares - Basic | 7,032 | 7,335 | ||||||||||||||||||
GAAP EPS - Basic | $ | (0.07 | ) | $ | (1.03 | ) | ||||||||||||||
Non-GAAP EPS - Basic | $ | 0.21 | $ | (0.78 | ) | |||||||||||||||
Weighted average number of shares - Diluted | 7,039 | 7,335 | ||||||||||||||||||
GAAP EPS - Diluted | $ | (0.07 | ) | $ | (1.03 | ) | ||||||||||||||
Non-GAAP EPS - Diluted | $ | 0.21 | $ | (0.78 | ) |
(1) | Consolidated amounts presented in the above tables include corporate unallocated operating expenses and intersegment adjustments which are not reflected in Network Equipment or Network Integration, therefore amounts may not total. |