8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

Current Report
Pursuant To Section 13 Or 15(D) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 28, 2008

MRV COMMUNICATIONS, INC.

(Name of registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of
Incorporation or organization) 001-11174
(Commission File Number) 06-1340090
(I.R.S. Employer
Identification Number)

20415 Nordhoff Street
Chatsworth, Ca
(Address of principal executive offices)
91311
(Zip Code)

Registrant’s telephone number, including area code: (818) 773-0900

Not Applicable
Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 — Results of Operations and Financial Condition.

On February 28, 2008, registrant made an earnings release announcing registrant’s unaudited financial results for the three and twelve months ended of December 31, 2007, the text of which is set forth in Exhibit 99.1 attached hereto. All information in the press release is presented as of February 28, 2008, and registrant does not assume any obligation to update such information in the future.

On February 28, 2008, as previously announced, registrant held a teleconference and audio web cast to discuss its unaudited financial results for the three and twelve months ended of December 31, 2007. The transcript of, and the Financial Highlights Overview and Highlights presented at, this teleconference and web cast is furnished herewith as Exhibit 99.2. All information in the transcript and web cast is presented as of February 28, 2008, and registrant does not assume any obligation to update such information in the future.

The information included in this Item 2.02, as well as Exhibits 99.1 and 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

[Remainder of this page intentionally left blank]

2

Item 9.01 Financial Statements and Exhibits

Exhibit 99.1	Registrant’s earnings release of February 28, 2008 announcing registrant’s unaudited financial results for the three and twelve months ended of December 31, 2007(furnished pursuant to Item 2.02)
Exhibit 99.2	The transcript of, and the Financial Highlights Overview and Highlights, presented at, registrant’s teleconference of February 28, 2008 (furnished pursuant to Item 2.02).

3

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: March 4, 2008

MRV COMMUNICATIONS, INC.
By:	/s/ Noam Lotan
	Noam Lotan
	President and Chief Executive Officer

4

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

MRV ANNOUNCES RECORD QUARTERLY AND ANNUAL REVENUE
IN FOURTH QUARTER AND FULL YEAR 2007

Q4 ‘07 Consolidated Revenue Up 37% Year-Over-Year and 22% Sequentially
Q4 ‘07 Network Equipment Revenue Up 19% Year-over-Year and 29% Sequentially
Q4 ‘07 Optical Component Revenue Up 95% Year-over-Year and 15% Sequentially

CHATSWORTH, CA — February 28, 2008 — MRV COMMUNICATIONS, INC. (Nasdaq: MRVC), today announced its results for the fourth quarter and fiscal year-ended December 31, 2007. Quarterly and annual revenue in each period were both MRV all-time records.

Revenue for the fourth quarter of 2007 was above guidance at $141 million, an increase of 37% over revenue of $103 million in the fourth quarter of 2006.

Fourth quarter of 2007 reported gross margin of 28.4% included an inventory write-down of $2.3 million related to MRV’s acquisition of Fiberxon that was completed in July 2007. This inventory write-down resulted in an approximate 1.6% decline to the fourth quarter of 2007 reported gross margin.

The Company reported a net loss of $1.4 million for the fourth quarter of 2007, or $0.01 per common share, which included the inventory write-down of $2.3 million, share-based compensation charges of $1.0 million and a $1.1 million charge from the amortization of intangibles related to the Fiberxon acquisition. This compares to net income of $0.6 million or $0.00 per common share in comparable period of 2006, which included share-based compensation charges of $1.0 million.

“We are very proud of our fourth quarter. Consolidated revenue was well above guidance and we were also pleased with our bottom line performance. Even with the inventory write-down and non-cash charges for share-based compensation and amortization of intangibles, we delivered near break-even results,” commented Noam Lotan, President & CEO of MRV. “Revenue growth during the quarter was driven by our internally-developed networking equipment products which grew sales 29% sequentially and 19% on a year-over-year basis and our optical components group, which posted a 15% sequential increase in sales.”

Exhibit 99.1-1

Continued Mr. Lotan, “We remain well positioned to take advantage of key industry growth drivers such as the increasing adoption of carrier class metro Ethernet services and the deployment of FTTX networks around the world. In 2008 we will continue to focus on revenue growth while emphasizing improvement in operating performance.”

Full Year of Fiscal 2007 Results

Revenues for the full year of 2007 were $448 million, up 26%, compared to revenues of $356 million for 2006. Net loss for 2007 was $18.6 million, or $0.13 per share, compared to a net loss of $5.5 million, or $0.05 per share for 2006. Included in the net loss for 2007 were non-cash charges of $6.8 million, composed of $4.9 million related to the Company’s common share exchange for convertible debt on August 10, 2007 and $1.9 million from the amortization of intangibles related to the Company’s acquisition of Fiberxon in July 2007. In addition, net loss for 2007 includes an inventory write-down of $2.3 million also related to that acquisition.

First Quarter of 2008 Outlook

MRV currently estimates that revenues for the first quarter of 2008 will be in the range of $124 million to $130 million. Net loss/break-even results per share is currently forecasted to be in the range of $(0.03) to $0.00 per share. This forecasted range includes the effect of non-cash share-based compensation (which is forecasted to be approximately $0.01 per share).

Other Information

MRV will host a conference call to discuss its fourth quarter and fiscal year-end of 2007 financial results today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). For parties in the United States and Canada, call 800-240-6709 to access the conference call. International parties can access the call at 303-275-2170. A financial presentation designed to guide participants through the call will also be available. MRV will offer its live audio broadcast of the conference call, along with the financial presentation, on the MRV Investor website at http://ir.mrv.com. For replay information, please visit the MRV Investor website.

Forward-Looking Statements

This press release contains statements regarding future financial and operating results of MRV, MRV’s expected revenues and net loss for the first quarter of 2008 that ends on March 31, 2008, management’s assessment of business trends, specifically MRV’s position to take advantage of key industry growth drivers such as the increasing adoption of carrier class metro Ethernet services and the deployment of FTTX networks, management’s continued focus on revenue growth and emphasis on improving operating performance during 2008, and other statements about future expectations, beliefs, goals, plans or prospects are based on management’s current expectations, estimates, forecasts and projections about MRV and its consolidated businesses and the respective market segments in which MRV’s businesses operate, in addition to managements’ assumptions. These statements constitute forward- looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “envisions,” “estimates,” “targets,” “intends,” “plans,” “believes,” “seeks,” “should,” “forecasts,” “projects,” variations of such words and similar expressions are intended to identify such forward-looking statements which are not statements of historical facts. These forward-looking statements are not guarantees of future performance or that the events anticipated will occur and that expected conditions will remain the same or improve and involve risks, uncertainties and assumptions, the likelihood of realizing are difficult to assess and may not occur. Therefore, actual outcomes, performance and results may differ from what is expressed or forecasted in such forward-looking

Exhibit 99.1-2

statements and such differences may vary materially from current expectations. Actual results could differ materially because of the following factors, among others, which may cause revenues, gross margins and income to fall short or losses to be greater than anticipated levels: intense competition relating to existing markets and our entry into new markets; the failure of perceived business trends to occur as expected or to result in demand for products developed, manufactured or sold by MRV’s operating groups; continued market acceptance of existing products; a failure to achieve market acceptance of new products; continued success in selling the products of other companies; competitive forces requiring product price discounts, concessions or incentives; the timing and amount of significant orders from customers; delays or cancellation of orders after receipt from customers; delays in product development and related product release schedules; the sufficiency of cash generated from operations and the availability of capital from outside sources on reasonable terms or at all; obsolete inventory or product returns; warranty and other claims on products; technological shifts; the availability of competitive products at prices below or with features in addition to those of MRV’s operating groups, the continued ability to protect its intellectual property rights; changes in mix of products it sells; maturing product life cycles; product sale terms and conditions; currency fluctuations, especially in the People’s Republic of China; changes in, or the implementation of new, tax laws or import and export duties in the countries where MRV and its operating segments conduct business, implementation of operating cost structures that align with revenue growth; the financial condition of customers and vendors; the commencement of, adverse results in, litigation; the impact of legislative actions; higher insurance costs; potential new accounting pronouncements; the effects of terrorist activity and armed conflict; disruptions in general economic activity and changes in MRV’s operations or those of its operating group or changes affecting security; the effects of travel restrictions and quarantines associated with major health problems, such as the Severe Acute Respiratory Syndrome or Avian Influenza; a slowdown of general economic activity or activities generally or specifically affecting the market segments in which MRV’s operating segments are engaged; decreases in corporate information technology spending or other changes in economic conditions that affect demand for MRV’s products. In addition, with its acquisition of Fiberxon, MRV faces new risks that could cause the forward-looking statements made in this and other press releases MRV may issue, including potential difficulties in the integration of Fiberxon, such as transitioning from Fiberxon policies and procedures, systems and leadership to those of MRV; the adjustment of MRV personnel to operating in China, including an awareness of and compliance with local business practices and regulatory requirements; the adjustment of Fiberxon personnel to different management; other difficulties assimilating Fiberxon’s operations, technologies, products, management or employees, particularly because there location in China where English is not widely spoken, the culture and political, economic, financial or monetary system and accounting principles and controls at variance with those of the U.S. and Taiwan where members of MRV’s operating groups have legacy offices, operations and facilities, increasing taxes and labor regulation and labor shortages in China, the diversion of management’s attention to business concerns of Fiberxon; risks inherent in conducting business in China, including the effects of ongoing relations between the U.S. and China and Taiwan and China, where MRV has had only brief experience, and problems inherent when any foreign enterprise conducts business in China; and fluctuations in China’s currency or in exchange rates between the U.S. dollar and Chinese renminbi.

For further information regarding risks and uncertainties associated with MRV’s businesses, please refer to the “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and “Risk Factors” sections of MRV’s SEC filings, including, but not limited to, its annual report on Form 10-K for the year ended December 31, 2006, quarterly reports on Form 10-Q, the latest of which was filed with the SEC on November 9, 2007, copies of which may be obtained by contacting MRV’s investor relations department or at MRV’s investor relations website at http://ir.mrv.com or from the SEC’s EDGAR website at www.sec.gov.

All information in this release is as of February 28, 2008. MRV undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in MRV’s expectations.

About MRV Communications, Inc.

MRV Communications, Inc. (“MRV”) is a leading provider of network equipment and services, and optical components. MRV’s networking business provides equipment used by commercial customers, governments and telecommunications service providers, and includes switches, routers, physical layer products and out-of-band management products as well as specialized networking products for aerospace, defense and other applications including voice and cellular communication. MRV markets and

Exhibit 99.1-3

sells its products worldwide through a variety of channels, including a dedicated direct sales force, manufacturers’ representatives, value-added-resellers, distributors and systems integrators. MRV also has operations in Europe that provide network system design, integration and distribution services that include products manufactured by third-party vendors, as well as internally developed and manufactured products. The Company’s optical components business, operating under the Source Photonics brand, includes Source Photonics, Inc. and Fiberxon, Inc., both wholly owned subsidiaries of MRV. Publicly traded since 1992, MRV is listed on the NASDAQ Global Market under the symbol MRVC. For more information about MRV and its products, please call (818) 773-0900 or visit www.mrv.com and www.sourcephotonics.com.

Investor Relations	The Blueshirt Group for MRV
MRV Communications, Inc.	Rakesh Mehta
Investor Relations	(415) 217-7722
(818) 886-MRVC (6782)	rakesh@blueshirtgroup.com
ir@mrv.com

Exhibit 99.1-4

MRV Communications, Inc.
Statements of Operations
(In thousands, except per share data)

	Three Months Ended						Year Ended
	Dec. 31,			Dec. 31,			Dec. 31,			Dec. 31,
	2007			2006			2007			2006
	(Unaudited)
Revenue	$	140,896		$	102,646		$	448,237		$	356,489
Cost of goods sold		101,493			71,342			320,264			244,207
Gross profit		39,403			31,304			127,973			112,282
Gross margin		28	%		30	%		29	%		31	%
Operating costs and expenses:
Product development and engineering		9,490			7,204			32,956			28,187
Selling, general and administrative		29,465			24,181			101,998			87,539
Amortization of intangibles		1,100			—			1,906			—
Goodwill impairment		—			—			—			52
Total operating costs and expenses		40,055			31,385			136,860			115,778
Operating (loss)		(652	)		(81	)		(8,887	)		(3,496	)
Interest expense		(877	)		(932	)		(3,968	)		(3,540	)
Other income (expense), net		136			2,074			(1,920	)		5,386
Income (loss) before taxes		(1,393	)		1,061			(14,775	)		(1,650	)
Provision (benefit) for income taxes		(12	)		468			3,853			3,865
Net income (loss)	$	(1,381	)	$	593		$	(18,628	)	$	(5,515	)
Net income (loss) per share:
Basic	$	(0.01	)	$	0.00		$	(0.13	)	$	(0.05	)
Diluted	$	(0.01	)	$	0.00		$	(0.13	)	$	(0.05	)
Weighted average number of shares
Basic		157,000			125,376			140,104			120,902
Diluted		157,000			128,551			140,104			120,902

Exhibit 99.1-5

MRV Communications, Inc.
Balance Sheets
(In thousands)

	December 31,		December 31,
	2007		2006
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	72,474	$	91,722
Short-term marketable securities		6,402		25,864
Time deposits		6,055		821
Accounts receivable, net		128,368		95,244
Inventories		86,676		61,361
Deferred income taxes		838		895
Other current assets		25,369		13,607
Total current assets		326,182		289,514
Property and equipment, net		24,510		14,172
Goodwill		137,371		36,348
Other intangible assets		11,994		—
Long-term marketable securities		1,442		—
Deferred income taxes		907		1,460
Other assets		5,097		4,728
	$	507,503	$	346,222
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term obligations	$	28,931	$	26,289
Accounts payable		82,927		47,384
Accrued liabilities		73,380		29,704
Deferred revenue		9,203		7,624
Other current liabilities		3,849		5,926
Total current liabilities		198,290		116,927
Convertible notes		—		23,000
Other long-term liabilities		9,321		7,295
Minority interest		5,193		5,248
Commitments and contingencies
Stockholders’ equity		294,699		193,752
	$	507,503	$	346,222

Exhibit 99.1-6

EX-99.2

Exhibit 99.2

Final Transcript

Conference Call Transcript

MRVC — Q4 2007 MRV Communications Earnings Conference Call

Event Date/Time: Feb. 28. 2008 / 4:30PM ET

Exhibit 99.2-1

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Final Transcript

Feb. 28. 2008 / 4:30PM ET, MRVC — Q4 2007 MRV Communications Earnings Conference Call

CORPORATE PARTICIPANTS

Anne-Marie Frisch
MRV Communications — IR

Noam Lotan
MRV Communications — President, CEO

Guy Avidan
MRV Communications — Acting CFO

CONFERENCE CALL PARTICIPANTS

John Anthony
Cowen & Co — Analyst

John Harmon
Needham & Co — Analyst

Greg Waters
Investors Asset Management — Analyst

PRESENTATION

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the MRV Communications fourth quarter and year end 2007 financial results conference call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (OPERATOR INSTRUCTIONS). This conference is being recorded today, Thursday, February 28th, 2008. I would now like to turn the conference over to Anne-Marie Frisch. Please go ahead, ma’am.

Anne-Marie Frisch - MRV Communications — IR

Thank you, Brittany. Good afternoon, everyone. Thank you for joining us today to discuss MRV’s 2007 fourth quarter and full year financial results. I am joined today by Noam Lotan, President and CEO, and Guy Avidan, acting CFO of MRV Communications. Earlier this afternoon, the company issued a press release reporting its results for the year ended December 31st, 2007. A financial presentation designed to guide participants through the call is available. The press release, along with the presentation, can both be viewed from the investor relations section of MRV’s website at ir.MRV.com. For reference, we have arranged for a taped replay of this call that can be accessed by telephone. The replay will take effect approximately two hours after the call is concluded, and will be available for one week. The dial-in numbers and pass codes are available on our website and will be provided at the conclusion of today’s call. This call is also being webcast live with a web replay available. Both may be accessed at ir.MRV.com.

We would like to remind you that during the course of this conference call, MRV’s management may make forward-looking statements including financial projections, statements as to the plans and objectives of management for future operations and statements as to the company’s future economic performance, financial condition, or results of operations. These forward-looking statements are not historical facts but rather are based on management’s current expectations and beliefs and are based on information currently available to us. Words such as may, will, expect, intends, plans, believes, targets, estimates, and variations of these words are intended to identify forward-looking statements. By discussing our current perception of our mark and making these forward-looking statements, we are not undertaking an obligation to provide updates in the future.

MRV’s actual results may differ materially from those projected in these forward-looking statements and no one should assume at any future date today’s forward-looking statements will reflect the same perceptions or estimates of management. Any future product feature or related specification that may be referenced in today’s call are for information purposes only, and are not commitments to deliver any technology or enhancement. MRV reserves the right to modify future product plans at any time. The forward-looking statements portion of our press release

Exhibit 99.2-2

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Final Transcript

Feb. 28. 2008 / 4:30PM ET, MRVC — Q4 2007 MRV Communications Earnings Conference Call

issued today as well as the risk factors section of our 10-K and 10-Q filed with the SEC discloses risks that could cause these differences. Additional risks not known to us from our business generally may also impair our business, financial condition, and results of operations or prevent us from realizing our current expectations. I would now like to turn the call over to Noam Lotan, MRV’s President and CEO. Noam?

Noam Lotan - MRV Communications — President, CEO

Thank you, Anne-Marie, good afternoon, everyone and thanks for joining us today. I’m very pleased to report that our fourth quarter was probably one of the best quarters in our history. Revenue for the fourth quarter was a record $141 million, well above our guided range of $130 million to $136 million. Revenue increased 22% sequentially and 37% year over year. For the year, consolidated revenue for 2007 was $448 million, and we have now grown full year revenue 26% in each of the past two years. Our growth rate is well above industry average. We also showed substantial improvement in our bottom line results in Q4, versus the prior quarter. On the consolidated basis, Q4 we have reported a $1.4 million loss or $0.01 on a per-share basis. Importantly, given our recent change to only reporting GAAP numbers, I want to make it it clear that in this $1.4 million loss results include $4.4 million of noncash charges comprised of share based compensation, amortization of intangibles related to the acquisition of Fiberxon, and inventory write-off we took in Q4 also related to that acquisition.

I’m pleased with these results and also believe we are positioned for continued success. I believe that our networking group is very well positioned to capitalize on industry growth. The importance of faster Internet connection is growing with high bandwidth applications such as video downloading. A market research firm recently reported that a record 10 billion videos were viewed on-line in December. Another firm projected by the year 2015, U.S. Internet traffic will increase 100 fold. This will require $100 billion in new Internet infrastructure in the U.S. alone over the next five years.

For carriers, delivering digital content services over networks designed for voice is a challenge. As a a leading supplier of optical communications solutions, MRV builds more official higher capacity networks. Customers are looking for a 10 X improvement at 1 X or 2 X of the cost. Helping them migrate to a higher bandwidth, more efficient scalable network is what MRV does best. Optical networks including optical access, transport, and aggregation is what we focus on. Our Optiswitch fiber driver and Lambda driver product families are leading the charge. Building upon our rich 20-year history of optical innovation and our 10-year experience in carrier-class Metro Ethernet, we are ready to participate in the next phase of ethernet services growth and we believe growth will be vigorous and healthy.

In fact, I was pleased two days ago when we learned that one of our North American carrier customers has been awarded ethernet services company of the year. They were recognized for the state of the art fiber network and their innovative managed services. As we continue to help customers with advanced optical networks, we also participate in mobile carriers implementation of efficient wireless back haul networks. These backhaul networks need to provide additional capacity, support data-centric high speed mobile applications, support and install legacy TDM infrastructure, and future-proof the network for IP-centric applications. We proved our commitment to industry standards and participated with our OptiSwitch product in the world’s first mobile backhaul interoperability demonstration at MTLS and EthernetWorld Congress which is supported by the IPMPLS forum and the Metro Ethernet forum, the MEF. The multivendor interoperability demonstration highlighted our standard based carrier ethernet features and TDM circuits and relation services. Ethernet features included MPLS backhaul transport services and ethernet OAM, Operation, Administration, and Management tools to maintain and measure SLAs.

I’m very pleased to announce in the current quarter we won deployment with a domestic tier 1 wireless provider. Our goal is to further capitalize on this large market opportunities and continue our growth to become a significant player in larger customers’ networks. We will get there through nonstop innovation and careful execution. In all geographies, our sales force and channel partners play an important role. Importantly in Europe we have the additional Benchpress installer of system integration arm. Our system integration companies in Europe, primarily in Italy, France, Switzerland, Scandinavia, play a critical role in servicing tier 1 carriers and large enterprise and government accounts. They provide third-party equipment and services as well as MRV products when applicable. In 2007, MRV product revenues that went through our system integrators grew 8% to $15 million.

Just now a few highlights with respect to Q4 performance in our networking group which was very encouraging. I’m pleased that revenue for the networking segment grew 17% year-over-year and the segment was profitable on a stand-alone basis in Q4. Network equipment, a subset of the networking segment, grew 29% sequentially $24 million to $31 million and 19% year over year, from $26 million to $31 million. I’m proud of the results in North America where, for the entire year, network equipment revenue in North America grew 26%, more importantly, our optical network equipment revenue, including Metro Ethernet and optical transport, grew twice as fast in North America at 52% year-over-year rate. Our investment in sales and marketing for network equipment paid off. 2007 revenue improved by $9.4 million for the year, while sales and

Exhibit 99.2-3

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Final Transcript

Feb. 28. 2008 / 4:30PM ET, MRVC — Q4 2007 MRV Communications Earnings Conference Call

marketing expense rose by a total of $1.7 million. Importantly, network equipment was profitable on a stand-alone basis turning a net profit in Q4 versus the loss of $3 million in Q3 and $1.7 million loss in Q4 of last year.

Let me now turn my attention to our optical component division. We are on file with the SEC for an IPO of Source Photonics. Therefore, information regarding Source Photonics is highly regulated by the SEC process. For this reason, Near Margalit, the CEO of Source Photonics will not be on our call as it has been our tradition in the past. Instead, Guy Avidan will give a brief overview of Source Photonics Q4 results during his portion of the call. Despite our inability to provide much detail, I’m very please with Source Photonics Q4 results as they posted revenue at the high end of their guidance range. Despite not being able to give much detail, I think it’s fair to say that I’m very proud of Source Photonics and all the progress they are make in the optical component market.

In summary , I was pleased with our Q4 results, the way we performed better than expectations. Our networking business was profitable on a standalone basis, and we continue to posture ourselves for continued success. I’m optimistic about the future for Q1 as we will outline for you momentarily. We are expecting continued growth, strong growth in the range of 38% to 45% top-line growth on a year-over-year basis, and while we continue to focus on growth, a consistent return to profitability is very much a priority and a near term focus for MRV. In recent years, we worked hard to build a strong, sustainable business, and were able to deliver strong revenue growth. Moving forward, while growth is still a priority, we need to make a more balanced approach and leverage our stronger position in the market into bottom line results. In Q4, we demonstrated it is possible to accomplish both.

With that said, let me now turn the call over to Guy Avidan, our acting CFO, to go through financial details for the fourth quarter and for the year.

Guy Avidan - MRV Communications — Acting CFO

Thank you, Noam. As we announced last quarter, we shifted to only reporting under GAAP, so unless I specifically note otherwise, all numbers I am discussing today are on a GAAP basis. We are reporting strong revenue growth in the fourth quarter which is above the previously given guidance on our last call, and we also were pleased with our ability to post improved bottom line performance. MRV has grown to a large company with 2007 sales of $448 million, nearly double our full year revenue level four years ago. For the fourth quarter, we reported record revenue of $141 million above our guidance range of $130 million to $136 million and an increase of 37% compared to $103 million in the same period last year.

Sequential revenue increased 22% from $116 million in the preceding third quarter. Fourth quarter gross margin was reported at 28.4%. This result includes an inventory write-down of $2.3 million related to the company’s acquisition completed in July 2007. This inventory write-down results in an approximate 1.6% decline in the fourth quarter reported growth margin. MRV’s total operating costs and expenses including share-based compensation and the amortization of intangibles during the quarter was $40 million, or 28% of revenue in the fourth quarter. This is favorable relative to the previous guidance we gave of anticipated operating expenses of 29 to 30% of sales.

On a consolidated basis, this quarter we reported a $1.4 million loss or $0.01 per share basis, which is at the higher end of our profitability guidance we gave on the last call for earnings per share between a loss of $0.04 to a loss of $0.01. More importantly, I would like to make it clear that this $1.4 million fourth quarter loss includes $2.1 million in noncash charges which consist of $1 million in share-based compensation expenses and $1.1 million in amortization of intangibles related to the Fiberxon acquisition we closed in July. In addition to the $2.3 million in inventory charges I just discussed.

Now I will provide some additional details and highlights on our networking business on a stand-alone basis, and also provide a brief overview of the Source Photonics Q4 results. I will then close with a few highlights on our consolidated balance sheet and our guidance for the first quarter of 2008. Our networking segment revenue, which includes our internally developed network improvement and our network integration revenue, reported fourth quarter revenue of $91 million, up 25% sequentially and up 17% compared to revenue of $78 million in the fourth quarter of 2008. This also was driven by our network equipment revenue of $31 million, which was up 19% year-over-year and up very strong 28% sequentially. Our network integration group also demonstrated good growth of revenue of $66 million for the fourth quarter, up 17% year-over-year.

Strength in our Q4 networking equipment sales come from the rebound in defense related shipments from the third quarter, and also strong sales of our optical transport and metro ethernet equipment. Our optical transport and metro ethernet product are designed to enable services where the two worlds of optical transport and packet ethernet alike. In the fourth quarter, the optical transport and metro ethernet product grew 17% year-

Exhibit 99.2-4

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Final Transcript

Feb. 28. 2008 / 4:30PM ET, MRVC — Q4 2007 MRV Communications Earnings Conference Call

over-year. During the year, 7% of our network integration sales were composed of our internally developed network equipment product. As Noam mentioned, our goal is to take advantage of strong surf channel into tier 1 carriers in Europe, and increase this percentage over time.

Gross margin in our networking segment were 34%, which compares to growth margin of 35% in the year-ago period and 30% last quarter. Margin were benefited by the network equipment group, which posted margin of 54%, up compared to 48% in the prior quarter and 61% from the same quarter in the year-ago period. We are pleased with our ability to improve our network equipment margins back above the 50% level. Off setting margin strength in the network equipment was our network integration growth margin, which was under 21%. This is below the historical mid to high 20% growth margin for this division. The lower the normal margin level for this division is due primarily to product mix from our network integration sales in Italy.

Overall operating expenses for our networking segment were $29 million or 32% of sales versus 34% of sales in the fourth quarter of last year. Our goal is to keep reducing expenses as a percentage of sales in our networking segment by keeping expenses relatively stable on an absolute basis while continuing to post good year-over-year growth on the top line. On an operating basis, our networking business achieved operating income of $2.1 million in the fourth quarter. Adjusting for share-based compensation expense, operating income from our networking business reached $3.4 million. We were pleased that the networking segment on a stand-alone basis was profitable in the fourth quarter, and we remain focused on delivering improved bottom line results.

Now let me turn my attention to our optical component division. As you know, we are on file with the SEC for an IPO for Source Photonics. Therefore, information regarding Source Photonics is highly regulated by the SEC process. For this reason, Near Margalit, the CEO of Source Photonics will not be on call as has been our tradition. In addition, we can only provide high-level financial information on Source Photonics on this call. Outside of the information we provided, you will need to refer to our SEC filing since we will not be able to answer any question regarding the business of Source Photonics. Source Photonics revenue for the quarter was $51 million, at the high end of our 47 to $52 million guidance. Net loss for the quarter was $1 million. Included in this loss was $1.5 million in amortization and stock-based compensation expenses, and an inventory write-down of $2.3 million, related to our position back in July.

Now for a quick summary of our consolidated balance sheet. The fourth quarter end, we had total cash and cash equivalent time deposits and investment of $86 million, relatively unchanged compared to the preceding third quarter. Accounts receivable increased to $128 million from $116 million last quarter. Our days sales outstanding were at 83 days, down from 91 days in the last quarter. As we discussed in the past, our DSOs are affected by the longer collection cycles typical in certain European markets, in which we do business. Inventories increased slightly to $87 million from $85 million last quarter. Our inventory turns were 4.7 times on an annualized basis.

Now turning to guidance. We currently forecast Q1 ‘08 total revenues to be in the range of $124 million to $130 million, comprising year-over-year growth of approximately 38% to 45%. The sequential growth in expected revenue is due to normal seasonality we see in our networking group moving from fourth quarter to the third quarter. On an operating expense perspective, we expect operating costs and expenses will be approximately 30% of revenue. On the bottom line, we’re currently forecasting to be in the range of break even per share to a net loss of $0.03 per share for the first quarter, which includes share based compensation expenses expected to be approximately $0.01 per share. Our ability to reach the high end of our profitability guidance range will depend on our ability to execute on our goal to improve overall margins and put a tighter control on our expenses in the first quarter.

Now we’re happy to open the line for questions.

Exhibit 99.2-5

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^© 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.

QUESTION AND ANSWER

Operator

Thank you, sir. We will now begin the question-and-answer session. (OPERATOR INSTRUCTIONS). Our first question is from John Anthony with Cowen and Company, please go ahead.

John Anthony - Cowen & Co — Analyst

Congratulations on the strength across the board. Few quick questions. Given it’s the end of February here and looking at your guidance, it’s pretty strong guidance, so if you could give us a sense of how much you have left to do in the quarter and what your expectations are for March relative to this guidance that would be very helpful.

Guy Avidan - MRV Communications — Acting CFO

Usually our March, our last month of the quarter, brings 50% of the business, meaning bookings and shipments. So we’re very confident with the first half of the business, which is actually two months. Visibility toward March gives us strong confidence regarding the guidance we just gave.

John Anthony - Cowen & Co — Analyst

Okay. So you’re not more back-end loaded than normal, you’re still at that 50% level?

Guy Avidan - MRV Communications — Acting CFO

Yes.

John Anthony - Cowen & Co — Analyst

Noam, you had mentioned a contract if I heard you correctly, did you say with a tier 1 wireless service provider in the United States?

Noam Lotan - MRV Communications — President, CEO

Yes, it’s a regional deployment in a wireless backhaul network of one of the tier one providers, and we’ve already received the initial order, which is quite sizable. Hopefully we will be able to issue press release providing you some more details in the next few weeks.

John Anthony - Cowen & Co — Analyst

When do you expect the revenue associated with that contract to hit your P&L?

Guy Avidan - MRV Communications — Acting CFO

I think we’re going start seeing it, March, April time frame. We hope very much this win will be replicated in other regions within the same carrier.

Exhibit 99.2-6

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^© 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.

Final Transcript

Feb. 28. 2008 / 4:30PM ET, MRVC — Q4 2007 MRV Communications Earnings Conference Call

John Anthony - Cowen & Co — Analyst

So there are no revenue recognition issues that would extend that?

Guy Avidan - MRV Communications — Acting CFO

I don’t see any.

John Anthony - Cowen & Co — Analyst

Okay. And then on the expense side, given the leverage that you’re seeing, where do you think you could ramp from a sales standpoint before you actually had to change the sales structure from the current run rate?

Guy Avidan - MRV Communications — Acting CFO

Sorry. Wasn’t quite sure I understood your question. I think we’re good for quite some time. We don’t plan any inquiries right now, we’re focusing on getting productivity out of the infrastructure that we have in place. I would say there’s still a lot of up side that we anticipate both from the Federal Government that we’ve been investing a it lot in the last two years as well as from additional carrier revenue in North America, and from the channel. We’ve been doing a lot of good work with channel partners, and we are — I think the best is yet to come.

John Anthony - Cowen & Co — Analyst

All right. Lastly —

Guy Avidan - MRV Communications — Acting CFO

No need to make adjustment or additional investment.

John Anthony - Cowen & Co — Analyst

Okay, great. Lastly, I know you said you’re not going to discuss Source Photonics but can you at least tell us whether the growth that Source experienced was broad base across both the Luminent and Fiberxon assets?

Guy Avidan - MRV Communications — Acting CFO

Unfortunately we really are not at liberty to provide further detail. I think it’s safe to assume that it was fairly balanced.

John Anthony - Cowen & Co — Analyst

Okay. Great. Thanks, guys. Congratulations.

Noam Lotan - MRV Communications — President, CEO

Thank you.

Exhibit 99.2-7

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^© 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.

Final Transcript

Feb. 28. 2008 / 4:30PM ET, MRVC — Q4 2007 MRV Communications Earnings Conference Call

Operator

Our next question is from John Harmon with Needham & Company. Please go ahead.

John Harmon - Needham & Co — Analyst

Hi, good afternoon.

Noam Lotan - MRV Communications — President, CEO

Hello, John.

John Harmon - Needham & Co — Analyst

Couple things stuck out when I typed in the numbers. If I typed in the numbers right it looks like revenue from Asia Pacific segment doubled sequentially. If that’s correct, and if so, where did it come from? How did that happen?

Noam Lotan - MRV Communications — President, CEO

That’s mainly from Japan. It’s the same deal we actually reported about a year ago but we don’t have orders from that deal every quarter.

John Harmon - Needham & Co — Analyst

Okay, thank you.

Noam Lotan - MRV Communications — President, CEO

That’s the growth. John, incidentally, that is a tier 1 wireless backhaul application.

John Harmon - Needham & Co — Analyst

Okay. And just secondly, on the balance sheet, I notice the accrued liabilities item also doubled sequentially. What is that deriving from?

Noam Lotan - MRV Communications — President, CEO

One second, John.

Guy Avidan - MRV Communications — Acting CFO

That’s reclassification of another item.

Exhibit 99.2-8

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^© 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.

Final Transcript

Feb. 28. 2008 / 4:30PM ET, MRVC — Q4 2007 MRV Communications Earnings Conference Call

John Harmon - Needham & Co — Analyst

Okay, thank you. Finally, on your networking equipment business, you did a good job of getting it back to profit afternoon. Was that mostly due to the increase in revenue or maybe you could talk about the structural changes you made. Were both parts, equipment integration, profitable, and how would the profits break down between the two parts?

Guy Avidan - MRV Communications — Acting CFO

Okay, so I think the answer is actually it’s a — has to do with a couple of factors. One is product mix. Product was favorable. I don’t know if you remember, but the prior quarter we mentioned that there was some delays in our aerospace, military and aerospace applications, and now it’s beginning to come back to normal. That’s part of it. So product mix.

Another part is the actual growth in revenue across the board, which obviously contributed to a better capacity utilization, and better ability to reduce costs of manufacturing. Then the third element is we have been, as we said on the last call, we’ve been really focusing very, very hard on the — try to gain operational efficiencies across divisional lines and also just by focusing and sharpening the pencil on our vendors and our processes, so we’re beginning to get the results of that. Hopefully that will carry us into subsequent quarters. So a combination of all of the above. What was the second part of your question?

John Harmon - Needham & Co — Analyst

The last part would be, of the profits you generated, how would that break down between networking equipment and systems integration?

Noam Lotan - MRV Communications — President, CEO

Well, in terms of revenue growth, so the network integration grew a lot, even much more than the equipment side. And this is partially due to the currency ratio in Europe and in most of our network integration sales are in euro and some sales in currencies that are related to the euro, like the Swiss franc and the Swedish kroner. In terms of profitable margin, most of the growth was on the other side, on the product side. And one reason, more business with the aerospace and defense, like Noam just mentioned. Another reason is more carrier business with higher margin, more sophisticated product that you can get a little bit more margin.

John Harmon - Needham & Co — Analyst

okay. Just one follow-up, if I may. Given the structural changes you’ve made, do you think your networking equipment business can stay profitable under most circumstances, or is there still more work to do?

Noam Lotan - MRV Communications — President, CEO

Is I think there’s more work to do. I don’t think it’s — definitely not a given that we can sustain profitability on a quarter by quarter. However, we’re encouraged by the growth prospects. We have ambitious targets for this coming year, and we don’t anticipate — we don’t anticipate additional investment in sales and marketing and Op Ex in general. So we’re able to keep op ex relatively flat and continue to grow both the top line and the gross margin percentage of revenue, then clearly we’re going to navigate our way into profitability, very carefully, but very consistently, and that’s our plan.

John Harmon - Needham & Co — Analyst

Thank you very much.

Exhibit 99.2-9

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Final Transcript

Feb. 28. 2008 / 4:30PM ET, MRVC — Q4 2007 MRV Communications Earnings Conference Call

Noam Lotan - MRV Communications — President, CEO

Thank you, John.

Operator

Thank you. Our next question is from [Greg Waters with Investors Asset Management.] Please go ahead.

Greg Waters - Investors Asset Management — Analyst

Good afternoon.

Noam Lotan - MRV Communications — President, CEO

Hi, Greg.

Greg Waters - Investors Asset Management — Analyst

My question, since a lot of them have already been answered, my main question really centers around the military and aerospace and how the CES fits into the long-term plans given the fiber optic and networking equipment focus of the remaining portion of the company. Is this something that’s a long-term commitment, or is this something potentially to be spun off in the future?

Guy Avidan - MRV Communications — Acting CFO

Well, I think that’s an investment banking question, and we’re certainly not prepared for that for this call. But just in general, CES has been a very close part of our operation in the sense that they are in the networking business, except most of what they do is effectively airborne, and, therefore, it’s a little bit less related to the carrier ethernet and optical networking that we’ve been discussing. However, there are obviously some level of synergies. There’s a lot of IQ concentrated there, and it’s certainly a strong part of our business. We very much value that, and the growth that we’ve seen, it’s a very long kind of a much longer sales cycle that carriers deploying networks, and personally I’m very, very excited about what these guys are doing, not to mention their contribution to our national defense. So, I’m not sure it’s the exact answer to your question —

Greg Waters - Investors Asset Management — Analyst

That does answer the question.

Guy Avidan - MRV Communications — Acting CFO

Okay, thank you.

Greg Waters - Investors Asset Management — Analyst

Follow-up on a different — on the tier 1 wireless provider, has that already begun shipping? Did you recognize if I revenue in Q4 for that?

Exhibit 99.2-10

Thomson StreetEvents www.streetevents.com Contact Us 10

^© 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.

Final Transcript

Feb. 28. 2008 / 4:30PM ET, MRVC — Q4 2007 MRV Communications Earnings Conference Call

Noam Lotan - MRV Communications — President, CEO

No.

Greg Waters - Investors Asset Management — Analyst

None, okay. And this is really way out there, but this is the second quarter in a row that I’ve seen some revenue from the development stage group. Does that stem from Charlotte’s Web, and is that the KVM business that we’re seeing, or what exactly is that?

Guy Avidan - MRV Communications — Acting CFO

Yes, it’s actually coming from Charlotte. What was the other part of the question?

Greg Waters - Investors Asset Management — Analyst

Exactly what equipment would that be?

Guy Avidan - MRV Communications — Acting CFO

Okay, so let me just describe a little bit. Obviously you’re familiar with KVM, since you asked the question, but it’s the ability to control multiple servers from one remote location and very useful for data center managers, especially if they have multiple data centers to manage. We came into this market with a high-end solution, probably the highest end solution in the market, and we start selling it, it initially it is a — these are not significant revenue, but the quality of the revenue is important because the type of customer that would buy that are really the blue chip customers, the people that have large networks that they really need intense computing, and we have excellent reference customers. So hopefully we’re going to be building on that strength and further expanding. So it does relate to our out of band management. It does relate to our network infrastructure. So in some ways it is kind of sold by some of the same sales people and the same channels that we’re working on, but as I mentioned, it’s still not significant, even though the quality of the revenue is very high.

Greg Waters - Investors Asset Management — Analyst

Thank you very much. Good quarter.

Guy Avidan - MRV Communications — Acting CFO

Thank you, Greg.

Operator

Thank you. (OPERATOR INSTRUCTIONS). There are no further questions in the queue at this time, I would like to turn the conference back over to Noam Lotan. Please go ahead, sir.

Noam Lotan - MRV Communications — President, CEO

Thank you, Brittany. I want to thank everyone for beg on the call today, we were very happy with our fourth quarter performance, and we truly anticipate continued success during 2008. And with that, I want to thank you very much and wish you a great afternoon. And hope to discuss with you the results of our next call in less than a quarter. Thank you very much. Have a good afternoon.

Exhibit 99.2-11

Thomson StreetEvents www.streetevents.com Contact Us 11

^© 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.

Final Transcript

Feb. 28. 2008 / 4:30PM ET, MRVC — Q4 2007 MRV Communications Earnings Conference Call

Operator

Thank you. Ladies and gentlemen, this concludes the MRV Communications fourth quarter and year-end 2007 financial results conference call. You may now disconnect. Thank you for using ACT Conferencing.

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Exhibit 99.2-12

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^© 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial.

4th Quarter 2007 Financial Results Teleconference

Forward-Looking Statements This presentation contains statements regarding future financial and operating results of MRV, MRV's expected revenues and net income (loss) for the first quarter of 2008 that ends on March 31, 2008, management's belief that MRV is positioned to take advantage of key emerging industry trends and management's expectations regarding those trends, and other statements about management's future expectations, beliefs, goals, plans or prospects and those of the market segments in which MRV is engaged that are based on management's current expectations, estimates, forecasts and projections about MRV, as well as MRV's future performance and the industries in which MRV operates, in addition to managements' assumptions. These statements constitute forward- looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "envisions," "estimates," "targets," "intends," "plans," "believes," "seeks," "should," "forecasts," "projects," variations of such words and similar expressions are intended to identify such forward-looking statements which are not statements of historical facts. These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to assess. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Actual results could differ materially because of the following factors, among others, which may cause revenues, gross margins and income (loss) to fall short of anticipated levels: vigorous competition relating to our entry into new markets or from our existing markets; market acceptance of new products; continued market acceptance of existing products and continued success in selling the products of other companies; product price discounts; the timing and amount of significant orders from customers; delays in product development and related product release schedules; obsolete inventory or product returns; warranty and other claims on products; technological shifts; the availability of competitive products at prices below MRV's prices; the continued ability to protect MRV's intellectual property rights; changes in product mix; maturing product life cycles; product sale terms and conditions; currency fluctuations; implementation of operating cost structures that align with revenue growth; the financial condition of MRV's customers and vendors; adverse results in litigation; the impact of legislative actions; higher insurance costs; potential new accounting pronouncements; the effects of terrorist activity and armed conflict; disruptions in general economic activity and changes in MRV's operations and security arrangements; the effects of travel restrictions and quarantines associated with major health problems, such as the Severe Acute Respiratory Syndrome, on general economic activity; decreases in corporate information technology spending or other changes in general economic conditions that affect demand for MRV's products. For further information regarding risks and uncertainties associated with MRV's businesses, please refer to the "Management's Discussion and Analysis of Results of Operations and Financial Condition" and "Risk Factors" sections of MRV's SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting MRV's investor relations department or at MRV's investor relations website at http://ir.mrv.com. All information in this presentation is as of February 28, 2008. MRV undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in MRV's expectations.

MRV Speakers Introduction Anne-Marie Frisch Investor Relations Overview & Highlights Noam Lotan President and CEO Financial Review Guy Avidan CFO Q & A

4th Quarter 2007 Financial Results Teleconference Overview & Highlights Noam Lotan President and Chief Executive Officer

Overview & Highlights

4th Quarter 2007 Financial Results Teleconference Financial Review Guy Avidan Chief Financial Officer

Key Measures

Results of Operations

Networking Group

Optical Components Group

Development Stage Group

Revenue Analysis by Geographical Region

Revenue by Groups of Similar Products

4th Quarter 2007 Financial Results Teleconference Q & A

Closing Thank You Connectivity Unlimited(tm)