-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AiB8lUPo5fT/SMw9OwOvL6Y4Gbn+s6I0eRGdVcpYOgmAaWQU11fOgKAT4tiIqimH ITl3eL5abfmijsy38B4vNA== 0000950148-96-000892.txt : 19960620 0000950148-96-000892.hdr.sgml : 19960620 ACCESSION NUMBER: 0000950148-96-000892 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MRV COMMUNICATIONS INC CENTRAL INDEX KEY: 0000887969 STANDARD INDUSTRIAL CLASSIFICATION: 3674 IRS NUMBER: 061340090 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11174 FILM NUMBER: 96566385 BUSINESS ADDRESS: STREET 1: 8917 FULLBRIGHT AVE CITY: CHATSWORTH STATE: CA ZIP: 91311 BUSINESS PHONE: 8187739044 MAIL ADDRESS: STREET 1: 8943 FULLBRIGHT AVE CITY: CHATSWORTH STATE: CA ZIP: 91311 10-Q 1 FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly Report under Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 1996 [ ] Transition Report pursuant to section 13 or 15(d) of the Securities Exchange Act. For the transition period from _______________ to ______________ Commission file number 1-11174 MRV Communications, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 06-1340090 - - ------------------------------------------- ---------------------------------- (State of other jurisdiction (IRS Employer of incorporation or organization) identification no.)
8917 Fullbright Ave., Chatsworth, CA 91311 - - ------------------------------------ ------------------------- (Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (818) 773-9044 Check whether the issuer:(1)has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No As of May 10, 1996 there were 9,588,437 shares of Common Stock, $.0067 par value per share, outstanding. 2 MRV COMMUNICATIONS, INC. Form 10-Q March 31, 1996 INDEX
PAGE NUMBER ----------- PART I FINANCIAL INFORMATION Item 1: Financial Statements: Condensed Consolidated Balance Sheets as of December 31, 1995 and March 31, 1996 (unaudited) 3 Condensed Consolidated Statements of Income (unaudited) for the three months ended March 31, 1995 and 1996 4 Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 1995 and 1996 5 Notes to Condensed Consolidated Financial Statements 6 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 8 PART II OTHER INFORMATION 9
3 MRV COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
--------------------------------------------------------------------------------------------------------------- December 31, March 31, 1995 1996 --------------------------------------------------------------------------------------------------------------- (unaudited) ASSETS ------ CURRENT ASSETS Cash $ 1,951 $ 1,173 Short-term investments 1,000 1,505 Restricted cash 6,272 5,714 Accounts receivable, net of reserves of $825 in 1995 and $807 in 1996 10,780 12,942 Inventories 8,382 9,882 Deferred income taxes 804 804 Other current assets 608 899 --------------------------------------------------------------------------------------------------------------- Total current assets 29,797 32,919 Property And Equipment - At cost, net of depreciation and amortization 2,060 2,335 Other Assets: Deferred income taxes 925 925 Other 525 508 --------------------------------------------------------------------------------------------------------------- $ 33,307 $ 36,687 LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable $ 4,342 $ 5,958 Accrued liabilities 2,221 1,631 Income taxes payable 1,215 1,484 --------------------------------------------------------------------------------------------------------------- Total current liabilities 7,778 9,073 DEFERRED RENT 46 40 OTHER LONG TERM DEBT 225 300 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $0.01 par value: 1,000,000 shares authorized no shares outstanding - - Common stock, $.0067 par value: 20,000,000 shares authorized 9,524,293 shares outstanding in 1995 and 9,587,714 in 1996 63 64 Additional paid-in capital 23,491 23,627 Retained earnings 1,704 3,583 --------------------------------------------------------------------------------------------------------------- Total stockholders' equity 25,258 27,274 --------------------------------------------------------------------------------------------------------------- $ 33,307 $ 36,687 ---------------------------------------------------------------------------------------------------------------
See accompanying notes 3 4 MRV COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited, in thousands, except share data)
--------------------------------------------------------------------------------------------------------------- 3 Months Ended ----------------------------------- March 31, March 31, 1995 1996 --------------------------------------------------------------------------------------------------------------- REVENUES, net $ 6,737 $ 15,529 --------------------------------------------------------------------------------------------------------------- COSTS AND EXPENSES: Cost of goods sold 4,260 8,989 Research and development expenses 702 1,684 Selling, general and administrative expenses 917 2,136 --------------------------------------------------------------------------------------------------------------- Operating income 858 2,720 Other income 227 80 Provision for income taxes 380 921 --------------------------------------------------------------------------------------------------------------- NET INCOME $ 705 $ 1,879 --------------------------------------------------------------------------------------------------------------- EARNINGS PER SHARE $ .08 $ .18 --------------------------------------------------------------------------------------------------------------- Weighted average number of common shares outstanding 8,834,375 10,706,357 ---------------------------------------------------------------------------------------------------------------
See accompanying notes 4 5 MRV COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands)
--------------------------------------------------------------------------------------------------------------- 3 Months Ended -------------------------------- March 31, March 31, 1995 1996 --------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 705 $ 1,879 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 41 78 (Increase) decrease in: Accounts receivable (933) (2,162) Inventories (1,421) (1,500) Deferred income taxes (7) - Other assets 475 (292) Increase (decrease) in: Accounts payable (164) 1,616 Accrued liabilities (55) (590) Income taxes payable (90) 269 Deferred rent - (6) Other long term debt - 75 --------------------------------------------------------------------------------------------------------------- Net cash used in operating activities (1,449) (633) --------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (212) (335) Restricted Cash - 558 Purchases of investments (10,253) (505) --------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (10,465) (282) --------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock 9,555 137 --------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 9,555 137 --------------------------------------------------------------------------------------------------------------- Net decrease in cash (2,359) (778) Cash at beginning of period 4,045 1,951 --------------------------------------------------------------------------------------------------------------- Cash at end of period $ 1,686 $ 1,173 ---------------------------------------------------------------------------------------------------------------
See accompanying notes. 5 6 MRV COMMUNICATIONS, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION - The accompanying unaudited condensed financial statements have been prepared in accordance with the requirements of Form 10-Q and, therefore, do not include all information and footnotes which would be presented if such financial statements were prepared in accordance with generally accepted accounting principles. These statements should be read in conjunction with the audited financial statements presented in the Company's Annual Report or Form 10-K for the year ended December 31, 1995. In the opinion of management, these interim financial statements reflect all normal and recurring adjustments necessary for a fair presentation of the financial position and results of operations for each of the periods presented. The results of operations and cash flows for such periods are not necessarily indicative of results to be expected for the full year. 2. NET EARNINGS PER SHARE - Net earnings per share are based upon the weighted average number of shares outstanding during each of the periods. There is no significant difference between primary and fully diluted earnings per share. 3. STOCK SPLIT - On March 5, 1996 Stockholders authorized an additional 10,000,000 shares and a three for two stock split. The date of record for the stock split was March 20, 1996 and the distribution date was April 2, 1996. All outstanding shares, weighted average numbers of shares outstanding, and earnings per share calculations in this document have been adjusted to reflect the three for two stock split. 6 7 ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, statements of operations data of the Company expressed as a percentage of revenues.
Quarter Ended March 31 ---------------------- 1995 1996 ---- ---- Revenues, net 100% 100% Cost of goods sold 63% 58% Gross profit 37% 42% Operating expanses: Research and development 10% 11% Selling, general and administrative 14% 14% Operating income 13% 17% Other income, net 3% 1% Income before taxes 16% 18%
Quarter ended March 31, 1996 as compared to quarter ended March 31, 1995 Revenues Revenues for the quarter ended March 31, 1996 from product sales were $15,529,000 as compared to $6,737,000 for the quarter ended March 31, 1995, an increase of $8,792,000 or 131 percent. Revenues increased as a result of greater marketing efforts and greater market acceptance of the Company's products, both domestically and internationally. International sales accounted for approximately 39 percent of revenues for the period ended March 31, 1996 as compared to 25 percent of revenues for the period ended March 31, 1995. International sales grew as a percentage of sales because of greater marketing efforts in overseas markets as well as increased sales and marketing resources put in place by the Company to service overseas markets. Gross Profit Gross profit was $6,540,000 for the quarter ended March 31, 1996 as compared to $2,477,000 for the same period in 1995, an increase of 164 percent. Gross profit as a percentage of revenues increased from 37% to 42% primarily as a result of lower cost production techniques and improved discounts obtained from vendors as the Company has increased the volume of its purchases. Research and Development Research and development ("R&D") expenses were $1,684,000 and $702,000 and represented 11 percent and 10 percent respectively of revenues for the quarters ended March 31, 1996 and 1995. The 140 percent increase in R&D spending was attributable to the continued development of the Company's fiber optic and networking products, including two-way simultaneous fiber optic transmission modules, Ethernet/Fast Ethernet Switches and ATM products. Additional costs were also associated with the hiring of additional research and development personnel and consultants. The Company intends to continue to invest in the research and development of new products. Management believes that the ability of the Company to develop and commercialize new products is a key competitive factor. Selling, General and Administrative Selling, General and Administrative ("SG&A") expenses increased to $2,136,000 for the quarter ended March 31, 1996 from $917,000 for the quarter ended March 31, 1995. The increase was due primarily to increased marketing and personnel costs, as well as other administrative expenses. As a percentage of revenues, SG&A was unchanged at 14 percent. 7 8 Net Income Net income increased to $1,879,000 for the quarter ended March 31, 1996 compared with a net income of $705,000 for the quarter ended March 31, 1995. This increase of 167 percent is primarily due to substantially increased sales and higher gross profit margins. LIQUIDITY AND CAPITAL RESOURCES Net cash used in operating activities for the three months ended March 31, 1996 was $633,000 and $1,449,000 for same period in 1995. The funds were used primarily in increased research and development, marketing expenses, and increased inventories and receivables as a result of increased revenues. Net cash provided by financing activities for the three months ending March 31, 1995 were $9,555,000. The cash provided by financing activities resulted primarily from the issuance of 1,350,000 shares of common stock at $8.00 per share less offering costs. Net cash provided by financing activities for the three months ending March 31, 1996 were $137,000 which resulted primarily from the issuance of shares upon the exercise of employee incentive stock options. Net cash used in investing activities for the three months ended March 31, 1996 was $505,000 and $10,465,000 for the same period in 1995. For the three months ended March 31, 1996 cash was primarily used to purchase short term investments and was provided by the release of a portion of the restricted cash used as security against letters of credit issued by a bank on behalf of the Company. The cash used in investing activity for the three months ended March 31, 1995 was primarily used to purchase U.S. Government securities. Effects of Inflation The Company believes that the relatively moderate rate of inflation over the past few years has not had a significant impact on the Company's sales or operating results, or on the prices of raw materials. 8 9 PART II - OTHER INFORMATION Item 1. Legal Proceedings The Company is not involved in any legal proceedings as of the date of this report. Item 2. Change in Securities (a) Not applicable (b) Not applicable Item 3. Defaults Upon Senior Securities Not applicable Item 4. Submission of matters to a vote of Security Holders On March 5, 1996 a special meeting of stockholders was held to approve an amendment to the Company's Certificate of Incorporation to effect a three-for-two split of the Company's Common Stock, to increase the number of authorized shares of the Company's Common Stock from 10,000,000 to 20,000,000 shares and to decrease the par value per share of the Company's Common Stock from $0.01 to $0.0067. The results of the voting were as follows:
Votes Votes Broker For Against Abstentions Non Votes ----- ------- ----------- --------- 5,676,297 33,739 6,355 642,318
Item 5. Other information Not applicable Item 6. Exhibits and reports on Form 8-K (a) Not applicable (b) No reports on Form 8-K were filed during the quarter for which this report on form 10-Q is filed. SIGNATURES Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant certifies that it has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on May 13, 1996. MRV COMMUNICATIONS, INC. By: /s/ Noam Lotan --------------------- Noam Lotan, President By: /s/ Edmund Glazer --------------------- Edmund Glazer, Chief Financial Officer 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 1,000 6,887 1,505 13,749 807 9,882 32,919 2,831 496 36,687 9,073 0 0 0 64 27,210 36,687 15,529 15,529 8,989 12,809 (80) 0 0 2,800 921 1,879 0 0 0 1,879 .18 .18
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