-----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, RJkd8LoroU/dpijG3H0Ldh9LegXBXLwzkuaushOYGXv3h7usmiCgrdRUXERjgwcB E6aWdXRwW5qiN1/z4JypXw== 0000950148-96-001715.txt : 19960816 0000950148-96-001715.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950148-96-001715 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MRV COMMUNICATIONS INC CENTRAL INDEX KEY: 0000887969 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [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: 96613287 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 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 June 30, 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 August 12, 1996 there were 19,748,776 shares of Common Stock, $.0034 par value per share, outstanding. 2 MRV COMMUNICATIONS, INC. Form 10-Q June 30, 1996 INDEX
PAGE NUMBER ----------- PART I FINANCIAL INFORMATION Item 1: Financial Statements: Condensed Consolidated Balance Sheets as of December 31, 1995 and June 30, 1996 (unaudited) 3 Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 1995 and 1996 4 Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 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
2 3 MRV COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
December 31, June 30, 1995 1996 - -------------------------------------------------------------------------------------------------------------- (unaudited) ASSETS ------ CURRENT ASSETS Cash $ 1,951 $ 3,453 Short-term investments 1,000 - Restricted cash 6,272 1,778 Accounts receivable, net of reserves of $825 in 1995 and $1,518 in 1996 10,780 19,541 Inventories 8,382 15,856 Deferred income taxes 804 946 Other current assets 608 1,888 - -------------------------------------------------------------------------------------------------------------- Total current assets 29,797 43,462 Property And Equipment- At cost, net of depreciation and amortization 2,060 4,606 Other Assets: Deferred income taxes 925 850 Other 525 914 - -------------------------------------------------------------------------------------------------------------- $ 33,307 $ 49,832 - -------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable $ 4,342 $ 12,342 Accrued liabilities 2,221 2,828 Income taxes payable 1,215 1,938 - -------------------------------------------------------------------------------------------------------------- Total current liabilities 7,778 17,108 DEFERRED RENT 46 40 OTHER LONG TERM DEBT 225 358 DEFERRED INCOME TAXES - 85 CAPITAL LEASE OBLIGATION - 1,083 COMMITMENTS AND CONTINGENCIES MINORITY INTERESTS - 744 STOCKHOLDERS' EQUITY: Preferred stock, $0.01 par value: 1,000,000 shares authorized no shares outstanding - - Common stock, $.0034 par value: 40,000,000 shares authorized 19,048,586 shares outstanding in 1995 and 19,289,774 in 1996 63 64 Additional paid-in capital 23,491 24,484 Retained earnings 1,704 5,866 - -------------------------------------------------------------------------------------------------------------- Total stockholders' equity 25,258 30,414 - -------------------------------------------------------------------------------------------------------------- $ 33,307 $ 49,832 - --------------------------------------------------------------------------------------------------------------
See accompanying notes 3 4 MRV COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except share data)
3 Months Ended 6 Months Ended --------------------------- -------------------------- June 30, June 30, June 30, June 30, 1995 1996 1995 1996 REVENUES, net $ 8,310 $ 19,586 $ 15,047 $ 35,115 - ------------------------------------------------------------------------------------------------------------ COSTS AND EXPENSES: Cost of goods sold 4,835 11,411 9,095 20,400 Research and development expenses 800 1,992 1,502 3,676 Selling, general and administrative expenses 1,454 2,959 2,371 5,095 Purchased technology in progress 6,211 - 6,211 - Restructuring costs 1,465 - 1,465 - - ------------------------------------------------------------------------------------------------------------ Operating (loss) income (6,455) 3,224 (5,597) 5,944 Other income 181 84 408 164 (Credit) Provision for income taxes (1,567) 962 (1,187) 1,883 Minority interests - - - 63 - ------------------------------------------------------------------------------------------------------------ NET (LOSS) INCOME $ (4,707) $ 2,346 $ (4,002) $ 4,162 - ------------------------------------------------------------------------------------------------------------ EARNINGS PER SHARE $ (0.25) $ 0.11 $ (0.22) $ 0.19 - ------------------------------------------------------------------------------------------------------------ Weighted average number of common shares outstanding 18,492,078 22,203,980 18,124,080 22,046,738 - ------------------------------------------------------------------------------------------------------------
See accompanying notes 4 5 MRV COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) - --------------------------------------------------------------------------
6 Months Ended ---------------------------------- June 30, June 30, 1995 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (4,002) $ 4,162 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 99 263 (Increase) decrease in: Accounts receivable (2,833) (8,761) Inventories (2,378) (7,474) Deferred income taxes (1,928) 18 Other assets 298 (1,297) Increase (decrease) in: Accounts payable 304 8,000 Accrued liabilities 3,105 607 Income taxes payable (169) 723 Deferred rent (1) (6) Minority interest - 744 Other long term debt - 133 - ---------------------------------------------------------------------------------------------------------- Net cash used in operating activities (7,505) (2,888) - ---------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (1,012) (2,774) Purchases of intangible assets (567) (407) Restricted Cash - 4,494 Assumption of capital lease - 1,083 Purchase of investments (12,409) - Redemption of short-term investments 6,040 1,000 - ---------------------------------------------------------------------------------------------------------- Net cash (used in) provided by investing activities (7,948) 3,396 - ---------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock 13,369 994 - ---------------------------------------------------------------------------------------------------------- Net cash provided by financing activities 13,369 994 - ---------------------------------------------------------------------------------------------------------- Net decrease in cash (2,084) 1,502 Cash at beginning of period 4,045 1,951 - ---------------------------------------------------------------------------------------------------------- Cash at end of period 1,961 3,453 - ----------------------------------------------------------------------------------------------------------
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 July 11, 1996, Stockholders authorized an additional 20,000,000 shares and a two for one stock split. The date of record for the stock split was July 29, 1996 and the distribution date was July 31, 1996. All outstanding shares, weighted average numbers of shares outstanding, and earnings per share calculations in this document have been adjusted to reflect the two for one 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.
3 Months Ended 6 Months Ended -------------- -------------- June 30 June 30 ------- ------- 1995 1996 1995 1996 ---- ---- ---- ---- Revenues, net 100% 100% 100% 100% Cost of goods sold 58 58 60 58 Gross profit 42 42 40 42 Operating expenses: Research and development 10 10 10 11 Selling, general and administrative 17 15 16 15 Purchased technology in progress 75 - 41 - Restructuring costs 17 - 10 - Operating income (77) 17 (37) 17 Other income, net 2 - 3 1 Income before taxes (75) 17 (34) 17
Revenues Revenues for the three and six months ended June 30, 1996 were $19,586,000 and $35,115,000, respectively, as compared to $8,310,000 and $15,047,000 for the three and six months ended June 30, 1995. The changes represented increases of $11,276,000 or 136 percent for the three months ended June 30, 1996 and $20,068,000 or 133 percent for the six months ended June 30, 1996. 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 51 and 46 percent of revenues for the three and six months ended June 30, 1996 as compared to 39 and 33 percent of revenues for the three and six months ended June 30, 1995. International sales, as a percentage of total revenues, increased because of greater market acceptance for the Company's products overseas. Gross Profit Gross Profit for the three and six months ended June 30, 1996 was $8,175,000 and $14,715,000, respectively, as compared to $3,475,000 and $5,952,000 for the three and six months ended June 30, 1995. The changes represented an increase of $4,700,000 or 135 percent for the three months ended June 30, 1996 and an increase of $8,763,000 or 147 percent for the six months ended June 30, 1996. Gross Profit as a percentage of revenues increased from 40 percent for the six months ended June 30, 1995 to 42 percent for the six month period ending June 30, 1996. The increase in gross margin resulted from improvements in costs of production. Gross Profit as a percentage of revenues for the three months ended June 30, 1995 and 1996 was unchanged at 42 percent. Research and Development Research and development ("R&D") expenses were $1,992,000 and $800,000, respectively, and represented 10 percent of revenues for each of the quarters ended June 30, 1996 and 1995. For the six months ended June 30, 1996 and 1995, R&D expenses were $3,676,000 and $1,502,000, which represented 11 percent and 10 percent, respectively. The 149 and 145 percent increase in R&D spending for the three and six months ended June 30, 1996, respectively, was attributable to the continued development of the Company's fiber optic and networking products, including new stand-alone LAN products, as well as to costs associated with the hiring of additional research and development personnel and consultants. Management believes that the ability of the Company to develop and commercialize new products is a key competitive factor. 7 8 Selling, General and Administrative Selling, General and Administrative ("SG&A") expenses increased to $2,959,000 for the quarter ended June 30, 1996 from $1,454,000 for the quarter ended June 30, 1995. As a percentage of revenues, SG&A decreased from 17 percent to 15 percent for the period. For the six months ended June 30, 1996 and 1995 SG&A increased to $5,095,000 from $2,371,000. As a percentage of sales SG&A decreased from 16 to 15 percent for the six months ended June 30, 1995 and June 30, 1996, respectively. The decrease in SG&A expenses is due primarily to savings obtained in the integration of the Company's computer networking activities in the U.S. with the activities of the subsidiaries acquired in 1995. Purchased Technology in Progress and Restructuring Costs Purchased technology in progress for the three and six months ended June 30, 1995 was $6,211,000. The purchased technology is for R&D projects in progress at the time of acquisition of assets from Galcom Networking, Ltd. and Ace-North Hills. No such purchases were made in the comparable periods for 1996. Restructuring costs during the three and six months ended June 30, 1995 were $1,465,000. No such costs were incurred during the three and six months ended June 30, 1996. The restructuring is associated with a plan adopted by the Company on June 30, 1995 calling for the merger of the newly acquired subsidiaries and the Company's LAN products division. The plan also calls for the closure of some facilities, termination of redundant employees and cancellation of representation agreements. Net Income Net Income increased from a loss of $4,707,000 for the quarter ended June 30, 1995 to net income of $2,346,000 for the quarter ended June 30, 1996. Net Income increased from a loss of $4,002,000 for the six months ended June 30, 1995 to net income of $4,162,000 for the six months ended June 30, 1996. The increases in net income in 1996 are primarily due to substantially increased sales and the absence of the non- recurring charges incurred in 1995. The non-recurring charges in 1995 were for the costs of purchased technology in progress acquired in the acquisitions of subsidiaries and costs associated with the adoption of a restructuring plan on June 30, 1995. LIQUIDITY AND CAPITAL RESOURCES Net cash used in operating activities for the six months ended June 30, 1996 was $2,887,000 and $7,505,000 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. In addition, for the period ended June 30, 1995 funds were used in the purchase of technology in progress and restructuring costs in connection with the acquisition of subsidiaries. Net cash provided by financing activities for the six months ending June 30, 1995 and 1996 were $13,369,000 and $994,000, respectively. In 1995, the cash provided by financing activities resulted primarily from the issuance of 2,700,000 shares of common stock at $12.00 per share less offering costs and the issuance of 819,972 shares in connection with the purchase of assets from Ace-North Hills. Net cash used in investing activities for the six months ended June 30, 1995 was $7,948,000. The majority of cash used in investing activities in 1995 was for the purchase of investments and the majority of cash provided by investing activities in the same period was from the redemption of short-term investments. Net cash provided by investing activities for the six months ended June 30, 1996 was $3,396,000. The majority of cash provided by investing activities in 1996 was from the cancellation of restrictions on cash. The majority of cash used in investing activities during 1996 was for the purchase of property and equipment. 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 Not applicable 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 3-MOS DEC-31-1996 APR-01-1996 JUN-30-1996 5,231 0 19,541 1,518 15,856 43,462 5,591 985 49,832 17,108 1,083 0 0 64 30,350 49,832 19,586 19,586 11,411 16,362 0 120 0 3,308 962 2,346 0 0 0 2,346 .11 .11
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