8-K 1 a10-1790_18k.htm 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): January 7, 2010

 

MRV COMMUNICATIONS, INC.

(Exact name of Registrant as specified in its charter)

 

DELAWARE

 

001-11174

 

06-1340090

(State or other jurisdiction of

 

(Commission file number)

 

(I.R.S. employer

incorporation or organization)

 

 

 

identification number)

 

20415 Nordhoff Street, Chatsworth, CA  91311

(Address of principal executive offices)  (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:

 

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 2.01 Completion of Acquisition or Disposition of Assets

 

As previously reported in a Current Report on Form 8-K filed by MRV Communications, Inc. (the “Company”) on December 31, 2009, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) with EDSLan Finance S.r.l., Elio Bianchi, Rodolfo Casieri, Cristina Ciambellini, Sergio Ciambellini and Barbara Pedrazzani on December 24, 2009.  The Purchase Agreement provided for the sale of the 90% of the shares of EDSLan S.p.A. (“EDSLan”) owned by the Company.  EDSLan is located in Milan, Italy, and is a communication equipment distribution company.

 

The Purchase Agreement provided for a) the payment from EDSLan to the Company of a dividend of two million Euro, b) the subsequent sale of the Company’s shares of EDSLan to its management for six million Euro and payment of a portion of the investment banker’s fees, and c) the cancellation of a put option requiring the Company to pay U.S. $918,000 to a member of management by December 31, 2009.  The buyers also entered into a distribution agreement requiring them to purchase and distribute a minimum of two million Euro of the Company’s products over the next three years.  The sale was completed on January 7, 2010.  Additional information on the financial impact of the transaction is included in Item 9.01(b) below.

 

The foregoing description of the sale is not complete and is qualified in its entirety by the terms and conditions set forth in the Purchase Agreement, which was attached as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on December 31, 2009, and is incorporated by reference herein.  A press release announcing the closing of the transaction was released on January 13, 2010, and is attached hereto as Exhibit 99.1.

 

Item 9.01 Financial Statements and Exhibits

 

(b)           Pro Forma Financial Information

 

On January 7, 2010, the Company completed the sale of its shares of EDSLan for, among other things, cash proceeds of $11.5 million including a) a dividend of $2.9 million and b) $8.6 million (in U.S. dollars as of the closing).  The description of the transaction and parties involved is contained in Item 2.01 above and incorporated herein.  The following unaudited pro forma condensed consolidated balance sheet as of September 30, 2009 is based on the Company’s historical unaudited condensed consolidated balance sheet as of September 30, 2009.  The pro forma condensed consolidated balance sheet gives effect to the EDSLan divestiture and related adjustments as if it had occurred on September 30, 2009.

 

2


 

MRV Communications, Inc.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

as of September 30, 2009

(In thousands, except par values)

 

 

 

 

 

Pro forma adjustments

 

 

 

 

 

As reported

 

EDSLan (1)

 

Impact of
transaction

 

Pro forma

 

Assets

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

67,888

 

$

(14

)

$

11,509

(2)

$

79,383

 

Short-term marketable securities

 

8,598

 

—

 

—

 

8,598

 

Time deposits (restricted)

 

14,025

 

—

 

—

 

14,025

 

Accounts receivable, net

 

128,748

 

(27,972

)

—

 

100,776

 

Inventories

 

80,206

 

(8,001

)

—

 

72,205

 

Other current assets

 

45,430

 

(784

)

—

 

44,646

 

 

 

 

 

 

 

 

 

 

 

Total current assets

 

344,895

 

(36,771

)

11,509

 

319,633

 

Non-current assets

 

70,574

 

(3,738

)

—

 

66,836

 

Total assets

 

$

415,469

 

$

(40,509

)

$

11,509

 

$

386,469

 

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

82,326

 

$

(10,122

)

—

 

$

72,204

 

Short-term obligations

 

77,979

 

(7,056

)

 

 

70,923

 

Other current liabilities

 

90,348

 

(2,908

)

(918

)(3)

86,522

 

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

250,653

 

(20,086

)

(918

)

229,649

 

Long-term liabilities

 

9,238

 

(1,818

)

 

 

7,420

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

MRV stockholders’ equity:

 

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value:

 

 

 

 

 

 

 

 

 

Authorized - 1,000 shares; no shares issued or outstanding

 

—

 

—

 

—

 

—

 

Common stock, $0.0017 par value:

 

 

 

 

 

 

 

 

 

Authorized - 320,000 shares

 

 

 

 

 

 

 

 

 

Issued – 158,960 shares

 

 

 

 

 

 

 

 

 

Outstanding - 157,607 shares

 

268

 

—

 

—

 

268

 

Other stockholders’ equity

 

148,874

 

(18,605

)

13,656

(4)

143,925

 

 

 

 

 

 

 

 

 

 

 

Total MRV stockholder’s equity

 

149,142

 

(18,605

)

13,656

 

144,193

 

Noncontrolling interests in consolidated subsidiaries (6)

 

6,436

 

—

 

(1,229

)(5)

5,207

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

155,578

 

(18,605

)

12,427

 

149,400

 

Total liabilities and equity

 

$

415,469

 

$

(40,509

)

$

11,509

 

$

386,469

 

 

(1)

Adjustments eliminate the assets and liabilities of EDSLan as of September 30, 2009.

(2)

Proceeds received by the Company as a result of the sale of EDSLan.

(3)

Elimination of put liability of the Company previously outstanding which was cancelled as part of the disposition.

(4)

Adjustment to stockholders’ equity to reflect the net impact of the disposition.

(5)

Balance of noncontrolling interest in EDSLan as of September 30, 2009.

(6)

Adjusted for retrospective adoption of Accounting Standards Codification Subtopic 810-10-45, which was adopted effective January 1, 2009.

 

The following unaudited consolidated pro forma financial information presents statements of operations for the years ended December 31, 2008, 2007 and 2006, and the nine months ended September 30, 2009 and 2008, and is based on the audited consolidated financial statements for the Company for the year ended December 31, 2008, the unaudited condensed consolidated financial statements for the nine months ended September 30, 2009, and 2008, and the unaudited operating results of EDSLan for the periods presented.  The pro forma financial information gives effect to the EDSLan divestiture as if it had occurred on January 1, 2006.

 

3


 

Unaudited Pro Forma Consolidated Statement of Operations

 

for the nine months ended September 30, 2009

 

(In thousands, except per share data)

 

 

 

 

 

Pro forma
adjustments (1)

 

 

 

 

 

As reported

 

EDSLan

 

Pro forma

 

Revenue

 

$

366,811

 

$

(43,742

)

$

323,069

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

272,307

 

(34,396

)

237,911

 

Gross profit

 

94,504

 

(9,346

)

85,158

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Product development and engineering

 

26,839

 

—

 

26,839

 

Selling, general and administrative

 

78,917

 

(8,035

)

70,882

 

Amortization of intangibles

 

1,692

 

 

 

1,692

 

 

 

 

 

 

 

 

 

Total operating expenses

 

107,448

 

(8,035

)

99,413

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

(12,944

)

(1,311

)

(14,255

)

 

 

 

 

 

 

 

 

Interest expense

 

(2,361

)

93

 

(2,268

)

Other income (expense), net

 

1,088

 

(195

)

893

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

(14,217

)

(1,413

)

(15,630

)

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

5,924

 

(633

)

5,291

 

 

 

 

 

 

 

 

 

Net loss

 

(20,141

)

(780

)

(20,921

)

Less: net income attributable to non-controlling interests

 

1,466

 

(32

)

1,434

 

 

 

 

 

 

 

 

 

Net loss attributable to MRV

 

$

(21,607

)

$

(748

)

$

(22,355

)

 

 

 

 

 

 

 

 

Net loss per share attributable to MRV common stockholders:

 

 

 

 

 

 

 

Basic and Diluted

 

$

(0.14

)

$

(0.00

)

$

(0.14

)

Weighted average number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

157,521

 

—

 

157,521

 

 

4


 

MRV Communications, Inc.

Unaudited Pro Forma Consolidated Statement of Operations

For the nine months ended September 30, 2008

(In thousands, except per share data)

 

 

 

 

 

Pro forma
adjustments (1)

 

 

 

 

 

As reported

 

EDSLan

 

Pro forma (3)

 

Revenue

 

$

403,790

 

$

(56,072

)

$

347,718

 

Cost of goods sold

 

287,248

 

(44,639

)

242,609

 

Gross profit

 

116,542

 

(11,433

)

105,109

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Product development and engineering

 

30,106

 

—

 

30,106

 

Selling, general and administrative

 

95,534

 

(9,710

)

85,824

 

Amoritization of intangibles

 

1,870

 

—

 

1,870

 

Total operating expenses

 

127,510

 

(9,710

)

117,800

 

Operating income (loss)

 

(10,968

)

(1,723

)

(12,691

)

Interest expense

 

(3,047

)

376

 

(2,671

)

Other income (expense), net

 

3,620

 

(289

)

3,331

 

Income (loss) before income taxes

 

(10,395

)

(1,636

)

(12,031

)

Provision (benefit) for income taxes

 

2,413

 

(903

)

1,510

 

Net loss

 

(12,808

)

(733

)

(13,541

)

Less: net income attributable to non-controlling interests

 

6

 

(38

)

(32

)

Net loss attributable to MRV

 

$

(12,814

)

$

(695

)

$

(13,509

)

 

 

 

 

 

 

 

 

Net loss per share attributable to MRV common stockholders:

 

 

 

 

 

 

 

Basic and Diluted

 

$

(0.08

)

$

(0.00

)

$

(0.09

)

Weighted average number of shares:

 

 

 

 

 

 

 

Basic and Diluted

 

157,284

 

—

 

157,284

 

 

5


 

MRV Communications, Inc.

 

Unaudited Pro Forma Consolidated Statement of Operations

 

For the year ended December 31, 2008

 

(In thousands, except per share data)

 

 

 

 

 

Pro forma
adjustments (1)

 

 

 

 

 

As reported

 

EDSLan

 

Pro forma

 

Revenue

 

$

538,022

 

$

(72,569

)

$

465,453

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

388,021

 

(57,635

)

330,386

 

 

 

 

 

 

 

 

 

Gross profit

 

150,001

 

(14,934

)

135,067

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Product development and engineering

 

38,746

 

—

 

38,746

 

Selling, general and administrative

 

129,019

 

(12,425

)

116,594

 

Impairment of goodwill and other intangibles

 

100,250

 

—

 

100,250

 

Amortization of intangibles

 

2,434

 

—

 

2,434

 

 

 

 

 

 

 

 

 

Total operating expenses

 

270,449

 

(12,425

)

258,024

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

(120,448

)

(2,509

)

(122,957

)

 

 

 

 

 

 

 

 

Interest expense

 

(3,956

)

458

 

(3,498

)

Other income (expense), net

 

4,450

 

(294

)

4,156

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

(119,954

)

(2,345

)

(122,299

)

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

3,150

 

(1,216

)

1,934

 

 

 

 

 

 

 

 

 

Net loss

 

(123,104

)

(1,129

)

(124,233

)

Less: net income attributable to non-controlling interests

 

100

 

(59

)

41

 

Net loss attributable to MRV

 

$

(123,204

)

$

(1,070

)

$

(124,274

)

 

 

 

 

 

 

 

 

Net loss per share attributable to MRV common stockholders:

 

 

 

 

 

 

 

Basic and Diluted

 

$

(0.78

)

$

(0.01

)

$

(0.79

)

Weighted average number of shares:

 

 

 

 

 

 

 

Basic and Diluted

 

157,323

 

—

 

157,323

 

 

6


 

MRV Communications, Inc.

Unaudited Pro Forma Consolidated Statement of Operations

For the year ended December 31, 2007

(In thousands, except per share data)

 

 

 

 

 

Pro forma adjustments (1)

 

 

 

 

 

As reported

 

EDSLan

 

Pro forma (3)

 

Revenue

 

$

448,237

 

$

(69,593

)

$

378,644

 

Cost of goods sold

 

320,750

 

(54,773

)

265,977

 

Gross profit

 

127,487

 

(14,820

)

112,667

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Product development and engineering

 

33,387

 

—

 

33,387

 

Selling, general and administrative

 

102,694

 

(11,793

)

90,901

 

Amoritization of intangibles

 

1,906

 

—

 

1,906

 

Total operating expenses

 

137,987

 

(11,793

)

126,194

 

Operating income (loss)

 

(10,500

)

(3,027

)

(13,527

)

Interest expense

 

(3,968

)

447

 

(3,521

)

Cost of debt conversion

 

(4,899

)

—

 

(4,899

)

Other income (expense), net

 

3,863

 

(282

)

3,581

 

Income (loss) before income taxes

 

(15,504

)

(2,862

)

(18,366

)

Provision (benefit) for income taxes

 

3,906

 

(1,546

)

2,360

 

Net loss

 

(19,410

)

(1,316

)

(20,726

)

Less: net income (loss) attributable to non-controlling interests (2)

 

(316

)

(97

)

(413

)

Net loss attributable to MRV

 

$

(19,094

)

$

(1,219

)

$

(20,313

)

 

 

 

 

 

 

 

 

Net loss per share attributable to MRV common stockholders:

 

 

 

 

 

 

 

Basic and Diluted

 

$

(0.14

)

$

(0.01

)

$

(0.14

)

Weighted average number of shares:

 

 

 

 

 

 

 

Basic and Diluted

 

140,104

 

—

 

140,104

 

 

7


 

MRV Communications, Inc.

Unaudited Pro Forma Consolidated Statement of Operations

For the year ended December 31, 2006

(In thousands, except per share data)

 

 

 

 

 

Pro forma
adjustments (1)

 

 

 

 

 

As reported

 

EDSLan

 

Pro forma (3)

 

Revenue

 

$

356,489

 

$

(61,194

)

$

295,295

 

Cost of goods sold

 

244,385

 

(47,341

)

197,044

 

Gross profit

 

112,104

 

(13,853

)

98,251

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Product development and engineering

 

28,369

 

—

 

28,369

 

Selling, general and administrative

 

88,542

 

(10,972

)

77,570

 

Impairment of goodwill and other intangibles

 

52

 

—

 

52

 

Amoritization of intangibles

 

—

 

—

 

—

 

Total operating expenses

 

116,963

 

(10,972

)

105,991

 

Operating income (loss)

 

(4,859

)

(2,881

)

(7,740

)

Interest expense

 

(3,540

)

280

 

(3,260

)

Other income (expense), net

 

4,577

 

(75

)

4,502

 

Income (loss) before income taxes

 

(3,822

)

(2,676

)

(6,498

)

Provision (benefit) for income taxes

 

3,450

 

(1,874

)

1,576

 

Net loss

 

(7,272

)

(802

)

(8,074

)

Less: net income (loss) attributable to non-controlling interests (2)

 

111

 

15

 

126

 

Net loss attributable to MRV

 

$

(7,383

)

$

(817

)

$

(8,200

)

 

 

 

 

 

 

 

 

Net loss per share attributable to MRV common stockholders:

 

 

 

 

 

 

 

Basic and Diluted

 

$

(0.06

)

$

(0.01

)

$

(0.07

)

Weighted average number of shares:

 

 

 

 

 

 

 

Basic and Diluted

 

120,902

 

—

 

120,902

 

 

(1) Proforma adjustments eliminate the revenue, expenses and income of EDSLan assuming the transaction occurred on the first day of the period presented.

 

(2) Income attributable to noncontrolling interest reflects the retrospective application of Accounting Standards Codification Subtopic 810-10-45, which was adopted by the Company effective January 1, 2009.

 

(3) Proforma results of operations do not reflect the loss on disposal of EDSLan, which would have been approximately $5 million had the transaction occurred on September 30, 2009.

 

(d)           Exhibits

 

Exhibit 10.1

Share Purchase Agreement, dated December 24, 2009, by and among the Company, EDSLan Finance S.r.l., Elio Bianchi, Rodolfo Casieri, Cristina Ciambellini, Sergio Ciambellini and Barbara Pedrazzani (incorporated by reference from Exhibit 10.1 of Form 8-K filed on December 31, 2009)

 

 

Exhibit 99.1

Press release of the Company dated January 13, 2010

 

8


 

SIGNATURE

 

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

 

Date: January 13, 2010

 

 

 

 

MRV COMMUNICATIONS, INC.

 

 

 

 

 

 

By:

/s/ Noam Lotan

 

 

Noam Lotan

 

 

Chief Executive Officer

 

9