UNITED STATES
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): March 29, 2012
MRV COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE |
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001-11174 |
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06-1340090 |
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(State or other jurisdiction of |
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(Commission file number) |
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(I.R.S. employer |
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incorporation or organization) |
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identification number) |
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20415 Nordhoff Street, Chatsworth, CA |
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91311 |
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(Address of principal executive offices) |
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(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
On March 29, 2012, MRV Communications, Inc. (the “Company”) completed the sale of all of the issued and outstanding capital stock of its wholly owned subsidiary CES Creative Electronic Systems SA (“CES”). The sale was completed pursuant to a Stock Purchase Agreement (the “Purchase Agreement”), dated as of December 2, 2011, with CES Holding SA, as Purchaser, represented for purpose of the Agreement by Vinci Capital Switzerland SA. The Purchase Agreement and sale of CES were approved by the Company’s stockholders at the Company’s annual meeting of stockholders held on January 9, 2012.
CES is a designer and manufacturer of complex high-performance avionics, defense and communications boards, sub-systems and complete systems, as well as test and support equipment, for the aerospace defense industry. The purchase price for CES paid on closing to the Company was CHF 25.8 million, or U.S. $28.4 million, with CHF 2.6 million, or U.S. $2.8 million of the proceeds going into an indemnification escrow account to be released in one year to the Company (subject to any indemnification claims that may be brought by Purchaser). Cash proceeds to the Company were approximately $24.5 million upon closing net of the escrowed funds and other closing costs including payment of investment banking and legal fees.
For reporting purposes, the results of operations of CES will be included as income from discontinued operations in the Company’s first quarter 2012 results.
Additional information on the financial impact of the transaction is included in Item 9.01(b) below. A copy of the Company’s press release announcing completion of the transactions contemplated by the Purchase Agreement was released on March 29, 2012 and is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(b) Pro Forma Financial Information
On March 29, 2012, the Company sold all of the issued and outstanding capital stock of CES to Purchaser for CHF 25.8 million, or US $28.4 million, with CHF 23.2 million ($25.6 million) payable on closing and CHF 2.6 million, or $2.8 million, subject to a one-year indemnification escrow as set forth in the Purchase Agreement. The description of the parties involved, consideration given and treatment of the results of operations, is contained in Item 2.01 above and is incorporated herein by reference.
The following unaudited pro forma condensed consolidated balance sheet as of December 31, 2011 is based on the Company’s audited condensed consolidated balance sheet as of December 31, 2011, and gives effect to the sale of CES and related adjustments as if the transaction had occurred on December 31, 2011.
MRV Communications, Inc.
Unaudited Pro Forma Condensed Balance Sheet
As of December 31, 2011
(In thousands, except par values)
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Pro forma adjustments |
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As reported |
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CES (1) |
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Impact of |
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Pro forma |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
83,716 |
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$ |
(12,364 |
) |
29,824 |
(2) |
$ |
101,176 |
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Short-term marketable securities |
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— |
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— |
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— |
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— |
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Restricted time deposits |
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1,661 |
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(1,281 |
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— |
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380 |
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Accounts receivable, net |
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60,964 |
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(5,310 |
) |
— |
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55,654 |
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Other receivables |
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11,604 |
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(356 |
) |
— |
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11,248 |
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Inventories |
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32,163 |
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(4,029 |
) |
— |
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28,134 |
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Deferred income taxes |
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2,062 |
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(402 |
) |
— |
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1,660 |
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Other current assets |
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6,592 |
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(1,069 |
) |
2,745 |
(3) |
8,268 |
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Total current assets |
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198,762 |
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(24,811 |
) |
32,569 |
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206,520 |
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Non-current assets |
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31,927 |
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(15,883 |
) |
— |
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16,044 |
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Total assets |
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$ |
230,689 |
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$ |
(40,106 |
) |
32,569 |
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$ |
222,564 |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
32,064 |
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$ |
(705 |
) |
$ |
— |
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$ |
31,359 |
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Short-term debt |
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8,987 |
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— |
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— |
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8,987 |
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Other current liabilities |
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40,748 |
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(2,532 |
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— |
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38,216 |
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Total current liabilities |
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81,799 |
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(3,237 |
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— |
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78,562 |
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Long-term liabilities |
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6,676 |
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(1,055 |
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— |
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5,621 |
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Commitments and contingencies |
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Equity: |
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MRV stockholders’ equity: |
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Preferred stock, $.0.01 par value: |
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Authorized - 1,000 shares; no shares issued or outstanding |
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— |
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— |
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— |
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— |
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Common stock, $0.0017 par value: |
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Authorized - 320,000 shares |
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Issued - 158,960 shares |
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Outstanding - 157,607 shares |
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270 |
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— |
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— |
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270 |
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Other stockholders’ equity |
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141,944 |
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(36,402 |
) |
32,569 |
(4) |
138,111 |
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Total MRV stockholder’s equity |
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142,214 |
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(36,402 |
) |
32,569 |
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138,381 |
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Noncontrolling interests in consolidated subsidiaries |
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— |
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— |
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— |
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— |
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Total equity |
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142,214 |
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(36,402 |
) |
32,569 |
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138,381 |
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Total liabilities and equity |
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$ |
230,689 |
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$ |
(40,364 |
) |
$ |
32,569 |
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$ |
222,894 |
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(1) Adjustments to eliminate the assets and liabilities of CES as of December 31, 2011.
(2) Proceeds to be received by the Company as a result of the sale of CES at closing and dividend from CES prior to closing, net of closing costs of $0.4 million, as if the transaction closed on the balance sheet date.
(3) Includes amounts held in escrow.
(4) Adjustment to stockholders’ equity to reflect the net impact of the disposition, as if the transaction closed on the balance sheet date.
The following unaudited consolidated pro forma financial information presents statements of operations for the years ended December 31, 2011, 2010 and 2009, and is based on the audited consolidated financial statements for the Company for the year ended December 31, 2011 and the operating results of CES for the periods presented. The pro forma financial information gives effect to the divestiture of CES as if it had occurred on January 1, 2009.
MRV Communications, Inc.
Unaudited Pro Forma Statement of Operations
For the year ended December 31, 2011
(In thousands, except per share data)
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Pro forma |
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As reported |
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CES |
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Pro forma |
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Revenue |
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$ |
266,753 |
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$ |
(34,643 |
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$ |
232,110 |
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Cost of sales |
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159,161 |
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(14,518 |
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144,643 |
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Gross profit |
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107,592 |
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(20,125 |
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87,467 |
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Operating expenses: |
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Product development and engineering |
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24,318 |
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(9,649 |
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14,669 |
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Selling, general and administrative |
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72,855 |
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(5,201 |
) |
67,654 |
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Impairment of goodwill |
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7,095 |
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— |
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7,095 |
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Total operating expenses |
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104,268 |
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(14,850 |
) |
89,418 |
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Operating income (loss) |
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3,324 |
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(5,275 |
) |
(1,951 |
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Interest expense |
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(930 |
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23 |
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(907 |
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Other income (loss), net |
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(1,227 |
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492 |
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(735 |
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Income (loss) from continuing operations before income taxes |
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1,167 |
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(4,760 |
) |
(3,593 |
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Provision for income taxes |
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4,579 |
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(1,187 |
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3,392 |
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Loss from continuing operations |
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$ |
(3,412 |
) |
$ |
(3,573 |
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$ |
(6,985 |
) |
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Loss from continuing operations per share: |
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Basic |
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$ |
(0.02 |
) |
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$ |
(0.04 |
) | |
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Diluted |
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$ |
(0.02 |
) |
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$ |
(0.04 |
) | |
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Weighted average number of shares: |
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Basic |
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157,561 |
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157,561 |
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Diluted |
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157,561 |
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157,561 |
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MRV Communications, Inc.
Unaudited Pro Forma Statement of Operations
For the year ended December 31, 2010
(In thousands, except per share data)
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Pro forma |
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As reported |
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CES |
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Pro forma |
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Revenue |
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$ |
256,032 |
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$ |
(29,436 |
) |
$ |
226,596 |
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Cost of goods sold |
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145,312 |
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(9,773 |
) |
135,539 |
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Gross profit |
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110,720 |
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(19,663 |
) |
91,057 |
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Operating expenses: |
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Product development and engineering |
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21,788 |
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(6,166 |
) |
15,622 |
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Selling, general and administrative |
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74,592 |
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(5,757 |
) |
68,835 |
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Total operating expenses |
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96,380 |
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(11,923 |
) |
84,457 |
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Operating income |
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14,340 |
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(7,740 |
) |
6,600 |
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Interest expense |
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(950 |
) |
18 |
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(932 |
) | |||
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Gain from settlement of deferred consideration obligation |
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520 |
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— |
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520 |
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Other income (expense), net |
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(2,576 |
) |
1,878 |
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(698 |
) | |||
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Income from continuing operations before income taxes |
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11,334 |
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(5,844 |
) |
5,490 |
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Provision for income taxes |
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2,660 |
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(1,197 |
) |
1,463 |
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Income from continuing operations |
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8,674 |
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(4,647 |
) |
4,027 |
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Less: Income from continuing operations attributable to noncontrolling interests |
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2,089 |
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— |
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2,089 |
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Income from continuing operations attributable to MRV |
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$ |
6,585 |
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$ |
(4,647 |
) |
$ |
1,938 |
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Income from continuing operations per share attributable to MRV stockholders: |
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Basic |
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$ |
0.04 |
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$ |
0.01 |
| |
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Diluted |
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$ |
0.04 |
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|
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$ |
0.01 |
| |
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Weighted average number of shares: |
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|
|
| |||
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Basic |
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157,569 |
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|
|
157,569 |
| |||
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Diluted |
|
158,423 |
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|
158,423 |
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MRV Communications, Inc.
Unaudited Pro Forma Statement of Operations
For the year ended December 31, 2009
(In thousands, except per share data)
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Pro forma |
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| |||
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As reported |
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CES |
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Pro forma |
| |||
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Revenue |
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$ |
228,508 |
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$ |
(24,998 |
) |
$ |
203,510 |
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Cost of goods sold |
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132,760 |
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(9,143 |
) |
123,617 |
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Gross profit |
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95,748 |
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(15,855 |
) |
79,893 |
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|
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Operating expenses: |
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|
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|
|
|
| |||
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Product development and engineering |
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22,732 |
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(6,578 |
) |
16,154 |
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Selling, general and administrative |
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77,599 |
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(7,449 |
) |
70,150 |
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Total operating expenses |
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100,331 |
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(14,027 |
) |
86,304 |
| |||
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Operating income (loss) |
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(4,583 |
) |
(1,828 |
) |
(6,411 |
) | |||
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Interest expense |
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(1,310 |
) |
17 |
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(1,293 |
) | |||
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Gain from settlement of deferred consideration obligation |
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20,524 |
|
— |
|
20,524 |
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Gain from sales of investments in unconsolidated entities |
|
3,488 |
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— |
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3,488 |
| |||
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Other income (expense), net |
|
623 |
|
136 |
|
759 |
| |||
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Income from continuing operations before income taxes |
|
18,742 |
|
(1,675 |
) |
17,067 |
| |||
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Provision for income taxes |
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4,159 |
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(500 |
) |
3,659 |
| |||
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Income from continuing operations |
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14,583 |
|
(1,175 |
) |
13,408 |
| |||
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Less: Income from continuing operations attributable to noncontrolling interests |
|
1,757 |
|
— |
|
1,757 |
| |||
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Income from continuing operations attributable to MRV |
|
$ |
12,826 |
|
$ |
(1,175 |
) |
$ |
11,651 |
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|
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|
| |||
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Income from continuing operations per share attributable to MRV stockholders: |
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|
|
|
|
|
| |||
|
Basic |
|
$ |
0.08 |
|
|
|
$ |
0.07 |
| |
|
Diluted |
|
$ |
0.08 |
|
|
|
$ |
0.07 |
| |
|
Weighted average number of shares: |
|
|
|
|
|
|
| |||
|
Basic |
|
157,547 |
|
|
|
157,547 |
| |||
|
Diluted |
|
157,665 |
|
|
|
157,665 |
| |||
|
|
|
|
|
|
|
|
| |||
(1) Pro forma adjustments eliminate the revenue, expenses and income of CES assuming the transaction occurred on January 1, 2009.
(d) Exhibits
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Exhibit 10.1 |
|
Stock Purchase Agreement, dated as of December 2, 2011, by and between the Company, as Seller, and CES Holding SA, as Purchaser, represented for purpose of the Agreement by Vinci Capital Switzerland SA (incorporated by reference from Exhibit 10.1 of Form 8-K filed on December 7, 2011) |
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Exhibit 99.1 |
|
Press release of the Company dated March 29, 2012 |
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.
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Date: March 30, 2012 |
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MRV COMMUNICATIONS, INC. | |
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By: |
/s/ Jennifer Hankes Painter |
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Jennifer Hankes Painter |
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VP, General Counsel and Secretary |
Exhibit 99.1
MRV Announces Closing of Sale of CES Creative Electronic Systems SA
CHATSWORTH, Calif., March 29, 2012 — MRV Communications, Inc. (OTCQB: MRVC) (“MRV” or the “Company”), a leading provider of optical communications network infrastructure equipment and integration and managed services, today announced that effective today it has closed the previously announced sale of CES Creative Electronic Systems SA (“CES”) through a definitive agreement with a consortium of European private equity firms led by Vinci Capital SA. Headwaters MB was the exclusive financial advisor to MRV for the transaction. The purchase price payable on closing was $28.4 million with $2.8 million of the proceeds going into an indemnification escrow account to be released in one year.
Barry Gorsun, Chief Executive Officer of MRV Communications noted, “This sale will allow us to focus on our core business units including OCS, Tecnonet, Alcadon, and Interdata, and we are steadfast in our efforts to drive shareholder value and enhance productivity.”
MRV remains a leading provider of network infrastructure equipment and network management products, as well as network integration and managed services. These products include MRV’s renowned Fiber Driver™ optical multi-service platform, the LambdaDriver™ WDM system, the Media Cross Connect™ physical layered switches and the OptiSwitch® platform. MRV also offers services for high speed carrier and enterprise networks.
Gorsun concluded, “We expect cash proceeds of approximately $24.5 million upon closing net of the escrowed funds and other closing costs. Proceeds from this sale increase the cash available for return to our stockholders and we will continue to pursue opportunities that benefit both MRV and our stockholders.”
About MRV Communications, Inc.
MRV Communications, Inc. is a leading global provider of carrier Ethernet, wavelength division multiplexing optical transport, infrastructure management equipment and solutions, as well as network integration and managed services. MRV’s solutions enable the delivery and provisioning of next-generation optical transport and carrier Ethernet services over any fiber infrastructure. MRV provides equipment and services worldwide to telecommunications service providers, enterprises, and governments, enabling network evolution and increasing efficiency, while reducing complexity and costs. Through its subsidiaries, MRV operates research and development centers in North America and Europe, along with support centers and sales offices around the world. For more information about MRV, visit http://www.mrv.com.
Contacts
Investor Relations:
MRV Communications, Inc.
(818) 886-MRVC (6782)
ir@mrv.com
or
CJP Communications for MRV
Thomas J. Rozycki, Jr.
(212) 279-3115 x208
trozycki@cjpcom.com
Media Relations:
MRV Communications, Inc.
pr@mrv.com