Segment Reporting and Geographic Information

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Segment Reporting and Geographic Information

Segment Reporting and Geographic Information

MRV operates its business in two segments: Network Equipment and Network Integration. Network Equipment designs, manufactures, distributes and services optical networking solutions and Internet infrastructure products, and Network Integration provides value-added integration and support services for customers' networks.

The accounting policies of the segments are the same as those described in the summary of significant accounting polices disclosed in MRV's2012Form 10-K. MRV evaluates segment performance based on revenues, gross profit and operating income (loss) of each segment. As such, there are no separately identifiable Statements of Operations data below operating income (loss).

The following table summarizes revenues by segment, including intersegment revenues (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
Network Equipment		$21,100			$21,519			$42,046			$41,938
Network Integration	17,135			19,560			35,117			35,075
Before intersegment adjustments	38,235			41,079			77,163			77,013
Intersegment adjustments	(60		)	(3,453		)	(83		)	(5,972		)
Total		$38,175			$37,626			$77,080			$71,041

Network Equipment revenue primarily consists of optical communication systems that include Metro Ethernet equipment, optical transport equipment, lab automation equipment, out-of-band network equipment, and the related service revenue and fiber optic components sold as part of system solutions. Network Integration revenue primarily consists of value-added integration and support service revenue, related third-party product sales (including third-party product sales through distribution) and fiber optic components sold as part of system solutions.

One customer accounted for $22.2 million and $20.2 million of revenue in Network Integration revenue, or 29% and 28% of total revenue, for the six months ended June 30, 2013 and 2012, respectively.

The same customer in Network Integration accounted for 20% and 21% of net accounts receivable as of June 30, 2013, and December 31, 2012, respectively. Another Network Integration customer accounted for 12% and 9% of accounts receivable as of June 30, 2013, and December 31, 2012, respectively.

The following table summarizes external revenue by geographic region (in thousands):

	Three months ended				Six months ended
	June 30,				June 30,
	2013		2012		2013		2012
Americas		$14,531		$13,035		$28,281		$25,883
Europe	21,869		23,277		45,290		42,906
Asia Pacific	1,775		1,314		3,509		2,252
Total		$38,175		$37,626		$77,080		$71,041

The following table summarizes long-lived assets, consisting of property and equipment, by geographic region (in thousands):

	June 30, 2013		December 31, 2012
Americas		$3,474		$2,099
Europe	1,524		1,590
Asia Pacific	40		46
Total		$5,038		$3,735

The following table provides selected Statement of Operations information by business segment (in thousands):

	Three months ended						Six months ended
	June 30,						June 30,
	2013			2012			2013			2012
Gross profit
Network Equipment	$	11,183		$	9,993		$	21,949		$	20,037
Network Integration	2,187			3,169			4,444			5,661
Total before intersegment adjustments	13,370			13,162			26,393			25,698
Corporate unallocated and intersegment adjustments(1)	2			150			6			295
Total	$	13,372		$	13,312		$	26,399		$	25,993
Depreciation expense
Network Equipment	$	283		$	230		$	583		$	459
Network Integration	52			57			105			116
Corporate	48			47			96			95
Total	$	383		$	334		$	784		$	670
Operating income (loss)
Network Equipment	$	(296	)	$	(337	)	$	(1,415	)	$	(1,767	)
Network Integration	675			1,605			1,366			2,675
Total before intersegment adjustments	379			1,268			(49		)	908
Corporate unallocated operating loss and adjustments (1)	(914		)	(2,512		)	(4,499		)	(5,797		)
Total	$	(535	)	$	(1,244	)	$	(4,548	)	$	(4,889	)

(1) Adjustments reflect the elimination of intersegment revenue and profit in inventory.

The following tables provide selected Balance Sheet and Statement of Cash Flow information by business segment (in thousands):

	Six months ended
	June 30,
	2013		2012
Additions to Fixed Assets
Network Equipment	$	2,064	$	440
Network Integration	46		52
Corporate	6		76
Discontinued operations	—		1,290
Total	$	2,116	$	1,858

	June 30, 2013		December 31, 2012
Total Assets
Network Equipment		$45,249		$44,445
Network Integration	45,071		47,400
Corporate and intersegment eliminations	30,267		36,720
Total		$120,587		$128,565