MRVC Mrv Communications, Inc. (MM)

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 financial results for the quarter and year ended December 31, 2011.

Commenting on the Company’s financial results announced today, Barry Gorsun, MRV’s chief executive officer, stated, “As the year progressed we experienced continued momentum, enabling us to report 19% sequential revenue growth in the fourth quarter. The strong end to the year resulted in another year of record revenue. While we are pleased with our top-line performance, we continue to implement initiatives designed to improve operating income, in part by removing costs, enhancing productivity and driving sales. We also focused on driving shareholder value in 2011, building off our efforts in 2010. As we enter 2012, we will continue to identify opportunities to enhance shareholder value while supporting our business units.”

MRV reported fourth quarter 2011 revenue of $74.1 million, compared with revenue of $62.5 million in the third quarter and $73.6 million in the fourth quarter of 2010. The $11.6 million sequential increase is attributable to a $9.0 million increase in the Company’s Network Integration group and, to a lesser degree, a $2.9 million increase at MRV’s Network Equipment group, partially offset by an increase in intersegment sales between each of these two business units, which are eliminated in the Company’s consolidated reporting. Both reporting segments benefited from a seasonally strong fourth quarter with the largest sequential increases in revenue coming from the French and Italian Network Integration subsidiaries, which had softer third quarters due to weak local telecom markets. The Company’s Optical Communications Systems business unit saw a 12% sequential increase.

Gross margin for the fourth quarter of 2011 was 37.9%, down from 40.2% last quarter and 39.2% in the fourth quarter of 2010. The sequential decrease was due primarily to the Company’s Italian business unit in the Network Integration group and a decrease in the proportion of revenue contributed by the Network Equipment group which has higher margins.

Operating expenses in the fourth quarter of $33.4 million included a $7.1 million goodwill impairment charge related to MRV’s Scandinavian subsidiary. Excluding this charge, operating expenses in the fourth quarter were $26.3 million, or 35% of revenue, compared to $21.6 million, or 35% of revenue, in the third quarter and $25.8 million, or 35% of revenue, in the fourth quarter of the prior year. The $4.7 million sequential increase included several charges that impact comparability to prior periods including $1.4 million in payments to stock option and restricted stock holders to compensate them for the loss in value of their equity grants due to the $75 million special dividend paid in November 2011, $0.5 million in severance to our former CEO, and $0.2 million in a litigation settlement. The remaining increase was due primarily to higher sales and marketing costs due to normal seasonality. Operating loss for the quarter was $5.3 million, compared with operating income of $3.4 million in the fourth quarter of 2010. This was the result of a $7.1 million goodwill impairment charge in one of MRV’s business units, and $2.1 million in other charges as described above.

On a full year basis, MRV reported revenues of $266.8 million, a $10.7 million, or 4%, increase compared to $256.0 million for 2010. Both operating segments contributed to a decline in gross margins from 43.2% last year to 40.3% in 2011.

A more detailed discussion of MRV’s 2011 fourth quarter and full year financial results, including an analysis by business segment, is included in the Management Discussion and Analysis section of the Company’s Form 10-K filed today.

About MRV Communications, Inc.

MRV Communications, Inc. is a leading global provider of carrier Ethernet, WDM 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 R&D 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.

Forward Looking Statements

This press release may contain statements regarding future financial and operating results of MRV, management's assessment of business trends, and other statements about management's future expectations, beliefs, goals, plans or prospects and those of the market segments in which MRV is engaged that are based on management's current expectations, estimates, forecasts and projections about MRV and its consolidated businesses and the respective market segments in which MRV’s businesses operate, in addition to management's assumptions. Statements in this press release regarding MRV's future financial and operating results, which are not statements of historical facts, constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "envisions," "estimates," "targets," "intends," "plans," "believes," "seeks," "should," "could," "forecasts," "projects," variations of such words and similar expressions, are intended to identify such forward-looking statements which are not statements of historical facts. These forward-looking statements are not guarantees of future performance nor guarantees that the events anticipated will occur or expected conditions will remain the same or improve. These statements involve certain risks, uncertainties and assumptions, the likelihood of which are difficult to assess and may not occur, including risks that each of its business segments may not make the expected progress in its respective market, or that management's long-term strategy may not achieve the expected results. Therefore, actual outcomes, performance and results may differ from what is expressed or forecast in such forward-looking statements, and such differences may vary materially from current expectations.

For further information regarding risks and uncertainties associated with MRV's businesses, please refer to the "Management's Discussion and Analysis of Results of Operations and Financial Condition" and "Risk Factors" sections of MRV's SEC filings, including, but not limited to, its annual report on Form 10-K for the year ended December 31, 2011, copies of which may be obtained by contacting MRV's investor relations department or by visiting MRV's website at http://www.mrv-corporate.com or the SEC's EDGAR website at http://www.sec.gov.

All information in this release is as of December 31, 2011 unless otherwise stated. MRV undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in MRV's expectations.

(Financial tables follow)

MRV Communications, Inc. Statement of Operations (In thousands, except per share data)

 

           

Three Months Ended

Year To Date

Dec 31,

   

Dec 31,

Dec 31,

Dec 31,

2011

2010

2011

2010

(Unaudited) Revenue $ 74,138 $ 73,522 $ 266,753 $ 256,032 Cost of goods sold   46,105     44,399     159,161     145,312   Gross profit 28,033 29,123 107,592 110,720 Gross margin 38 % 40 % 40 % 43 %   Operating costs and expenses: Product development and engineering 6,259 6,018 24,318 21,788 Selling, general and administrative 20,002 19,696 72,855 74,592 Impairment of goodwill   7,095     -     7,095     -   Total operating expenses 33,356 25,714 104,268 96,380 Operating income (loss) (5,323 ) 3,409 3,324 14,340   Interest Expense (243 ) (276 ) (930 ) (950 ) Other income, net   610     (1,240 )   (1,227 )   (2,056 ) Income (loss) from continuing operations before taxes (4,956 ) 1,893 1,167 11,334 Provision (benefit) for income taxes   1,541     (1,907 )   4,579     2,660   Income (loss) of continuing operations (6,497 ) 3,800 (3,412 ) 8,674   Income (loss) from discontinued operations, net   -     35,697     (3,414 )   42,106     Net income (loss) (6,497 ) 39,497 (6,826 ) 50,780 Less:

Net income (loss) from continuing operations attributable to noncontrolling interests

- 273 - 2,089

Net income (loss) from discontinued operations attributable to noncontrolling interests

  -     -     -     -   Net income (loss) attributable to MRV $ (6,497 ) $ 39,224   $ (6,826 ) $ 48,691     Net income (loss) from continuing operations attributable to MRV $ (6,497 ) $ 3,527 $ (3,412 ) $ 6,585 Net income (loss) from discontinued operations attributable to MRV $ - $ 35,697 $ (3,414 ) $ 42,106   Net income (loss) per share - basic: From continuing operations: $ (0.04 ) $ 0.02 $ (0.02 ) $ 0.04 From discontinued operations: $ -   $ 0.23   $ (0.02 ) $ 0.27   Net income (loss) per share - basic $ (0.04 ) $ 0.25   $ (0.04 ) $ 0.31     Net income (loss) per share - diluted: From continuing operations: $ (0.04 ) $ 0.02 $ (0.02 ) $ 0.04 From discontinued operations: $ -   $ 0.23   $ (0.02 ) $ 0.27   Net income (loss) per share - diluted $ (0.04 ) $ 0.25   $ (0.04 ) $ 0.31     Weighted average number of shares: Basic

157,686

157,257

157,561

157,569

Diluted

157,686

158,068

157,561

158,423

 

 

MRV Communications, Inc. Balance Sheet (In thousands)      

December 31,

   

December 31,

2011

2010

  ASSETS Current assets: Cash and cash equivalents $ 83,716 $ 141,001 Short-term marketable securities - 13,474 Restricted time deposits 1,661 1,709 Accounts receivable, net 60,964 61,455 Other receivables 11,604 15,294 Inventories 32,163 41,072 Deferred income taxes 2,062 2,511 Other current assets 6,592 9,838 Current assets from discontinued operations held for sale   -   2,774 Total current assets 198,762 289,128 Property and equipment, net 9,360 8,461 Goodwill 17,999 25,229 Deferred income taxes, net of current portion 3,702 2,125 Intangibles, net 325 - Other assets 541 571 Noncurrent assets from discontinued operations held for sale   -   1,352 Total assets $ 230,689 $ 326,866   LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $ 8,987 $ 18,036 Deferred consideration payable 4,615 4,615 Accounts payable 32,064 32,279 Accrued liabilities 22,726 23,714 Deferred revenue 10,985 14,186 Other current liabilities 2,422 2,166 Current liabilities from discontinued operations held for sale   -   1,376 Total current liabilities 81,799 96,372 Other long-term liabilities 6,676 8,931 Long-term liabilities from discontinued operations held for sale - 462 Commitments and contingencies Total MRV stockholders' equity 142,214 221,101 Non-controlling interests   -   - Total Equity 142,214 221,101 Total liabilities and stockholders' equity $ 230,689 $ 326,866