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.
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 |
| 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 |
|
|
|
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|
|
|
|
| ||||
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: |
|
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|
|
|
|
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| ||||
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.
Unaudited Pro Forma Consolidated Statement of Operations
for the nine months ended September 30, 2009
(In thousands, except per share data)
|
|
|
| Pro forma |
|
|
| |||
|
| 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 |
| |||
|
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|
| |||
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 |
| |||
|
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|
|
|
|
| |||
Total operating expenses |
| 107,448 |
| (8,035 | ) | 99,413 |
| |||
|
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|
|
| |||
Operating income (loss) |
| (12,944 | ) | (1,311 | ) | (14,255 | ) | |||
|
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|
|
|
|
| |||
Interest expense |
| (2,361 | ) | 93 |
| (2,268 | ) | |||
Other income (expense), net |
| 1,088 |
| (195 | ) | 893 |
| |||
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Income (loss) before income taxes |
| (14,217 | ) | (1,413 | ) | (15,630 | ) | |||
|
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|
| |||
Provision (benefit) for income taxes |
| 5,924 |
| (633 | ) | 5,291 |
| |||
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| |||
Net loss |
| (20,141 | ) | (780 | ) | (20,921 | ) | |||
Less: net income attributable to non-controlling interests |
| 1,466 |
| (32 | ) | 1,434 |
| |||
|
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| |||
Net loss attributable to MRV |
| $ | (21,607 | ) | $ | (748 | ) | $ | (22,355 | ) |
|
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| |||
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 |
| |||
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 |
|
|
| |||
|
| 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 |
| |||
|
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|
| |||
Operating expenses: |
|
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|
|
|
|
| |||
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 | ) |
|
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|
|
| |||
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 |
| |||
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 |
|
|
| |||
|
| As reported |
| EDSLan |
| Pro forma |
| |||
Revenue |
| $ | 538,022 |
| $ | (72,569 | ) | $ | 465,453 |
|
|
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|
|
|
| |||
Cost of goods sold |
| 388,021 |
| (57,635 | ) | 330,386 |
| |||
|
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|
|
|
|
|
| |||
Gross profit |
| 150,001 |
| (14,934 | ) | 135,067 |
| |||
|
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|
|
|
| |||
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 |
| |||
|
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|
|
|
|
| |||
Operating income (loss) |
| (120,448 | ) | (2,509 | ) | (122,957 | ) | |||
|
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|
|
|
|
|
| |||
Interest expense |
| (3,956 | ) | 458 |
| (3,498 | ) | |||
Other income (expense), net |
| 4,450 |
| (294 | ) | 4,156 |
| |||
|
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|
|
| |||
Income (loss) before income taxes |
| (119,954 | ) | (2,345 | ) | (122,299 | ) | |||
|
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|
|
| |||
Provision (benefit) for income taxes |
| 3,150 |
| (1,216 | ) | 1,934 |
| |||
|
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|
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| |||
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 | ) |
|
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Net loss per share attributable to MRV common stockholders: |
|
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|
|
| |||
Basic and Diluted |
| $ | (0.78 | ) | $ | (0.01 | ) | $ | (0.79 | ) |
Weighted average number of shares: |
|
|
|
|
|
|
| |||
Basic and Diluted |
| 157,323 |
| — |
| 157,323 |
| |||
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 |
| |||
|
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|
|
|
|
|
| |||
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 |
| |||
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 |
|
|
| |||
|
| 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 |
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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| MRV COMMUNICATIONS, INC. | |
|
| |
|
|
|
| By: | /s/ Noam Lotan |
|
| Noam Lotan |
|
| Chief Executive Officer |