Exhibit 99.1
For Release
MRV ANNOUNCES THIRD QUARTER 2011 FINANCIAL RESULTS
CHATSWORTH, CA — November 9, 2011 — 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 third quarter ended September 30, 2011.
Dilip Singh, chief executive officer of MRV, commented, “MRV’s transformation continues as we remain focused on cultivating shareholder value by enhancing our products and services portfolios across business units and adding over 30 new customers worldwide during this quarter.”
Commenting on the financial results of the quarter, Singh continued, “Our local markets exhibited some slowness in the third quarter which adversely impacted revenue and gross margins. Although we had a decline in revenues and lower gross margins, our efforts this year to control and reduce our operating expenses allowed us to deliver a six percent operating income margin. Despite the slowness seen in our markets this quarter, we believe our long-term growth prospects remain strong as our customers will continue to make infrastructure investments in their networks to meet bandwidth growth requirements.”
Consolidated Results
MRV reported third quarter 2011 revenue of $62.5 million, compared with revenue of $68.2 million last quarter and $66.1 million in the third quarter of 2010. The year-over-year decrease is attributable to a decline of $3.3 million in the Company’s Network Integration Group and, to a lesser degree, a decline of $0.7 million at MRV’s Network Equipment Group, offset by a decrease in intersegment sales between each of these two business units, which are eliminated in the Company’s consolidated reporting. The declines in revenue came from our French and Italian subsidiaries, which are experiencing a soft local telecom market, and from the Company’s Optical Communications Systems division (“OCS”). OCS saw an 8% year-over-year decline in revenue, partly attributable to the loss of revenue from the free-space optics product line and other less profitable products discontinued since the third quarter of 2010. Product sales of out-of-band networking and fiber optic components were also weaker than last year. Partially offsetting the declines, OCS saw an increase in service revenues.
Gross margin for the third quarter of 2011 was 40.3%, down from 43.1% last quarter and 42.1% in the third quarter of 2010 due to margin declines across all business units. Gross margin was impacted by several factors including lower revenues, changes in product mix at certain business units, changes in the contribution of revenue by each business unit, pricing pressures, fluctuations in foreign exchange rates, most notably at Creative Electronic Systems S.A. (“CES”), where costs of revenue are incurred in Swiss Francs but revenue is denominated in U.S. dollars and Euros, and the aforementioned decline in intersegment sales between MRV’s Network Integration Group and Network Equipment Group.
Operating expenses declined 2% year-over-year to $21.6 million. In the same quarter of 2010 MRV recorded a credit of $1.4 million for the reversal of a litigation accrual related to a lawsuit against Source Photonics and MRV which was settled in the third quarter of 2010 by Source Photonics. MRV was released from the claim as part of the settlement. Adjusting for the favorable prior year impact of this credit, operating expenses declined by $1.9 million and SG&A for the third quarter of 2011 improved to 25.5% of sales from 27.0% of sales reported in the third quarter of 2010. Compared to the prior quarter, operating expenses declined $4.2 million, or 16%, and improved from 37.9% of revenue last quarter to 34.6% this quarter. The year-over-year decrease primarily came from OCS and relates in part to the closure of our free-space optics product line and rationalization of certain foreign offices and decreased employee benefits and voluntary reductions in headcount.
On a year-to-date basis, MRV reported revenues of $192.6 million, a $10.2 million, or 5.6%, increase compared to $182.5 million for the nine month period of 2010. A decrease in gross margins of 342 basis points, partially offset by a decrease in operating expenses as a percent of revenue of 191 basis points, led to a decrease in operating margin from 6.0% to 4.5%.
A more detailed discussion of MRV’s third quarter results, including an analysis by business segment, is included in the Management Discussion and Analysis section of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 filed with the Securities Exchange Commission today.
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.
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, 2010, and its quarterly report on Form 10-Q for the quarter ended September 30, 2011, copies of which may be obtained by contacting MRV’s investor relations department or at MRV’s website at http://www.mrv-corporate.com or from the SEC’s EDGAR website at http://www.sec.gov.
All information in this release is as of September 30, 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.
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
(Financial tables follow)
MRV Communications, Inc.
Statements of Operations
(In thousands, except per share data)
| | Three months ended September 30, | | Nine months ended September 30, | |
| | 2011 | | 2010 | | 2011 | | 2010 | |
| | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | |
Revenue: | | | | | | | | | |
Product revenue | | $ | 48,154 | | $ | 52,940 | | $ | 151,066 | | $ | 145,237 | |
Service revenue | | 14,301 | | 13,180 | | 41,549 | | 37,222 | |
Total revenue | | 62,455 | | 66,120 | | 192,615 | | 182,459 | |
Cost of sales | | 37,368 | | 38,631 | | 113,056 | | 100,862 | |
Gross profit | | 25,087 | | 27,489 | | 79,559 | | 81,597 | |
Operating expenses: | | | | | | | | | |
Product development and engineering | | 5,666 | | 5,654 | | 18,059 | | 15,770 | |
Selling, general and administrative | | 15,918 | | 16,443 | | 52,853 | | 54,896 | |
Total operating expenses | | 21,584 | | 22,097 | | 70,912 | | 70,666 | |
Operating income | | 3,503 | | 5,392 | | 8,647 | | 10,931 | |
Interest expense | | (217 | ) | (242 | ) | (687 | ) | (674 | ) |
Gain from settlement of deferred consideration obligation | | — | | — | | — | | 520 | |
Other loss, net | | (1,548 | ) | (1,245 | ) | (1,837 | ) | (1,336 | ) |
Income from continuing operations before income taxes | | 1,738 | | 3,905 | | 6,123 | | 9,441 | |
Provision (benefit) for income taxes | | (343 | ) | 874 | | 3,038 | | 4,567 | |
Income from continuing operations | | 2,081 | | 3,031 | | 3,085 | | 4,874 | |
Income (loss) from discontinued operations, net of income taxes of $20 in 2011 and $859 and $2,102 for the three and nine months in 2010, respectively | | — | | 543 | | (3,414 | ) | 6,409 | |
Net income (loss) | | 2,081 | | 3,574 | | (329 | ) | 11,283 | |
Less: | | | | | | | | | |
Net income from continuing operations attributable to noncontrolling interests | | — | | 696 | | — | | 1,816 | |
Net income (loss) attributable to MRV | | $ | 2,081 | | $ | 2,878 | | $ | (329 | ) | $ | 9,467 | |
Net income from continuing operations attributable to MRV | | $ | 2,081 | | $ | 2,335 | | $ | 3,085 | | $ | 3,058 | |
Net income (loss) from discontinued operations attributable to MRV | | $ | — | | $ | 543 | | $ | (3,414 | ) | $ | 6,409 | |
Net income (loss) attributable to MRV per share — basic: | | | | | | | | | |
From continuing operations | | $ | 0.01 | | $ | 0.01 | | $ | 0.02 | | $ | 0.02 | |
From discontinued operations | | $ | — | | $ | — | | $ | (0.02 | ) | $ | 0.04 | |
Net income attributable to MRV per share — basic (1) | | $ | 0.01 | | $ | 0.02 | | $ | — | | $ | 0.06 | |
Net income (loss) attributable to MRV per share — diluted: | | | | | | | | | |
From continuing operations | | $ | 0.01 | | $ | 0.01 | | $ | 0.02 | | $ | 0.02 | |
From discontinued operations | | $ | — | | $ | — | | $ | (0.02 | ) | $ | 0.04 | |
Net income attributable to MRV per share — diluted (1) | | $ | 0.01 | | $ | 0.02 | | $ | — | | $ | 0.06 | |
Weighted average number of shares: | | | | | | | | | |
Basic | | 157,535 | | 157,707 | | 157,518 | | 157,674 | |
Diluted | | 158,601 | | 158,590 | | 158,518 | | 158,561 | |
(1) Amounts may not add due to rounding.
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MRV Communications, Inc.
Balance Sheets
(In thousands, except par values)
| | September 30,
2011
(Unaudited) | | December 31,
2010 | |
Assets | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 153,754 | | $ | 141,001 | |
Short-term marketable securities | | — | | 13,474 | |
Restricted time deposits | | 1,760 | | 1,709 | |
Accounts receivable, net | | 57,915 | | 61,455 | |
Other receivables | | 15,783 | | 15,294 | |
Inventories | | 36,654 | | 41,072 | |
Deferred income taxes | | 2,487 | | 2,511 | |
Other current assets | | 7,670 | | 9,838 | |
Current assets of discontinued operations | | — | | 2,774 | |
Total current assets | | 276,023 | | 289,128 | |
Property and equipment, net | | 8,653 | | 8,461 | |
Goodwill | | 25,879 | | 25,229 | |
Other intangibles | | 375 | | — | |
Deferred income taxes, net of current portion | | 3,337 | | 2,125 | |
Other assets | | 544 | | 571 | |
Noncurrent assets of discontinued operations | | — | | 1,352 | |
Total assets | | $ | 314,811 | | $ | 326,866 | |
| | | | | |
Liabilities and equity | | | | | |
Current liabilities: | | | | | |
Short-term debt | | $ | 13,188 | | $ | 18,036 | |
Deferred consideration payable | | 4,615 | | 4,615 | |
Accounts payable | | 25,373 | | 32,279 | |
Accrued liabilities | | 21,339 | | 23,714 | |
Deferred revenue | | 13,724 | | 14,186 | |
Other current liabilities | | 3,491 | | 2,166 | |
Current liabilities of discontinued operations | | — | | 1,376 | |
Total current liabilities | | 81,730 | | 96,372 | |
Other long-term liabilities | | 6,434 | | 8,931 | |
Long-term liabilities from discontinued operations | | — | | 462 | |
Commitments and contingencies | | | | | |
| | | | | |
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 — 160,341 shares in 2011 and 160,038 shares in 2010 | | | | | |
Outstanding — 157,649 shares in 2011 and 157,600 shares in 2010 | | 270 | | 270 | |
Additional paid-in capital | | 1,412,410 | | 1,410,234 | |
Accumulated deficit | | (1,200,681 | ) | (1,200,352 | ) |
Treasury stock — 2,692 shares in 2011 and 2,437 in 2010 | | (3,271 | ) | (2,846 | ) |
Accumulated other comprehensive income | | 17,919 | | 13,795 | |
Total stockholders’ equity | | 226,647 | | 221,101 | |
Total liabilities and stockholders’ equity | | $ | 314,811 | | $ | 326,866 | |
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