Mail Stop 0306
April 14, 2005
VIA U.S. MAIL AND FAX (818) 407-5656
Mr. Shay Gonen
Chief Financial Officer
MRV Communications, Inc.
20415 Nordhoff Street
Chatsworth, California 91311
Re: MRV Communications, Inc.
Form 10-K for the year ended December 31, 2004
Dear Mr. Gonen:
We have reviewed your filing and have the following
comments.
We have limited our review to matters related to the issues raised
in
our comments. Where indicated, we think you should revise your
documents in future filings in response to these comments. If you
disagree, we will consider your explanation as to why our comment
is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with supplemental information so we may better
understand your disclosure. After reviewing this information, we
may
or may not raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comment or on any other
aspects
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for the year ended December 31, 2004
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk -
Page 44
1. In future filings please disclose quantitative and qualitative
information concerning foreign currency exchange risk. Your
discussion should include the exchange rate risk for the Euro,
Swedish Krona, Swiss Franc and the Taiwan dollar. Refer to Item
305
of Regulation S-K and our publication "Question and Answers About
the
New Market Disclosure Rule" available on our web site at
www.sec.gov.
Statement of Cash Flows - Page 52
2. Please tell us how you determined the effect of exchange rate
changes on cash and cash equivalents. We noted that this amount is
the same as your adjustment to other comprehensive income in
fiscal
year 2003 and 2004. Refer to paragraphs 25 and 146 of SFAS 95.
Note 1. Summary of Significant Accounting Policies
Stock-Based Compensation - Page 57
3. We note that you reversed stock compensation expense related to
unvested forfeited stock options for which stock compensation was
previously recognized. Explain to us in more detail your
accounting
and demonstrate that it complies with GAAP. Also, discuss the
consideration given to the guidance in EITF 00-23, Issue 11. We
may
have additional comments after reviewing your response.
Transactions with Stock of a Subsidiary - Page 59
4. We note that you recorded an extraordinary gain in conjunction
with the acquisition of a minority interest. Supplementally tell
us
more about the acquisition and your accounting for the
extraordinary
gain. Cite the accounting literature upon which you relied.
Reclassifications - Page 60
5. We noted that you reclassified amounts that were previously
recorded as sales of accounts receivable. Please clarify for us
the
nature of the receivables and the recourse provision. In addition,
tell us what led to this reclassification and why reclassification
is
appropriate, rather than a change in accounting or a correction of
an
error.
Note 6. Accrued Liabilities - Page 62
6. Please revise future filings to provide the disclosures
required
by paragraph 14 of FIN 45, as it relates to your product
warranties.
Note 10. Convertible Debt - Page 65
7. Please tell us if there is a value related to the conversion
feature of the convertible notes. In addition, tell us when the
notes
become convertible and how the conversion price was determined.
Support your method of valuing, accounting for and classifying
related balances in the financial statements. Refer to the
guidance
in EITF 98-5 and FAS 150, as necessary.
* * * * * * * *
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter with your response that keys your
responses to our comments and provides any requested supplemental
information. Detailed cover letters greatly facilitate our
review.
Please file your cover letter on EDGAR. Please understand that we
may have additional comments after reviewing your amendment and
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require.
Since the company and its management are in possession of all
facts
relating to a company`s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that
* The company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* Staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* The company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Julie Sherman, Staff Accountant, at (202)
824-
5506, or me at (202) 942-1931 if you have questions regarding
these
comments. In this regard, do not hesitate to contact Martin
James,
the Senior Assistant Chief Accountant, at (202) 942-1984.
Sincerely,
Angela Crane
Branch Chief
Mr. Shay Gonen
MRV Communications, Inc.
April 14, 2005
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