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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): FEBRUARY 22, 2000
MRV COMMUNICATIONS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 06-1340090
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
8943 FULLBRIGHT AVE
CHATSWORTH, CA 91311
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
ISSUER'S TELEPHONE NUMBER: (818)767-9044
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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Item 5. Other Events
On February 22, 2000, MRV Communications, Inc. issued a press release
announcing its financial results at, and for the three months and year ended,
December 31, 1999 and the acquisition of Fiber Optic Communications, Inc. A copy
of that press release is attached as Exhibit 99.1 to this Form 8-K and is
incorporated herein by reference
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Press Release dated February 22, 2000.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Date: February 23, 2000
MRV COMMUNICATIONS, INC.
By: /s/ EDMUND GLAZER
-----------------------------------
Edmund Glazer
Executive Vice President Finance
and Administration
and Chief Financial Officer
3
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EXHIBIT 99.1
MRV Announces 4th Quarter Results and the Acquisition of FOCI -- Fiber Optic
Communications, Inc.
CHATSWORTH, Calif.--(BUSINESS WIRE)--Feb. 22, 2000--MRV Communications, Inc.
(Nasdaq:MRVC) today reported its consolidated year-end and fourth quarter
results for the period ended Dec. 31, 1999, and separately announced the
acquisition of Fiber Optic Communications, Inc. ("FOCI").
Bringing into focus its business model of creating and managing growth companies
in optical technology and Internet infrastructure, MRV announced the acquisition
of FOCI and the decision to exit the Enterprise LAN switching business.
Under the terms of the agreement, FOCI shareholders will receive shares of MRV
common stock and cash with an aggregate value of approximately $263 million,
based on the closing stock price of MRV on Feb. 18, 2000. MRV will take a
one-time charge of approximately $13.8 million in connection with the decision
to exit the enterprise LAN switching activities.
Based in Hsinchu Science Park, Taiwan, FOCI is a leading manufacturer of passive
fiber optic components for WDM transmission. The company has a broad array of
products for use in EDFA and optical networks, including WDM couplers,
isolators, attenuators, circulators, dispersion compensating grating, wavelength
add-drop multiplexers, thin film and fiber Bragg grating filters, and MOICs.
FOCI will showcase at the upcoming OFC show its new Lithium Niobate external
modulators.
Additional products in development include Arrayed Waveguide Grating DWDM
multiplexers, and Planar lightwave circuit (PLC) photonic switches. Applications
for FOCI product lines range from Long Haul Telecommunication systems to Fiber
to The Home (FTTH). FOCI has more than 80 engineers, of which 45 have advanced
degrees. All FOCI facilities, composed of 150,000 sq.ft., are ISO certified. The
additional manufacturing space more than doubles MRV's available optical
manufacturing capacity.
MRV announced its intent to merge the FOCI operation with its Optical Access
division prior to the contemplated IPO. The Optical Access division of MRV is a
world class leader in active optical components. When combined, the merged
company will be one of the largest and most advanced optical component and
module manufacturers in the world.
It will be the only known manufacturer, other than JDS-Uniphase, to combine
active and passive technologies. Combining active and passive capabilities will
lead to optical networking products with tightly integrated active and passive
components, as well as MOICs and OEICs. By joining forces, the new entity will
offer customers a broad array of active and passive components, and integrated
modules, used to transmit and manage optical signals in fiber optic networks.
Noam Lotan, President and CEO of MRV Communications commented on the
acquisition: "Together with FOCI, we now have the ability to produce
breakthrough hybrid products based on integrated active and passive components.
It is important to note that FOCI has an exceptionally strong and cohesive
management team, which worked together for many years at ITRI, prior to founding
FOCI. We have great confidence in their abilities and our engineers are anxious
to get started on some exciting joint projects."
Steve Lin, President of FOCI added: "We are excited to align our technology,
manufacturing expertise and capacity with a world class leader like MRV. By
combining our complementary portfolios, we can offer a broad range of solutions
integrating both
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active and passive components to meet the increasing demand for products with a
higher level of functionality."
With the broad product range of the new entity, MRV becomes a powerhouse in
optical technology. In addition to FOCI's line of passive components, the
current activities within MRV include an in-house foundry for Long-Reach DFB
lasers, optical transceivers, hybrid Triplexers for residential connectivity,
and coarse WDM modules. The R&D activities of MRV's affiliates include extreme
high power 980nm pump lasers for optical amplifiers, DWDM modules and EDFAs.
Over the past 2 years, MRV adopted a business model of creating and managing
several start-up companies and forming independent business units, in order to
take them public. The principal focus of the MRV group of companies, which now
comprises 14 companies, is: Optical components, Optical networks and Internet
infrastructure. The FOCI acquisition and merger with MRV's Optical division,
creates a stronger candidate for an IPO. This will further validate MRV's basic
business model.
Accordingly, MRV decided to exit the Enterprise LAN switching business, which no
longer fits MRV's business model.
Lotan continued: "Our business model supports the creation of value by focusing
on faster growing entities and at the same time creating new start-up companies
in optics and Internet infrastructure. Discontinuing our Enterprise LAN
switching activity in favor of growing our optical components, optical networks
and carriers revenue is the logical choice. It allows us to focus on higher
pay-off opportunities in optics."
Revenues for the three months ended December 31, 1999 and 1998 were $73,903,000
and $74,883,000, respectively. For the years ended December 31, 1999 and 1998
revenues were $288,524,000 and $264,075,000, respectively.
Pro forma net income, before the charge for the write-off of inventories
associated with LAN switching products was $669,000 for the fourth quarter of
1999 compared with $239,000 for the fourth quarter of 1998. Pro Forma Basic and
Diluted Earnings per Share before the charge for Q4 1999 were $.02 compared with
$.01 in the fourth quarter of 1998.
Pro Forma net income before the charge for the year 1999 was $852,000 compared
with a net loss of $20,106,000 in 1998. Pro Forma Basic and Diluted Earnings per
Share, before the charge, for the year 1999 were $.03 compared with a Basic and
Diluted Loss per Share of $.76 in 1998.
Net Loss, including the charge for the write-off of inventories associated with
LAN switching products was $13,092,000 for the fourth quarter of 1999 compared
with Net Income of $239,000 for the fourth quarter of 1998. Basic and Diluted
Losses per Share including the charge for Q4 1999 were $.48 compared with
Earnings per Share of $.01 in the fourth quarter of 1998.
Net Loss including the charge for the year 1999 was $12,909,000 compared with a
net loss of $20,106,000 in 1998. Basic and Diluted Losses per Share, including
the charge, for the year 1999 were $.48 compared with $.76 in 1998.
About MRV Communications, Inc.
MRV Communications, Inc. is in the business of creating and managing growth
companies in Optical Technology and Internet infrastructure. The company has
leveraged its early leadership in fiber optic transmission into a well-focused
range of solutions, integrating switching, routing, access servers and optical
transmission systems.
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As the Internet evolves into a single global communication network, MRV has
launched the development of new technologies to drive the next generation
infrastructures. Such developments encompass optical access systems,
subscribers' management systems and Linux-based solutions. MRV has initiated and
funded cutting-edge start-up companies including New Access Communications,
Charlotte's Networks, Hyperchannel and Zuma Networks.
This release may contain forward-looking statements that involve risks and
uncertainties. These statements may differ materially from actual future events
or results. Readers are referred to the documents filed by MRV with the
Securities and Exchange Commission, specifically the most recent reports on
Forms 10K and 10Q, which identify important risk factors that could cause actual
results to differ from those contained in the forward-looking statements,
including potential fluctuations in operating results, dependence on new product
developments, rapid technological and market changes, manufacturing risks,
volatility of the company's stock price, financial risk management, and future
growth subject to risks.
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MRV COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31,
1999 1998
(audited)
ASSETS
CURRENT ASSETS:
Cash & cash equivalents $ 34,330 $ 20,692
Short-term investments 10,141 30,493
Accounts receivable, net of
reserves of $8,451 in 1999
and $8,487 in 1998 60,637 54,596
Inventories 35,392 47,467
Refundable income taxes 3,216 --
Deferred income taxes 6,907 5,035
Other current assets 6,336 5,508
Total current assets 156,959 163,791
PROPERTY AND EQUIPMENT - At cost,
net of depreciation and amortization 19,600 19,357
OTHER ASSETS:
Goodwill, net 27,214 26,666
Investments, principally U.S. Treasuries 101,936 100,138
Deferred income taxes 5,324 5,661
Loan financing costs and other 3,500 4,579
$ 314,533 $ 320,192
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of financing
lease obligations $ 198 $ 185
Accounts payable 33,455 29,757
Accrued liabilities 15,403 13,606
Accrued restructuring costs -- 82
Deferred revenue 1,478 4,398
Income taxes payable -- 445
Total current liabilities 50,534 48,473
LONG-TERM LIABILITIES
Convertible debentures 90,000 90,000
Capital lease obligations,
net of current portion 1,481 1,400
Deferred income taxes 281 48
Other long-term liabilities 2,647 2,869
Total long term liabilities 94,409 94,317
MINORITY INTERESTS 2,775 2,973
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value:
1,000 shares authorized no shares outstanding -- --
Common stock, $0.0034 par value:
80,000 shares authorized and
28,117 shares outstanding in 1999
and 26,639 shares outstanding in 1998 124 88
Additional paid-in capital 191,440 180,656
Treasury stock (133) (133)
Retained earnings (deficit) (18,377) (5,471)
Accumulated other comprehensive loss (6,239) (711)
Total stockholders' equity 166,815 174,429
$ 314,533 $ 320,192
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MRV COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Year Ended, Three Months Ended
December 31, December 31,
1999 1998 1999 1998
(Audited) (Unaudited)
REVENUES, net $288,524 $264,075 $ 73,903 $ 74,883
COSTS AND EXPENSES:
Cost of goods sold 197,442 165,385 58,828 56,287
Research and development
expenses 35,319 25,817 9,806 8,480
Selling, general and
administrative expenses 71,757 56,753 23,488 16,978
Purchased technology
in progress -- 20,633 -- --
Restructuring costs -- 15,671 -- (7,523)
Operating (loss) income (15,994) (20,184) (18,219) 661
Interest expense related
to convertible notes 4,500 2,480 1,125 1,110
Other income (expense),
net 4,822 6,819 872 3,537
Provision (credit) for
income taxes (2,153) 5,707 (4,731) 4,665
Minority interests (610) 1,345 (649) 975
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM (12,909) (22,897) (13,092) (2,552)
EXTRAORDINARY ITEM
Gain on repurchase of
convertible notes -- 2,791 -- 2,791
NET INCOME (LOSS) $(12,909) $(20,106) $(13,092) $ 239
NET INCOME (LOSS)
PER-SHARE - BASIC,
BEFORE EXTRAORDINARY
ITEM $ (0.48) $ (0.86) $ (0.48) $ (0.10)
NET INCOME (LOSS)
PER-SHARE - DILUTED,
BEFORE EXTRAORDINARY
ITEM $ (0.48) $ (0.86) $ (0.48) $ (0.10)
NET INCOME (LOSS)
PER SHARE - BASIC $ (0.48) $ (0.76) $ (0.48) $ 0.01
NET INCOME (LOSS)
PER SHARE - DILUTED $ (0.48) $ (0.76) $ (0.48) $ 0.01
SHARES USED IN PER SHARE
CALCULATION - BASIC 26,960 26,532 27,541 26,637
SHARES USED IN PER SHARE
CALCULATION - DILUTED 26,960 26,532 27,541 30,207
(Continued on following page)
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MRV COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(In thousands, except per share data)
Year Ended, Three Months Ended
December 31, December 31,
1999 1998 1999 1998
(Audited) (Unaudited)
PRO FORMA INFORMATION
(UNAUDITED)
WRITE OFF OF ASSETS
ASSOCIATED
WITH LAN PRODUCTS $ 13,761 $-- $ 13,761 $--
NET INCOME (LOSS)
BEFORE WRITE OFF OF
ASSETS ASSOCIATED
WITH LAN PRODUCTS $ 852 $(20,106) $ 669 $ 239
EARNINGS PER SHARE
BEFORE WRITE OFF OF
ASSETS ASSOCIATED WITH
LAN PRODUCTS
- BASIC $ 0.03 $ (0.76) $ 0.02 $ 0.01
EARNINGS PER SHARE
BEFORE WRITE OFF OF
ASSETS ASSOCIATED WITH
LAN PRODUCTS
- DILUTED $ 0.03 $ (0.76) $ 0.02 $ 0.01
SHARES USED IN PER-SHARE
CALCULATION - BASIC 26,960 26,532 27,541 26,637
SHARES USED IN PER-SHARE
CALCULATION - DILUTED 29,601 26,532 30,786 30,207
