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EX-99.1 - EX-99.1 - MRV COMMUNICATIONS INCa12-8282_1ex99d1.htm

 

 

UNITED STATES

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): March 29, 2012

 

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

 

On March 29, 2012, MRV Communications, Inc. (the “Company”) completed the sale of all of the issued and outstanding capital stock of its wholly owned subsidiary CES Creative Electronic Systems SA (“CES”). The sale was completed pursuant to a Stock Purchase Agreement (the “Purchase Agreement”), dated as of December 2, 2011, with CES Holding SA, as Purchaser, represented for purpose of the Agreement by Vinci Capital Switzerland SA. The Purchase Agreement and sale of CES were approved by the Company’s stockholders at the Company’s annual meeting of stockholders held on January 9, 2012.

 

CES is a designer and manufacturer of complex high-performance avionics, defense and communications boards, sub-systems and complete systems, as well as test and support equipment, for the aerospace defense industry. The purchase price for CES paid on closing to the Company was CHF 25.8 million, or U.S. $28.4 million, with CHF 2.6 million, or U.S. $2.8 million of the proceeds going into an indemnification escrow account to be released in one year to the Company (subject to any indemnification claims that may be brought by Purchaser). Cash proceeds to the Company were approximately $24.5 million upon closing net of the escrowed funds and other closing costs including payment of investment banking and legal fees.

 

For reporting purposes, the results of operations of CES will be included as income from discontinued operations in the Company’s first quarter 2012 results.

 

Additional information on the financial impact of the transaction is included in Item 9.01(b) below. A copy of the Company’s press release announcing completion of the transactions contemplated by the Purchase Agreement was released on March 29, 2012 and is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Item 9.01  Financial Statements and Exhibits

 

(b)         Pro Forma Financial Information

 

On March 29, 2012, the Company sold all of the issued and outstanding capital stock of CES to Purchaser for CHF 25.8 million, or US $28.4 million, with CHF 23.2 million ($25.6 million) payable on closing and CHF 2.6 million, or $2.8 million, subject to a one-year indemnification escrow as set forth in the Purchase Agreement. The description of the parties involved, consideration given and treatment of the results of operations, is contained in Item 2.01 above and is incorporated herein by reference. 

 

The following unaudited pro forma condensed consolidated balance sheet as of December 31, 2011 is based on the Company’s audited condensed consolidated balance sheet as of December 31, 2011, and gives effect to the sale of CES and related adjustments as if the transaction had occurred on December 31, 2011.

 

2



 

MRV Communications, Inc.

Unaudited Pro Forma Condensed Balance Sheet

As of December 31, 2011

(In thousands, except par values)

 

 

 

 

 

Pro forma adjustments

 

 

 

 

 

As reported

 

CES (1)

 

Impact of
transaction

 

Pro forma

 

Assets

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

83,716

 

$

(12,364

)

29,824

(2)

$

101,176

 

Short-term marketable securities

 

 

 

 

 

Restricted time deposits

 

1,661

 

(1,281

)

 

380

 

Accounts receivable, net

 

60,964

 

(5,310

)

 

55,654

 

Other receivables

 

11,604

 

(356

)

 

11,248

 

Inventories

 

32,163

 

(4,029

)

 

28,134

 

Deferred income taxes

 

2,062

 

(402

)

 

1,660

 

Other current assets

 

6,592

 

(1,069

)

2,745

(3)

8,268

 

Total current assets

 

198,762

 

(24,811

)

32,569

 

206,520

 

Non-current assets

 

31,927

 

(15,883

)

 

16,044

 

Total assets

 

$

230,689

 

$

(40,106

)

32,569

 

$

222,564

 

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

32,064

 

$

(705

)

$

 

$

31,359

 

Short-term debt

 

8,987

 

 

 

8,987

 

Other current liabilities

 

40,748

 

(2,532

)

 

38,216

 

Total current liabilities

 

81,799

 

(3,237

)

 

78,562

 

Long-term liabilities

 

6,676

 

(1,055

)

 

5,621

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

MRV 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 - 158,960 shares

 

 

 

 

 

 

 

 

 

Outstanding - 157,607 shares

 

270

 

 

 

270

 

Other stockholders’ equity

 

141,944

 

(36,402

)

32,569

(4)

138,111

 

Total MRV stockholder’s equity

 

142,214

 

(36,402

)

32,569

 

138,381

 

Noncontrolling interests in consolidated subsidiaries

 

 

 

 

 

Total equity

 

142,214

 

(36,402

)

32,569

 

138,381

 

Total liabilities and equity

 

$

230,689

 

$

(40,364

)

$

32,569

 

$

222,894

 

 


(1) Adjustments to eliminate the assets and liabilities of CES as of December 31, 2011.

(2) Proceeds to be received by the Company as a result of the sale of CES at closing and dividend from CES prior to closing, net of closing costs of $0.4 million, as if the transaction closed on the balance sheet date.

(3) Includes amounts held in escrow.

(4) Adjustment to stockholders’ equity to reflect the net impact of the disposition, as if the transaction closed on the balance sheet date.

 

3



 

The following unaudited consolidated pro forma financial information presents statements of operations for the years ended December 31, 2011, 2010 and 2009, and is based on the audited consolidated financial statements for the Company for the year ended December 31, 2011 and the operating results of CES for the periods presented. The pro forma financial information gives effect to the divestiture of CES as if it had occurred on January 1, 2009.

 

MRV Communications, Inc.

Unaudited Pro Forma Statement of Operations

For the year ended December 31, 2011

(In thousands, except per share data)

 

 

 

 

 

Pro forma
adjustments (1)

 

 

 

 

 

As reported

 

CES

 

Pro forma

 

Revenue

 

$

266,753

 

$

(34,643

)

$

232,110

 

Cost of sales

 

159,161

 

(14,518

)

144,643

 

Gross profit

 

107,592

 

(20,125

)

87,467

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Product development and engineering

 

24,318

 

(9,649

)

14,669

 

Selling, general and administrative

 

72,855

 

(5,201

)

67,654

 

Impairment of goodwill

 

7,095

 

 

7,095

 

 

 

 

 

 

 

 

 

Total operating expenses

 

104,268

 

(14,850

)

89,418

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

3,324

 

(5,275

)

(1,951

)

Interest expense

 

(930

)

23

 

(907

)

Other income (loss), net

 

(1,227

)

492

 

(735

)

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes

 

1,167

 

(4,760

)

(3,593

)

Provision for income taxes

 

4,579

 

(1,187

)

3,392

 

 

 

 

 

 

 

 

 

Loss from continuing operations

 

$

(3,412

)

$

(3,573

)

$

(6,985

)

 

 

 

 

 

 

 

 

Loss from continuing operations per share:

 

 

 

 

 

 

 

Basic

 

$

(0.02

)

 

 

$

(0.04

)

Diluted

 

$

(0.02

)

 

 

$

(0.04

)

 

 

 

 

 

 

 

 

Weighted average number of shares:

 

 

 

 

 

 

 

Basic

 

157,561

 

 

 

157,561

 

Diluted

 

157,561

 

 

 

157,561

 

 

4



 

MRV Communications, Inc.

Unaudited Pro Forma Statement of Operations

For the year ended December 31, 2010

(In thousands, except per share data)

 

 

 

 

 

Pro forma
adjustments (1)

 

 

 

 

 

As reported

 

CES

 

Pro forma

 

Revenue

 

$

256,032

 

$

(29,436

)

$

226,596

 

Cost of goods sold

 

145,312

 

(9,773

)

135,539

 

Gross profit

 

110,720

 

(19,663

)

91,057

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Product development and engineering

 

21,788

 

(6,166

)

15,622

 

Selling, general and administrative

 

74,592

 

(5,757

)

68,835

 

 

 

 

 

 

 

 

 

Total operating expenses

 

96,380

 

(11,923

)

84,457

 

 

 

 

 

 

 

 

 

Operating income

 

14,340

 

(7,740

)

6,600

 

Interest expense

 

(950

)

18

 

(932

)

Gain from settlement of deferred consideration obligation

 

520

 

 

520

 

Other income (expense), net

 

(2,576

)

1,878

 

(698

)

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

11,334

 

(5,844

)

5,490

 

Provision for income taxes

 

2,660

 

(1,197

)

1,463

 

Income from continuing operations

 

8,674

 

(4,647

)

4,027

 

Less: Income from continuing operations attributable to noncontrolling interests

 

2,089

 

 

2,089

 

Income from continuing operations attributable to MRV

 

$

6,585

 

$

(4,647

)

$

1,938

 

 

 

 

 

 

 

 

 

Income from continuing operations per share attributable to MRV stockholders:

 

 

 

 

 

 

 

Basic

 

$

0.04

 

 

 

$

0.01

 

Diluted

 

$

0.04

 

 

 

$

0.01

 

Weighted average number of shares:

 

 

 

 

 

 

 

Basic

 

157,569

 

 

 

157,569

 

Diluted

 

158,423

 

 

 

158,423

 

 

5



 

MRV Communications, Inc.

Unaudited Pro Forma Statement of Operations

For the year ended December 31, 2009

(In thousands, except per share data)

 

 

 

 

 

Pro forma
adjustments (1)

 

 

 

 

 

As reported

 

CES

 

Pro forma

 

Revenue

 

$

228,508

 

$

(24,998

)

$

203,510

 

Cost of goods sold

 

132,760

 

(9,143

)

123,617

 

Gross profit

 

95,748

 

(15,855

)

79,893

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Product development and engineering

 

22,732

 

(6,578

)

16,154

 

Selling, general and administrative

 

77,599

 

(7,449

)

70,150

 

Total operating expenses

 

100,331

 

(14,027

)

86,304

 

Operating income (loss)

 

(4,583

)

(1,828

)

(6,411

)

Interest expense

 

(1,310

)

17

 

(1,293

)

Gain from settlement of deferred consideration obligation

 

20,524

 

 

20,524

 

Gain from sales of investments in unconsolidated entities

 

3,488

 

 

3,488

 

Other income (expense), net

 

623

 

136

 

759

 

Income from continuing operations before income taxes

 

18,742

 

(1,675

)

17,067

 

Provision for income taxes

 

4,159

 

(500

)

3,659

 

Income from continuing operations

 

14,583

 

(1,175

)

13,408

 

Less: Income from continuing operations attributable to noncontrolling interests

 

1,757

 

 

1,757

 

Income from continuing operations attributable to MRV

 

$

12,826

 

$

(1,175

)

$

11,651

 

 

 

 

 

 

 

 

 

Income from continuing operations per share attributable to MRV stockholders:

 

 

 

 

 

 

 

Basic

 

$

0.08

 

 

 

$

0.07

 

Diluted

 

$

0.08

 

 

 

$

0.07

 

Weighted average number of shares:

 

 

 

 

 

 

 

Basic

 

157,547

 

 

 

157,547

 

Diluted

 

157,665

 

 

 

157,665

 

 

 

 

 

 

 

 

 

 


(1) Pro forma adjustments eliminate the revenue, expenses and income of CES assuming the transaction occurred on January 1, 2009.

 

6



 

(d)     Exhibits

 

Exhibit 10.1

 

Stock Purchase Agreement, dated as of December 2, 2011, by and between the Company, as Seller, and CES Holding SA, as Purchaser, represented for purpose of the Agreement by Vinci Capital Switzerland SA (incorporated by reference from Exhibit 10.1 of Form 8-K filed on December 7, 2011)

 

 

 

Exhibit 99.1

 

Press release of the Company dated March 29, 2012

 

7



 

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.

 

Date: March 30, 2012

 

 

 

 

 

 

MRV COMMUNICATIONS, INC.

 

 

 

 

 

By:

/s/ Jennifer Hankes Painter

 

 

Jennifer Hankes Painter

 

 

VP, General Counsel and Secretary

 

8