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Technology Stocks : MRV Communications (MRVC) opinions? -- Ignore unavailable to you. Want to Upgrade?

To: Greg h2o who wrote (12561)	3/31/1999 11:48:00 PM
From: Sector Investor	Read Replies (1) \| Respond to of 42804

<<and that when these hobby companies begin to show a profit (if ever) the profits won't go to MRV's bottom line... anybody else get that feeling?>> No. Greg, these companies are not new (except for Kempton, which was first mentioned in the Q4 CC). See this information from the 10-K MRVC issued on April 15, 1998, which spells things out quite clearly. In May 1996, the Company purchased 50 percent of the outstanding stock of EDSLAN SRL, an Italian networking company. The purchase price paid by the Company was approximately $1,050,000. The purchase agreement calls for the Company to receive 80 percent of EDS' profits or losses from the date of acquisition. In June and November, 1997, the Company purchased an additional 10 percent of the outstanding stock of EDSLAN SRL, for $500,000, respectively. At December 31, 1997, the Company owns 70 percent of EDSLAN SRL. Here is a link to their Website -note the NBase LOGO: edslan.com Also from the same document, Netsoft is wholly owned, as are several others: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, NBase Communications, Inc., NBase Communications, Ltd. (Nbase Ltd.), NBase Europe GmbH (Nbase Europe), NBase Fibronics, Ltd. (Fibronics), Netsoft Solutions, Ltd. (Netsoft), and its 70 percent-owned subsidiary, EDSLAN SRL (EDS). All significant intercompany transactions and accounts have been eliminated.

To: Greg h2o who wrote (12561)	4/1/1999 8:29:00 AM
From: Sector Investor	Respond to of 42804

MRVC's financial relationship with New Access: ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In July 1998, the Company and New Access Communications, Inc. ("New Access") entered into a Securities Purchase Agreement, under which the Company purchased for $950,000 shares of the capital stock of New Access equal to approximately 19% of the capital stock of New Access then outstanding and warrants to purchase additional capital stock of New Access, which, if fully exercised for an aggregate of $2,050,000, the Company would own an aggregate of approximately 60% of New Access's capital stock (when the shares purchased upon exercise of the warrants are added to the Company's existing stake in New Access). The warrants are exercisable in two installments (provided the first installment is exercised) by July 1, 1999 and January 4, 2000, respectively. New Access is engaged in the development of new products based on wave division multiplexing technology. Dr. Margalit is the Chairman of the Board and Chief Executive Officer of New Access and a principal shareholder of it. Dr. Near Margalit is the son of Dr. Shlomo Margalit, a principal shareholder of the Company and the Company's Chairman of the Board of Directors and Chief Technical Officer.

To: Greg h2o who wrote (12561)	4/1/1999 8:41:00 AM
From: Sector Investor	Respond to of 42804

MRVC Customers: CUSTOMERS The Company has sold its products worldwide to over 500 diverse customers in a wide range of industries, primarily; data communications, telecommunications and cable TV. The Company anticipates that these customers will continue to purchase its products in the foreseeable future. No customer accounted for more than 10% of the Company's revenues in 1996, 1997 or 1998. Current customers include: NETWORK SWITCHING <TABLE> <S> <C> COMPUTERS AND ELECTRONICS GOVERNMENT AGENCIES - AMP Incorporated - General Services Administration - Black Box Corporation - Ministry of Agriculture, Germany - Engel GmbH & Co. - Ministry of Justice, Netherlands - Fujitsu Ltd. (Japan) - Ministry of Social Security (Belgium) - Intel Corporation - MITI (Japan) - International Business Machines Corp. - South African Police - Newbridge Networks - US Coast Guard BANKING, FINANCE AND INSURANCE DIVERSIFIED AND OTHER - Bankgarot Sweden - ADP - Chase Manhattan Bank - Bayer AG - GE Capital - Eastman Kodak - HBOC - Tele-Communications, Inc. - Nationsbank - The Walt Disney Co. FIBER OPTIC COMPONENTS DATA COMMUNICATIONS TELECOMMUNICATIONS - Cabletron - Broadband Network Inc. - Cisco Systems, Inc. - Ciena - Packet Engines - Reltec - Nortel Networks - Tellabs - Xylan - Transcom VIDEO AND VOICE COMMUNICATIONS INSTRUMENTATION - Augat Communication Products Inc. - EXFO - C-COR - GN Nettest - General Instrument - Noyes Fiber Systems - Kathrein Werke - 3M - Texscan - Wandel & Goltermann

To: Greg h2o who wrote (12561)	4/1/1999 8:43:00 AM
From: Sector Investor	Respond to of 42804

OEMS: OEM. Each of the Company's OEM partners resells the products under its own name. The Company believes that the OEM partnerships enhance its ability to sell its products in significant quantities to large organizations. Since these OEM partners provide their own technical and sales support to their customers, the Company is able to focus on other sales channels. The Company customarily enters into contracts with OEM customers to establish the terms and conditions of sales made pursuant to orders from OEMs. These OEMs incorporate the Company's product into systems or subsystems, which are then sold to end users via various distribution channels. The Company has established OEM relationships in connection with its switching equipment with leading communications and networking companies including Newbridge Networks, Fujitsu and Intel. The Company's fiber optic components are sold only to OEMs.

To: Greg h2o who wrote (12561)	4/1/1999 8:52:00 AM
From: Sector Investor	Respond to of 42804

The growth in R&D and SG&A relative to Revenue: During the last quarter of 1998, the Company determined to discontinue some of its low-end networking products that were not sufficiently profitable and this resulted in a one time write-down of $3,101,000. Research and Development. For the years ended December 31, 1998 and 1997, research and development expenses ("R&D") expenses were $25,817,000 and $13,093,000, respectively. R&D expenses as a percentage of revenues increased from 7.9% of revenues during year ended December 31, 1997, to 9.8% of revenues for year ended December 31, 1998. This increase was primarily caused by additional developed projects commenced during the year and associated personnel costs as well as increased expenses resulting from personnel added to existing projects.. The Company intends to continue to invest in the research and development of new products. Management believes that the ability of the Company to develop and commercialize new products is a key competitive factor. Selling, General and Administrative. For the years ended December 31, 1998 and 1997, selling, general and administrative ("SG&A") expenses increased to $56,753,000 rom $27,365,000. As a percentage of revenues, SG&A increased from 16.5% for the year ended December 31, 1997 to 21.5% for the year ended December 31, 1998. The increases in SG&A expense, both in dollar amounts and as a percentage of sales were due primarily to substantially increased marketing efforts as well as the addition of personnel and overhead costs in additional and expanded locations.

To: Greg h2o who wrote (12561)	4/1/1999 8:56:00 AM
From: Sector Investor	Respond to of 42804

Inventories: Inventories were $47,467,000 at December 31, 1998 as compared to $41,689,000 at December 31, 1997. The increase in inventories was primarily attributable to the Company's decision to add larger inventories to shorten lead times for customers and the Xyplex Acquisition. Management believes that the Company's inventory levels at various points in time may not necessarily be comparable to those of many other companies in its industry. This is because MRV conducts significant in-house manufacturing of various components used in its products and thus carries substantial raw materials and work-in-progress in addition to finished products in its inventories. In contrast, many competitors outsource to turnkey contract manufacturers substantial portions of their production requirements and thus do not include material amounts of raw materials or work in progress in inventories and may in some circumstances not even include finished products in inventory if the contract manufacturer ships directly to the competitors' customers.

To: Greg h2o who wrote (12561)	4/1/1999 8:59:00 AM
From: Sector Investor	Read Replies (1) \| Respond to of 42804

Turnkey and Kempton are 100% owned. RDS is 50% owned. These All flow to the bottom line. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, NBase Communications, Inc., NBase Communications, Ltd. (Nbase Ltd.), NBase Europe GmbH (Nbase Europe), NBase Fibronics, Ltd. (Fibronics), Netsoft Solutions, Ltd. (Netsoft), Turnkey, Kempton Communications, Nbase Xyplex, its 70 percent-owned subsidiary, EDSLAN SRL (EDS) and its 50 percent-owned subsidiary, RDS. All significant intercompany transactions and accounts have been eliminated. The financial statements of NBase Europe, Netsoft, Turnkey, Kempton Communications, EDS and RDS have been prepared in the companies' local currencies and have been translated into U.S. dollars. The functional currency for these companies is their local currency. Assets and liabilities are translated from the local currencies into U.S. dollars at the exchange rate prevailing at the balance sheet date. Revenues, expenses and cash flows are translated at weighted average exchange rates for the period to approximate translation at the exchange rates prevailing at the dates those elements are recognized in the financial statements. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income(loss).