887969--3/16/2010--MRV_COMMUNICATIONS

related topics

{customer, product, revenue}

{product, market, service}

{operation, international, foreign}

{control, financial, internal}

{property, intellectual, protect}

{financial, litigation, operation}

{cost, operation, labor}

{regulation, change, law}

{cost, regulation, environmental}

{stock, price, operating}

{stock, price, share}

{system, service, information}

{operation, natural, condition}

{condition, economic, financial}

{tax, income, asset}

{provision, law, control}

{capital, credit, financial}

{personnel, key, retain}

Our operating results may be adversely impacted by worldwide political and economic uncertainties and specific conditions in the markets we address, including the cyclical nature of and volatility in the communications and optical components industries. Our quarterly operating results are subject to significant fluctuations, and you should not rely on them as an indication of our future performance. Our operating results could fluctuate significantly from quarter to quarter and year to year. Competition, especially in the networking equipment and optical components markets, is ever increasing, which could reduce our revenue and gross margins or cause us to lose market share. Our markets are subject to rapid technological change, and to compete effectively, we must continually introduce new products that achieve market acceptance. Our products are deployed in large and complex systems and may contain defects that are not detected until after our products have been installed, which may cause us to incur significant costs, divert our attention from product development efforts or damage our reputation and cause us to lose customers. Although we were profitable on a consolidated basis in the fourth quarter of 2009, we have not achieved profitability on a consolidated basis for a full year since 2004 and may not achieve profitability in the future. Our customers may adopt alternate technologies for which we do not produce products or for which our products are not adaptable. If our customers do not qualify our products or if their customers do not qualify their products, our results of operations may suffer. We do not have long-term volume purchase contracts with our customers, so our customers may increase, decrease, cancel or delay their purchasing levels at any time with minimal advance notice to us, which may significantly harm our business. We may suffer losses as a result of entering into fixed price contracts. A few customers account for a substantial portion of our sales, increasing both our dependence on a few revenue sources and the risk that our operations will suffer materially if a significant customer stops ordering from us or substantially reduces its business with us. Our ability to utilize our NOLs and certain other tax attributes may be limited. We face risks in reselling the products of other companies. There are a limited number of potential source suppliers for certain components, which makes us susceptible to supply shortages. Our inability to achieve adequate production yields for certain components could result in a loss of sales and customers or higher than expected costs. We rely substantially upon a limited number of contract manufacturing partners, and if these contract manufacturers fail to meet our short- and long-term needs and contractual obligations, our business may be negatively impacted. If we fail to forecast component and material requirements accurately for our manufacturing facilities, we could incur additional costs or experience manufacturing delays. We face increased risks associated with the consolidation of our Taiwan and PRC manufacturing operations in a single location in Chengdu, PRC. Our business and future operating results may be adversely affected by events outside of our control. Our insurance coverage for natural disasters is limited. Environmental regulations applicable to our manufacturing operations could limit our ability to expand or subject us to substantial costs. Compliance with current and future environmental regulations may be costly which could impact our future operating results. Our business and future operating results are subject to a wide range of uncertainties arising out of the international nature of our operations and facilities. Our operating results are impacted by foreign exchange rates and interest rate fluctuations. We face risks inherent in doing business in PRC. Labor shortages or strikes in Southern PRC could adversely affect our gross margins or decrease revenues. Failure to comply with the U.S. Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences. We could suffer losses from corrupt or fraudulent business practices. If our cash flow deteriorates in the future, our liquidity and ability to operate our business could be adversely affected. We may not be able to obtain capital when desired on favorable terms, if at all. If we fail to protect our intellectual property, we may not be able to compete. We are involved in intellectual property disputes for the foreseeable future as part of doing business in the communications and optical components industries, which could divert management's attention, cause us to incur significant costs, and prevent us from selling or using the challenged technology. We are involved in various class action securities and derivative litigation due to past stock option practices, and the related restatement of our prior financial results. We are involved in other lawsuits and legal proceedings. Failure to achieve and maintain internal controls in accordance with Sections 302 and 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and stock price. The loss of key management could negatively affect our business. Delaware law and our ability to issue preferred stock may have anti-takeover effects that could prevent a change in control, which may cause our stock price to decline. There is no assurance of an established public trading market for our Common Stock, which would adversely affect the ability of investors in our Company to sell their Common Stock in the public markets. Because this Form 10-K contains forward-looking statements, it may not prove to be accurate.

Full 10-K form ▸

887969--3/16/2010--MRV_COMMUNICATIONS_INC