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8-K - FORM 8-K - TOLLGRADE COMMUNICATIONS INC \PA\ | l40400e8vk.htm |
Exhibit 99.1
NEWS RELEASE |
Contact: Michael D. Bornak, Chief Financial Officer/ Office: 412-820-1406
mbornak@tollgrade.com
mbornak@tollgrade.com
TOLLGRADE REPORTS SECOND QUARTER 2010 RESULTS
TOP LINE GROWTH AND A RETURN TO PROFITABILITY
PITTSBURGH, PA August 3, 2010 Tollgrade Communications, Inc. (NASDAQ: TLGD), a leading
supplier of network service assurance test products and solutions, today reported revenue of $11.5
million and net income of $1.2 million or $0.10 per share for the second quarter ended June 30,
2010. Revenue and net income increased by approximately $0.9 million and $2.7 million compared to
the second quarter of 2009 representing increases of 8% and 181%, respectively. The results for
the second quarter of 2010 also include the effects of net severance charges of approximately $0.6
million which were primarily associated with the departure of the Companys former chief executive
officer.
We took action to realign our business beginning in the fourth quarter of 2009 and
accelerated our efforts to significantly reduce operating costs during the first quarter of 2010.
Our reduced operating cost structure had a major impact on our ability to report a profit during
the second quarter of 2010, and we believe these actions have positioned the Company to sustain
profitability in the future and to be more competitive in the marketplace, helping us to drive top
line growth. Our primary focus continues to be on our installed customer base and securing revenue
from existing and new customer projects as well as long term maintenance agreements. We are
committed to delivering the highest levels of service to our customers and we are confident that
our reduced operating cost structure has not affected our ability to continue to deliver the level
of service our customers have come to expect, said Edward Kennedy, President and Chief Executive
Officer.
Mr. Kennedy added, We have recently finalized a nine month maintenance contract extension with a
major European service provider and are in the process of finalizing a new multi-year maintenance contract with another major European provider. Currently, we have multiple customer
trials underway that we believe will create revenue opportunities in the second half of 2010 and in
2011. Our workforce is energized and committed to achieving our goals and driving shareholder
value.
As of June 30, 2010, our cash and short-term investments position was $64.1 million compared to
$66.0 million at December 31, 2009. The decrease of $1.9 million primarily reflects cash used for
severance payments as well as the timing of accounts receivable collections. As of the end of
July, our cash and short-term investment position was approximately $66.6 million.
Third Quarter 2010 Outlook
We expect revenue to be in the range of $11 million to $13 million for the third quarter of 2010.
We believe our collective revenue opportunities and our reduced cost structure will position the
Company to sustain profitability and provide greater returns to our shareholders, said Mr.
Kennedy.
Conference Call and Webcast
A conference call to discuss earnings results for the second quarter 2010 will be held on Tuesday,
August 3, 2010 at 4:30 p.m. Eastern Time.
The telephone number for participants is 1-888-338-8373 (International:+1-973-872-3000). Please
reference Tollgrades Second Quarter 2010 Results Conference Call.
The conference call will also be broadcast live over the Internet. To listen to this conference
call via the Internet, follow this link http://investors.tollgrade.com/events.cfm or simply
go to the www.tollgrade.com home page and select the Join the Webcast link.
The call will be available for replay via web access starting at approximately 7:00 p.m. Eastern
Time on August 3, 2010, and will be available for the next twelve months from the Public &
Investors page at www.tollgrade.com.
About Tollgrade
Tollgrade Communications, Inc. is a leading provider of network service assurance products and
services for centralized test systems around the world. Tollgrade designs, engineers, markets and
supports centralized test systems, test access and next generation network assurance technologies.
Tollgrades customers range from the top telecom providers, to numerous independent telecom and
broadband providers around the world. Tollgrades network testing, measurement and monitoring
solutions support the infrastructure of telecom companies and power distribution companies. For
more information, visit Tollgrades web site at www.tollgrade.com.
TOLLGRADE COMMUNICATIONS, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per-share data)
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per-share data)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2010 | June 27, 2009 | June 30, 2010 | June 27, 2009 | |||||||||||||
Revenues: |
||||||||||||||||
Products |
$ | 4,936 | $ | 4,141 | $ | 9,158 | $ | 9,970 | ||||||||
Services |
6,564 | 6,502 | 13,509 | 10,990 | ||||||||||||
Total revenues |
11,500 | 10,643 | 22,667 | 20,960 | ||||||||||||
Cost of sales: |
||||||||||||||||
Products |
2,273 | 2,769 | 4,087 | 5,554 | ||||||||||||
Services |
1,863 | 1,935 | 3,856 | 3,359 | ||||||||||||
Amortization of
Intangible Assets |
389 | 649 | 789 | 1,290 | ||||||||||||
Severance |
(51 | ) | 93 | 417 | 276 | |||||||||||
Total cost of sales |
4,474 | 5,446 | 9,149 | 10,479 | ||||||||||||
Gross Profit |
7,026 | 5,197 | 13,518 | 10,481 | ||||||||||||
Operating expenses: |
||||||||||||||||
Selling and marketing |
1,273 | 1,628 | 3,336 | 3,283 | ||||||||||||
General and administrative |
1,954 | 2,839 | 4,172 | 5,414 | ||||||||||||
Research and development |
1,680 | 2,405 | 4,040 | 4,441 | ||||||||||||
Severance |
627 | 3 | 1,885 | 66 | ||||||||||||
Total operating expenses |
5,534 | 6,875 | 13,433 | 13,204 | ||||||||||||
Income (Loss) from operations |
1,492 | (1,678 | ) | 85 | (2,723 | ) | ||||||||||
Other (expense) income |
(315 | ) | 391 | (724 | ) | 509 | ||||||||||
Income (Loss) before income
taxes |
1,177 | (1,287 | ) | (639 | ) | (2,214 | ) | |||||||||
(Benefit) Provision for
income taxes |
(50 | ) | 198 | (203 | ) | 295 | ||||||||||
Income (Loss) from
continuing operations |
1,227 | (1,485 | ) | (436 | ) | (2,509 | ) | |||||||||
Loss from discontinued
operations |
| (24 | ) | | (223 | ) | ||||||||||
Net income (loss) |
$ | 1,227 | $ | (1,509 | ) | $ | (436 | ) | $ | (2,732 | ) | |||||
Diluted earnings per-share
information: |
||||||||||||||||
Weighted average shares of
common stock and
equivalents: |
12,815 | 12,681 | 12,652 | 12,680 | ||||||||||||
Net Income (loss) per common
and common equivalent shares |
$ | 0.10 | $ | (0.12 | ) | $ | (0.03 | ) | $ | (0.22 | ) | |||||
Net Income (loss) per common
and common equivalent
shares
from continuing operations |
$ | 0.10 | $ | (0.12 | ) | $ | (0.03 | ) | $ | (0.20 | ) | |||||
Net Income (loss) per common and
common equivalent shares
from discontinued operations |
$ | 0.00 | $ | 0.00 | $ | 0.00 | $ | (0.02 | ) | |||||||
TOLLGRADE COMMUNICATIONS, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
June 30, 2010 | December 31, 2009 | |||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 64,147 | $ | 66,046 | ||||
Accounts and Other receivables |
11,049 | 8,005 | ||||||
Inventories |
1,567 | 2,119 | ||||||
Prepaid expenses and deposits |
794 | 759 | ||||||
Property and equipment, net |
2,574 | 3,101 | ||||||
Intangible assets |
6,041 | 7,110 | ||||||
Other assets |
882 | 547 | ||||||
Total assets |
$ | 87,054 | $ | 87,687 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities |
$ | 7,587 | $ | 7,933 | ||||
Long-Term Liabilities |
1,872 | 2,011 | ||||||
Total liabilities |
9,459 | 9,944 | ||||||
Total shareholders equity |
77,595 | 77,743 | ||||||
Total liabilities and shareholders equity |
$ | 87,054 | $ | 87,687 | ||||
Forward Looking Statements
The foregoing release contains forward looking statements regarding future events or results
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements concerning the Companys current
expectations regarding revenue for the third quarter 2010, our revenue and profit levels going
forward, our ability to provide greater returns to our shareholders, our ability to be more
competitive in the marketplace, our ability to maintain expected service levels despite our reduced
operating structure, our ability to secure a new multi-year maintenance contract with one of our
European customers as planned, the anticipated success of our product trials currently underway and
our expectation that revenue opportunities may result from those trials. We caution readers that
such forward looking statements are, in fact, predictions that are subject to risks and
uncertainties and that actual events or results may differ materially from those anticipated events
or results expressed or implied by such forward looking statements. We disclaim any current
intention to update these forward looking statements, and the estimates and assumptions within
them, at any time or for any reason. In particular, the following factors, among others could
cause actual results to differ materially from those described in the forward looking statements:
(a) our inability to realize the benefits of our revenue initiatives and our efforts to reduce our
cost structure, in either case due to unforeseen delays, changes in our markets or other factors,
and the risk that these initiatives will not promote revenue growth or sustain profitability in the
timeframe or to the degree that we anticipate; (b) the risk that our previous cost-cutting
initiatives may have impaired, or that our current and future initiatives may impair, our ability
to effectively develop and market products and remain competitive in our markets and to hire and
retain qualified employees; (c) possible delays in, or the inability to complete, negotiation and
execution of purchase and service agreements with new or existing customers, in particular, the new
multi-year maintenance contract that we are currently negotiating with one of our European
customers and our ability to enter into agreements with customers upon completion of trials that we
have underway; (d) the inability to complete or possible delays in completing certain research and
development efforts required for new products and solutions and delays in market acceptance of our
new products and solutions beyond the timeframes anticipated or at all; (e) our reliance on third
party products and services for a portion of our revenue, in particular, our OEM relationship for
our protocol analyzer products and related services; (f) our inability to recognize all or a
portion of our backlog as expected, due to delays in shipment or other factors; (g) changes in
exchange rates of foreign currencies in which we transact business relative to the U.S. dollar; (h)
general economic uncertainty and its impact on the capital budgets for certain of our major
customers; (i) the inability to make changes in business strategy, development plans and product
offerings to respond to the needs of the significantly changing telecommunications markets and
network technologies; (j) our dependence upon a limited number of third party subcontractors and
component suppliers to manufacture or supply certain aspects of the products we sell; (k) the
ability to manage the risks associated with and to grow our business; and (l) the uncertain
economic and political climate in certain parts of the world where we conduct business and the
potential that such climate may deteriorate. Other factors that could cause actual events or
results to differ materially f
rom those contained in the forward looking statements are included
in the Companys filings with the U.S. Securities and Exchange Commission (the SEC) including,
but not limited to, the Companys Form 10-K for the year ended December 31, 2009 and any
subsequently filed reports. All documents are also available through the SECs Electronic Data
Gathering Analysis and Retrieval system at www.sec.gov or from the Companys website at
www.tollgrade.com.
All other trademarks are the property of their respective owners.