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8-K - FORM 8-K - TOLLGRADE COMMUNICATIONS INC \PA\ | l40969e8vk.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 HIGHEST QUARTERLY PROFIT IN NEARLY A DECADE
DOUBLES SECOND QUARTER 2010 NET INCOME
PITTSBURGH, PA October 28 , 2010 Tollgrade Communications, Inc. (NASDAQ: TLGD), a leading
supplier of network service assurance test products and solutions, today reported revenue of $11.1
million and net income of $2.5 million or $0.19 per share on a fully diluted basis for the third
quarter ended September 30, 2010. The Companys net income for this quarter was more than double
the second quarter 2010 net income of $1.2 million and was the highest quarterly net income since
the second quarter of 2001. Although third quarter 2010 revenue was down slightly compared to the
third quarter 2009 revenue of $11.3 million, due primarily to timing of customer orders, net income
increased by approximately $9.6 million from the loss of approximately $(7.1) million posted in the
third quarter of 2009.
The Company performed very well during the quarter, closing a key customer contract and
posting positive net income for the second consecutive quarter. Although certain projects that we
hoped would be included in our third quarter revenues have been delayed, we anticipate that they
will close in the fourth quarter or early in 2011. Our primary focus still continues to be on our
core customers to ensure they receive the highest levels of service. We are working hard to secure
revenues from both new and existing customers. For example, in the third quarter, we finalized a
new multi-year long term maintenance contract with a major European telecommunications provider.
Lastly, during the quarter, we generated approximately $5.4 million in cash from operations, said
Edward Kennedy, President and Chief Executive Officer.
As of September 30, 2010, the Companys cash and short-term investments position was $69.6 million
compared to $66.0 million at December 31, 2009. The increase of $3.6 million primarily reflects
cash generated from operations.
Fourth Quarter 2010 Revenue Outlook
We expect revenue to be in the range of $10 million to $13 million for the fourth quarter of 2010.
Our revenue range for guidance reflects several revenue opportunities that were deferred from the
third quarter, but which we believe may be recognized in the fourth quarter of 2010 or early in
2011, said Mr. Kennedy.
Conference Call and Webcast
A conference call to discuss earnings results for the third quarter 2010 will be held on Thursday,
October 28, 2010 at 4:00 p.m. Eastern Time.
The telephone number for participants is 1-888-338-8373 (International:+1-973-872-3000). Please
reference Tollgrades Third 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 October 28, 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 | Nine Months Ended | |||||||||||||||
September 30, 2010 | September 26, 2009 | September 30, 2010 | September 26, 2009 | |||||||||||||
Revenues: |
||||||||||||||||
Products |
$ | 4,716 | $ | 5,016 | $ | 13,874 | $ | 14,986 | ||||||||
Services |
6,340 | 6,310 | 19,849 | 17,300 | ||||||||||||
Total revenues |
11,056 | 11,326 | 33,723 | 32,286 | ||||||||||||
Cost of sales: |
||||||||||||||||
Products |
1,645 | 2,537 | 5,732 | 8,090 | ||||||||||||
Services |
2,081 | 2,137 | 5,937 | 5,497 | ||||||||||||
Amortization of Intangible Assets |
388 | 659 | 1,177 | 1,949 | ||||||||||||
Impairment of intangible assets |
| 191 | | 191 | ||||||||||||
Inventory write-down |
| 3,070 | | 3,070 | ||||||||||||
Severance |
(98 | ) | 502 | 319 | 778 | |||||||||||
Total cost of sales |
4,016 | 9,096 | 13,165 | 19,575 | ||||||||||||
Gross Profit |
7,040 | 2,230 | 20,558 | 12,711 | ||||||||||||
Operating expenses: |
||||||||||||||||
Selling and marketing |
1,243 | 1,567 | 4,579 | 4,850 | ||||||||||||
General and administrative |
1,813 | 4,111 | 5,985 | 9,525 | ||||||||||||
Research and development |
1,428 | 2,353 | 5,468 | 6,795 | ||||||||||||
Severance |
(111 | ) | 1,114 | 1,774 | 1,179 | |||||||||||
Other impairments |
| 293 | | 293 | ||||||||||||
Total operating expenses |
4,373 | 9,438 | 17,806 | 22,642 | ||||||||||||
Income (Loss) from operations |
2,667 | (7,208 | ) | 2,752 | (9,931 | ) | ||||||||||
Other income (expense) |
677 | 46 | (47 | ) | 555 | |||||||||||
Income (Loss) before income taxes |
3,344 | (7,162 | ) | 2,705 | (9,376 | ) | ||||||||||
Provision (benefit) for income taxes |
851 | (80 | ) | 648 | 215 | |||||||||||
Income (Loss) from continuing
operations |
2,493 | (7,082 | ) | 2,057 | (9,591 | ) | ||||||||||
Loss from discontinued operations |
| | | (223 | ) | |||||||||||
Net income (loss) |
$ | 2,493 | $ | (7,082 | ) | $ | 2,057 | $ | (9,814 | ) | ||||||
Diluted earnings per-share
information: |
||||||||||||||||
Weighted average shares of common
stock and equivalents: |
13,167 | 12,682 | 12,926 | 12,681 | ||||||||||||
Net Income (loss) per common and
common equivalent shares |
$ | 0.19 | $ | (0.56 | ) | $ | 0.16 | $ | (0.78 | ) | ||||||
Net Income (loss) per common and
common equivalent shares
from continuing operations |
$ | 0.19 | $ | (0.56 | ) | $ | 0.16 | $ | (0.76 | ) | ||||||
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)
September 30, 2010 | December 31, 2009 | |||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 69,564 | $ | 66,046 | ||||
Accounts and Other receivables |
9,805 | 8,005 | ||||||
Inventories |
1,582 | 2,119 | ||||||
Prepaid expenses and deposits |
610 | 759 | ||||||
Property and equipment, net |
2,330 | 3,101 | ||||||
Intangible assets |
5,834 | 7,110 | ||||||
Other assets |
500 | 547 | ||||||
Total assets |
$ | 90,225 | $ | 87,687 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities |
$ | 7,577 | $ | 7,933 | ||||
Long-Term Liabilities |
2,114 | 2,011 | ||||||
Total liabilities |
9,691 | 9,944 | ||||||
Total shareholders equity |
80,534 | 77,743 | ||||||
Total liabilities and shareholders equity |
$ | 90,225 | $ | 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 fourth quarter 2010 and the anticipated success and timing
of our efforts to secure revenue from existing customer initiatives currently underway 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 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 from
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.