Tollgrade Reports Third Consecutive Quarterly Profit
24 February 2011 - 10:00AM
Tollgrade Communications, Inc. (Nasdaq:TLGD), a leading supplier of
network service assurance test products and solutions, today
reported revenue of $11.9 million and net income of $2.4 million or
$0.17 per share on a fully diluted basis for the fourth quarter
ended December 31, 2010. The Company's net income of $2.4 million
for the fourth quarter 2010 was almost equal to its third quarter
2010 net income of $2.5 million, which was the highest quarterly
net income since the second quarter of 2001. Although fourth
quarter 2010 revenue was down by approximately $0.8 million
compared to fourth quarter 2009 revenue of $12.7 million, the
Company's profit from operations was approximately $1.9 million in
the fourth quarter of 2010 compared to an operating loss of $(27.5)
million in the fourth quarter of 2009, which included intangible
asset impairments of approximately $27.0 million.
For the year ended December 31, 2010, the Company posted revenue
of approximately $45.6 million and net income of $4.4 million or
$0.34 per share on a fully diluted basis compared to revenue of
$44.9 million and a net loss of $(36.2) million or a loss per share
on a fully diluted basis of $(2.85) for the prior year. With
net income for the year of $4.4 million, 2010 was the Company's
first profitable year since 2005. Included in the Company's
2009 net loss, were approximately $30.5 million of non-cash
expenses primarily related to intangible asset impairments and
inventory write-downs.
"The Company again performed well during the quarter, posting
positive net income for the third consecutive quarter and for the
full year, representing our first annual profit since
2005. Our number one goal coming into 2010 was to ensure
profitability, and we accomplished that goal. We became
profitable in part through our cost saving initiatives, which
included moving to a totally outsourced variable cost manufacturing
model, along with workforce and other non-headcount related cost
savings. These cost reductions were strategically made to
ensure that our customers would still receive the highest levels of
service. Additionally, during the year, we generated
approximately $5.5 million in cash from operations," said Edward
Kennedy, President and Chief Executive Officer.
First Quarter 2011 Revenue Outlook
"We expect revenue to be in the range of $10 million to $12
million for the first quarter of 2011 as the first quarter of the
year is traditionally one of our lighter quarters due to timing and
seasonality of orders," said Mr. Kennedy.
Conference Call and Webcast
A conference call to discuss earnings results for the fourth
quarter and full year 2010 will be held on Thursday, February
24, 2011 at 4:30 p.m. Eastern Time.
The telephone number for participants is 1-888-338-8373
(International: +1-973-872-3000). Please reference Tollgrade Fourth
Quarter and Full Year 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 February 24, 2011.
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. Tollgrade's
customers range from the top telecom providers, to numerous
independent telecom and broadband providers around the
world. Tollgrade's network testing, measurement and monitoring
solutions support the infrastructure of telecom companies and power
distribution companies. For more information, visit
Tollgrade's web site at www.tollgrade.com.
The Tollgrade Communications, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=7127
TOLLGRADE
COMMUNICATIONS, INC. AND SUBSIDIARIES |
Unaudited Condensed
Consolidated Statements of Operations |
(In thousands, except per-share
data) |
|
|
|
|
|
|
Three Months
Ended |
Year
Ended |
|
December 31,
2010 |
December 31,
2009 |
December 31,
2010 |
December 31,
2009 |
Revenues: |
|
|
|
|
Products |
$5,193 |
$4,950 |
$19,067 |
$19,936 |
Services |
6,730 |
7,705 |
26,579 |
25,005 |
Total
revenues |
11,923 |
12,655 |
45,646 |
44,941 |
Cost of sales: |
|
|
|
|
Products |
2,527 |
3,721 |
8,259 |
11,812 |
Services |
1,681 |
1,647 |
7,618 |
7,143 |
Amortization of Intangible
Assets |
393 |
627 |
1,570 |
2,576 |
Impairment of intangible
assets |
-- |
26,960 |
-- |
27,151 |
Inventory write-down |
-- |
-- |
-- |
3,070 |
Severance |
-- |
-- |
319 |
778 |
Total cost of
sales |
4,601 |
32,955 |
17,766 |
52,530 |
Gross
Profit/(loss) |
7,322 |
(20,300) |
27,880 |
(7,589) |
|
|
|
|
|
Operating expenses: |
|
|
|
|
Selling and marketing |
1,388 |
1,959 |
5,967 |
6,809 |
General and administrative |
2,576 |
2,616 |
8,561 |
12,141 |
Research and development |
1,373 |
2,617 |
6,841 |
9,411 |
Severance |
52 |
-- |
1,826 |
1,180 |
Other impairments |
-- |
-- |
-- |
293 |
Total operating
expenses |
5,389 |
7,192 |
23,195 |
29,834 |
|
|
|
|
|
Income (Loss) from
operations |
1,933 |
(27,492) |
4,685 |
(37,423) |
Other income |
56 |
12 |
9 |
567 |
Income (Loss) before income
taxes |
1,989 |
(27,480) |
4,694 |
(36,856) |
(Benefit) provision for income
taxes |
(377) |
(1,089) |
271 |
(874) |
Income (Loss) from
continuing operations |
2,366 |
(26,391) |
4,423 |
(35,982) |
Loss from discontinued
operations |
-- |
-- |
-- |
(223) |
Net income
(loss) |
$2,366 |
$(26,391) |
$4,423 |
$(36,205) |
|
|
|
|
|
Diluted earnings per-share
information: |
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock
and equivalents: |
13,594 |
12,690 |
13,160 |
12,683 |
|
|
|
|
|
Net Income (loss) per common and
common equivalent shares |
$0.17 |
$(2.08) |
$0.34 |
$(2.85) |
|
|
|
|
|
Net Income (loss) per common and
common equivalent shares from continuing operations |
$0.17 |
$(2.08) |
$0.34 |
$(2.83) |
|
|
|
|
|
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) |
|
|
|
|
December 31,
2010 |
December 31,
2009 |
ASSETS |
|
|
|
|
|
Cash and cash equivalents |
$72,194 |
$66,046 |
Accounts and Other receivables |
8,625 |
8,005 |
Inventories |
1,373 |
2,119 |
Prepaid expenses and deposits |
798 |
759 |
Property and equipment, net |
2,246 |
3,101 |
Intangible assets |
5,391 |
7,110 |
Other assets |
710 |
547 |
Total assets |
$91,337 |
$87,687 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
Current liabilities |
$5,411 |
$7,933 |
|
|
|
Long-Term Liabilities |
1,634 |
2,011 |
|
|
|
Total
liabilities |
7,045 |
9,944 |
|
|
|
Total shareholders' equity |
84,292 |
77,743 |
|
|
|
Total liabilities and
shareholders' equity |
$91,337 |
$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 Company's current expectations regarding
revenue for the first quarter of 2011. 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) the risk that our business could be disrupted as a
result of uncertainty related to our recently announced merger
agreement with an affiliate of Golden Gate Capital ("GGC") (the
"Merger"); (b) the inability to complete the Merger in the
timeframe or manner currently anticipated, or at all, as a result
of several factors, including, among other things, the failure of
one or more of the merger agreement's closing conditions,
litigation relating to the Merger, or the failure to obtain
shareholder approval of the Merger; (c) the requirement in the
merger agreement that we secure GGC's consent prior to engaging in
certain actions during the pendency of the Merger, and the risk
that this requirement will prevent us from pursuing opportunities
or otherwise taking actions that we might otherwise have; (d) 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; (e) 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; (f) 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; (g)
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; (h) 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; (i) our inability to
recognize all or a portion of our backlog as expected, due to
delays in shipment or other factors; (j) changes in exchange rates
of foreign currencies in which we transact business relative to the
U.S. dollar; (k) general economic uncertainty and its impact on the
capital budgets for certain of our major customers; (l) our
dependence upon a limited number of third party subcontractors and
component suppliers to manufacture or supply certain aspects of the
products we sell; (m) the ability to manage the risks associated
with and to grow our business; and (n) 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 Company's filings with the U.S. Securities and
Exchange Commission (the "SEC") including, but not limited to, the
Company's Form 10-K for the year ended December 31, 2009 and any
subsequently filed reports. All documents are also available
through the SEC's Electronic Data Gathering Analysis and Retrieval
system at www.sec.gov or from the Company's website at
www.tollgrade.com.
CONTACT: Michael D. Bornak, Chief Financial Officer
Office: 412-820-1406
mbornak@tollgrade.com
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