7/12 TLGD Inc. Reports Record Second Quarter Earnings and Sales
PITTSBURGH, July 12 /PRNewswire/ -- Tollgrade Communications, Inc. (Nasdaq: TLGD - news) today reported record earnings and revenues for the second quarter of 2000. Earnings for the second quarter were $.54 per share, an increase of 170.0% over the second quarter of 1999 of $.20 per share on a diluted basis. These per share results include the effect of additional equivalent common shares as a result of an increase in the average share price between periods.
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Revenues for the second quarter of 2000 were $29,666,710, an increase of 107.9% over the same quarter last year. Net income for the second quarter of 2000 was $7,153,879, an increase of 201.4% compared to $2,373,179 for the prior year quarter.
Contributing to the increase in quarterly revenues were:
Increased sales of core MCU® products to SBC Communications, Inc. (including Ameritech, Pacific Bell, and SNET) associated with that company's efforts to improve testability in their multi-state region. MCU products provide test access in fiber-optic-based Digital Loop Carrier systems;
Increased product sales of certain MCU products sold into the CLEC markets, as well as those sold on an Original Equipment Manufacturer (OEM) basis;
Increased sales of the company's next generation DigiTest® system products to Sprint under the company's purchase agreement with Sprint North Supply, as well as to Nortel Networks for deployment into the CLEC markets, including TriVergent Communications and ATI. Current quarter sales include approximately $3,600,000 of revenue related to orders shipped prior to April 1, 2000 which were pending receipt of final third party certifications and customer acceptance. All such certifications and customer acceptance notifications were received in the second quarter. Overall DigiTest sales accounted for approximately 23.1% of current quarter sales;
Increased product sales for the company's LIGHTHOUSE® Cable Status Monitoring System to RCN Corporation and AT&T Broadband and Internet Services (AT&T BIS), as well as to ANTEC, an Original Equipment Manufacturer of cable network products. Overall Cable Status Monitoring System sales accounted for 7.5% of current quarter sales; and
Increased billings related to the company's new Professional Services business.
Gross profit for the current quarter was $18,253,327, an increase of 118.2% compared to $8,366,945 in the second quarter of 1999. As a percentage of sales, gross profit for the current quarter was 61.5% versus 58.6% for the comparable period in 1999. Gross profit margins improved as a direct result of increased sales levels and favorable sales mix.
Furthermore, the company reported that second quarter 2000 income from operations was $10,632,437, an increase of 205.8%, versus $3,476,485 in the second quarter of 1999.
Operating details, compared to the second quarter of 1999, include:
Selling and marketing expenses increased 71.3% to $3,027,461, primarily due to an increase in the number of sales and marketing personnel to support new product introductions and enhance customer support, as well as increased commission expense which pertains to the increased sales levels. In addition, the current quarter includes increased spending on general advertising, promotion and related marketing activities.
General and administrative expenses increased 55.0%, to $1,495,334, reflecting an increase in performance-based compensation reserves, certain professional service fees, as well as various employee recruiting-related expenditures.
Research and development expenses increased 43.6% to $3,098,095, due to the addition of personnel and increased project-related costs associated with developing new products and new technologies and enhancing features of existing products.
Order backlog at July 1, 2000 was $11,591,177. The company's backlog consists of firm customer purchase orders.
Statements included here, which are not historical in nature, are forward- looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including without limitation, statements as to management's beliefs, strategies, plans, expectations or opinions in connection with company performance, which are based on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate.
The forward-looking statements must be qualified by important factors that could cause actual earnings and other results to differ materially from those achieved in the past or those expected by the company. These include: rapid technological change along with the need to continually develop new products; the company's focus on a relatively narrow range of products; competition; the company's dependence on key employees; difficulties in managing the company's growth; the company's dependence upon certain customers and certain suppliers; the company's dependence upon proprietary rights; risks of third party claims of infringement; and government regulation.
Tollgrade Communications, Inc., designs, engineers, markets and supports test system, test access and status monitoring products for the telecommunications and cable television industries. Tollgrade, which is headquartered in Cheswick, Pa., a suburb of Pittsburgh, employs more than 355 people and recorded 1999 revenues of $61.1 million. The company maintains a presence in regions across the United States and in the United Kingdom. Tollgrade's World Wide Web address is www.tollgrade.com.
TOLLGRADE COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per-share data)
Three Months Ended Six Months Ended
07/01/00 06/26/99 07/01/00 06/26/99
Revenues $29,667 $14,270 $52,084 $25,390
Cost of product sales 11,414 5,903 19,785 10,655
Gross profit 18,253 8,367 32,299 14,735
Operating expenses:
Selling and marketing 3,028 1,768 5,411 3,166
General and administrative 1,495 965 2,873 2,013
Research and development 3,098 2,158 5,689 4,034
Total operating expenses 7,621 4,891 13,973 9,213
Income from operations 10,632 3,476 18,326 5,522
Other income 546 237 1,015 508
Income before income taxes 11,178 3,713 19,341 6,030
Provision for income taxes 4,024 1,340 6,963 2,171
Net income $7,154 $2,373 $12,378 $3,859
Diluted earnings per-share
information:
Weighted average shares of
common stock and
equivalents: 13,318 11,612 13,218 11,684
Net income per common and
common equivalent shares $0.54 $0.20 $0.94 $0.33
TOLLGRADE COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
July 1, 2000 Dec. 31, 1999
ASSETS
Current assets:
Cash and cash equivalents $20,773 $15,556
Short-term investments 24,666 13,517
Accounts receivable:
Trade 12,500 10,865
Other 683 335
Inventories 21,635 17,336
Prepaid expenses and deposits 370 462
Deferred tax assets 6,040 575
Total current assets 86,667 58,646
Long-term investments 3,225 2,850
Property and equipment, net 5,708 4,337
Deferred tax assets 368 368
Patents and other assets 53 1
Total assets $96,021 $66,202
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,508 $912
Accrued expenses 963 1,223
Accrued salaries and wages 1,726 2,209
Royalties payable 1,266 794
Income taxes payable 689 2,444
Deferred income 105 1,106
Total current liabilities 6,257 8,688
Deferred tax liabilities 10 10
Total liabilities 6,267 8,698
Total shareholders' equity 89,754 57,504
Total liabilities and
shareholders' equity $96,021 $66,202
(R) MCU is a registered trademark of Tollgrade Communications, Inc.
(R) LIGHTHOUSE is a registered trademark of Tollgrade Communications, Inc.
SOURCE: Tollgrade Communications, Inc.
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