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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC
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FORM 10-Q/A
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 2000
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ___________ to ____________
Commission file number 0-27312
TOLLGRADE COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
PENNSYLVANIA 25-1537134
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
493 NIXON RD.
CHESWICK, PA 15024
(Address of Principal Executive Offices, including zip code)
412-820-1400
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes ___X___ No _______
As of October 28, 2000, there were 13,296,249 shares of the Registrant's
Common Stock, $0.20 par value per share, and no shares of the Registrant's
Preferred Stock, $1.00 par value per share, outstanding.
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This report consists of a total of 32 pages. The exhibit index is on page 20.
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TOLLGRADE COMMUNICATIONS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2000
TABLE OF CONTENTS
PAGE NO.
PART I. FINANCIAL INFORMATION
ITEM 1 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2000 AND DECEMBER 31,
1999 ......................................................................................3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE-MONTH AND
NINE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 25, 1999.........................4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS
ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 25, 1999 ...........................................5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.......................................6
REVIEW REPORT OF INDEPENDENT ACCOUNTANTS...................................................9
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION................................................................................ 10
PART II. OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS.........................................................................18
ITEM 2 CHANGES IN SECURITIES.....................................................................18
ITEM 3 DEFAULTS UPON SENIOR SECURITIES...........................................................18
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......................................18
ITEM 5 OTHER INFORMATION.........................................................................18
ITEM 6 EXHIBITS AND REPORTS FILED ON FORM 8-K....................................................18
SIGNATURE...............................................................................................19
EXHIBIT INDEX...........................................................................................20
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PORTIONS AMENDED
The Registrant hereby amends Part I, Item 1 contained in the Registrant's Report
on Form 10-Q for the quarter ended September 30, 2000 to reclassify certain tax
benefits on the exercise of non-qualified stock options from "Cash Flows
provided by Financing Activities" to "Cash Flows provided by Operating
Activities" section of the Condensed Consolidated Statements of Cash Flows. On
the Condensed Consolidated Statements of Cash Flows, in the section entitled
"Adjustments to reconcile net income to net cash provided by operating
activities", the line item description "Tax benefit from exercise of stock
options" is added and the amount is $9,883,835 for the nine-month period ended
September 30, 2000, is reflected. The sub-total "Net Cash Provided by Operating
Activities" is amended to read $18,512,940 for the nine-month period ended
September 30, 2000. There was no effect for the nine month period ended
September 25, 1999. In the section entitled "Cash Flows from Financing
Activities", the line item description "Proceeds from the exercise of stock
options, including related tax benefits", is amended to read "Proceeds from the
exercise of stock options" and the amount is amended to read $11,046,256 for the
nine-month period ended September 30, 2000. Except as set forth in Part I, Item
1 below, no other changes are made to the Registrant's Report on Form 10-Q for
the quarter ended September 30, 2000.
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TOLLGRADE COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
Sept. 30, 2000 Sept. 25, 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 19,674,034 $ 5,797,572
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,331,410 920,097
Tax benefit from exercise of stock options 9,883,835 --
Deferred income taxes (114,785) (253,545)
Changes in assets and liabilities:
Increase in accounts receivable-trade (3,231,161) (1,521,422)
Increase in accounts receivable-other (337,968) (12,393)
Increase in inventories (8,795,103) (4,740,301)
(Increase) decrease in prepaid expenses and other assets (49,586) 124,222
Increase in accounts payable 2,344,950 718,440
(Decrease) increase in accrued expenses and deferred income (914,516) 801,218
Increase in accrued salaries and wages 607,754 132,369
Decrease in royalties payable (47,710) (219,905)
(Decrease) increase in income taxes payable (1,838,214) 151,863
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Net cash provided by operating activities 18,512,940 1,898,215
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CASH FLOWS FROM INVESTING ACTIVITIES:
Redemption/maturity of investments 14,427,752 9,353,489
Purchase of investments (23,366,913) (9,299,831)
Capital expenditures (2,930,048) (1,259,712)
Purchase of treasury stock -- (1,375,688)
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Net cash used in investing activities (11,869,209) (2,581,742)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 11,046,256 677,857
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Net cash provided by financing activities 11,046,256 677,857
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Net increase (decrease)in cash and cash equivalents 17,689,987 (5,670)
Cash and cash equivalents at beginning of period 15,555,810 8,311,353
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Cash and cash equivalents at end of period $ 33,245,797 $ 8,305,683
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The accompanying notes are an integral part of the
condensed consolidated financial statements.
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TOLLGRADE COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revision to Financial Statements:
The accompanying condensed consolidated statements of cash flows have been
revised to reflect tax benefits arising from the exercise of stock options as an
operating cash flow rather than a financing cash flow. The effect was to
increase cash flows from operations and decrease cash flows from financing for
the nine-months ended September 30, 2000 by $9,883,835. The prior period
presented has been reclassified for comparative purposes in accordance with
Emerging Issues Task Force Issue 00-15. The condensed consolidated balance
sheets and condensed consolidated statements of operations were not affected.
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REVIEW REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Tollgrade Communications, Inc.:
We have reviewed the accompanying condensed consolidated balance sheet of
Tollgrade Communications, Inc. and its subsidiaries as of September 30, 2000,
and the related condensed consolidated statements of operations for each of the
three-month and nine-month periods ended September 30, 2000 and September 25,
1999 and the condensed consolidated statement of cash flows for the nine-month
periods ended September 30, 2000 and September 25, 1999. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated interim financial statements
for them to be in conformity with accounting principles generally accepted in
the United States of America.
We previously audited, in accordance with auditing standards generally accepted
in the United States of America, the consolidated balance sheet of Tollgrade
Communications, Inc. and subsidiaries as of December 31, 1999 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the year then ended (not presented herein); and in our report dated January 24,
2000, except for Note 2, which is as of March 20, 2000, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in he accompanying condensed consolidated balance
sheet as of December 31, 1999, is fairly stated in all material respects in
relation to the consolidated balance sheet from which it has been derived.
As indicated in Note 1, the 2000 condensed consolidated statement of cash flows
has been revised.
/s/ PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
October 10, 2000, except for the last paragraph
of Note 1, as to which the date is August 14, 2001
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
The following exhibits are being filed with this report:
15 Letter re unaudited interim financial information
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TOLLGRADE COMMUNICATIONS, INC.
(REGISTRANT)
Dated: August 17, 2001 /S/ CHRISTIAN L. ALLISON
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CHRISTIAN L. ALLISON
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Dated: August 17, 2001 /S/ SAMUEL C. KNOCH
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SAMUEL C. KNOCH
CHIEF FINANCIAL OFFICER AND TREASURER
Dated: August 17, 2001 /S/ BRADLEY N. DINGER
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BRADLEY N. DINGER
CONTROLLER
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EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)
Exhibit
Number Description
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15 Letter re unaudited interim financial information
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