1
Exhibit 99.1
KNOW HOW GOOD YOUR NETWORK CAN BE.(TM)
TOLLGRADE(R)
2
Enabling the
Digital Edge
Tollgrade's strategy
for long-term growth
KNOW HOW GOOD YOUR NETWORK CAN BE.(TM)
TOLLGRADE(R)
3
TOLLGRADE(R)
OUR CUSTOMER'S NETWORK
[Graphic depicting flowchart of typical customer network]
Private-Line
Access |----------------------------DS1
Network | SmartJack
OC-12c |
ADM OC-12c
---------------|ADM
| OC-x | -----DS1 Medium &
| | DS1 Service -----DS3 Large Business
| |DSLAM ADM Customers
| | OC-12c
Router | ---------------------------------------------------Voice
| OC-3c | xDSL Service -10/100
| | IAD
|DCS |
Network Class 5 Switch |
Core |
|---------|
ATM ----------------------------|----------------------------------------------------POTS
Switch | PSTN OC-x | RT NID
| Switch |
| |
| Consumer |----------------------------------------------------POTS Residential &
| Access | OC-3c Small Business
| Network | RT NID Customers
| |
| COT |----------------------------------------------------POTS
| OC-3c NID
| CATV --Video Residential
|-------------------------------------------------------------------------------10/100 Customers
Access
Network Head End TRX TRX NID
BAIRD 092101 3
4
TOLLGRADE(R)
CORE PRODUCT FAMILIES
[Graphical representation of our products and services and reseller products]
BROADBAND EDGE [Picture]
T&M SOLUTIONS
PROFESSIONAL
CONSUMER ACCESS [Picture] SERVICES
T&M SOLUTIONS Lucent LoopCare*
Nortel AccessCare*
CATV ACCESS [Picture]
T&M SOLUTIONS
*Per OEM/Reseller Agreements.
BAIRD 092101 4
5
REVENUES BY
PRODUCT FAMILY (dollars in millions)
[GRAPH]
$120-------------------------------------------------------------------
$100-------------------------------------------------------------------
$80-------------------------------------------------------------------
$60-------------------------------------------------------------------
$40-------------------------------------------------------------------
$20-------------------------------------------------------------------
$46.2M $61.1M $114.4M
$0-------------------------------------------------------------------
1998 1999 2000
-----------------------------------------------------------------------
[ ] Consumer [ ] BB Edge [ ] CATV [ ] Services
TOLLGRADE(R)
KNOW HOW GOOD YOUR NETWORK CAN BE.(TM)
BAIRD 092101 5
6
OUR FOCUS MOVING FORWARD
PROVIDING OUR CUSTOMERS WITH LEADING EDGE TEST & MANAGEMENT SOLUTIONS WHICH...
- Enable the competitive rollout of digital broadband services.
- High Speed Internet
- Voice over Broadband
- Digital Video
- Fully leverage the investments in their existing access network
infrastructure.
- Incumbent Centralized Test & Management Systems
- Recently Deployed DSLAMs and NGDLCs
TOLLGRADE(R)
KNOW HOW GOOD YOUR NETWORK CAN BE.(TM)
BAIRD 092101 6
7
A SHIFT IN THE MARKET
- Currently, the market is shifting from a focus of BUILDING CAPACITY in the
network's core to FILLING CAPACITY at the edge.
- AS A RESULT...
TOLLGRADE(R)
KNOW HOW GOOD YOUR NETWORK CAN BE.(TM)
BAIRD 092101 7
8
...OUR CUSTOMERS
ARE BUYING MORE...
DLC Equipment
[Graphic depicting growth of DLC equipment shipments]
Source: RHK Telecommunications Industry Analysis
IAD/Gateways
[Graphic depicting growth of voiceover broadband market]
Source: RHK Telecommunications Industry Analysis
TOLLGRADE(R)
KNOW HOW GOOD YOUR NETWORK CAN BE.(TM)
BAIRD 092101 8
9
...TO DRIVE INCREASED
DEPLOYMENTS OF...
Internet Services
[Graphic depicting growth of internet services market presentation]
Source: RHK Telecommunications Industry Analysis
VoB Services
[Graphic depicting growth of voiceover broadband equipment shipments]
Source: RHK Telecommunications Industry Analysis
TOLLGRADE(R)
KNOW HOW GOOD YOUR NETWORK CAN BE.(TM)
BAIRD 092101 9
10
THE POSITIVE IMPACT
- This increased investment in the broadband edge provides unique growth
potential for Tollgrade by leveraging:
- ITS MARKET DOMINANCE - IN PARTNERSHIP WITH LUCENT - WITH CONSUMER
ACCESS T&M SOLUTIONS.
- ITS UNMATCHED ABILITY TO INTEGRATE TEST INTO ACCESS NETWORK ELEMENTS,
INCLUDING NGDLCS AND DSLAMS
- ITS COMPANY-WIDE APPLICATIONS KNOWLEDGE OF TESTING BROADBAND SERVICES
OVER THE COPPER/COAX LOOP.
TOLLGRADE(R)
KNOW HOW GOOD YOUR NETWORK CAN BE.(TM)
BAIRD 092101 10
11
OUR HIGH-LEVEL STRATEGIES
- DIGITAL LTS
- Enable the RBOC's competitive management of the Digital Consumer
through the evolution of their existing Consumer Access T&M solutions.
- IMU ANYWHERE
- Maximize the global presence of Tollgrade's broadband edge solutions
through win/win relationships with industry leading Access Network
Element and Private-Line T&M suppliers.
- DIGITAL W/O A DISPATCH
- Enable our customer's ability to accelerate broadband service
deployments by enhancing their existing access network T&M solutions
to include IP/ATM service verification.
TOLLGRADE(R)
KNOW HOW GOOD YOUR NETWORK CAN BE.(TM)
BAIRD 092101 11
12
FINANCIAL STATEMENTS
Balance Sheet (Dollars in Thousands)
June 30, 2001 December 31, 2000
--------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------
Current Assets
Cash and Investments $76,417 $58,830
Accounts Receivable 18,190 19,590
Inventories 24,980 30,499
Other 2,201 10,721
--------------------------------------------------------------------------------
TOTAL CURRENT ASSETS $121,788 $119,640
Other $17,664 $11,635
--------------------------------------------------------------------------------
TOTAL ASSETS $139,452 $131,275
--------------------------------------------------------------------------------
CLA-BoD 7-19-01 12
13
FINANCIAL STATEMENTS
Balance Sheet (Dollars in Thousands)
June 30, 2001 December 31, 2000
--------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Total Liabilities $5,003 $8,515
Total Shareholders' Equity $134,449 $122,760
--------------------------------------------------------------------------------
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $139,452 $131,275
--------------------------------------------------------------------------------
CLA-BoD 7-19-01 13
14
FINANCIAL STATEMENTS
Statement of Cash Flows (Dollars in Thousands)
First Half 2001 First Half 2000
----------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 9,559 $ 12,378
Adjustments to reconcile Net Income to Cash 13,979 (2,161)
----------------------------------------------------------------------------------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 23,538 $ 10,217
----------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures ($ 2,436) ($ 2,217)
----------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the exercise of Stock Options 1,045 8,742
CLA-BoD 7-19-01 14
15
FINANCIAL STATEMENTS
Statement of Cash Flows continued (Dollars in Thousands)
First Half 2001 First Half 2000
----------------------------------------------------------------------------------------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 22,147 16,742
----------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 61,580 31,922
----------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $83,727 $48,664
----------------------------------------------------------------------------------------
CLA-BoD 7-19-01 15
16
FINANCIAL STATEMENTS
Second Quarter Statement of Operations (Dollars in Thousands)
% of Total % of Total
2001 Actual Revenue 2000 Actual Revenue
--------------------------------------------------------------------------------------------
NET PRODUCT SALES $ 21,776 100% $ 29,667 100%
--------------------------------------------------------------------------------------------
GROSS PROFIT $ 12,211 56.1% $ 18,253 61.5%
--------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES $ 6,704 30.8% $ 7,621 25.7%
--------------------------------------------------------------------------------------------
NET INCOME $ 3,803 17.5% $ 7,154 24.1%
--------------------------------------------------------------------------------------------
WEIGHTED average shares
and equivalents: diluted 13,404,290 13,318,461
--------------------------------------------------------------------------------------------
DILUTED E.P.S $ .28 $ .54
--------------------------------------------------------------------------------------------
ANALYSTS CONSENSUS
ESTIMATE (excluding charge) $ .30
--------------------------------------------------------------------------------------------
CLA-BoD 7-19-01 16
17
FINANCIAL STATEMENTS
First Half Statement of Operations (Dollars in Thousands)
% of Total % of Total
2001 Actual Revenue 2000 Actual Revenue
--------------------------------------------------------------------------------------------
Net Product Sales $ 49,766 100% $ 52,084 100%
--------------------------------------------------------------------------------------------
Gross Profit $ 27,926 56.1% $ 32,299 62.0%
--------------------------------------------------------------------------------------------
Total Operating Expenses $ 14,043 28.2% $ 13,973 26.8%
--------------------------------------------------------------------------------------------
Net Income $ 9,559 19.2% $ 12,378 23.8%
--------------------------------------------------------------------------------------------
Weighted average shares
and equivalents: diluted 13,391,030 13,217,634
--------------------------------------------------------------------------------------------
Diluted E.P.S $ .71 $ .94
--------------------------------------------------------------------------------------------
Analysts Consensus
Estimate (excluding charge) $ .73
--------------------------------------------------------------------------------------------
CLA-BoD 7-19-01 17
18
KNOW HOW GOOD YOUR NETWORK CAN BE.(TM)
TOLLGRADE(R)