##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
  þ
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2011
 o
    
    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: 000-27312
 TOLLGRADE COMMUNICATIONS, INC.
  Pennsylvania
    
    25-1537134(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)
 3120 Unionville Road, Suite 400
Cranberry Township, PA 16066
 724-720-1400
  Yes þ       No o
  Yes o       No o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  Yes o       No þ




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##### 



TOLLGRADE COMMUNICATIONS, INC.
 Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 2011  Table of Contents
 Page No.PART I. FINANCIAL INFORMATIONItem 1 Condensed Consolidated Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of March 31, 2011 and
December 31, 2010
    
    
    3Condensed Consolidated Statements of Operations for the three
month periods ended March 31, 2011 and March 31, 2010
    
    
    4Condensed Consolidated Statements of Cash Flows for the three
month periods ended March 31, 2011 and March 31, 2010
    
    
    5Condensed Consolidated Statements of Changes in Shareholders
Equity for the three month period ended March 31, 2011
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2 Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    12Item 3 Quantitative and Qualitative Disclosures about Market Risk
    
    
    18Item 4 Controls and Procedures
    
    
    19PART II. OTHER INFORMATIONItem 1 Legal Proceedings
    
    
    19Item 1A Risk Factors
    
    
    20Item 6 Exhibits
    
    
    20SIGNATURES
    
    
    21EXHIBIT INDEX
    
    
    22EX-31.1EX-31.2EX-32
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1.
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 TOLLGRADE COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except par value) (Unaudited)
 March 31, 2011
    
    December 31, 2010ASSETSCurrent assets:Cash and cash equivalents
    
    $
    70,886
    
    
    $
    72,194Short-term investments
    
    
    
    
    
    
    3Accounts receivable:Trade, net of allowance for doubtful accounts at $1,658 in 2011 and $1,496 in
2010
    
    
    8,798
    
    
    
    7,975Other
    
    
    906
    
    
    
    650Inventories
    
    
    1,256
    
    
    
    1,373Prepaid expenses and deposits
    
    
    751
    
    
    
    798Deferred and refundable income taxes
    
    
    111
    
    
    
    93Total current assets
    
    
    82,708
    
    
    
    83,086Property and equipment, net
    
    
    3,877
    
    
    
    2,246Intangibles
    
    
    5,190
    
    
    
    5,391Deferred tax assets
    
    
    241
    
    
    
    191Other assets
    
    
    423
    
    
    
    423Total assets
    
    $
    92,439
    
    
    $
    91,337LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    544
    
    
    $
    1,867Accrued warranty
    
    
    189
    
    
    
    222Accrued expenses
    
    
    2,139
    
    
    
    986Accrued salaries and wages
    
    
    509
    
    
    
    1,044Accrued royalties payable
    
    
    67
    
    
    
    218Income taxes payable
    
    
    489
    
    
    
    481Deferred revenue
    
    
    927
    
    
    
    593Total current liabilities
    
    
    4,864
    
    
    
    5,411Pension obligation
    
    
    864
    
    
    
    795Deferred tax liabilities
    
    
    14
    
    
    
    14Other liabilities
    
    
    1,748
    
    
    
    825Total liabilities
    
    
    7,490
    
    
    
    7,045Commitments and contingenciesShareholders equity:Common
stock, $0.20 par value 50,000 authorized shares, issued shares, 14,270 in 2011 and 14,073 in 2010
    
    
    2,854
    
    
    
    2,815Additional paid-in capital
    
    
    78,854
    
    
    
    77,326Treasury stock, at cost, 1,162 shares in 2010 and 2009
    
    
    (8,632
    )
    
    
    (8,632
    )Retained earnings
    
    
    12,789
    
    
    
    13,966Accumulated other comprehensive loss
    
    
    (916
    )
    
    
    (1,183
    )Total shareholders equity
    
    
    84,949
    
    
    
    84,292Total liabilities and shareholders equity
    
    $
    92,439
    
    
    $
    91,337
  3




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##### Table of Contents



TOLLGRADE COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data) (Unaudited)
 Three Months EndedMarch 31, 2011
    
    March 31, 2010Revenues:Products
    
    $
    2,830
    
    
    $
    4,222Services
    
    
    6,566
    
    
    
    6,945Total revenues
    
    
    9,396
    
    
    
    11,167Cost of sales:Products
    
    
    1,596
    
    
    
    1,814Services
    
    
    1,700
    
    
    
    1,993Amortization
    
    
    302
    
    
    
    400Severance
    
    
    
    
    
    
    468Total cost of sales
    
    
    3,598
    
    
    
    4,675Gross profit
    
    
    5,798
    
    
    
    6,492Operating expenses:Selling and marketing
    
    
    1,390
    
    
    
    2,063General and administrative
    
    
    3,509
    
    
    
    2,218Research and development
    
    
    1,774
    
    
    
    2,360Severance
    
    
    245
    
    
    
    1,258Total operating expense
    
    
    6,918
    
    
    
    7,899Loss from operations
    
    
    (1,120
    )
    
    
    (1,407
    )Other income
    
    
    90
    
    
    
    (409
    )Loss before income taxes
    
    
    (1,030
    )
    
    
    (1,816
    )Provision/(benefit) for income taxes
    
    
    147
    
    
    
    (153
    )Net loss
    
    
    (1,177
    )
    
    
    (1,663
    )PER SHARE INFORMATION:Weighted average shares of common stock and equivalents:Basic
    
    
    13,018
    
    
    
    12,656Diluted
    
    
    13,018
    
    
    
    12,656Net loss per common share:Basic
    
    $
    (0.09
    )
    
    $
    (0.13
    )Diluted
    
    $
    (0.09
    )
    
    $
    (0.13
    )
  4




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##### Table of Contents



TOLLGRADE COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands) (Unaudited)
 March 31,
    
    March 31,2011
    
    2010Cash flows from operating activities:Net Loss
    
    $
    (1,177
    )
    
    $
    (1,663
    )Adjustments to reconcile net loss to net cash used in
 operating activitiesAmortization expense
    
    
    302
    
    
    
    400Depreciation expense
    
    
    298
    
    
    
    327Stock-based compensation expense
    
    
    172
    
    
    
    506Deferred income taxes
    
    
    (46
    )
    
    
    (825
    )Loss on disposed assets
    
    
    5
    
    
    
    Inventory impairment
    
    
    73
    
    
    
    Provision for allowance for doubtful accounts
    
    
    75
    
    
    
    Changes in assets and liabilities:Accounts receivable-trade and other
    
    
    (967
    )
    
    
    (1,065
    )Inventories
    
    
    44
    
    
    
    267Prepaid expenses, deposits and other assets
    
    
    52
    
    
    
    5Accounts payable
    
    
    (1,272
    )
    
    
    115Accrued warranty
    
    
    (36
    )
    
    
    (2
    )Accrued expenses
    
    
    (420
    )
    
    
    410Income taxes payable
    
    
    339
    
    
    
    (494
    )Other
    
    
    843
    
    
    
    Net cash used in operating activities
    
    
    (1,715
    )
    
    
    (2,019
    )Cash flows from investing activities:Redemption of short term investments
    
    
    3
    
    
    
    Purchase of property and equipment
    
    
    (1,132
    )
    
    
    (151
    )Net cash used in investing activities
    
    
    (1,129
    )
    
    
    (151
    )Cash flows from financing activities:Proceeds from the exercise of stock options
    
    
    1,395
    
    
    
    Other
    
    
    114Repurchase of treasury stock
    
    
    
    
    
    
    (69
    )Net cash provided by/(used) in financing activities
    
    
    1,509
    
    
    
    (69
    )Net (decrease)/increase in cash and cash equivalents
    
    
    (1,335
    )
    
    
    2,239Effect of exchange rate changes on cash and cash equivalents
    
    
    27
    
    
    
    (50
    )Cash and cash equivalents, beginning of period
    
    
    72,194
    
    
    
    66,046Cash and cash equivalents, end of period
    
    $
    70,886
    
    
    $
    63,757Supplemental disclosure of cash flow information:Cash paid during the period for income taxes
    
    
    231
    
    
    
    704
  5




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Tollgrade Communications, Inc. and Subsidiaries
 
 Consolidated Statements of Changes in Shareholders Equity
 In thousands (Unaudited)
 Common Stock
    
    
    
    
    
    Treasury StockAdditional
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated OtherPaid-In
    
    
    
    
    
    
    
    
    
    Retained
    
    ComprehensiveShares
    
    Amount
    
    Capital
    
    Shares
    
    Amount
    
    Earnings
    
    Loss
    
    TotalBalance at December 31, 2010
    
    
    14,073
    
    
    $
    2,815
    
    
    $
    77,326
    
    
    
    1,162
    
    
    $
    (8,632
    )
    
    $
    13,966
    
    
    $
    (1,183
    )
    
    $
    84,292Exercise of common stock options
    
    
    197
    
    
    $
    39
    
    
    $
    1,356
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,395Compensation expense for options
and restricted stock, net
    
    
    
    
    
    
    
    
    
    $
    172
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    172Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    267
    
    
    $
    267Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1,177
    )
    
    
    
    
    
    $
    (1,177
    )Balance at March 31, 2011
    
    
    14,270
    
    
    $
    2,854
    
    
    $
    78,854
    
    
    
    1,162
    
    
    $
    (8,632
    )
    
    $
    12,789
    
    
    $
    (916
    )
    
    $
    84,949
  6




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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Unaudited)
 1. BASIS OF PRESENTATION
    2. FAIR VALUE MEASUREMENTS
  
    
    Level 1  Unadjusted quoted prices in active markets that are accessible at the
measurement date for identical, unrestricted assets or liabilities;
    
    Level 2  Inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly or indirectly, including quoted prices for
similar assets or liabilities in active markets; quoted prices for identical or similar
assets or liabilities in markets that are not active; inputs other than quoted prices that
are observable for the asset or liability (e.g., interest rates); and inputs that are
derived principally from or corroborated by observable market data by correlation or other
means; and
    
    Level 3  Inputs that are both significant to the fair value measurement and
unobservable.
  7




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3. STOCK BASED COMPENSATION
   Stock-Based Compensation Expense
    Number of
    
    
    Range of Option
    
    
    Weighted AverageShares
    
    
    Prices
    
    
    Exercise PriceOutstanding, December 31, 2010
    
    
    1,312,992
    
    
    $
    3.27 - $32.90
    
    
    $
    8.03Exercised
    
    
    (196,772
    )
    
    $
    5.17 - $9.49
    
    
    $
    7.09Cancelled/Forfeited/Expired
    
    
    (16,650
    )
    
    $
    8.49 - $32.28
    
    
    $
    18.42Outstanding, March 31, 2011
    
    
    1,099,570
    
    
    $
    3.27 - $32.90
    
    
    $
    8.04
 4. SEVERANCE
   8




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5. INTANGIBLE ASSETS
  March 31, 2011ImpairmentsDuring theUseful Life
    
    
    
    
    
    Accumulated
    
    Reporting(Years)
    
    Gross
    
    Amortization
    
    Period
    
    NetAmortizing Intangible Assets:Post warranty service agreements
    
    6-15
    
    $
    37,757
    
    
    $
    33,407
    
    
    
    
    
    
    $
    4,350Technology
    
    2-10
    
    
    13,332
    
    
    
    12,728
    
    
    
    
    
    
    $
    604Customer relationships
    
    5-15
    
    
    732
    
    
    
    544
    
    
    
    
    
    
    $
    188Tradenames and other
    
    0.5-10
    
    
    305
    
    
    
    257
    
    
    
    
    
    
    $
    48Total Intangible Assets
    
    
    
    $
    52,126
    
    
    $
    46,936
    
    
    $
    0
    
    
    $
    5,190
 December 31, 2010ImpairmentsDuring theUseful Life
    
    
    
    
    
    Accumulated
    
    Reporting(Years)
    
    Gross
    
    Amortization
    
    Period
    
    NetAmortizing Intangible Assets:Post warranty service agreements
    
    6-15
    
    $
    37,539
    
    
    $
    33,113
    
    
    
    
    
    
    $
    4,426Technology
    
    2-10
    
    
    13,986
    
    
    
    13,275
    
    
    
    
    
    
    $
    711Customer relationships
    
    5-15
    
    
    905
    
    
    
    704
    
    
    
    
    
    
    $
    201Tradenames and other
    
    0.5-10
    
    
    574
    
    
    
    521
    
    
    
    
    
    
    $
    53Total Intangible Assets
    
    
    
    $
    53,004
    
    
    $
    47,613
    
    
    $
    0
    
    
    $
    5,391
  Impairments
 Long-Lived Assets
  6. INVENTORIES
  March 31, 2011
    
    
    December 31, 2010Raw materials
    
    $
    525
    
    
    $
    804Work in process
    
    
    117
    
    
    
    179Finished goods
    
    
    614
    
    
    
    390Total Inventory
    
    
    1,256
    
    
    
    1,373
 9




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7. PRODUCT WARRANTY
  March 31, 2011
    
    
    December 31, 2010Balance at the beginning of the period
    
    $
    222
    
    
    $
    504Accruals for warranties issued during the period
    
    
    46
    
    
    
    251Settlements during the period
    
    
    (79
    )
    
    
    (533
    )Balance at the end of the period
    
    $
    189
    
    
    $
    222
 8. PER SHARE INFORMATION
  9. REVENUE CONCENTRATION, MAJOR CUSTOMERS
  March 31, 2011
    
    March 31, 2010System Test Products
    
    $
    1,630
    
    
    
    17
    %
    
    $
    2,430
    
    
    
    22
    %MCU
    
    
    1,142
    
    
    
    12
    %
    
    
    1,776
    
    
    
    16
    %Other
    
    
    58
    
    
    
    1
    %
    
    
    16
    
    
    
    0
    %Total Products
    
    $
    2,830
    
    
    
    30
    %
    
    
    4,222
    
    
    
    38
    %Managed Services
    
    
    1,697
    
    
    
    18
    %
    
    
    1,748
    
    
    
    16
    %Other Services
    
    
    4,869
    
    
    
    52
    %
    
    
    5,197
    
    
    
    47
    %Total Services
    
    $
    6,566
    
    
    
    70
    %
    
    
    6,945
    
    
    
    62
    %Total Revenue
    
    $
    9,396
    
    
    
    100
    %
    
    $
    11,167
    
    
    
    100
    %
  10




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##### Table of Contents



March 31, 2011
    
    March 31, 2010Customer A
    
    $
    1,697
    
    
    
    18
    %
    
    $
    1,752
    
    
    
    16
    %Customer B
    
    
    1,550
    
    
    
    17
    %
    
    
    2,828
    
    
    
    25
    %Customer C
    
    
    1,062
    
    
    
    11
    %
    
    
    950
    
    
    
    9
    %Total
    
    $
    4,309
    
    
    
    46
    %
    
    $
    5,530
    
    
    
    50
    %
  March 31, 2011
    
    March 31, 2010RegionEMEA
    
    $
    2,125
    
    
    
    23
    %
    
    $
    3,455
    
    
    
    31
    %Americas
    
    
    635
    
    
    
    7
    %
    
    
    235
    
    
    
    2
    %Asia
    
    
    10
    
    
    
    0
    %
    
    
    12
    
    
    
    0
    %Total International
    
    
    2,770
    
    
    
    30
    %
    
    
    3,702
    
    
    
    33
    %Total Domestic
    
    
    6,626
    
    
    
    70
    %
    
    
    7,465
    
    
    
    67
    %Total Revenue
    
    $
    9,396
    
    
    
    100
    %
    
    $
    11,167
    
    
    
    100
    %
 10. COMPREHENSIVE INCOME
 Three Months EndedMarch 31, 2011
    
    March 31, 2010Net Loss
    
    $
    (1,177
    )
    
    $
    (1,663
    )Foreign currency translation
    
    
    (29
    )
    
    
    421Comprehensive Loss
    
    $
    (1,206
    )
    
    $
    (1,242
    )
 11. SUBSEQUENT EVENTS
   11




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##### Table of Contents



Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion should be read in conjunction with the Unaudited Condensed Consolidated
Financial Statements and Notes thereto appearing elsewhere in this report. Additionally, when used
in this form 10-Q unless the context requires otherwise, the terms we, our, and us refer to
Tollgrade Communications, Inc.
 CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995.
   Overview
   12




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Our Customers
  Backlog
  13




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##### Table of Contents



RESULTS OF OPERATIONS
 THREE MONTHS ENDED MARCH 31, 2011 COMPARED TO THREE MONTHS ENDED MARCH 31, 2010
 Revenues
 March 31, 2011
    
    
    March 31, 2010
    
    
    Change
    
    
    %System Test Products
    
    $
    1,630
    
    
    $
    2,430
    
    
    $
    (800
    )
    
    
    -33
    %MCU
    
    
    1,142
    
    
    
    1,776
    
    
    $
    (634
    )
    
    
    -36
    %Other
    
    
    58
    
    
    
    16
    
    
    $
    42
    
    
    
    263
    %Total Products
    
    
    2,830
    
    
    
    4,222
    
    
    $
    (1,392
    )
    
    
    -33
    %Managed Services
    
    
    1,697
    
    
    
    1,748
    
    
    $
    (51
    )
    
    
    -3
    %Other Services
    
    
    4,869
    
    
    
    5,197
    
    
    $
    (328
    )
    
    
    -6
    %Total Services
    
    
    6,566
    
    
    
    6,945
    
    
    $
    (379
    )
    
    
    -5
    %Total Revenue
    
    $
    9,396
    
    
    $
    11,167
    
    
    $
    (1,771
    )
    
    
    -16
    %
    Gross Profit
  14




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Selling and Marketing Expenses
 March 31, 2011
    
    
    March 31, 2010
    
    
    Change
    
    
    %Employee Costs
    
    $
    960
    
    
    $
    1,502
    
    
    $
    (542
    )
    
    
    -36
    %Travel Expenses
    
    
    167
    
    
    
    207
    
    
    
    (40
    )
    
    
    -19
    %Consulting
    
    
    150
    
    
    
    137
    
    
    
    13
    
    
    
    9
    %Other
    
    
    113
    
    
    
    217
    
    
    
    (104
    )
    
    
    -48
    %Total
    
    $
    1,390
    
    
    $
    2,063
    
    
    $
    (673
    )
    
    
    -33
    %
  General and Administrative Expenses
 March 31, 2011
    
    
    March 31, 2010
    
    
    Change
    
    
    %Employee Costs
    
    $
    821
    
    
    $
    913
    
    
    $
    (92
    )
    
    
    -10
    %Stock Compensation
    
    
    81
    
    
    
    415
    
    
    
    (334
    )
    
    
    -80
    %Bad Debt Expense
    
    
    75
    
    
    
    0
    
    
    
    75
    
    
    
    100
    %Legal & Professional Fees
    
    
    1,890
    
    
    
    260
    
    
    
    1,630
    
    
    
    627
    %Other
    
    
    642
    
    
    
    630
    
    
    
    12
    
    
    
    2
    %Total
    
    $
    3,509
    
    
    $
    2,218
    
    
    $
    1,291
    
    
    
    58
    %
   15




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##### Table of Contents



Research and Development Expenses
 March 31, 2011
    
    
    March 31, 2010
    
    
    Change
    
    
    %Employee Costs
    
    $
    1,416
    
    
    $
    1,889
    
    
    $
    (473
    )
    
    
    -25
    %Professional Fees
    
    
    142
    
    
    
    336
    
    
    
    (194
    )
    
    
    -58
    %Other
    
    
    216
    
    
    
    135
    
    
    
    81
    
    
    
    60
    %Total
    
    $
    1,774
    
    
    $
    2,360
    
    
    $
    (586
    )
    
    
    -25
    %
  Severance Expenses
  Other (Expense)/Income
  Income Taxes
   LIQUIDITY AND CAPITAL RESOURCES
  16




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##### Table of Contents



COMMITMENTS AND CONTRACTUAL OBLIGATIONS
   MoreLess than 1
    
    
    
    
    
    
    3-5
    
    
    than 5Total
    
    
    year
    
    
    1-3 years
    
    
    years
    
    
    yearsOperating Lease Obligations
    
    $
    3,658
    
    
    $
    831
    
    
    $
    1,199
    
    
    $
    814
    
    
    $
    814Severance Obligation
    
    
    273
    
    
    
    273Uncertain Tax Obligations
    
    
    904
    
    
    
    
    
    
    
    904Pension Obligations
    
    
    863
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    863Total
    
    $
    5,698
    
    
    $
    1,104
    
    
    $
    2,103
    
    
    $
    814
    
    
    $
    1,677
  17




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##### Table of Contents



Application of Critical Accounting Policies
     
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   18




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##### Table of Contents



Item 4. CONTROLS AND PROCEDURES
   
 PART II. OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  
    
    Steven Tencza vs. Edward H. Kennedy, et al.(Case No. GD-11-003755 (Derivative) and
Case No. GD-11-006284 (Class Action)) and Vladimir Gusinsky Revocable Trust vs. Edward H.
Kennedy, et al.(Case No. GD-11-003908 (Derivative) and Case No. GD-11-006285 (Class
Action)), which were filed on February 24, 2011 and on March 1, 2011, respectively, in the
Court of Common Pleas of Allegheny County, Pennsylvania;
    
    Equity Benefit Partners vs. Edward H. Kennedy, et al.(Case No. 11-10364), filed in the
Court of Common Pleas of Butler County, Pennsylvania on March 18, 2011; and
    
    Margaret W. Crouthamel vs. Edward H. Kennedy, et al., filed in the U.S. District Court
for the Western District of Pennsylvania (Case No. 2:11-cv-00403-RCM) on March 28, 2011.
 In
re Tollgrade Communications, Inc. Derivative and Class Action Litigation Vladimir Gusinsky Revocable Trust Tencza Equity Benefit Partners
 19




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##### Table of Contents



Item 1A. RISK FACTORS
  
 Item 6. EXHIBITS
 (a)
    
    Exhibits:
  ExhibitNumber
    
    Description2.1
    
    Agreement and Plan of Merger, dated as of February 21,
2011, by and among Talon Merger Sub, Inc., a
Pennsylvania corporation, Talon Holdings, Inc., a
Delaware corporation, and Tollgrade Communications,
Inc., a Pennsylvania corporation, filed as Exhibit 2.1
to the Companys report on Form 8-K filed with the SEC
on February 25, 2011.10.1
    
    Second Amendment to Agreement, dated as of February 20,
2011, by and between Tollgrade Communications, Inc., a
Pennsylvania corporation, and Michael D. Bornak, filed
as Exhibit 10.1 to the Companys report on Form 8-K
filed with the SEC on February 25, 2011.10.2
    
    First Amendment to Agreement, dated as of February 20,
2011, by and between Tollgrade Communications, Inc., a
Pennsylvania corporation, and Edward H. Kennedy, filed
as Exhibit 10.2 to the Companys report on Form 8-K
filed with the SEC on February 25, 2011.10.3
    
    Summary of 2011 Commission Program for Robert H. King,
filed as Exhibit 10.26 to the Companys Annual Report on
Form 10-K filed with the SEC on March 10, 2011 (the
2010 10-K).10.4
    
    Amendment dated February 20, 2011 to Agreement in effect
between the Company and Gregory M. Nulty, filed as
Exhibit 10.34 to the Companys 2010 10-K.10.5
    
    Amendment dated February 20, 2011 to Agreement in effect
between the Company and Jennifer M. Reinke, filed as
Exhibit 10.35 to the Companys 2010-10-K.31.1
    
    Certification of Chief Executive Officer, filed herewith.31.2
    
    Certification of Chief Financial Officer, filed herewith.32
    
    Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18.U.S.C. Section 350, filed herewith.
 
 20




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##### Table of Contents



SIGNATURES
  Tollgrade Communications, Inc.(Registrant)Dated: May 10, 2011/s/ Edward H. KennedyEdward H. KennedyChief Executive Officer and PresidentDated: May 10, 2011/s/ Michael D. BornakMichael D. BornakChief Financial Officer and Treasurer
 21




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description2.1
    
    Agreement and Plan of Merger, dated as of February 21,
2011, by and among Talon Merger Sub, Inc., a
Pennsylvania corporation, Talon Holdings, Inc., a
Delaware corporation, and Tollgrade Communications,
Inc., a Pennsylvania corporation, filed as Exhibit 2.1
to the Companys report on Form 8-K filed with the SEC
on February 25, 2011.10.1
    
    Second Amendment to Agreement, dated as of February 20,
2011, by and between Tollgrade Communications, Inc., a
Pennsylvania corporation, and Michael D. Bornak, filed
as Exhibit 10.1 to the Companys report on Form 8-K
filed with the SEC on February 25, 2011.10.2
    
    First Amendment to Agreement, dated as of February 20,
2011, by and between Tollgrade Communications, Inc., a
Pennsylvania corporation, and Edward H. Kennedy, filed
as Exhibit 10.2 to the Companys report on Form 8-K
filed with the SEC on February 25, 2011.10.3
    
    Summary of 2011 Commission Program for Robert H. King,
filed as Exhibit 10.26 to the Companys Annual Report on
Form 10-K filed with the SEC on March 10, 2011 (the
2010 10-K).10.4
    
    Amendment dated February 20, 2011 to Agreement in effect
between the Company and Gregory M. Nulty, filed as
Exhibit 10.34 to the Companys 2010 10-K.10.5
    
    Amendment dated February 20, 2011 to Agreement in effect
between the Company and Jennifer M. Reinke, filed as
Exhibit 10.35 to the Companys 2010-10-K.31.1
    
    Certification of Chief Executive Officer, filed herewith.31.2
    
    Certification of Chief Financial Officer, filed herewith.32
    
    Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18.U.S.C. Section 350, filed herewith.
 22