Tollgrade Communications to acquire wireline test system unit of Emerson Network Power

February 9, 2006

2 Min Read

PITTSBURGH -- Tollgrade Communications, Inc. (Nasdaq: TLGD - News) today announced it has reached a definitive agreement to purchase the test system business unit of Emerson Network Power, Energy Systems, North America, Inc., a subsidiary of Emerson (NYSE: EMR - News).

The Emerson Test System business (formerly a part of RelTec and later, Marconi) will add a largely international portfolio of customers for which Emerson currently provides wireline testing software and hardware products for DSL and traditional POTS applications. Tollgrade will acquire substantially all the assets of this business and assume certain specified liabilities in a cash transaction valued at approximately $5.5 million, subject to adjustment for working capital and other items. Tollgrade preliminarily expects that the acquisition may be initially dilutive to GAAP earnings per share, but accretive by the end of fiscal year 2006, and could add to 2006 revenues in the range of $7 million to $8 million. The closing is subject to customary closing conditions, and is currently expected to be completed no later than mid-March, 2006.

"With nearly one-half of the world's communications systems still untested, the addition of Emerson's Test System business and team will expand our global footprint and will add to our solid position of embedded access lines," said Mark B. Peterson, Tollgrade's President and Chief Executive Officer. "This aggregation of systems and customers is a strategic move to strengthen our base as we evolve and deliver our next generation network assurance technology to a larger addressable global market of telecom and cable customers offering voice, data and video services," he added.

Tollgrade, recognized for its customer responsiveness, is a market leader in creating and supporting centralized test systems for telecom and cable companies around the world. It currently deploys test systems in about one- third of the world's existing access lines; the Emerson acquisition would increase Tollgrade's embedded base of telco access lines by approximately 25%, largely in the international market.

This acquisition will support two strategic initiatives for Tollgrade -- first, to protect its leadership position in the core network assurance markets as the access network evolves to support triple play services; secondly, to expand its global reach.

Thirteen Emerson engineers and system test staff, located in Warrenville, Illinois and Ft. Worth, Texas are expected to remain with the test system business and join Tollgrade upon completion of the transaction.

Tollgrade Communications Inc.

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