EX-99.3

Exhibit 99.3

Tollgrade Communications, Inc.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On August 1, 2007, Tollgrade Communications, Inc. (hereafter “Tollgrade” or the “Company”) completed its acquisition of the assets of the Teradyne Broadband Test Systems (“Broadband Test Systems”). Broadband Test Systems was a division of Teradyne, Inc. (the “Teradyne”). Under the terms of the purchase agreement, Tollgrade paid $11.3 million in cash to Teradyne plus the assumption of specific liabilities. Additional cash payments of approximately $0.4 million were made for transaction costs.

The acquisition was recorded under the purchase method of accounting in accordance with the provisions of SFAS No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and other Intangible Assets.” The preliminary allocation of purchase price used in the unaudited pro forma condensed combined financial statements is based on management’s estimates of the fair market value of the assets acquired and liabilities assumed. These estimates are subject to change upon the final valuation of the Broadband Test Systems acquired assets and liabilities.

The unaudited pro forma condensed combined Balance Sheet of Tollgrade and Broadband Test Systems as of June 30, 2007 is presented as if the Broadband Test Systems acquisition and related cash payments occurred on June 30, 2007.

The unaudited pro forma condensed combined Statement of Operations of Tollgrade and Broadband Test Systems for the year ended December 31, 2006 and the six months ended June 30, 2007 are presented as if the Broadband Test Systems acquisition and related cash payment had taken place on January 1, 2006.

The unaudited pro forma condensed combined financial statements are based on the historical financial statements of Tollgrade and Broadband Test Systems after giving effect to cash payments to finance the acquisition, as well as the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined financial statements are not intended to represent or be indicative of the consolidated results of operations or financial position of the Company that would have been reported had the acquisition and cash payments been completed as of the dates presented, and should not be taken as representative of the future results of operations or financial position of the Company. This information should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements. The unaudited pro forma statements of operations do not reflect any operating efficiencies and cost savings that the Company may achieve with respect to the combined companies.

The unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial statements and accompanying notes of Tollgrade’s annual reported filed on Form 10-K for the year ended December 31, 2006 and quarterly reports on Form 10-Q for the quarters ended March 31, 2007 and June 30, 2007.

Tollgrade Communications, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of June 30, 2007
(In thousands)

Broadband Test

Tollgrade

Systems

Pro Forma

ASSETS

Historical

Adjustments

Combined

Current assets:

Cash and cash equivalents

54,171

—

(11,700

)(A)

42,471

Short-term investments

12,761

Accounts receivable:

Trade, net of allowance for doubtful accounts of $447 in 2007

9,994

4,921

14,915

Other

1,460

Inventories

11,888

500

249

(B)

12,637

Prepaid expenses and deposits

958

267

1,225

Receivable from officer

145

Deferred and refundable income taxes

2,262

Assets held for sale

589

4,273

(4,273

)(C)

589

Total current assets

94,228

9,961

(15,724

)

88,465

Property and equipment, net

3,209

723

)(N)

3,923

Deferred tax assets

—

264

(264

)(D)

Intangibles

40,400

8,549

(E)

48,949

(101

)(N)

(101

)

Goodwill

23,836

—

(N)

23,836

Other assets

664

(55

)(F)

664

Total assets

162,337

11,003

(7,604

)

165,736

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

1,215

240

1,455

Accrued warranty

2,040

Accrued expenses

1,308

796

462

(M)

2,566

Accrued salaries and wages

428

1,008

(1,008

)(F)

428

Accrued royalties payable

305

Deferred revenue and customer advances

2,984

1,260

(101

) (G)

4,143

Total current liabilities

8,280

3,304

(647

)

10,937

Deferred tax liabilities

3,386

Retirement plans liabilities

—

742

(H)

742

Total liabilities

11,666

3,304

15,065

Commitments and contingencies

Shareholders’ equity/Parent Company equity

150,671

7,699

(7,699

) (I)

150,671

Total liabilities and shareholders’ equity

162,337

11,003

(7,604

)

165,736

The accompanying notes are an integral part of the unaudited pro forma condensed combined financial statements.

Tollgrade Communications, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the year ended December 31, 2006
(In thousands, except per share data)

Broadband Test

Tollgrade

Systems

Pro Forma

Historical

Adjustments

Combined

Revenues:

Products

52,358

6,145

—

58,503

Services

13,036

14,743

27,779

65,394

20,888

86,282

Cost of sales:

Products

25,277

5,176

30,453

Services

4,543

6,996

11,539

Amortization

3,419

1,777

(J)(E)

5,196

Inventory write-down

4,308

37,547

12,172

1,777

51,496

Gross profit

27,847

8,716

(1,777

)

34,786

Operating expenses:

Selling and marketing

10,552

4,914

15,466

General and administrative

7,981

2,981

10,962

Research and development

13,276

6,267

19,543

Restructuring expense

1,840

1,924

3,764

Total operating expense

33,649

16,086

49,735

Loss from operations

(5,802

)

(7,370

)

(1,777

)

(14,949

)

Other income:

Interest income

2,755

—

(590

)(K)

2,165

Total other income

2,755

—

(590

)

2,165

Loss before income taxes

(3,047

)

(7,370

)

(2,367

)

(12,784

)

Benefit for income taxes

(1,213

)

(108

)

—

(L)

(1,321

)

Net loss

(1,834

)

(7,262

)

(2,367

)

(11,463

)

EARNINGS PER SHARE INFORMATION:

Weighted average shares of common stock and equivalents:

Basic

13,239

—

13,239

Diluted

13,239

—

13,239

Net loss per common share:

Basic

(0.14

)

—

(0.87

)

Diluted

(0.14

)

—

(0.87

)

The accompanying notes are an integral part of the unaudited pro forma condensed combined financial statements.

Tollgrade Communications, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the six months ended June 30, 2007
(In thousands, except per share data)

Broadband Test

Tollgrade

Systems

Pro Forma

Historical

Adjustments

Combined

Revenues:

Products

21,449

2,714

—

24,163

Services

5,774

7,510

13,284

27,223

10,224

37,447

Cost of sales:

Products

9,503

1,241

(59

)(O)

10,685

Services

1,760

3,899

(183

)(O)

5,476

Amortization

1,138

—

889

(J)(E)

2,027

12,401

5,140

647

18,188

Gross profit

14,822

5,084

(647

)

19,259

Operating expenses:

Selling and marketing

4,510

1,344

(28

)(O)

5,826

General and administrative

4,448

1,233

(33

)(O)

5,648

Research and development

5,945

1,751

(145

)(O)

7,551

Restructuring expense

594

170

—

764

Total operating expense

15,497

4,498

(206

)

19,789

(Loss) income from operations

(675

)

586

(441

)

(530

)

Other income:

Interest income

1,516

—

(295

)(K)

1,221

Total other income

1,516

—

(295

)

1,221

Income (loss) before income taxes

841

586

(736

)

691

Provision (benefit) for income taxes

280

194

(287

)(L)

187

Net income (loss)

561

392

(449

)

504

EARNINGS PER SHARE INFORMATION:

Weighted average shares of common stock and equivalents:

Basic

13,257

—

13,257

Diluted

13,480

—

13,480

Net income per common share:

Basic

0.04

—

0.04

Diluted

0.04

—

0.04

The accompanying notes are an integral part of the unaudited pro forma condensed combined financial statements.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
TOLLGRADE COMMUNICATIONS, INC.

1. Acquisition of the business of Broadband Test Systems of Teradyne, Inc.

On August 1, 2007, Tollgrade Communications, Inc. (hereafter “Tollgrade” or the “Company”) completed its acquisition of the business of Teradyne Broadband Test Systems (“Broadband Test Systems”). Broadband Test Systems was a division of Teradyne, Inc. (“Teradyne”). Under the terms of the purchase agreement, Tollgrade paid $11.3 million in cash to Teradyne plus the assumption of specific liabilities. Additional cash payments of approximately $0.4 million were made for transaction costs.

Preliminary Purchase Price
The total preliminary purchase price is estimated at $11.7 million and consists of $11.3 million paid to Teradyne and cash paid of $0.4 million for transaction costs. We do not foresee any additional cash payments to Teradyne as a result of the finalization of the net assets acquired.

Preliminary Purchase Price Allocation
The total preliminary purchase price will be allocated to the Broadband Test Systems tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of June 30, 2007. Based upon a preliminary valuation, the total preliminary purchase price was allocated as follows (in thousands):


Net assets of Broadband Test Systems — historical basis	$	7,699
Adjustments for assets not acquired:
Assets held for sale		(4,273	)
Deferred tax asset		(264	)
Long-term other assets		(55	)
Adjustments for liabilities not assumed:
Accrued salaries and wages		1,008
Retirement plan liability assumed		(742	)


Net assets acquired by Tollgrade		3,373

Adjustments to record net assets at fair value:
Fair value of inventories, net		249
Fair value of intangible assets		8,549
Fair value of deferred revenue		101
Acquisition related reserves		(462	)


Fair value of net assets acquired		11,810
Purchase price		11,700


Excess fair value of acquired assets over costs	$	(110	)(N)

The preliminary allocation of the purchase price is based upon a preliminary valuation, as described below, and Tollgrade’s estimates and assumptions are subject to change upon final valuation.

Tangible Assets:
Tangible assets were recorded at their respective carrying amounts, except for inventory. Tollgrade increased Broadband Test Systems’ historical net carrying value of certain inventory by $249,000 in the pro forma condensed

combined pro forma Balance Sheet to reflect its fair market value. The property and equipment, net are recorded at carrying value, which the Company believes approximates fair value.

Identifiable Intangible Assets:
Identifiable intangible assets acquired include post warrant service agreements, technology, trade name and patents. Maintenance contracts represent the underlying relationships and agreements with customers of Broadband Test Systems’ installed base.

The fair value of intangible assets was based on a preliminary valuation using either the discounted cash flow method or the relief from royalty method as well as discussions with Broadband Test Systems management and a review of certain transaction-related documents and forecasts. The rate utilized to discount net cash flows to their present values ranged from 18% to 24%. This discount rate was determined after consideration of similar companies’ required rates of return, utilizing Capital Asset Pricing Model.

Estimated useful lives were based on historical experience with technology life cycles, product roadmaps, branding strategy, historical and projected maintenance renewal rates, historical treatment of Tollgrade’s acquisition-related intangible assets and Tollgrade’s intended future use of the intangible assets.

Deferred Revenue:
Tollgrade reduced the Broadband Test Systems’ historical deferred revenue carrying value by $101,000 in the unaudited pro forma condensed combined balance sheet to reflect its fair market value.

Pension Obligation:
Tollgrade acquired the pension obligation of three employees based in Germany (the “Pension Plan”). Tollgrade determined the pension obligation in accordance with Statement of Financial Accounting Standards No. 158 (“SFAS 158”)- Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans. The Pension Plan is unfunded.

3. Pro Forma Adjustments

The following pro forma adjustments are included in the unaudited pro forma condensed combined Balance Sheet and Statements of Operations for the respective periods ended December 31, 2006 and June 30, 2007:

	(A)		To record the cash paid to Teradyne of $11.3 million and cash paid of $0.4 million for transaction costs.

	(B)		To increase the carrying value of inventories to estimated selling prices less the cost of disposal and selling effort.

	(C)		To remove assets that are classified as held for sale but were not part of the acquisition by Tollgrade. The assets held for sale represent the former Broadband Test Systems corporate headquarters and operations facility owned by Teradyne. Tollgrade did not purchase the corporate headquarters and operations facility.

	(D)		The transaction is an acquisition of assets, therefore historical tax basis does not transfer to Tollgrade and as such, deferred taxes must be eliminated.

	(E)		To record the difference between the preliminary fair value and the historical amount of intangible assets (in thousands):


	Historical		Preliminary								Estimated
	Amount		Fair				Annual		Six Months		Useful
	-Net-		Value		Increase		Amortization		Amortization		Life
Post warranty service agreements	$	—	$	6,250	$	6,250	$	1,323	$	662	3-48 years
Technology		—		920		920		89		45	10 years
Customer relationships		—		576		576		130		65	10 years
Other		—		803		803		235		117	3-10 years

Total identifiable intangible assets		—	$	8,549	$	8,549	$	1,777	$	889

Broadband Test Systems historical amortization								—		—

Net increase in amortization							$	1,777	$	889

The annual amortization is the estimated expense for the first 12 months. The amortization expense will change in subsequent years as the expense is being calculated based on the usage of the asset which differs from straight-line amortization. Refer to (J).

	(F)		To eliminate other long-term assets and accrued salaries and wages that were excluded from the asset purchase agreement.

	(G)		To adjust the historical carrying value of deferred revenue to fair market value.

	(H)		To record the obligation associated with the German Pension Plan. This obligation was assumed by Tollgrade.

	(I)		To eliminate Broadband Test Systems’ historical parent company equity.

	(J)		To record amortization expense related to intangible assets acquired.

			Amortization expense was estimated for finited lived intangible asset using an accelerated amortization expense which reflects the pattern in which the economic benefits of the assets are consumed or otherwise used. Software-related intangible assets are amortized based on the greater of the amount computed using the ratio that current gross revenues bear to the total of current and anticipated future gross revenues for that product, or straight-line method over the remaining estimated economic life. All amortization of intangible assets is recorded in cost of goods sold.

	(K)		This adjustment represent interest income foregone at a weighted-average rate of 5.0% due to cash paid for the acquisition and transaction costs.

	(L)		This adjustment represents the income tax benefit related to pro forma adjustments recorded in the unaudited condensed combined statements of operations assuming a statutory rate of 39%. We also establish a 100% valuation allowance for the tax benefit recorded as of December 31, 2006 as we do not believe that the tax benefit would be realized.

	(M)		In connection with the acquisition, Tollgrade established a plan to relocate employees and to close or relocate certain facilities consisting of $0.2 million for employee relocation and $0.3 million for lease termination costs.

(N)

Based on our preliminary allocation of purchase price, the net assets acquired exceeded the total purchase price of $11.7 million. The excess fair value was allocated on a pro rata basis reducing the value assigned to property and equipment, net and intangible assets.

Excess Fair Value of Acquired Assets Over Costs Allocation (in thousands):


	Broadband Test
	Systems		Pro Forma		Excess FV			Pro Forma
	Historical Basis		Adjustment		Allocation			Combined
Property and equipment, net	$	723	$	—	$	(9	)	$	714
Intangible assets		—		8,549		(101	)		8,448


Total	$	723	$	8,549	$	(110	)	$	9,162

(O)

To remove occupancy and other related costs associated with assets that are classified as held for sale but were not part of the acquisition by Tollgrade. These costs are included in the historical June 30, 2007 unaudited condensed combined statement of operations of Broadband Test Systems.