Catapult Communications Reports Fourth Quarter Fiscal Year 2007 Results

MOUNTAIN VIEW, Calif., Nov. 8 /PRNewswire-FirstCall/ -- Catapult Communications Corporation today reported that revenues for its fourth fiscal quarter ended September 30, 2007 were $10.7 million, compared to $13.8 million in the comparable quarter in fiscal 2006. Revenues in the fourth fiscal quarter of 2006 included recognition of approximately $5.0 million in backlog from previous periods that had been delayed due to engineering issues.

After non-cash, pre-tax stock option costs of approximately $1 million, the Company reported a net loss of $1.7 million or $0.13 per diluted share in the three months ended September 30, 2007. In the same period a year ago, the Company reported a net loss of approximately $11.1 million, or $0.76 per diluted share, after approximately $0.9 million in non-cash, pre-tax stock option expenses, $3.7 million in pre-tax impairment, inventory obsolescence and restructuring charges, and a $7.6 million valuation allowance recorded against its U.S. deferred tax assets. No such charges or valuation allowances were recorded in the three months ended September 30, 2007.

In the fourth quarter of fiscal year 2007, the Company's combined cash, cash equivalent and short term investment position decreased by approximately $0.8 million to $62.2 million. The Company generated approximately $0.8 million in positive cash flow from operations in the quarter and repurchased 217,643 shares at a total cost of approximately $1.6 million. This reduced the remaining number of shares authorized for repurchase to 1,318,765 at September 30, 2007. The Company's Board of Directors has since authorized an increase to 1,500,000 in the number of shares available for repurchase at November 6, 2007.

"Overall, we have seen a gradual improvement in business conditions," said Dr. Richard A. Karp, Catapult's Chairman and CEO. "Over time, we also see the prospect of further improvement in the demand for our test products, driven by adoption of new technologies such as IMS, WiMax and LTE."

Catapult Communications will be discussing its fourth quarter results on a conference call today, beginning at 5:15 p.m. Eastern/2:15 p.m. Pacific. Please dial [phone] or [phone] and provide conference ID# 82285078 to access the call. The conference call will also be broadcast from http://www.catapult.com/.

A replay of this teleconference will be available on the Company's website for one year following the conference call. A digital recording will be provided by telephone two hours after the completion of the conference call through midnight on November 15, 2007. To access the replay, please dial [phone] or [phone] and enter conference ID# 30297847.

About Catapult Communications

Catapult Communications is a leading supplier of advanced digital telecom test systems to global equipment manufacturers and service providers, including Alcatel-Lucent, Ericsson, Motorola, NEC, NTT DoCoMo, Nortel and Nokia Siemens Networks. The Catapult DCT2000(R) and MGTS(R) systems deliver superior high-end test solutions for hundreds of protocols and variants - spanning IMS, WiMAX, 4G/3G/2.5G/2G UMTS, VoIP, GPRS, SS7, Intelligent Network, ATM, ISDN and other network environments. The Company is committed to providing testing tools that are at the forefront of the telecom technology curve.

Catapult is headquartered at 160 South Whisman Road, Mountain View, CA 94041. Tel: [phone]. International offices are located in the U.K., Ireland, Germany, France, Finland, Sweden, Canada, Japan, China, Australia, India and the Philippines. Information about Catapult Communications can be found on the Web at http://www.catapult.com/.

Forward Looking Statements

The statements in this press release regarding the Company's business conditions and the demand for its test products are forward-looking statements. These statements are subject to various risks and uncertainties that could cause actual results to differ from those forecasted. Such risks include delays in the rate of adoption of new technologies, the Company's inability to develop products to address those technologies, competitive product offerings, including those developed by the Company's customers, and the Company's dependence on a limited number of customers. For other factors that may cause actual results to differ from those projected, please refer to the Company's Form 10-K, Forms 10-Q and other filings with the Securities and Exchange Commission.

For investor information contact: Leigh Salvo, Investor Relations [phone] Communications Corporation CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) For the three For the twelve months ended months ended September 30, September 30, 2007 2006 2007 2006 Revenues: Products $7,626 $9,928 $25,090 $32,372 Services 3,080 3,902 14,251 15,012 Total revenues 10,706 13,830 39,341 47,384 Cost of revenues: Products 1,493 1,938 5,311 5,513 Services 734 885 3,101 3,811 Amortization of purchased technology 12 2,029 49 2,543 Total cost of revenues 2,239 4,852 8,461 11,867 Gross profit 8,467 8,978 30,880 35,517 Operating expenses: Research and development 3,601 3,594 13,349 13,652 Sales and marketing 4,292 4,136 16,701 17,341 General and administrative 2,343 3,508 9,102 10,647 Restructuring Costs - 359 - 359 Total operating expenses 10,236 11,597 39,152 41,999 Operating loss (1,769) (2,619) (8,272) (6,482) Interest income 796 826 3,268 2,817 Other income (expense), net 48 (67) 1,795 (11) Loss before income taxes (925) (1,860) (3,209) (3,676) Provision for income taxes 777 9,216 1,212 6,990 Net loss $(1,702) $(11,076) $(4,421) $(10,666) Net loss per share: Basic $(0.13) $(0.76) $(0.32) $(0.72) Diluted $(0.13) $(0.76) $(0.32) $(0.72) Shares used in per share calculation: Basic 13,587 14,617 13,849 14,736 Diluted 13,587 14,617 13,849 14,736 Catapult Communications Corporation CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) September 30, September 30, 2007 2006 ASSETS Current Assets: Cash, cash equivalents and short-term investments $62,242 $70,134 Accounts receivable, net 7,015 9,696 Inventories 2,485 3,484 Other current assets 1,863 1,677 Total current assets 73,605 84,991 Property and equipment, net 1,585 1,912 Goodwill and other intangibles 49,537 49,610 Other assets 3,066 294 Total assets $127,793 $136,807 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued liabilities $5,573 $4,592 Deferred revenue 6,206 7,703 Total current liabilities 11,779 12,295 Deferred revenue, long-term portion 389 256 Deferred taxes and other liabilities, long-term 3,849 2,524 Total liabilities 16,017 15,075 Total stockholders' equity 111,776 121,732 Total liabilities and stockholders' equity $127,793 $136,807