Catapult Communications (CATT) 8-K Catapult Communications Reports Full Unaudited Fourth Quarter and Fiscal Year 2006 Operating Results

For investor information contact:
Leigh Salvo, Investor Relations
(650) 314-1000
ir@catapult.com

CATAPULT COMMUNICATIONS REPORTS FULL UNAUDITED
FOURTH QUARTER AND FISCAL YEAR 2006 OPERATING RESULTS

Mountain View, CA—December 6, 2006—Catapult Communications Corporation (Nasdaq: CATT) today reported that it has completed its accounting for income taxes and finalized its unaudited results for the quarter and year ended September 30, 2006.

As previously announced, revenues for the Company’s fourth fiscal quarter ended September 30, 2006 were $13.8 million, and a pre-tax loss of $1.9 million was recorded after reflecting a $359,000 restructuring charge as well as non-cash charges totaling $4.2 million for stock option costs, increased inventory obsolescence and impairment of long-lived assets.

The Company’s provision for income taxes in the fourth quarter of fiscal 2006 was $9.2 million primarily as a result of a full valuation allowance recorded against its U.S. deferred tax assets.

The resulting net loss in the fourth quarter of fiscal year 2006 was $11.1 million or $0.76 per diluted share, compared to a net profit of $2.5 million or $0.17 per diluted share in the fourth quarter of fiscal 2005.

About Catapult Communications

Catapult Communications is a leading supplier of advanced digital telecom test systems to global equipment manufacturers and service providers, including Lucent, Motorola, NEC, NTT DoCoMo and Nortel. The Catapult DCT2000® and MGTS® systems deliver superior high-end test solutions for hundreds of protocols and variants — spanning IMS, 3G, VoIP, GPRS, SS7, Intelligent Network, 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: 650-960-1025. International offices are located in the U.K., Germany, France, Finland, Sweden, Canada, Japan, China, Australia and India. Information about Catapult Communications can be found on the Web at www.catapult.com.

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Catapult Communications Corporation
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

	For the three months						For the twelve months
	ended						ended
	September 30,						September 30,
	2006			2005			2006			2005
Revenues:
Products	$	9,928		$	12,100		$	32,372		$	50,441
Services		3,902			3,651			15,012			14,507
Total revenues		13,830			15,751			47,384			64,948
Cost of revenues:
Products		1,938			1,859			5,513			5,766
Services		885			838			3,811			3,434
Amortization and impairment of purchased technology		2,029			171			2,543			686
Total cost of revenues		4,852			2,868			11,867			9,886
Gross profit		8,978			12,883			35,517			55,062
Operating expenses:
Research and development		3,594			3,039			13,652			12,445
Sales and marketing		4,136			4,465			17,341			18,401
General and administrative		3,508			3,130			10,647			9,008
Restructuring costs		359			—			359			—
Total operating expenses		11,597			10,634			41,999			39,854
Operating income (loss)		(2,619	)		2,249			(6,482	)		15,208
Interest income		826			442			2,817			1,364
Other income (expense), net		(67	)		(28	)		(11	)		(148	)
Income (loss) before income taxes		(1,860	)		2,663			(3,676	)		16,424
Provision for income taxes		9,216			141			6,990			2,276
Net income (loss)	$	(11,076	)	$	2,522		$	(10,666	)	$	14,148
Net income (loss) per share:
Basic	$	(0.76	)	$	0.17		$	(0.72	)	$	0.96
Diluted	$	(0.76	)	$	0.17		$	(0.72	)	$	0.94
Shares used in per share calculation:
Basic		14,617			14,772			14,736			14,677
Diluted		14,617			14,977			14,736			15,019

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Catapult Communications Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

	September 30,		September 30,
	2006		2005
ASSETS
Current Assets:
Cash, cash equivalents and short-term investments	$	70,134	$	68,807
Accounts receivable, net		9,696		14,724
Inventories		3,484		3,104
Other current assets		1,677		2,004
Total current assets		84,991		88,639
Property and equipment, net		1,912		1,693
Goodwill and other intangibles		49,610		53,445
Other assets		294		3,983
Total assets	$	136,807	$	147,760
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	$	4,592	$	7,055
Deferred revenue		7,703		7,697
Total current liabilities		12,295		14,752
Deferred taxes and other long term liabilities		2,524		—
Deferred revenue long-term portion		256		485
Total liabilities		15,075		15,237
Total stockholders’ equity		121,732		132,523
Total liabilities and stockholders’ equity	$	136,807	$	147,760

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