EXHIBIT 99.1
Investor Relations:
Leigh Salvo
(650)314-1000
ir@catapult.com
CATAPULT COMMUNICATIONS REPORTS RECORD REVENUES
AND NET INCOME FOR FISCAL YEAR 2004
MOUNTAIN VIEW, CALIFORNIA OCTOBER 28, 2004 - Catapult Communications Corporation
(Nasdaq: CATT) today reported record revenues of $58 million for the fiscal year
ended September 30, 2004, an increase of 28% over fiscal 2003. Net income for
the fiscal year ended September 30, 2004 was a record $13.9 million or $0.95 per
diluted share. This compares to net income of $4.4 million or $0.33 per diluted
share for fiscal year 2003.
For the fourth quarter ended September 30, 2004, revenues were $15.4 million, an
increase of 51% over the fourth quarter of fiscal 2003. Net income for the
fourth fiscal quarter was $5.5 million or $0.38 per diluted share. This compares
to net income of $1.2 million or $0.09 per diluted share in the same quarter the
previous year.
Catapult recorded a tax benefit of $1.8 million or $0.12 per diluted share in
the fourth quarter of fiscal 2004. This reflects primarily a reduction in
accrued tax liability upon the successful completion of an IRS audit. In the
fourth quarter of fiscal 2003, a tax benefit of $1.7 million or $0.13 per
diluted share was recorded, reflecting the net impact of losses incurred in the
U.S. and profits generated in other jurisdictions, as well as an additional $1.5
million in tax benefits from the favorable resolution of international tax
issues.
"In the fourth quarter, our results once again exceeded our expectations, due to
stronger than anticipated performance in three of our four regions," said Dr.
Richard A. Karp, Catapult's Chairman and CEO. "Revenues in Europe were up 248%
year-over-year. In Japan, the rate of technological change - the primary driver
for our business - continues to be high. In our Rest of World region, which
includes China, where we recently opened an office, revenues were up 184%.
Although it will take time to build a strong presence in China, I continue to
view this as a high potential area."
During the fourth quarter of fiscal 2004, Catapult completed a stock offering
that included 200,000 primary shares. The offering also included 1,081,250
secondary shares which Tekelec received upon conversion of $17.3 million in
notes payable which had been issued as part of the purchase price for Catapult's
acquisition of Tekelec's network diagnostic business in 2002. The offering also
included 437,187 secondary shares sold by Dr. Karp and by Nancy Karp, a director
of Catapult, of which 137,187 shares represented an over-allotment option
exercised by the underwriters shortly after quarter end.
Catapult's combined cash and short-term investment position increased by $6.2
million to $52.7 million in the fourth quarter of 2004. Net proceeds from the
offering accounted for $3.0 million of this increase. With the conversion of the
notes payable, Catapult is once again debt-free.
BUSINESS OUTLOOK
"The current uncertainty in our North American region appears to be offset by
the exceptional growth in our other worldwide regions," stated Karp. "As a
result, I currently forecast that revenues in the first quarter of fiscal year
2005 will be $15.2 million, a 38% increase from the same quarter of our last
fiscal year, and that our diluted earnings per share will be 23 cents, a 229%
improvement from the same quarter a year ago."
Catapult Communications will discuss its fourth quarter results on a conference
call today, beginning at 5:15 p.m. Eastern/2:15 p.m. Pacific. Please dial (800)
901-5231 to access the conference call. International and local participants can
dial (617) 786-2961. Please reference Catapult Communications or reservation
number 64630540. The conference call will also be available on the Internet from
the Investor section of the Company's website.
An online replay of this teleconference will be available on the Company's
website for one week following the conference call. A digital recording will
also be available one hour after the completion of the conference call through
midnight on November 13, 2004. To access the replay, please dial (888) 286-8010
or (617) 801-6888 and enter reservation number 34051403.
ABOUT CATAPULT
Catapult Communications is a leading supplier of advanced digital telecom test
systems to global equipment manufacturers and service providers. The Catapult
DCT2000(R) and MGTS(R) systems deliver superior high-end test solutions for
hundreds of protocols and variants, spanning 3G, VoIP, GPRS, SS7, Intelligent
Network, ATM, ISDN and other network environments.
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, Canada, Japan, China and Australia.
FORWARD LOOKING STATEMENTS
The statements in this press release regarding the Company's business outlook
and its projected revenues and earnings per share 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
the Company's dependence on a limited number of customers and the resulting
effect of delays or cancellations by such customers of their orders; inability
by the Company to meet its production and/or product development schedules; the
demand for telecommunications equipment in general, and, in particular, for
software-based telecommunications test systems; and new and enhanced product
offerings by competitors. 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.
CATAPULT COMMUNICATIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
For the three months ended For the year ended
September 30, September 30,
2004 2003 2004 2003
-------- -------- -------- --------
Revenues:
Products $ 12,084 $ 7,502 $ 45,703 $ 35,344
Services 3,323 2,704 12,315 9,880
-------- -------- -------- --------
Total revenues 15,407 10,206 58,018 45,224
-------- -------- -------- --------
Cost of revenues:
Products 1,430 1,370 5,192 5,652
Services 1,152 698 3,570 2,825
Amortization of purchased technology 172 172 686 686
-------- -------- -------- --------
Total cost of revenues 2,754 2,240 9,448 9,163
-------- -------- -------- --------
-------- -------- -------- --------
Gross profit 12,653 7,966 48,570 36,061
-------- -------- -------- --------
Operating expenses:
Research and development 3,047 3,107 11,740 13,519
Sales and marketing 4,230 3,605 17,075 14,506
General and administrative 1,754 1,631 6,885 6,679
Restructuring costs -- 730 -- 730
-------- -------- -------- --------
Total operating expenses 9,031 9,073 35,700 35,434
-------- -------- -------- --------
Operating income 3,622 (1,107) 12,870 627
Interest income, net 159 104 480 436
Other income (expense) (13) 546 148 1,216
-------- -------- -------- --------
Income before income taxes 3,768 (457) 13,498 2,279
Provision for (benefit from) income taxes (1,775) (1,682) (413) (2,086)
-------- -------- -------- --------
Net income $ 5,543 $ 1,225 $ 13,911 $ 4,365
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Net income per share:
Basic $ 0.42 $ 0.10 $ 1.06 $ 0.34
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Diluted $ 0.38 $ 0.09 $ 0.95 $ 0.33
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Shares used in per share calculation:
Basic 13,357 12,879 13,100 12,948
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Diluted 14,744 13,121 14,556 13,113
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CATAPULT COMMUNICATIONS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, September 30,
2004 2003
-------- --------
ASSETS
Current Assets:
Cash and cash equivalents $ 18,320 $ 11,770
Short-term investments 34,350 18,901
Accounts receivable, net 10,110 10,598
Inventory 2,380 2,325
Other current assets 2,623 3,503
-------- --------
Total current assets 67,783 47,097
Property and equipment, net 2,640 3,384
Goodwill and other intangibles 54,466 55,487
Other assets 3,382 1,121
-------- --------
Total assets $128,271 $107,089
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 7,048 $ 7,218
Deferred revenue - current portion 5,388 5,576
Convertible notes payable -- 17,674
-------- --------
Total current liabilities 12,436 30,468
Deferred Revenue - long-term portion 70
Total stockholders' equity 115,765 76,621
-------- --------
Total liabilities and
stockholders' equity $128,271 $107,089
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