Catapult Communications Reports Strong Revenue Growth in First Quarter Fiscal 2005

Catapult Communications Reports Strong Revenue Growth in First Quarter Fiscal 2005 MOUNTAIN VIEW, Calif., Jan. 27 /PRNewswire-FirstCall/ -- Catapult Communications Corporation (NASDAQ:CATT) today reported revenues and net income for its first fiscal quarter ended December 31, 2004. Total revenues for the quarter were $15.9 million, an increase of 44% over revenues of $11.0 million reported for the comparable quarter a year ago. Net income for the first fiscal quarter was $3.8 million, a 317% increase over net income of $0.9 million in the first quarter of fiscal 2004. Gross profit margin was 86%, three percentage points higher than in the first quarter of fiscal 2004 due primarily to economies of scale in the cost of both products and services. Diluted earnings per share were $0.25, a 257% increase from $0.07 in the first quarter of fiscal 2004. "I am extremely pleased to report that every one of our major regions met or exceeded its orders target in the first quarter of this fiscal year. As a result, our overall revenue, earnings, and cash flow all surpassed our initial expectations and we enter the March quarter with a significantly stronger backlog than usual," said Dr. Richard A. Karp, Chairman and CEO. BUSINESS OUTLOOK "The March quarter is normally less predictable for us due to the back-end loaded nature of Japanese fiscal year-end spending. However, this year there is more likelihood that year-over-year growth will occur due to the higher than usual backlog entering the quarter. As a result, I currently expect that revenue in the second quarter of fiscal 2005 will be $18.9 million and net income per diluted share will be $0.34," added Karp. Catapult Communications will be discussing its first quarter results on a conference call today, beginning at 5:15 p.m. Eastern/2:15 p.m. Pacific. Please dial 800-299-9630 to access the conference call. International and local participants can dial 617-786-2904. Please reference Catapult Communications or reservation number 25825201. The conference call will also be available on the Internet from the Investor section of the Company's website. A replay of this teleconference will be available on the Company's website for one year following the conference call. A digital recording will also be available by telephone one hour after the completion of the conference call through midnight on February 3, 2005. To access the replay, please dial 888-286-8010 or 617-801-6888 and enter reservation number 60700568. 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 statement in this press release regarding the Company's expected revenues and net income for its second fiscal quarter is a forward-looking statement. This statement is 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. For Investor Relations Contact: Investor Relations 650-314-1000 ir@catapult.com Catapult Communications Corporation CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (unaudited) For the three months ended December 31, 2004 2003 Revenues: Products $12,373 $8,421 Services 3,498 2,628 Total revenues 15,871 11,049 Cost of revenues: Products 1,242 1,001 Services 821 720 Amortization of purchased technology 171 171 Total cost of revenues 2,234 1,892 Gross profit 13,637 9,157 Operating expenses: Research and development 2,971 2,652 Sales and marketing 4,703 3,950 General and administrative 1,906 1,676 Total operating expenses 9,580 8,278 Operating income 4,057 879 Interest income 224 194 Interest expense -- (88) Other income 7 104 Income before income taxes 4,288 1,089 Provision for income taxes 475 174 Net income $3,813 $915 Net income per share: Basic $0.26 $0.07 Diluted 0.25 0.07 Shares used in per share calculation: Basic 14,600 12,904 Diluted 15,147 13,196 Catapult Communications Corporation CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) December 31, September 30, 2004 2004 ASSETS Current Assets: Cash and cash equivalents $42,513 $18,320 Short-term investments 14,464 34,350 Accounts receivable, net 14,805 10,110 Inventory 2,617 2,380 Other current assets 2,249 2,623 Total current assets 76,648 67,783 Property and equipment, net 2,384 2,640 Goodwill and other intangibles 54,211 54,466 Other assets 3,322 3,382 Total assets $136,565 $128,271 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued liabilities $6,940 $7,048 Deferred revenue - current portion 8,177 5,388 Total current liabilities 15,117 12,436 Deferred revenue - long-term portion 304 70 Total liabilities 15,421 12,506 Total stockholders' equity 121,144 115,765 Total liabilities and stockholders' equity $136,565 $128,271 Source: Catapult Communications Corporation CONTACT: Leigh Salvo, Investor Relations, +1-650-314-1000, or ir@catapult.com, for Catapult Communications Corporation Web site: http://www.catapult.com/ ------- Profile: International Entertainment