##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from          to
 Commission file number 0-24701
 CATAPULT COMMUNICATIONS CORPORATION
  Nevada
    
    77-0086010(State or other jurisdiction of
    
    (I.R.S. EmployerIncorporation or organization)
    
    Identification Number)
 160 South Whisman Road
Mountain View, California 94041
 (650) 960-1025
  þ o
  Large accelerated filer
o
    
    Accelerated filer
þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



CATAPULT COMMUNICATIONS CORPORATION
 FORM 10-Q
 INDEX
 PagePart IFinancial InformationItem 1. Financial StatementsUnaudited Condensed Consolidated Balance Sheets as of March 31, 2008 and September 30, 2007
    
    
    1Unaudited Condensed Consolidated Statements of Operations for the three and six months ended
March 31, 2008 and 2007
    
    
    2Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2008
and 2007
    
    
    3Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    17Item 4. Controls and Procedures
    
    
    17Part IIOther InformationItem 1A. Risk Factors
    
    
    18Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 4. Submission of Matters to a Vote of Security Holders
    
    
    19Item 6. Exhibits
    
    
    19Signature
    
    
    20EXHIBIT 10.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32




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##### Table of Contents



Part I. Financial Information
 
 Item 1. Financial Statements
 CATAPULT COMMUNICATIONS CORPORATION
 
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    September 30,2008
    
    
    2007(In thousands, except shareand par value data)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    39,387
    
    
    $
    23,351Short-term investments
    
    
    11,024
    
    
    
    38,891Accounts receivable, net of allowances of $16 and $61 as of March 31, 2008 and
September 30, 2007, respectively
    
    
    10,569
    
    
    
    7,015Inventories
    
    
    2,171
    
    
    
    2,485Deferred tax assets
    
    
    260
    
    
    
    96Prepaid expenses and other current assets
    
    
    1,982
    
    
    
    1,767Total current assets
    
    
    65,393
    
    
    
    73,605Long-term investments
    
    
    6,750
    
    
    
    Property and equipment, net
    
    
    1,424
    
    
    
    1,585Goodwill
    
    
    49,394
    
    
    
    49,394Other intangibles, net
    
    
    107
    
    
    
    143Other assets
    
    
    2,247
    
    
    
    2,243Total assets
    
    $
    125,315
    
    
    $
    126,970LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    645
    
    
    $
    617Accrued liabilities
    
    
    5,814
    
    
    
    4,956Deferred revenue
    
    
    7,935
    
    
    
    6,206Total current liabilities
    
    
    14,394
    
    
    
    11,779Deferred revenue, long-term
    
    
    137
    
    
    
    406Deferred taxes and other liabilities, long-term
    
    
    4,695
    
    
    
    3,009Total liabilities
    
    
    19,226
    
    
    
    15,194Commitments and contingencies (Note 11)Stockholders Equity:Common stock, $0.001 par value, 40,000,000 shares
authorized; 13,032,006 and 13,427,073 issued and
outstanding as of March 31, 2008 and September 30, 2007,
respectively
    
    
    13
    
    
    
    13Additional paid-in capital
    
    
    48,095
    
    
    
    48,661Accumulated other comprehensive income
    
    
    1,170
    
    
    
    1,026Retained earnings
    
    
    56,811
    
    
    
    62,076Total stockholders equity
    
    
    106,089
    
    
    
    111,776Total liabilities and stockholders equity
    
    $
    125,315
    
    
    $
    126,970
  1




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CATAPULT COMMUNICATIONS CORPORATION
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three months ended
    
    
    Six months endedMarch 31,
    
    
    March 31,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands, except per share amounts)Revenues:Products
    
    $
    6,925
    
    
    $
    6,069
    
    
    $
    13,695
    
    
    $
    12,625Services
    
    
    3,010
    
    
    
    3,524
    
    
    
    6,541
    
    
    
    7,535Total revenues
    
    
    9,935
    
    
    
    9,593
    
    
    
    20,236
    
    
    
    20,160Cost of revenues:Products
    
    
    1,225
    
    
    
    1,290
    
    
    
    2,473
    
    
    
    2,418Services
    
    
    752
    
    
    
    748
    
    
    
    1,550
    
    
    
    1,602Amortization of purchased technology
    
    
    12
    
    
    
    12
    
    
    
    24
    
    
    
    24Total cost of revenues
    
    
    1,989
    
    
    
    2,050
    
    
    
    4,047
    
    
    
    4,044Gross profit
    
    
    7,946
    
    
    
    7,543
    
    
    
    16,189
    
    
    
    16,116Operating expenses:Research and development
    
    
    3,466
    
    
    
    3,270
    
    
    
    7,019
    
    
    
    6,285Sales and marketing
    
    
    4,241
    
    
    
    3,941
    
    
    
    8,586
    
    
    
    8,232General and administrative
    
    
    2,106
    
    
    
    2,194
    
    
    
    4,278
    
    
    
    4,478Restructuring costs (Note 13)
    
    
    2,197
    
    
    
    
    
    
    
    2,197
    
    
    
    Total operating expenses
    
    
    12,010
    
    
    
    9,405
    
    
    
    22,080
    
    
    
    18,995Operating loss
    
    
    (4,064
    )
    
    
    (1,862
    )
    
    
    (5,891
    )
    
    
    (2,879
    )Interest income
    
    
    592
    
    
    
    840
    
    
    
    1,336
    
    
    
    1,647Other income, net (Note 12)
    
    
    235
    
    
    
    1,835
    
    
    
    365
    
    
    
    1,828Income (loss) before income taxes
    
    
    (3,237
    )
    
    
    813
    
    
    
    (4,190
    )
    
    
    596Provision for income taxes
    
    
    113
    
    
    
    749
    
    
    
    331
    
    
    
    976Net income (loss)
    
    $
    (3,350
    )
    
    $
    64
    
    
    $
    (4,521
    )
    
    $
    (380
    )Net income (loss) per share  basic
    
    $
    (0.26
    )
    
    $
    0.00
    
    
    $
    (0.34
    )
    
    $
    (0.03
    )Net income (loss) per share  diluted
    
    $
    (0.26
    )
    
    $
    0.00
    
    
    $
    (0.34
    )
    
    $
    (0.03
    )Shares used in per share calculation:Basic
    
    
    13,119
    
    
    
    13,970
    
    
    
    13,247
    
    
    
    14,037Diluted
    
    
    13,119
    
    
    
    14,025
    
    
    
    13,247
    
    
    
    14,037
  2




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CATAPULT COMMUNICATIONS CORPORATION
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six months endedMarch 31,2008
    
    
    2007(In thousands)Cash flows from operating activities:Net loss as reported
    
    $
    (4,521
    )
    
    $
    (380
    )Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:Depreciation and amortization of property and equipment
    
    
    491
    
    
    
    432Amortization of purchased technology
    
    
    24
    
    
    
    24Amortization of other acquisition related intangibles
    
    
    12
    
    
    
    12Provision for doubtful accounts
    
    
    (45
    )
    
    
    1Deferred income taxes
    
    
    136
    
    
    
    250Stock based compensation expenses
    
    
    1,479
    
    
    
    1,370Gain on disposal of fixed assets
    
    
    
    
    
    
    (15
    )Change in assets and liabilities:Accounts receivable
    
    
    (3,598
    )
    
    
    1,097Inventories
    
    
    321
    
    
    
    (37
    )Prepaid expenses and other current assets
    
    
    (208
    )
    
    
    (84
    )Other assets
    
    
    2
    
    
    
    (1,805
    )Accounts payable
    
    
    430
    
    
    
    (10
    )Accrued liabilities
    
    
    1,800
    
    
    
    567Deferred revenue
    
    
    1,456
    
    
    
    294Net cash provided by (used in) operating activities
    
    
    (2,221
    )
    
    
    1,716Cash flows from investing activities:Sale and maturities of investments
    
    
    44,861
    
    
    
    55,683Purchase of investments
    
    
    (23,697
    )
    
    
    (45,888
    )Purchase of property and equipment
    
    
    (307
    )
    
    
    (354
    )Proceeds from sale of property and equipment
    
    
    
    
    
    
    60Net cash provided by investing activities
    
    
    20,857
    
    
    
    9,501Cash flows from financing activities:Repurchase of common stock
    
    
    (2,772
    )
    
    
    (4,482
    )Proceeds from exercise of stock options
    
    
    
    
    
    
    10Net cash used in financing activities
    
    
    (2,772
    )
    
    
    (4,472
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    172
    
    
    
    168Net increase in cash and cash equivalents
    
    
    16,036
    
    
    
    6,913Cash and cash equivalents, beginning of period
    
    
    23,351
    
    
    
    22,462Cash and cash equivalents, end of period
    
    $
    39,387
    
    
    $
    29,375Supplemental disclosure of cash flow information:Unrealized gain (loss) on investments
    
    $
    2
    
    
    $
    (2
    )Cash paid for income taxes
    
    
    303
    
    
    
    193Non-cash investing activities:Purchase of property and equipment on account
    
    $
    
    
    
    $
    12
  3




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CATAPULT COMMUNICATIONS CORPORATION
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1THE COMPANY AND BASIS OF PRESENTATION
   Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109
 NOTE 2RECENT ACCOUNTING PRONOUNCEMENTS
 Fair Value Measurements. Application of FASB Statement No. 157 to FASB Statement
No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements Purposes of
Lease Classification or Measurement under Statement 13 Effective Date of
FASB Statement No. 157
 Business Combinations,
 4




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Noncontrolling Interests in
Consolidated Financial Statementsan amendment of ARB No. 51.
 Disclosures about Derivative
Instruments and Hedging Activities-an amendment of SFAS No. 133
 NOTE 3  STOCK-BASED COMPENSATION
 Share-Based Payment,
  Three months ended
    
    
    Six months endedMarch 31,
    
    
    March 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Stock-Based Compensation Expense:Cost of sales  products
    
    $
    40
    
    
    $
    28
    
    
    $
    90
    
    
    $
    63Cost of sales  services
    
    
    54
    
    
    
    51
    
    
    
    121
    
    
    
    117Research and development expense
    
    
    160
    
    
    
    177
    
    
    
    361
    
    
    
    324Selling and marketing expense
    
    
    138
    
    
    
    142
    
    
    
    306
    
    
    
    314General and administrative expense
    
    
    263
    
    
    
    244
    
    
    
    601
    
    
    
    552Total stock-based compensation expense
    
    
    655
    
    
    
    642
    
    
    
    1,479
    
    
    
    1,370Tax effect on stock-based compensation expenses
    
    
    (4
    )
    
    
    (4
    )
    
    
    (8
    )
    
    
    (9
    )Net effect on net income (loss)
    
    $
    651
    
    
    $
    638
    
    
    $
    1,471
    
    
    $
    1,361
 5




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Employee Stock Option PlansThree months ended
    
    Six months endedMarch 31,
    
    March 31,2008
    
    2007
    
    2008
    
    2007Expected life of option

    4.26 years

    4.12 years

    4.26 years

    4.48 yearsExpected volatility
    
    
    55.0
    %
    
    
    61.2
    %
    
    
    55.0
    %
    
    
    61.6
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Risk-free interest rate
    
    
    2.39
    %
    
    
    4.82
    %
    
    
    3.36
    %
    
    
    4.60
    %
  6




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NOTE 4  BASIC AND DILUTED NET INCOME (LOSS) PER SHARE
 Earnings per Share
 Three months ended
    
    
    Six months endedMarch 31,
    
    
    March 31,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands, except per share amounts)Net income (loss), as reported for basic and diluted earnings per share
    
    $
    (3,350
    )
    
    $
    64
    
    
    $
    (4,521
    )
    
    $
    (380
    )Weighted average shares outstanding
    
    
    13,119
    
    
    
    13,970
    
    
    
    13,247
    
    
    
    14,037Dilutive options
    
    
    
    
    
    
    55
    
    
    
    
    
    
    
    Weighted average shares assuming dilution
    
    
    13,119
    
    
    
    14,025
    
    
    
    13,247
    
    
    
    14,037Net income (loss) per share:Basic
    
    $
    (0.26
    )
    
    $
    0.00
    
    
    $
    (0.34
    )
    
    $
    (0.03
    )Diluted
    
    $
    (0.26
    )
    
    $
    0.00
    
    
    $
    (0.34
    )
    
    $
    (0.03
    )
  Three months ended
    
    Six months endedMarch 31,
    
    March 31,2008
    
    2007
    
    2008
    
    2007(In thousands)Common stock options
    
    
    2,657
    
    
    
    2,285
    
    
    
    2,643
    
    
    
    2,235
 NOTE 5  INVENTORIES
  March 31,
    
    
    September 30,2008
    
    
    2007(In thousands)Inventories:Raw materials
    
    $
    1,716
    
    
    $
    2,235Work-in-process
    
    
    94
    
    
    
    23Finished goods
    
    
    361
    
    
    
    227$
    2,171
    
    
    $
    2,485
 NOTE 6  GOODWILL AND INTANGIBLE ASSETS
   7




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NOTE 7  INCOME TAXES
  Accounting for Uncertainty in Income an interpretation of FASB Statement No. 109
   8




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NOTE 8  STOCKHOLDERS EQUITY
 Comprehensive Income (loss)
  Three months ended
    
    
    Six months endedMarch 31,
    
    
    March 31,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)Net income (loss), as reported
    
    $
    (3,350
    )
    
    $
    64
    
    
    $
    (4,521
    )
    
    $
    (380
    )Currency translation adjustment
    
    
    160
    
    
    
    49
    
    
    
    143
    
    
    
    177Unrealized gains (losses) on investments
    
    
    4
    
    
    
    (1
    )
    
    
    2
    
    
    
    (2
    )Comprehensive income (loss)
    
    $
    (3,186
    )
    
    $
    112
    
    
    $
    (4,376
    )
    
    $
    (205
    )
 Stock Option Plans
  Repurchase of Common Stock
  NOTE 9  GEOGRAPHICAL INFORMATION
  9




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Europe, Middle
    
    
    
    
    
    Asia
    
    ConsolidatedAmericas
    
    East & Africa
    
    Japan
    
    Pacific
    
    Total(In thousands)Six months ended March 31, 2008Revenues from unaffiliated customers
    
    $
    4,260
    
    
    $
    5,117
    
    
    $
    7,946
    
    
    $
    2,913
    
    
    $
    20,236Six months ended March 31, 2007Revenues from unaffiliated customers
    
    $
    5,256
    
    
    $
    5,984
    
    
    $
    5,746
    
    
    $
    3,174
    
    
    $
    20,160As of March 31, 2008Goodwill
    
    $
    22,896
    
    
    $
    26,498
    
    
    $
    
    
    
    $
    
    
    
    $
    49,394Long-lived assets
    
    $
    784
    
    
    $
    232
    
    
    $
    221
    
    
    $
    187
    
    
    $
    1,424As of September 30, 2007Goodwill
    
    $
    22,896
    
    
    $
    26,498
    
    
    $
    
    
    
    $
    
    
    
    $
    49,394Long-lived assets
    
    $
    937
    
    
    $
    323
    
    
    $
    223
    
    
    $
    102
    
    
    $
    1,585
   NOTE 10  CUSTOMER INFORMATION
  Percentage of Accounts Receivable as of
    
    Percentage of RevenuesThree months ended
    
    Six months endedMarch 31,
    
    September 30,
    
    March 31,
    
    March 31,2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007Customer A
    
    
    20
    %
    
    
    
    
    
    
    22
    %
    
    
    11
    %
    
    
    13
    %
    
    
    Customer B
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    %
    
    
    
    
    
    
    16
    %Customer C
    
    
    11
    %
    
    
    
    
    
    
    15
    %
    
    
    14
    %
    
    
    13
    %
    
    
    10
    %Customer D
    
    
    12
    %
    
    
    22
    %
    
    
    10
    %
    
    
    
    
    
    
    11
    %
    
    
    Customer E
    
    
    12
    %
    
    
    
    
    
    
    15
    %
    
    
    
    
    
    
    
    
    
    
    Customer F
    
    
    10
    %
    
    
    33
    %
    
    
    
    
    
    
    
    
    
    
    12
    %
    
    
    
 NOTE 11  CONTINGENCIES
 Accounting for Contingencies
 NOTE 12  LEGAL SETTLEMENT
  10




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NOTE 13  RESTRUCTURING COSTS
  NOTE 14  LONG-TERM INVESTMENTS
    
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Forward-looking Statements
   
    
    the variable size and timing of individual purchases by our customers, including delays
in customer purchasing decisions or orders due to customer consolidation;
    
    the absence of long-term customer purchase contracts;
    
    seasonal factors that may affect capital spending by customers, such as the varying
fiscal year ends of customers and the reduction in business during the summer months,
particularly in Europe;
 11




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
    
    the relatively long sales cycles for our products;
    
    competitive conditions in our markets;
    
    exchange rate fluctuations;
    
    the timing of the introduction and market acceptance of new products or product
enhancements by us and by our customers, competitors and suppliers;
    
    costs associated with developing and introducing new products;
    
    product life cycles;
    
    changes in the level of operating expenses relative to revenues;
    
    product defects and other quality problems;
    
    customer order deferrals in anticipation of new products;
    
    supply interruptions;
    
    changes in global or regional economic conditions or in the telecommunications
industry;
    
    asset impairment, valuation allowance and restructuring charges;
    
    changes in our tax rate;
    
    changes in the mix of products sold;
    
    changes in the regulatory environment; and
    
    adverse results from litigation.
   Overview
 Our Business and Products
 ® ®
 Conditions and Trends in Our Industry
   12




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Summary of Our Financial Performance in the Second Quarter of Fiscal 2008
   Critical Accounting Policies and Estimates
 Accounting for Uncertainty in Income Taxes, an interpretation of
FASB Statement No. 109
 Results of Operations
  Three months ended
    
    Six months endedMarch 31,
    
    March 31,2008
    
    2007
    
    2008
    
    2007Revenues:Products
    
    
    69.7
    %
    
    
    63.3
    %
    
    
    67.7
    %
    
    
    62.6
    %Services
    
    
    30.3
    
    
    
    36.7
    
    
    
    32.3
    
    
    
    37.4Total revenues
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Cost of revenues:Products
    
    
    12.3
    
    
    
    13.5
    
    
    
    12.2
    
    
    
    12.0Services
    
    
    7.6
    
    
    
    7.8
    
    
    
    7.7
    
    
    
    8.0Amortization of purchased technology
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1Total cost of revenues
    
    
    20.0
    
    
    
    21.4
    
    
    
    20.0
    
    
    
    20.1Gross profit
    
    
    80.0
    
    
    
    78.6
    
    
    
    80.0
    
    
    
    79.9Operating expenses:Research and development
    
    
    34.9
    
    
    
    34.1
    
    
    
    34.7
    
    
    
    31.2Sales and marketing
    
    
    42.7
    
    
    
    41.1
    
    
    
    42.4
    
    
    
    40.8General and administrative
    
    
    21.2
    
    
    
    22.8
    
    
    
    21.1
    
    
    
    22.2Restructuring costs
    
    
    22.1
    
    
    
    
    
    
    
    10.9
    
    
    
    Total operating expenses
    
    
    120.9
    
    
    
    98.0
    
    
    
    109.1
    
    
    
    94.2Operating loss
    
    
    (40.9
    )
    
    
    (19.4
    )
    
    
    (29.1
    )
    
    
    (14.3
    )Interest income
    
    
    6.0
    
    
    
    8.8
    
    
    
    6.6
    
    
    
    8.2Other income, net
    
    
    2.3
    
    
    
    19.1
    
    
    
    1.8
    
    
    
    9.1Income (loss) before income taxes
    
    
    (32.6
    )
    
    
    8.5
    
    
    
    (20.7
    )
    
    
    3.0Provision for income taxes
    
    
    1.1
    
    
    
    7.8
    
    
    
    1.6
    
    
    
    4.9Net income (loss)
    
    
    (33.7
    )%
    
    
    0.7
    %
    
    
    (22.3
    )%
    
    
    (1.9
    )%Gross profit margin on products
    
    
    82.3
    %
    
    
    78.7
    %
    
    
    81.9
    %
    
    
    80.9
    %Gross profit margin on services
    
    
    75.0
    %
    
    
    78.8
    %
    
    
    76.3
    %
    
    
    78.7
    %
  13




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##### Table of Contents



Comparison of the Three-Month Periods Ended March 31, 2008 and 2007
 Revenues
   
    
    revenues in the Americas decreased by 46% to $1.3 million;
    
    revenues in Europe, the Middle East and Africa decreased by 25% to $1.8 million;
    
    revenues in Japan increased by 55% to $5.5 million; and
    
    revenues in Asia Pacific outside Japan increased by 1% to $1.4 million.
  Cost of Revenues
   Research and Development
  Sales and Marketing
  General and Administrative
  Restructuring Charge
  Interest income
  14




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##### Table of Contents



Other income, net
  Provision for income taxes
  Comparison of the Six-Month Periods Ended March 31, 2008 and 2007
 Revenues
   
    
    revenues in the Americas decreased by 19% to $4.3 million;
    
    revenues in Europe, the Middle East and Africa decreased by 14% to $5.1 million;
    
    revenues in Japan increased by 38% to $7.9 million; and
    
    revenues in Asia Pacific outside Japan decreased by 8% to $2.9 million.
  Cost of Revenues
   Research and Development
  Sales and Marketing
  15




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##### Table of Contents



General and Administrative
  Restructuring Charge
  Interest income
  Other income, net
  Provision for income taxes
  Liquidity and Capital Resources
    Payments Due by PeriodLess Than
    
    
    1-3
    
    
    3-5
    
    
    More thanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 Years(In millions)Operating leases
    
    $
    4.3
    
    
    $
    1.7
    
    
    $
    1.9
    
    
    $
    0.7
    
    
    $
    Unconditional purchase obligations
    
    
    0.2
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    4.5
    
    
    $
    1.9
    
    
    $
    1.9
    
    
    $
    0.7
    
    
    $
    
  16




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##### Table of Contents



Recent Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Exchange Risk and Derivative Financial Instruments
    Interest Rate Risk
  
 Item 4. Controls and Procedures
 Evaluation of disclosure controls and procedures.
  17




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##### Table of Contents



Internal Control-Integrated Framework
   Changes in internal control over financial reporting.
  
 Part II. Other Information
 
 Item 1A. Risk Factors
  Risks Related to Our Business
 Our investment in auction rate securities exposes us to risks that may affect the liquidity of
these investments and result in losses.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  18




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##### Table of Contents



Repurchases of Common StockTotal Number of
    
    
    Maximum NumberTotal
    
    
    
    
    
    
    Shares Purchased
    
    
    of Shares that MayNumber
    
    
    Average
    
    
    as Part of Publicly
    
    
    Yet Be Purchasedof Shares
    
    
    Price Paid
    
    
    Announced
    
    
    Under the PlansPurchased
    
    
    Per Share (1)
    
    
    Plans or Programs
    
    
    Or ProgramsJanuary 1, 2008  January 31, 2008
    
    
    139,850
    
    
    $
    7.08
    
    
    
    139,850
    
    
    
    1,215,862February 1, 2008  February 29, 2008
    
    
    22,970
    
    
    
    6.79
    
    
    
    22,970
    
    
    
    1,192,892March 1, 2008  March 31, 2008
    
    
    60,200
    
    
    
    5.75
    
    
    
    60,200
    
    
    
    1,132,692Total for the Quarter
    
    
    223,020
    
    
    $
    6.69
    
    
    
    223,020
    
    
    
    1,132,692
 
 (1)
    
    Average price paid per share includes brokerage commission  
 Item 4. Submission of Matters to a Vote of Security Holders
            
 Item 6. Exhibits
 10.1
    
    1998 Stock Plan, as amended February 5, 2008.31.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32
    
    Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
 19




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##### Table of Contents



SIGNATURE
  CATAPULT COMMUNICATIONS CORPORATIONDate: May 8, 2008
    By:
    /s/ Christopher A. StephensonChristopher A. StephensonVice President and Chief Financial Officer

(Principal Financial Officer) 20