<PAGE>



                                    FORM 10-Q

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
(Mark One)

/X/   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                For the quarterly period ended December 31, 2000

                                       OR

/ /    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934


Commission file number 0-24701

                       CATAPULT COMMUNICATIONS CORPORATION
             (Exact name of Registrant as specified in its charter)


                   NEVADA                                      77-0086010
      (State or other jurisdiction of                       (I.R.S. Employer
       incorporation or organization)                    Identification Number)

                             160 SOUTH WHISMAN ROAD
                         MOUNTAIN VIEW, CALIFORNIA 94041

                                 (650) 960-1025

          (Address, including zip code, and telephone number, including
                   area code, of principal executive offices)



         Indicate by check mark whether the registrant (1) has filed all reports
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No

         As of January 31, 2001, there were 12,904,145 shares of the
Registrant's Common Stock, $0.001 par value, outstanding.



<PAGE>



                       CATAPULT COMMUNICATIONS CORPORATION
                                    FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>


PART I--FINANCIAL INFORMATION                                                                     PAGE
-----------------------------                                                                     ----
<S>                                                                                               <C>
Item 1.  Condensed Consolidated Financial Statements (unaudited)

Condensed Consolidated Balance Sheets at December 31, 2000 and September 30, 2000                    3

Condensed Consolidated Income Statements for the three months ended December 31,
         2000 and 1999                                                                               4

Condensed Consolidated Statements of Cash Flows for the three months ended
         December 31, 2000 and 1999                                                                  5

Notes to Condensed Consolidated Financial Statements                                                 6

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                                                   8

Item 3.  Quantitative and Qualitative Disclosures About Market Risk                                 15

PART II--OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K                                                           15

SIGNATURES                                                                                          16

</TABLE>

                                       2
<PAGE>



PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                       CATAPULT COMMUNICATIONS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)



<TABLE>
<CAPTION>

                                                                                               DECEMBER 31,  SEPTEMBER 30,
                                                                                                  2000           2000
                                                                                                  ----           ----
                                                    ASSETS                                    (unaudited)
<S>                                                                                            <C>            <C>
Current Assets:
   Cash and cash equivalents ............................................................      $  1,746       $  5,200
   Short-term investments ...............................................................        52,218         43,437
   Accounts receivable, net .............................................................         3,756          5,630
   Inventories, net .....................................................................         1,514          1,399
   Deferred income taxes ................................................................         1,263          1,263
   Prepaid expenses .....................................................................           648            691
   Other current assets .................................................................           111             --
                                                                                               --------       --------

      Total current assets ..............................................................        61,256         57,620
Property and equipment, net .............................................................         1,527          1,529
Other assets ............................................................................           433            194
                                                                                               --------       --------
      Total assets ......................................................................      $ 63,216       $ 59,343
                                                                                               ========       ========

                                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Accounts payable .....................................................................      $    759       $    862
   Accrued liabilities ..................................................................         6,401          5,735
   Deferred revenue .....................................................................         1,935          1,859
                                                                                               --------       --------
      Total current liabilities .........................................................         9,095          8,456

Stockholders' Equity:
   Common stock .........................................................................            13             13
   Additional paid-in capital ...........................................................        20,391         20,270
   Deferred compensation ................................................................           (42)           (60)
   Retained earnings ....................................................................        33,514         30,362
   Accumulated other comprehensive income ...............................................           545            602
   Treasury stock (50,000 shares at cost) ...............................................          (300)          (300)
                                                                                               --------       --------
      Total stockholders' equity ........................................................        54,121         50,887
                                                                                               --------       --------
      Total liabilities and stockholders' equity ........................................      $ 63,216       $ 59,343
                                                                                               ========       ========
</TABLE>


            See Notes to condensed consolidated financial statements.

                                       3

<PAGE>


                       CATAPULT COMMUNICATIONS CORPORATION
                    CONDENSED CONSOLIDATED INCOME STATEMENTS
                 (in thousands, except share and per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                                 FOR THE THREE MONTHS ENDED
                                                                                                        DECEMBER 31,
                                                                                              2000                       1999
                                                                                              ----                       ----
<S>                                                                                   <C>                        <C>
      Revenues:
         Product sales .................................................              $      8,372               $      3,872
         Services ......................................................                     1,363                      1,112
                                                                                      ------------               ------------
           Total revenues ..............................................                     9,735                      4,984
                                                                                      ------------               ------------

      Cost of revenues:
         Product sales .................................................              $        679               $        460
         Services ......................................................                       150                        312
                                                                                      ------------               ------------
           Total cost of revenues ......................................                       829                        772
                                                                                      ------------               ------------
      Gross profit .....................................................                     8,906                      4,212

      Operating expenses:
         Research and development ......................................              $        979               $        615
         Sales and marketing ...........................................                     2,525                      1,990
         General and administrative ....................................                     1,237                        697
                                                                                      ------------               ------------
           Total operating expenses ....................................                     4,741                      3,302
                                                                                      ------------               ------------
      Operating income .................................................                     4,165                        910

      Interest income ..................................................                       775                        604
      Other expense, net ...............................................                       (91)                      (187)
                                                                                      ------------               ------------

      Income before income taxes .......................................                     4,849                      1,327
      Provision for income taxes .......................................                     1,697                        510
                                                                                      ------------               ------------

       Net income ......................................................              $      3,152               $        817
                                                                                      ============               ============

      Earnings per share:
        Basic ..........................................................              $       0.24               $       0.06
                                                                                      ============               ============

        Diluted ........................................................              $       0.24               $       0.06
                                                                                      ============               ============

      Shares used in per share calculation:
        Basic ..........................................................                12,870,000                 12,727,000
                                                                                      ============               ============

        Diluted ........................................................                13,178,000                 13,103,000
                                                                                      ============               ============
</TABLE>


            See Notes to condensed consolidated financial statements.

                                       4
<PAGE>



                       CATAPULT COMMUNICATIONS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                             THREE MONTHS ENDED
                                                                                                 DECEMBER 31,

                                                                                               2000         1999
                                                                                               ----         ----
<S>                                                                                          <C>          <C>
      Cash flows from operating activities:
      Net income .......................................................................     $ 3,152      $   817
      Adjustments to reconcile net income to net cash provided (used) by
         operating activities:
         Depreciation and amortization .................................................         150           98

         Amortization of deferred stock compensation ...................................          18           18
         Change in current assets and liabilities:
            Accounts receivable ........................................................       1,874        2,171
            Inventories ................................................................        (115)         (65)
            Prepaid expenses ...........................................................          43          (21)
            Other assets ...............................................................        (350)          10
            Accounts payable ...........................................................        (103)          68
            Accrued liabilities ........................................................         666       (1,142)
            Deferred revenue ...........................................................          76          255
                                                                                             -------      -------
              Net cash provided by operating activities ................................       5,411        2,209
                                                                                             -------      -------

      Cash flows from investing activities:
         Purchases of investments, net .................................................      (8,781)      (7,182)
         Purchase of property and equipment ............................................        (148)        (208)
                                                                                             -------      -------
              Net cash used by investing activities ....................................      (8,929)      (7,390)
                                                                                             -------      -------
      Cash flows from financing activities:
         Proceeds from issuance of common stock ........................................         121          111
                                                                                             -------      -------

              Net cash provided by financing activities ................................         121          111

      Unrealized gain on investment ....................................................          25         --
      Effect of exchange rate changes on cash ..........................................         (82)        (302)
                                                                                             -------      -------

      Decrease in cash and cash equivalents ............................................      (3,454)      (5,372)
      Cash and cash equivalents, beginning of period ...................................       5,200        8,486
                                                                                             -------      -------

      Cash and cash equivalents, end of period .........................................     $ 1,746      $ 3,114
                                                                                             =======      =======
</TABLE>

           See Notes to condensed consolidated financial statements.

                                       5


<PAGE>



                       CATAPULT COMMUNICATIONS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1--THE COMPANY AND BASIS OF PRESENTATION

         Catapult Communications Corporation (the "Company") designs, develops,
manufactures, markets and supports an advanced software-based test system
offering an integrated suite of testing applications for the global
telecommunications industry. The Company's advanced test systems assist its
customers in the design, integration, installation and acceptance testing of a
broad range of digital telecommunications equipment and services. The Company
has been incorporated in Nevada since June 19, 1998. The Company has operations
in the United States, Canada, the United Kingdom, Europe and Japan. The Company
conducts its business within one industry segment.

         These accompanying condensed consolidated financial statements and
related notes are unaudited. However, in the opinion of management, all
adjustments (consisting only of normal recurring adjustments) that are necessary
for the fair presentation of the financial position and results of operations
for the interim periods presented have been included. The results of operations
for such periods are not necessarily indicative of results to be expected for
any future period or the fiscal year ending September 30, 2001. These financial
statements, including the notes thereto, should be read in conjunction with the
audited financial statements for the year ended September 30, 2000, which were
included as part of the Company's Annual Report on Form 10-K for the year ended
September 30, 2000.

REVENUE RECOGNITION

Sales of the Company's product arrangements normally include hardware and
software. Certain of the Company's sales may also include installation. The
Company also offers training and maintenance services. The Company recognizes
revenue on system sales upon shipment or when installed, if installation
services are purchased, provided collection is probable. Training and
maintenance revenues are based on the Company's established history of separate
sales of training and maintenance. Training revenues are recognized at the time
the training is complete. Maintenance revenues are recognized ratably over the
term of the maintenance contract.

NOTE 2 - RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities," effective beginning in the first quarter of
2000. SFAS No. 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires companies to recognize all
derivatives as either assets or liabilities on the balance sheet and measure
those instruments at fair value. Gains or losses resulting from changes in the
values of those derivatives would be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. The Company adopted
SFAS 133 effective October 1, 2000. The adoption of SFAS 133 has not had a
material effect on the consolidated financial statements.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 ("SAB 101"), "Revenue Recognition," which provides guidance on
the recognition, presentation and disclosure of revenue in financial statements
filed with the Securities and Exchange Commission. SAB 101 outlines the basic
criteria that must be met to recognize revenue and provides guidance for
disclosures related to revenue recognition policies. The Company adopted SAB 101
effective October 1, 2000. The adoption of SAB 101 did not have a material
effect on the consolidated financial statements.


                                       6
<PAGE>


In March 2000, the Financial Accounting Standards Board issued Interpretation
No. 44 ("FIN 44") "Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of Opinion No. 25" for (a) the definition of
employee for purposes of applying Opinion No. 25, (b) the criteria for
determining whether a plan qualifies as a noncompensatory plan, (c) the
accounting consequences of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. The Company adopted FIN 44
effective July 1, 2000. The adoption of FIN 44 did not have a material impact on
the financial statements.

In various areas, including revenue recognition, accounting standards and
practices continue to evolve. The FASB's Emerging Issues Task Force continues to
address revenue related accounting issues. The management of the Company
believes it is in compliance with all of the rules and related guidance as they
currently exist. However, any changes to generally accepted accounting
principles in these areas could impact the Company's accounting for its
operations.

NOTE 3--BASIC AND DILUTED EARNINGS PER SHARE

         Basic earnings per share are computed using the weighted average number
of common shares outstanding during the period. Diluted earnings per share
include the effect of dilutive potential common shares (options) issued during
the period using the treasury stock method. The following data is presented in
thousands except share and per share data:

<TABLE>
<CAPTION>

                                                         Three months ended
                                                              December 31,
                                                           2000          1999
                                             (in thousands, except share and per share data)
<S>                                                     <C>           <C>
      Net income ..............................        $     3,152   $       817
                                                       ===========   ===========


      Weighted average shares outstanding .....         12,870,000    12,727,000
      Dilutive options ........................            308,000       376,000
                                                       -----------   -----------
      Weighted average shares assuming dilution         13,178,000    13,103,000
                                                       ===========   ===========

      Earnings per share:
      Basic ...................................        $      0.24   $      0.06
                                                       ===========   ===========

      Diluted .................................        $      0.24   $      0.06
                                                       ===========   ===========
</TABLE>


NOTE 4--COMPREHENSIVE INCOME

         The components of comprehensive income, net of tax, are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                            Three months ended
                                                               December 31,
                                                         2000                 1999
                                                         ----                 ----
<S>                                                     <C>                    <C>
      Net income ...........................            3,152                  817
      Currency translation adjustment ......              (82)                 302
      Unrealized gain on investment ........               25                   --
                                                        -----                -----
      Comprehensive income .................            3,095                1,119
                                                        =====                =====
</TABLE>

                                       7
<PAGE>

NOTE 5--INVENTORIES (in thousands)

<TABLE>
<CAPTION>
                                                                               December 31,    September 30,
                                                                                   2000            2000

<S>                                                                               <C>             <C>
      Raw Materials .......................................................       $1,307          $1,223
      Work-in-process .....................................................           83              93
      Finished goods ......................................................          124              83
                                                                                  ------          ------
                                                                                  $1,514          $1,399
                                                                                  ======          ======
</TABLE>


NOTE 6 - SEGMENT REPORTING

         The Company is organized to operate and service a single industry
segment: the design, development, manufacture, marketing and support of advanced
software-based test systems globally.

         The Company's principal geographical areas of operations, sales, income
and assets by region for the current and previous three month periods ended
December 31 were as follows (in thousands):

<TABLE>
<CAPTION>
                                                              NORTH        UK AND                       CONSOLIDATED
                                                             AMERICA       EUROPE           JAPAN          TOTAL
                                                             -------       ------           -----          -----
<S>                                                           <C>           <C>            <C>              <C>

THREE MONTHS ENDED DECEMBER 31, 2000
Sales to unaffiliated customers......................         $4,364        $1,067         $4,304           $9,735
Net income...........................................          3,008          (160)           304            3,152
Identifiable assets at December 31, 2000.............         59,554         2,339          1,323           63,216

THREE MONTHS ENDED DECEMBER 31, 1999
Sales to unaffiliated customers......................         $1,840        $1,260         $1,884           $4,984
Net income...........................................            759           (56)           114              817
Identifiable assets at December 31, 1999.............         44,946         3,111          2,527           50,584
</TABLE>


         The result of operations by geographic region includes significant
sales principally from the United States to the Company's foreign locations at
agreed upon transfer prices.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION
WITH "SELECTED CONSOLIDATED FINANCIAL DATA" AND THE COMPANY'S CONSOLIDATED
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED IN THE COMPANY'S ANNUAL REPORT
ON FORM 10-K FOR 2000.

FORWARD-LOOKING STATEMENTS

         THE FOLLOWING DISCUSSION CONTAINS STATEMENTS THAT ARE NOT HISTORICAL
FACTS BUT ARE FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE GENERALLY
IDENTIFIED BY THE USE OF FORWARD-LOOKING WORDS AND PHRASES, SUCH AS "INTENDED,"
"EXPECTS," "ANTICIPATES" AND "IS (OR ARE) EXPECTED (OR ANTICIPATED)." THESE
FORWARD-LOOKING STATEMENTS INCLUDE BUT ARE NOT LIMITED TO THOSE IDENTIFIED IN
THIS REPORT WITH AN ASTERISK (*) SYMBOL. ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE DISCUSSED IN SUCH FORWARD-LOOKING STATEMENTS, AND THE COMPANY'S
STOCKHOLDERS SHOULD CAREFULLY REVIEW THE CAUTIONARY STATEMENTS SET FORTH IN THIS
REPORT ON FORM 10-Q, INCLUDING THOSE SET FORTH UNDER THE CAPTION "FACTORS THAT
MAY AFFECT FUTURE RESULTS."

         THE COMPANY MAY FROM TIME TO TIME MAKE ADDITIONAL WRITTEN AND ORAL
FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS CONTAINED IN THE COMPANY'S
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION AND IN

                                       8
<PAGE>

ITS REPORTS TO STOCKHOLDERS. THE COMPANY DOES NOT UNDERTAKE TO UPDATE ANY
FORWARD-LOOKING STATEMENTS THAT MAY BE MADE IN THIS FORM 10-Q AND FROM TIME TO
TIME OR ON BEHALF OF THE COMPANY.

OVERVIEW

         The Company designs, develops, manufactures, markets and supports an
advanced software-based test system offering an integrated suite of testing
applications for the global telecommunications industry. The Company's family of
digital communication test systems is designed to enable equipment manufacturers
and network operators to deliver complex digital telecommunications equipment
and services more quickly and cost-effectively. The DCT product line performs a
variety of test functions, including simulation, load and stress testing,
feature verification, conformance testing and monitoring. The company maintains
an extensive library of software modules that support a large number of
protocols and variants. The DCT system consists of advanced software and
hardware running on a third-party UNIX-based workstation. In addition, the
Company offers customer support under software support contracts, as well as
installation and training.

RESULTS OF OPERATIONS

         The following table sets forth, for the periods indicated, the
percentage relationship of certain items from the Company's consolidated
statements of income to total revenues.

<TABLE>
<CAPTION>

                                                                     For the three months ended December 31,
                                                                             2000                  1999
                                                                             ----                  ----
<S>                                                                          <C>                    <C>

     Revenues:
        Product sales................................                        86.0%                  77.7%
        Services.....................................                        14.0                   22.3
                                                                            -----                  -----
          Total revenues                                                    100.0                  100.0


     Cost of revenues:
        Product sales................................                         7.0                    9.2
        Services.....................................                         1.5                    6.3
                                                                            -----                  -----
          Total cost of revenues.....................                         8.5                   15.5
                                                                            -----                  -----
     Gross profit....................................                        91.5                   84.5

     Operating expenses:
        Research and development.....................                        10.1                   12.3
        Sales and marketing..........................                        25.9                   39.9
        General and administrative...................                        12.7                   14.0
                                                                            -----                  -----
          Total operating expenses...................                        48.7                   66.2
                                                                            -----                  -----

     Operating income................................                        42.8                   18.3
     Interest income.................................                         7.9                   12.1
     Other income (expense)..........................                        (0.9)                  (3.8)
                                                                            -----                  -----

     Income before taxes.............................                        49.8                   26.6
                                                                            -----                  -----
     Provision for taxes.............................                        17.4                   10.2
                                                                            -----                  -----

     Net income......................................                        32.4%                  16.4%
                                                                            =====                  =====

     Gross margin on product sales...................                        91.9%                  88.1%
                                                                            =====                  =====

     Gross margin on services........................                        89.0%                  71.9%
                                                                            =====                  =====
</TABLE>

                                       9
<PAGE>

THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999

REVENUES

         Revenues increased by approximately 95% from $5.0 million for the three
months ended December 31, 1999 to $9.7 million for the three months ended
December 31, 2000. Over the same period, product sales increased by
approximately 116% from $3.9 million to $8.4 million. Services revenue increased
by approximately 23% from $1.1 million to $1.4 million. The increase in product
sales was primarily attributable to the results generated from the Company's
increased focus on test systems for third generation (3G) digital cellular and
Voice over IP (VoIP). The increase in services revenue was primarily due to
sales of software support contracts associated with new system sales as well as
support contract renewals and customer training.

COST OF REVENUES

         Cost of product sales consists of the costs of board assembly by
independent contractors, purchased components, payroll and benefits for
personnel in product testing, purchasing, shipping and inventory management, as
well as supplies, media and freight. Cost of services consists primarily of the
costs of payroll and benefits for customer support personnel, installation and
training. Cost of sales increased approximately 7% from $772,000 for the three
months ended December 31, 1999 to $829,000 for the three months ended December
31, 2000. Over the same period, the cost of product sales increased by
approximately 48%. Gross margin for product sales increased from 88.1% to 91.9%
over this same period as the Company's sales mix had a greater proportion of
higher margin products. Cost of services decreased by approximately 52% from
$312,000 for the three months ended December 31, 1999 to $150,000 for the three
months ended December 31, 2000. Over the same period, service gross margin on
services increased from 71.9% to 89.0%.

RESEARCH AND DEVELOPMENT

         Research and development expenses consist primarily of the costs of
payroll and benefits for engineers, materials, equipment and consulting
services. To date, all software development costs have been expensed as
research and development expenses as incurred. Research and development expenses
increased by approximately 59% from $615,000 for the three months ended December
31, 1999 to $979,000 for the three months ended December 31, 2000. As a
percentage of total revenues, research and development expenses decreased from
12.3% to 10.1% over the same period. The increase in absolute dollars was due
primarily to an increase in compensation expense in the engineering group. The
Company expects that research and development expenses will increase in absolute
dollars for the foreseeable future as the Company intends to continue to invest
in product development.*

SALES AND MARKETING

         Sales and marketing expenses consist primarily of the costs of payroll,
benefits, commissions and bonuses, occupancy costs, travel and promotional
expenses, such as product brochures and trade show costs. Sales and marketing
expenses increased by approximately 27% from $2.0 million for the three months
ended December 31, 1999 to $2.5 million for the three months ended December 31,
2000. As a percentage of total revenues, sales and marketing expenses decreased
from 39.9% for the three months ended December 31, 1999 to 25.9% for the three
months ended December 31, 2000. The increase in absolute dollars was due
primarily to an increase in sales and marketing personnel resulting in increased
salary, commissions, and bonuses, increased travel expenses, and the expansion
of the Company's sales and support offices. The Company expects that sales and
marketing expenses will increase in absolute dollars for the foreseeable future
as the Company intends to continue to invest in its sales and marketing
capabilities.*

                                       10
<PAGE>

GENERAL AND ADMINISTRATIVE

         General and administrative expenses include costs associated with the
Company's general and risk management, meeting public company reporting
requirements, employee recruitment and retention, investor relations and finance
functions. General and administrative expenses increased by approximately 77%
from $697,000 for the three months ended December 31, 1999 to $1,237,000 for the
three months ended December 31, 2000 due primarily to an overall increase in
personnel which resulted in increased salary and bonus expenses in addition to
increased legal and accounting fees, and facility costs. As a percentage of
total revenues, general and administrative expenses decreased from 14.0% to
12.7% over the same period.

INTEREST INCOME

         Interest income consists primarily of interest earned on cash and cash
equivalents and short-term investments. Interest income increased from $604,000
for the three months ended December 31, 1999 to $775,000 for the three months
ended December 31, 2000 due to an increase in the Company's cash and cash
equivalent balances and short-term investments primarily from profitable
operations and to higher prevailing interest rates

OTHER EXPENSE, NET

         Other expense primarily represents gains and losses from fluctuations
in exchange rates on transactions denominated in foreign currencies. Other
expense decreased from $187,000 for the three months ended December 31, 1999 to
$91,000 for the three months ended December 31, 2000 due to reduced foreign
exchange losses, including losses realized on forward contracts entered into
which were denominated in currencies other than the US dollar.

PROVISION FOR INCOME TAXES

         Provision for income tax consists of federal, state and international
income taxes. The Company's effective tax rate was 39.0% for the three months
ended December 31, 1999 and 35.0% for the three months ended December 31, 2000.
These tax rates primarily reflect the anticipated percentages of revenues
derived by the Company from international operations. The Company expects that
its future tax rate may vary depending in part on the relative income
contribution by its domestic and foreign operations.*

LIQUIDITY AND CAPITAL RESOURCES

         Historically, the Company has financed its operations, including
increases in accounts receivable and capital equipment acquisitions, primarily
through cash generated from operations, cash proceeds from its initial public
offering of common stock, profitable operations, investment earnings and the
exercise of employee stock options.

         The Company's operating activities provided cash of $2.2 million and
$5.4 million in the periods ended December 31, 1999 and 2000, respectively. The
cash provided by the Company's operations for the three months ended December
31, 2000 was primarily attributable to high profitability, increased accrued
liabilities, and a decrease in accounts receivable. Investing activities,
consisting primarily of purchases of short-term investments and to a lesser
extent additions to property and equipment, used cash of $7.4 million and $8.9
million in the three months ended December 31, 1999 and 2000, respectively.
Financing activities in the three months ended December 31, 1999 and 2000 were
attributable to exercises of employee stock options and the purchase of shares
under the employee stock purchase plan in both periods.

         As of December 31, 2000, the Company had working capital of $52.2
million, cash and cash equivalents of $1.7 million and short-term investments of
$52.2 million. As of December 31, 2000, the Company had no bank indebtedness and
no long-term commitments other than operating lease obligations.

                                       11
<PAGE>

The Company expects that capital expenditures will increase in fiscal 2001 over
the prior year due to increased personnel and office expansion.*

         The Company believes that cash and cash equivalents, short-term
investments and funds generated from operations will provide the Company with
sufficient funds to finance its operations for at least the next 12 months.* The
Company may require additional funds to support its working capital requirements
or for other purposes. There can be no assurance that additional financing will
be available or that if available, such financing will be obtainable on terms
favorable to the Company or its stockholders.

FACTORS THAT MAY AFFECT FUTURE RESULTS

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; LENGTHY SALES CYCLE

         The Company has experienced, and anticipates that it will continue to
experience, significant fluctuations in quarterly revenues and operating
results. The Company's revenues and operating results are relatively difficult
to forecast for a number of reasons, including (i) the variable size and timing
of individual purchases by customers, (ii) 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,
(iii) the relatively long sales cycles for the Company's products, (iv) the
timing of hiring sales and technical personnel, (v) changes in timing and amount
of sales incentive compensation, (vi) competitive conditions in the Company's
markets, (vii) exchange rate fluctuations, (viii) changes in the mix of products
sold, (ix) the timing of the introduction and market acceptance of new products
or product enhancements by the Company, its customers, competitors or suppliers,
(x) costs associated with developing and introducing new products, (xi) product
life cycles, (xii) changes in the level of operating expenses relative to
revenues, (xiii) software defects and other product quality problems, (xiv)
customer order deferrals in anticipation of new products, (xv) delays in
purchasing decisions or customer orders due to customer consolidation, (xvi)
supply interruptions, (xvii) changes in the regulatory environment and (xviii)
changes in global or regional economic conditions or in the telecommunications
industry.

         The Company's revenues in any period generally have been, and are
likely to continue to be, derived from relatively small numbers of sales and
service transactions with relatively high average revenues per order. Therefore,
the loss of any orders or delays in closing such transactions could have a more
significant impact on the Company's quarterly revenues and results of operations
than on those of companies with relatively high volumes of sales or low revenues
per order. See "Dependence on Limited Number of Customers" below. The Company's
products generally are shipped within 15 to 30 days after orders are received
and revenues are recognized upon installation of the products, provided no
significant vendor obligations remain and collection of the related receivable
is deemed probable. As a result, the Company generally does not have a
significant backlog of orders, and revenues in any quarter are substantially
dependent on orders booked, shipped and installed in that quarter.

         A customer's decision to purchase the Company's products typically
involves a significant technical evaluation, internal procedural delays
associated with large capital expenditure approvals and testing and acceptance
of new systems that affect key operations. For these and other reasons, the
sales cycle associated with the Company's products is typically lengthy and
subject to a number of significant risks over which the Company has little or no
control. Historically, the period between initial customer contact and purchase
of the Company's products has typically ranged from two to nine months, with
sales to new customers (including new divisions within existing customers) at
the longer end of this range. Because of the lengthy sales cycle and the
relatively small number and large size of customers' orders, if revenues
forecast from a specific customer for a particular quarter are not realized in
that quarter, the Company's operating results for that quarter could be
materially adversely affected.

         The Company's expectations for future revenues are predicated, to a
large extent, on the recruitment and hiring of a significant number of
employees, particularly experienced sales and technical personnel.

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<PAGE>

Failure to hire, or delays in hiring, sufficient sales and technical personnel
could have a material adverse effect on the Company's results of operations for
any period.

         Due to the relatively fixed nature of most of the Company's costs,
including personnel and facilities costs, and because operating expenses are
based on anticipated revenue, a decline in revenue from even a limited number of
transactions, failure to achieve expected revenue in any fiscal quarter or
unanticipated variations in the timing of recognition of specific revenues can
cause significant variations in operating results from quarter to quarter and
may in some future quarter result in losses or have a material adverse effect on
the Company's business, financial condition and results of operations. The
Company believes, therefore, that period-to-period comparisons of its operating
results should not be relied upon as an indication of future performance.

         For all of the foregoing factors, as well as other unanticipated
factors, it is possible that in some future quarter the Company's results of
operations could fail to meet the expectations of public market analysts or
investors. In such event, or in the event that adverse conditions prevail or are
perceived to prevail generally or with respect to the Company's business, the
price of the Company's common stock will likely be materially adversely
affected.

DEPENDENCE ON LIMITED NUMBER OF CUSTOMERS

         The Company's customer base is highly concentrated, and a relatively
small number of companies have accounted for substantially all of the Company's
revenues to date. In the three months ended December 31, 2000, the Company's top
four customers represented approximately 72% of total revenues. The Company
expects that it will continue to depend upon a relatively limited number of
customers for substantially all of its revenues in future periods, although no
customer is presently obligated either to purchase a specific amount of products
or to provide the Company with binding forecasts of purchases for any period.
The loss of a major customer or the reduction, delay or cancellation of orders
from one or more of the Company's significant customers could materially
adversely affect the Company's business, financial condition and results of
operations.

RISKS ASSOCIATED WITH INTERNATIONAL SALES AND OPERATIONS

         Company revenues from international customers were approximately 55%
during the three months ended December 31, 2000. The Company expects that
international sales will continue to account for a significant portion of its
revenues in future periods.* The Company sells its products worldwide through
its direct sales force. The Company has offices located in Japan, Canada, the
United Kingdom, Germany, and France and plans to add offices, staff and
resources worldwide from time to time. International sales and operations are
subject to inherent risks, including difficulties in staffing and managing
foreign operations, longer customer payment cycles, greater difficulty in
accounts receivable collection, changes in regulatory requirements or in
economic or trade policy, costs related to localizing products for foreign
countries, potentially weaker protection for intellectual property in certain
foreign countries, the burden of complying with a wide variety of foreign laws
and practices, tariffs and other trade barriers, and potentially adverse tax
consequences, including restrictions on repatriation of earnings. During the
last two fiscal years and during the three months ended December 31, 2000 a
significant portion of the Company's sales has been to customers in Japan. If
economic conditions in Japan deteriorate to a significant extent, the Company's
business, financial condition and results of operations could be materially
adversely affected. In addition, although the Company cannot predict the
potential consequences to the Company's business of the adoption of the Euro as
a common currency in Europe, the transition to the Euro presents a number of
risks, including increased competition from European firms as a result of
increased pricing transparency. An inability to obtain necessary regulatory
approvals in foreign markets on a timely basis could also have a material
adverse effect on the Company's business, financial condition and results of
operations.


                                       13
<PAGE>

         Most of the Company's international sales, including its sales in
Japan, are denominated in local currencies. Although the Company currently
engages in hedging transactions with respect to certain receivables resulting
from certain inter-company sales, there can be no assurance that the Company
will continue to do so or that its hedging activities will be successful.
Fluctuations in foreign currency exchange rates may contribute to fluctuations
in the Company's operating results. For example, changes in foreign currency
exchange rates could adversely affect the revenues, net income, earnings per
share and cash flow of the Company's operations in affected markets. Similarly,
such fluctuations may cause the Company to raise prices, which could affect
demand for the Company's products and services. In addition, if exchange or
price controls or other restrictions are imposed in countries in which the
Company does business, the Company's business, financial condition and results
of operations would be materially adversely affected.

RAPID TECHNOLOGICAL CHANGE; UNCERTAINTY OF ACCEPTANCE OF THE COMPANY'S PRODUCTS
AND SERVICES

         The market for telecommunications test systems and services is subject
to rapid technological change, evolving industry standards, rapid changes in
customer requirements and frequent product and service introductions and
enhancements. The Company's future success will depend in part on its ability to
anticipate and respond to these changes by enhancing its existing products and
services and by developing and introducing, on a timely and cost-effective
basis, new products, features and services that address the needs of its
customer base. There can be no assurance that the Company will be successful in
identifying, developing and marketing new products, product enhancements and
related services that respond to technological change or evolving industry
standards or that adequately meet new market demands. In addition, because of
the rapid technological change characteristic of the telecommunications
industry, the Company may be required to support legacy systems used by its
customers, which may place additional demands on the Company's personnel and
other resources and may require the Company to maintain an inventory of
otherwise obsolete components.

         The Company's test systems currently operate only on the UNIX operating
system. The Company's current and prospective customers may require other
operating systems to be used in their telecommunications test systems, such as
Windows 95, Windows NT or Windows 98 or may require the integration of other
industry standards. There can be no assurance that the Company would be able to
successfully adapt its products to such operating systems on a timely or
cost-effective basis, if at all. The failure of the Company to respond to
rapidly changing technologies and to develop and introduce new products and
services in a timely manner would have a material adverse effect on the
Company's business, financial condition and results of operations.

         The Company's success will depend in part on whether a large number of
telecommunications equipment manufacturers and network operators purchase the
Company's products and services. Because the telecommunications market is
rapidly evolving, it is difficult to predict the future success of products and
services in this market. The customers in this market use products from a number
of competing suppliers for various testing purposes, and there has not been
broad adoption of the products of one company. There can be no assurance that
the Company's current or future products or services will achieve widespread
acceptance among network operators, telecommunications equipment manufacturers
or other potential customers or that solutions developed by competitors will not
render the Company's products obsolete or uncompetitive. In the event the
telecommunications industry does not broadly adopt the Company's products or
services or does so less rapidly than expected by the Company, or in the event
the Company's products are rendered obsolete or uncompetitive by more advanced
solutions, the Company's business, financial condition and results of operations
would be materially adversely affected.

CALIFORNIA ENERGY CRISIS

         California is in the midst of an energy crisis that could disrupt the
Company's operations and increase its expenses. Suppliers of electric power have
on some occasions implemented, and may in the future continue to implement,
rolling blackouts throughout California. The Company currently does not have
backup

                                       14
<PAGE>


generators or alternate sources of power in the event of a blackout, and its
current insurance does not provide coverage for any damages it or its customers
may suffer as a result of any interruption in its power supply. If blackouts
interrupt the Company's power supply, it would be temporarily unable to continue
operations at its facilities in California. Any such interruption in the
Company's ability to continue operations at its facilities could damage the
Company's reputation, harm its ability to retain existing customers and to
obtain new customers, and could result in lost revenue, any of which could
substantially harm its business and results of operations.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FOREIGN EXCHANGE RISK AND DERIVATIVE FINANCIAL INSTRUMENTS

         The Company's foreign subsidiaries operate and sell the Company's
products in various global markets. As a result, the Company is exposed to
changes in interest rates and currency exchange rates on sales denominated in
foreign currencies. The Company utilizes foreign currency forward exchange
contracts and options to minimize exposure against future movements in foreign
exchange rates that affect certain foreign currency denominated receivables. The
Company attempts to match the forward contracts with the underlying receivables
in terms of currency, amount and maturity. The Company does not use derivative
financial instruments for speculative or trading purposes. Because the impact of
movements in currency exchange rates on forward contracts offsets the related
impact on the exposures, these financial instruments minimize the risk that
would otherwise result from changes in currency exchange rates. Realized gains
and losses on forward exchange contracts may offset foreign exchange transaction
gains or losses from revaluation of foreign currency denominated receivable
balances which otherwise would be charged to other income (expense). There can
be no assurance that these current or future activities will be successful.

         At December 31, 2000 the Company had forward exchange contracts
maturing in fiscal 2001 to sell approximately $1.0 million in Pounds Sterling.
The fair market value of the contracts at December 31, 2000 was not material.

         The Company has evaluated the potential near-term losses in future
earnings, fair values and cash flows from reasonably possible near-term changes
in market rates or prices and believes that any such losses would not be
material.*

         Additional factors that could affect future operating results or the
price of the Common Stock are set forth under the caption "Factors That May
Affect Future Results" in the Company's Annual Report on Form 10-K for 2000.

PART II.  OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      EXHIBITS.


         (b)      REPORTS ON FORM 8-K.

                  No reports on Form 8-K were filed during the quarter for which
this report on Form 10-Q is filed.


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<PAGE>


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                            CATAPULT COMMUNICATIONS CORPORATION



Date:    February 9, 2001                   BY: /s/  Chris Stephenson
                                            -------------------------
                                            Chris Stephenson
                                            Vice President and Chief
                                            Financial Officer
                                            (Principal Financial Officer)


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