##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 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
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 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, 2009 and September 30, 2008
    
    
    1Unaudited Condensed Consolidated Statements of Operations for the three and six months ended
March 31, 2009 and 2008
    
    
    2Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2009
and 2008
    
    
    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
    
    
    18Item 6. Exhibits
    
    
    19Signature
    
    
    19EX-31.1EX-31.2EX-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 30,2009
    
    
    2008(In thousands, except shareand par value data)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    28,733
    
    
    $
    33,792Short-term investments
    
    
    8,970
    
    
    
    7,588Accounts receivable, net of allowances of $16 as of March 31, 2009
and September 30, 2008, respectively
    
    
    8,472
    
    
    
    6,487Inventories
    
    
    3,078
    
    
    
    2,313Deferred tax assets
    
    
    56
    
    
    
    98Prepaid expenses
    
    
    1,944
    
    
    
    2,333Total current assets
    
    
    51,253
    
    
    
    52,611Property and equipment, net
    
    
    879
    
    
    
    1,011Goodwill
    
    
    49,394
    
    
    
    49,394Other intangibles, net
    
    
    34
    
    
    
    70Long-term investments (Note 14)
    
    
    4,641
    
    
    
    4,950Other assets (Note 15, 16)
    
    
    8,913
    
    
    
    5,992Total assets
    
    $
    115,114
    
    
    $
    114,028LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    1,174
    
    
    $
    1,984Accrued liabilities
    
    
    4,160
    
    
    
    4,040Deferred revenue
    
    
    9,727
    
    
    
    6,446Total current liabilities
    
    
    15,061
    
    
    
    12,470Deferred revenue, long-term
    
    
    74
    
    
    
    173Deferred taxes, long-term
    
    
    3,859
    
    
    
    3,557Tax liabilities, long-term
    
    
    1,338
    
    
    
    1,338Other liabilities, long-term
    
    
    124
    
    
    
    162Total liabilities
    
    
    20,456
    
    
    
    17,700Commitments and contingencies (Note 12)Stockholders Equity:Common stock, $0.001 par value, 40,000,000
shares authorized; 11,301,255 and 11,778,887
issued and outstanding as of March 31, 2009 and
September 30, 2008, respectively
    
    
    11
    
    
    
    12Additional paid-in capital
    
    
    41,013
    
    
    
    42,449Accumulated other comprehensive income (loss)
    
    
    (356
    )
    
    
    951Retained earnings
    
    
    53,990
    
    
    
    52,916Total stockholders equity
    
    
    94,658
    
    
    
    96,328Total liabilities and stockholders equity
    
    $
    115,114
    
    
    $
    114,028
  1




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CATAPULT COMMUNICATIONS CORPORATION
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three months ended
    
    
    Six months endedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands, except per share amounts)Revenues:Products
    
    $
    8,931
    
    
    $
    6,925
    
    
    $
    15,388
    
    
    $
    13,695Services
    
    
    3,161
    
    
    
    3,010
    
    
    
    6,516
    
    
    
    6,541Total revenues
    
    
    12,092
    
    
    
    9,935
    
    
    
    21,904
    
    
    
    20,236Cost of revenues:Products
    
    
    1,656
    
    
    
    1,225
    
    
    
    3,108
    
    
    
    2,473Services
    
    
    512
    
    
    
    752
    
    
    
    985
    
    
    
    1,550Amortization of purchased technology
    
    
    12
    
    
    
    12
    
    
    
    24
    
    
    
    24Total cost of revenues
    
    
    2,180
    
    
    
    1,989
    
    
    
    4,117
    
    
    
    4,047Gross profit
    
    
    9,912
    
    
    
    7,946
    
    
    
    17,787
    
    
    
    16,189Operating expenses:Research and development
    
    
    1,713
    
    
    
    3,466
    
    
    
    3,351
    
    
    
    7,019Sales and marketing
    
    
    3,908
    
    
    
    4,241
    
    
    
    7,879
    
    
    
    8,586General and administrative
    
    
    2,092
    
    
    
    2,106
    
    
    
    4,351
    
    
    
    4,278Restructuring costs (Note 13)
    
    
    
    
    
    
    2,197
    
    
    
    
    
    
    
    2,197Total operating expenses
    
    
    7,713
    
    
    
    12,010
    
    
    
    15,581
    
    
    
    22,080Operating income (loss)
    
    
    2,199
    
    
    
    (4,064
    )
    
    
    2,206
    
    
    
    (5,891
    )Interest income
    
    
    121
    
    
    
    592
    
    
    
    353
    
    
    
    1,336Other income (expense), net
    
    
    (369
    )
    
    
    235
    
    
    
    (194
    )
    
    
    365Income (loss) before income taxes
    
    
    1,951
    
    
    
    (3,237
    )
    
    
    2,365
    
    
    
    (4,190
    )Provision for income taxes
    
    
    844
    
    
    
    113
    
    
    
    1,201
    
    
    
    331Net income (loss)
    
    $
    1,107
    
    
    $
    (3,350
    )
    
    $
    1,164
    
    
    $
    (4,521
    )Net income (loss) per share  Basic and Diluted
    
    $
    0.10
    
    
    $
    (0.26
    )
    
    $
    0.10
    
    
    $
    (0.34
    )Shares used in per share calculation:Basic
    
    
    11,333
    
    
    
    13,119
    
    
    
    11,452
    
    
    
    13,247Diluted
    
    
    11,350
    
    
    
    13,119
    
    
    
    11,455
    
    
    
    13,247
  2




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CATAPULT COMMUNICATIONS CORPORATION
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six months endedMarch 31,2009
    
    
    2008(In thousands)Cash flows from operating activities:Net income (loss) as reported
    
    $
    1,164
    
    
    $
    (4,521
    )Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation and amortization of property and equipment
    
    
    272
    
    
    
    491Amortization of purchased technology
    
    
    24
    
    
    
    24Amortization of other acquisition related intangibles
    
    
    12
    
    
    
    12Gain on disposal of fixed assets
    
    
    (6
    )
    
    
    Provision for doubtful accounts
    
    
    
    
    
    
    (45
    )Deferred income taxes
    
    
    328
    
    
    
    136Stock based compensation expense
    
    
    969
    
    
    
    1,479Change in assets and liabilities:Accounts receivable
    
    
    (1,955
    )
    
    
    (3,598
    )Inventories
    
    
    (764
    )
    
    
    321Prepaid expenses and other current assets
    
    
    354
    
    
    
    (208
    )Other assets
    
    
    76
    
    
    
    2Accounts payable
    
    
    (811
    )
    
    
    430Accrued liabilities
    
    
    156
    
    
    
    1,800Deferred revenue
    
    
    3,179
    
    
    
    1,456Net cash provided by (used in) operating activities
    
    
    2,998
    
    
    
    (2,221
    )Cash flows from investing activities:Sale and maturities of investments
    
    
    5,855
    
    
    
    44,861Purchase of investments
    
    
    (7,201
    )
    
    
    (23,697
    )Capitalized software development costs
    
    
    (3,854
    )
    
    
    Purchase of property and equipment
    
    
    (150
    )
    
    
    (307
    )Proceeds from sale of property and equipment
    
    
    6
    
    
    
    Net cash (used in) provided by investing activities
    
    
    (5,344
    )
    
    
    20,857Cash flows from financing activity:Repurchase of common stock
    
    
    (2,567
    )
    
    
    (2,772
    )Net cash used in financing activity
    
    
    (2,567
    )
    
    
    (2,772
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (146
    )
    
    
    172Net (decrease) increase in cash and cash equivalents
    
    
    (5,059
    )
    
    
    16,036Cash and cash equivalents, beginning of period
    
    
    33,792
    
    
    
    23,351Cash and cash equivalents, end of period
    
    $
    28,733
    
    
    $
    39,387Supplemental disclosure of cash flow information:Unrealized
(loss) gain on investments
    
    $
    (1,203
    )
    
    $
    2Cash paid for income taxes
    
    
    192
    
    
    
    303
  3




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CATAPULT COMMUNICATIONS CORPORATION
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  The Company and Basis of Presentation
   Fair Value Measurements The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment
of FASB Statement No. 115.
 Note 2  Recent Accounting Pronouncements
 Fair Value
Measurements
 Effective
Date of FASB Statement No. 157
 Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active
 4




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The Fair Value Option for Financial Assets and Financial
Liabilitiesincluding an amendment of FASB Statement No. 115,
 Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating Securities Earnings per Share.
 Determining
Fair Value When the Volume and Level of Activity for the Asset or Liability have Significantly
Decreased and Identifying Transactions That Are Not Orderly Recognition and Presentation of Other-Than-Temporary
Impairments Interim Disclosures about Fair Value of Financial Instruments, Fair Value Measurements
 Note 3  Stock-Based Compensation
  Three months ended
    
    
    Six months endedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Stock-Based Compensation Expense:Cost of sales  products
    
    $
    36
    
    
    $
    40
    
    
    $
    81
    
    
    $
    90Cost of sales  services
    
    
    (1
    )
    
    
    54
    
    
    
    3
    
    
    
    121Research and development expense
    
    
    32
    
    
    
    160
    
    
    
    93
    
    
    
    361Selling and marketing expense
    
    
    128
    
    
    
    138
    
    
    
    289
    
    
    
    306General and administrative expense
    
    
    222
    
    
    
    263
    
    
    
    503
    
    
    
    601Total stock-based compensation expense
    
    
    417
    
    
    
    655
    
    
    
    969
    
    
    
    1,479Tax effect on stock-based compensation expenses
    
    
    (4
    )
    
    
    (4
    )
    
    
    (9
    )
    
    
    (8
    )Net effect on net income (loss)
    
    $
    413
    
    
    $
    651
    
    
    $
    960
    
    
    $
    1,471
 Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed
 5




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Three months ended
    
    
    Six months endedMarch 31,
    
    
    March 31,2009
    
    
    2009Balance beginning of period
    
    $
    83
    
    
    $
    46Stock-based compensation expense capitalized during the period
    
    
    34
    
    
    
    71Amortization of capitalized stock-based compensation
    
    
    
    
    
    
    Balance at March 31, 2009
    
    $
    117
    
    
    $
    117
   Employee Stock Option PlansThree months ended
    
    Six months endedMarch 31,
    
    March 31,2009
    
    2008
    
    2009
    
    2008Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected life of option
    
    4.48 years
    
    4.26 years
    
    4.48 years
    
    4.26 yearsRisk-free interest rate
    
    
    1.75
    %
    
    
    2.39
    %
    
    
    2.14
    %
    
    
    3.36
    %Expected volatility
    
    
    61.9
    %
    
    
    55.0
    %
    
    
    57.7
    %
    
    
    55.0
    %
  Note 4  Basic and Diluted Net Income (Loss) per Share
 Earnings per Share
 Three months ended
    
    
    Six months endedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands, except per share amounts)Net income (loss), as reported for basic and diluted earnings per share
    
    $
    1,107
    
    
    $
    (3,350
    )
    
    $
    1,164
    
    
    $
    (4,521
    )Weighted average shares outstanding
    
    
    11,333
    
    
    
    13,119
    
    
    
    11,452
    
    
    
    13,247Dilutive options
    
    
    17
    
    
    
    
    
    
    
    3
    
    
    
    Weighted average shares assuming dilution
    
    
    11,350
    
    
    
    13,119
    
    
    
    11,455
    
    
    
    13,247Net income (loss) per share:Basic
    
    $
    0.10
    
    
    $
    (0.26
    )
    
    $
    0.10
    
    
    $
    (0.34
    )Diluted
    
    $
    0.10
    
    
    $
    (0.26
    )
    
    $
    0.10
    
    
    $
    (0.34
    )
 6




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Three months ended
    
    Six months endedMarch 31,
    
    March 31,2009
    
    2008
    
    2009
    
    2008(In thousands)Common stock options
    
    
    2,783
    
    
    
    2,657
    
    
    
    2,769
    
    
    
    2,643
 Note 5  Fair Value Measurements
 Fair Value
Measurements
      Quoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableMarch 31,
    
    
    Identical Assets
    
    
    Inputs
    
    
    Inputs2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Cash and cash equivalents
    
    $
    28,733
    
    
    $
    28,733
    
    
    $
    
    
    
    $
    Short-term investments
    
    
    8,970
    
    
    
    
    
    
    
    8,970
    
    
    
    Long-term investments
    
    
    4,641
    
    
    
    
    
    
    
    
    
    
    
    4,641Non-marketable equity investment
    
    
    884
    
    
    
    
    
    
    
    
    
    
    
    884$
    43,228
    
    
    $
    28,733
    
    
    $
    8,970
    
    
    $
    5,525
  Three months
    
    
    Six monthsEnded
    
    
    EndedMarch 31, 2009
    
    
    March 31, 2009Balance, beginning of period
    
    $
    6,455
    
    
    $
    6,764Total realized gains (losses) included in interest and other income, net
    
    
    
    
    
    
    Total unrealized losses included in comprehensive income (loss)
    
    
    (930
    )
    
    
    (1,239
    )Purchases (sales), net
    
    
    
    
    
    
    Transfers into (out of) Level 3,net
    
    
    
    
    
    
    Balance, end of period
    
    $
    5,525
    
    
    $
    5,525
  7




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Note 6  Inventories
  March 31,
    
    
    September 30,2009
    
    
    2008(In thousands)Inventories:Raw materials
    
    $
    2,146
    
    
    $
    1,548Work-in-process
    
    
    118
    
    
    
    243Finished goods
    
    
    814
    
    
    
    522$
    3,078
    
    
    $
    2,313
 Note 7  Goodwill and Intangible Assets
   Note 8  Income Taxes
  Accounting for Uncertainty in Income Taxes,
an interpretation of FASB Statement No. 109
   8




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Note 9  Stockholders Equity
 Comprehensive income (loss)
  Three months ended
    
    
    Six months endedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands)Net income (loss), as reported
    
    $
    1,107
    
    
    $
    (3,350
    )
    
    $
    1,164
    
    
    $
    (4,521
    )Currency translation adjustment
    
    
    (136
    )
    
    
    160
    
    
    
    (105
    )
    
    
    143Unrealized gains (losses) on investments
    
    
    (951
    )
    
    
    4
    
    
    
    (1,203
    )
    
    
    2Comprehensive income (loss)
    
    $
    20
    
    
    $
    (3,186
    )
    
    $
    (144
    )
    
    $
    (4,376
    )
 Stock Option Plans
  Repurchase of Common Stock
  Note 10  Geographical Information
  9




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Europe, Middle
    
    
    
    
    
    Asia
    
    ConsolidatedAmericas
    
    East & Africa
    
    Japan
    
    Pacific
    
    Total(In thousands)Six months ended March 31, 2009Revenues from unaffiliated customers
    
    $
    3,487
    
    
    $
    4,025
    
    
    $
    9,251
    
    
    $
    5,141
    
    
    $
    21,904Six months ended March 31, 2008Revenues from unaffiliated customers
    
    $
    4,260
    
    
    $
    5,117
    
    
    $
    7,946
    
    
    $
    2,913
    
    
    $
    20,236As of March 31, 2009Goodwill
    
    $
    22,896
    
    
    $
    26,498
    
    
    $
    
    
    
    $
    
    
    
    $
    49,394Long-lived assets
    
    
    500
    
    
    
    104
    
    
    
    155
    
    
    
    120
    
    
    
    879As of September 30, 2008Goodwill
    
    $
    22,896
    
    
    $
    26,498
    
    
    $
    
    
    
    $
    
    
    
    $
    49,394Long-lived assets
    
    
    601
    
    
    
    97
    
    
    
    178
    
    
    
    135
    
    
    
    1,011
   Note 11  Customer Information
  Percentage of Accounts Receivable as of
    
    Percentage of RevenuesThree months ended
    
    Six months endedMarch 31,
    
    September 30,
    
    March 31,
    
    March 31,2009
    
    2008
    
    2009
    
    2008
    
    2009
    
    2008Customer A
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    %
    
    
    12
    %
    
    
    11
    %Customer B
    
    
    23
    %
    
    
    21
    %
    
    
    
    
    
    
    
    
    
    
    12
    %
    
    
    12
    %Customer C
    
    
    
    
    
    
    11
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Customer D
    
    
    
    
    
    
    10
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Customer E
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15
    %
    
    
    
    
    
    
    13
    %Customer F
    
    
    16
    %
    
    
    
    
    
    
    35
    %
    
    
    22
    %
    
    
    22
    %
    
    
    13
    %Customer G
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15
    %
    
    
    
    
    
    
    
 Note 12  Contingencies
 Accounting for Contingencies
 Note 13  Restructuring Costs
  10




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Note 14  Long-term Investments
    Note 15  Capitalized Software Development Costs
  Note 16  Non-marketable Equity Investment
  Note 17  Subsequent Events
  
 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;
 11




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##### Table of Contents




    
    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;
    
    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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##### Table of Contents



Summary of Our Financial Performance in the Second Quarter of Fiscal 2009
   Recent Developments
  Critical Accounting Policies and Estimates
  Fair Value Measurement
 Fair Value Measurements The
Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB
Statement No. 115
    Results of Operations
  13




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##### Table of Contents



Three months ended
    
    Six months endedMarch 31,
    
    March 31,2009
    
    2008
    
    2009
    
    2008Revenues:Products
    
    
    73.9
    %
    
    
    69.7
    %
    
    
    70.3
    %
    
    
    67.7
    %Services
    
    
    26.1
    
    
    
    30.3
    
    
    
    29.7
    
    
    
    32.3Total revenues
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Cost of revenues:Products
    
    
    13.7
    
    
    
    12.3
    
    
    
    14.2
    
    
    
    12.2Services
    
    
    4.2
    
    
    
    7.6
    
    
    
    4.5
    
    
    
    7.7Amortization of purchased technology
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1Total cost of revenues
    
    
    18.0
    
    
    
    20.0
    
    
    
    18.8
    
    
    
    20.0Gross profit
    
    
    82.0
    
    
    
    80.0
    
    
    
    81.2
    
    
    
    80.0Operating expenses:Research and development
    
    
    14.2
    
    
    
    34.9
    
    
    
    15.3
    
    
    
    34.7Sales and marketing
    
    
    32.3
    
    
    
    42.7
    
    
    
    36.0
    
    
    
    42.4General and administrative
    
    
    17.3
    
    
    
    21.2
    
    
    
    19.8
    
    
    
    21.1Restructuring costs
    
    
    
    
    
    
    22.1
    
    
    
    
    
    
    
    10.9Total operating expenses
    
    
    63.8
    
    
    
    120.9
    
    
    
    71.1
    
    
    
    109.1Operating income (loss)
    
    
    18.2
    
    
    
    (40.9
    )
    
    
    10.1
    
    
    
    (29.1
    )Interest income
    
    
    1.0
    
    
    
    6.0
    
    
    
    1.6
    
    
    
    6.6Other income (expense), net
    
    
    (3.1
    )
    
    
    2.3
    
    
    
    (0.9
    )
    
    
    1.8Income (loss) before income taxes
    
    
    16.1
    
    
    
    (32.6
    )
    
    
    10.8
    
    
    
    (20.7
    )Provision for income taxes
    
    
    6.9
    
    
    
    1.1
    
    
    
    5.5
    
    
    
    1.6Net income (loss)
    
    
    9.2
    %
    
    
    (33.7
    )%
    
    
    5.3
    %
    
    
    (22.3
    )%Gross profit margin on products
    
    
    81.5
    %
    
    
    82.3
    %
    
    
    79.8
    %
    
    
    81.9
    %Gross profit margin on services
    
    
    83.8
    %
    
    
    75.0
    %
    
    
    84.9
    %
    
    
    76.3
    %
  Comparison of the Three-Month Periods Ended March 31, 2009 and 2008
 Revenues
   
    
    revenues in the Americas increased by 6% to $1.3 million;
    
    revenues in Europe, the Middle East and Africa increased by 7% to $1.9 million;
    
    revenues in Japan increased by 9% to $6.1 million; and
    
    revenues in Asia Pacific outside Japan increased by 105% to $2.8 million.
  Cost of Revenues
   14




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##### Table of Contents



Research and Development
  Sales and Marketing
  General and Administrative
  Restructuring Charge
  Interest income
  Other income (expense), net
  Provision for income taxes
  Comparison of the Six-Month Periods Ended March 31, 2009 and 2008
 Revenues
   
    
    revenues in the Americas decreased by 18% to $3.5 million;
 15




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##### Table of Contents




    
    revenues in Europe, the Middle East and Africa decreased by 21% to $4.0 million;
    
    revenues in Japan increased by 16% to $9.3 million; and
    
    revenues in Asia Pacific outside Japan increased by 76% to $5.1 million.
  Cost of Revenues
   Research and Development
  Sales and Marketing
  General and Administrative
  Restructuring Charge
  Interest income
  Other income (expense), net
  Provision for income taxes
  16




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##### Table of Contents



Impact of Inflation
  Liquidity and Capital Resources
      Recent Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of disclosure controls and procedures.
  17




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##### Table of Contents



Changes in internal control over financial reporting.
  
 Part II. Other Information
 
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  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, 2009 - January 31, 2009
    
    
    43,573
    
    
    $
    6.61
    
    
    
    43,573
    
    
    
    1,063,838February 1, 2009 - February 28, 2009
    
    
    27,488
    
    
    
    6.86
    
    
    
    27,488
    
    
    
    1,036,350March 1, 2009 - March 31, 2009
    
    
    13,982
    
    
    
    6.27
    
    
    
    13,982
    
    
    
    1,022,368Total for the Quarter
    
    
    85,043
    
    
    $
    6.64
    
    
    
    85,043
    
    
    
    1,022,368
 
 (1)
    
    Average price paid per share includes brokerage commission.  
 Item 4. Submission of Matters to a Vote of Security Holders
          18




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##### Table of Contents



Item 6. Exhibits
 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.
 
 SIGNATURE
  CATAPULT COMMUNICATIONS CORPORATIONDate: May 13, 2009
    By:
    /s/      Christopher A. StephensonChristopher A. StephensonVice President and Chief Financial Officer
     (Principal Financial Officer) 19