<PAGE>
   
                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

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

                  For the Quarterly Period Ended March 31, 1998

                                       OR

          ( ) 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: 000-23774

                           ASCEND COMMUNICATIONS, INC.

             (Exact name of registrant as specified in its charter)

               DELAWARE                              94-3092033

      (State or other jurisdiction of             (I.R.S. Employer
       incorporation or organization)            Identification No.)

                                ONE ASCEND PLAZA
                             1701 HARBOR BAY PARKWAY
                            ALAMEDA, CALIFORNIA 94502
                                 (510) 769-6001

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

Indicate by check mark whether the registrant (1) has filed all reports required
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 
                                    ---        ---
The number of shares outstanding of the Registrant's Common Stock, $0.001 par
value, was 192,849,018 as of March 31, 1998.

This report, including exhibits, consists of 218 pages. The Index To Exhibits is
found on page 26.
<PAGE>
 
                           ASCEND COMMUNICATIONS, INC.
                   
                                    FORM 10-Q

                                TABLE OF CONTENTS
PART I:  FINANCIAL INFORMATION                                          Page No.
                                                                        -------

         Item 1:  Financial Statements (Unaudited)

                  Condensed Consolidated Balance Sheets as of
                  March 31, 1998 and December 31, 1997                       3

                  Condensed Consolidated Statements of Operations for the
                  Quarters Ended March 31, 1998 and 1997                     4

                  Condensed Consolidated Statements of Cash Flows for
                  the Quarters Ended March 31, 1998 and 1997                 5

                  Notes to Condensed Consolidated Financial Statements       6

         Item 2:  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                       13

PART II: OTHER INFORMATION

         Item 6: Exhibits and Reports on Form 8-K                           22

                  A:  Exhibits                                              22

                  B:  Reports on Form 8-K                                   24

         Signatures                                                         25

         Index to Exhibits                                                  26

                                       2
<PAGE>
 
PART I:           FINANCIAL INFORMATION

ITEM I:           FINANCIAL STATEMENTS

                           ASCEND COMMUNICATIONS, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                    UNAUDITED

                                 (In Thousands)


<TABLE> 
<CAPTION> 
                                                                MARCH 31,               DEC. 31,
                                                                  1998                    1997
                                                               ------------            ------------
<S>                                                             <C>                     <C> 
ASSETS:
Current assets:
  Cash and cash equivalents................................    $   341,022             $   240,817
  Short-term investments...................................        264,095                 234,610
  Accounts receivable, net.................................        243,002                 234,183
  Inventories..............................................        102,936                  99,637
  Deferred income taxes....................................        105,057                  85,057
  Other current assets.....................................         18,562                  20,283
                                                               ------------            ------------
    Total current assets...................................      1,074,674                 914,587

Investments................................................         86,328                 101,212
Furniture, fixtures and equipment, net.....................        126,700                 114,351
Other assets...............................................         18,810                   7,744
                                                               ------------            ------------
    Total assets...........................................    $ 1,306,512             $ 1,137,894
                                                               ============            ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable.........................................    $    72,258              $   54,414
  Accrued compensation and related liabilities.............         16,771                  25,315
  Accrued liabilities......................................        162,640                  88,909
                                                               ------------            ------------
    Total current liabilities..............................        251,669                 168,638
                                                                                       
Commitments and contingencies                                                          

Stockholders' equity:
  Common Stock.............................................            193                     191
  Additional paid-in capital...............................        911,668                 878,455
  Retained earnings........................................        142,982                  90,610
                                                               ------------            ------------
    Total stockholders' equity.............................      1,054,843                 969,256
                                                               ------------            ------------
    Total liabilities and stockholders' equity.............    $ 1,306,512             $ 1,137,894
                                                               ============            ============
</TABLE> 

                                       3
<PAGE>
                         ASCEND COMMUNICATIONS, INC.
    
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                  UNAUDITED
          
                    (In Thousands, Except Per Share Data)

<TABLE> 
<CAPTION> 
     
                                                                     QUARTER ENDED MARCH 31,
                                                                   --------------------------
                                                                      1998             1997
                                                                   ----------      ----------
<S>                                                               <C>            <C> 
Net sales.................................................         $ 305,114       $  292,740
Cost of sales.............................................           109,810          102,387
                                                                   ----------      ----------
  Gross profit............................................           195,304          190,353
                                                           
Operating expenses:                                        
  Research and development................................            40,988           34,668  
  Sales and marketing.....................................            67,339           53,241
  General and administrative..............................            10,044            9,089
  Purchased research and development......................                 -          231,100
                                                                   ----------      ----------
   Total operating expenses...............................           118,371          328,098
                                                                   ----------      ----------
Operating income (loss)...................................            76,933         (137,745)
Interest income, net......................................             4,964            5,276
                                                                   ----------      ----------
Income (loss) before income taxes.........................            81,897         (132,469) 
Provision for income taxes................................            29,525           30,772
                                                                   ----------      ----------
Net income (loss).........................................         $  52,372       $ (163,241)
                                                                   =========       ==========
Net income (loss) per share - Basic.......................         $    0.27       $    (0.88)
                                                                   =========       ==========
Net income (loss) per share - Diluted.....................         $    0.26       $    (0.88)
                                                                   =========       ==========
Number of shares used in per share calculation - Basic....           192,849          185,812
                                                                   =========       ==========
Number of shares used in per share calculation - Diluted..           203,245          185,812
                                                                   =========       ==========
</TABLE> 

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
                                       4
<PAGE>

                          ASCEND COMMUNICATIONS, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   UNAUDITED

                                (In Thousands) 

<TABLE>
<CAPTION>
                                                                                        QUARTERS ENDED MARCH 31,
                                                                                        ------------------------
                                                                                          1998            1997
                                                                                        --------        --------
<S>                                                                                  <C>              <C>
Operating activities:

Net income (loss).................................................................    $  52,372        $(163,241)

Adjustments to reconcile net income (loss) to net cash
 provided by operating activities:
    Depreciation and amortization.................................................       13,725            8,868
    Purchased research and development.............................................          --          231,000
    Deferred income taxes.........................................................      (20,000)          (6,404)

    Changes in operating assets and liabilities:
      Accounts receivable.........................................................       (8,819)          (8,690)
      Inventories.................................................................       (3,299)          (5,823)
      Other current assets........................................................        1,721            6,473
      Other assets................................................................      (11,066)          (4,880)
      Accounts payable............................................................       17,844            6,950
      Accrued liabilities and accrued compensation and related liabilities........       65,187           (9,294)
                                                                                        --------        --------
        Net cash provided by operating activities.................................      107,665           55,059
                                                                                        --------        --------

Investing activities:
    Purchases of investments......................................................     (103,274)         (69,029)
    Maturities and sales of investments...........................................       88,673           45,659
    Purchases of furniture, fixtures and equipment................................      (26,074)         (27,239)
    Effects of business combinations..............................................           --           (9,300)
                                                                                        --------        --------
      Net cash used in investing activities.......................................      (40,675)         (59,909)
                                                                                        --------        --------

Financing activities:
    Proceeds from issuance of common stock, net...................................       24,259           25,027
    Tax benefit related to exercise of stock options..............................        8,956           26,200
                                                                                        --------        --------
      Net cash provided by financing activities...................................       33,215           51,227
                                                                                        --------        --------

Net increase in cash and cash equivalents.........................................      100,205           46,377
Cash and cash equivalents, beginning of period....................................      240,817          312,369
                                                                                        --------        --------
Cash and cash equivalents, end of period..........................................     $341,022        $ 358,746
                                                                                        ========        ========

Supplemental non-cash investing and financing activities:
  Liabilities assumed in business combination.....................................     $     --        $   9,600
                                                                                        ========        ========

Supplemental disclosure of cash flow information:
  Cash paid for income taxes......................................................     $    967        $     290
                                                                                        ========        ========

</TABLE>

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                       5
<PAGE>
      
 
                           ASCEND COMMUNICATIONS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                    UNAUDITED

GENERAL

Ascend Communications, Inc. (the "Company" or "Ascend") develops, manufactures
and sells wide area networking solutions for telecommunications carriers,
Internet service providers and corporate customers worldwide that enable them to
build: (i) Internet access systems consisting of point-of-presence termination
("POP") equipment for Internet service providers ("ISPs") and remote site
Internet access equipment for Internet subscribers; (ii) telecommunications
carrier and ISP backbone networks utilizing high speed Frame Relay, Asynchronous
Transfer Mode ("ATM") and Internet Protocol ("IP") switches; (iii) extensions
and enhancements to corporate backbone networks that facilitate access to these
networks by remote offices, telecommuters and mobile computer users; and (iv)
videoconferencing and multimedia access facilities. The Company's products
support existing digital and analog networks.

In February 1997, the Company purchased InterCon Systems Corporation
("InterCon"), a leading developer of remote access client software products for
both corporate and ISP markets. The transaction was accounted for as a purchase.
The operations of InterCon have been included for periods subsequent to the
acquisition (see "Business Combinations").

On April 1, 1997, the Company acquired Whitetree, Inc. ("Whitetree"), a
developer and manufacturer of high speed ATM switching products. The transaction
was accounted for as a pooling of interests. The operations of Whitetree have
been included for periods subsequent to the acquisition. The Company's
historical consolidated financial statements prior to the combination have not
been restated to reflect the financial results of Whitetree as these results
were not material to the Company (see "Business Combinations").

On June 30, 1997, the Company acquired Cascade Communications Corp. ("Cascade"),
a leading developer and manufacturer of carrier class Frame Relay, ATM and IP
switching products. The transaction was accounted for as a pooling of interests.
The consolidated financial statements of Ascend for prior periods have been
restated to include the financial position and results of operations of Cascade
(see "Business Combinations").

On January 28, 1997, Cascade completed its acquisition of Sahara Networks, Inc.
("Sahara"), a privately held developer of scaleable high-speed broadband access
products. The acquisition was accounted for as a purchase. The operations of
Sahara have been included for periods subsequent to the acquisition.

The interim condensed consolidated financial statements of Ascend have been
prepared by the Company without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations.

                                       6
<PAGE>

 
                           ASCEND COMMUNICATIONS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)

GENERAL (continued)

The information included in this report should be read in conjunction with the
Company's audited financial statements and notes thereto included in the
Company's 1997 Annual Report on Form 10-K.

In the opinion of management, the accompanying unaudited interim condensed
consolidated financial statements reflect all adjustments (consisting only of
normal recurring adjustments) necessary to summarize fairly the financial
position, results of operations and cash flows for such periods. The results for
the interim period ended March 31, 1998 are not necessarily indicative of the
results that may be expected for any future periods.

CONCENTRATION OF CREDIT RISK

The Company sells and distributes a substantial percentage of its products to
ISPs, value-added resellers and distributors, and local and long-distance
telecommunications carriers throughout North America, Europe and Asia and the
Pacific Basin. Accounts receivable are principally from these customers. The
Company conducts ongoing credit evaluations of its customers and maintains
reserves for potential credit losses.

INVENTORIES

Inventories are stated at the lower of cost (determined by the first-in,
first-out method) or market. Inventories consist of (in thousands):

<TABLE> 
<CAPTION> 
                                                MARCH 31,      DEC. 31,
                                                  1998           1997
                                               ----------     ----------
<S>                                           <C>            <C> 
Finished goods...........................      $  29,751      $  18,053
Products in process......................         41,929         15,579
Raw materials and supplies...............         31,256         66,005
                                               ----------     ----------

                                               $ 102,936      $  99,637
                                               ==========     ==========
</TABLE> 

                                       7

<PAGE>
 
                           ASCEND COMMUNICATIONS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)

COMMITMENTS

In March 1996, the Company entered into an agreement to lease 13 acres of land
and fund the construction of buildings, being used for the Company's
headquarters, located in Alameda, California. In March 1998, the Company
renegotiated the lease agreement to increase the lease commitment from
approximately $24.9 million to approximately $46.0 million to fund the purchase
of additional land and the construction of additional buildings on the land. The
lease term is five years, as of the date of the re-negotiation, with an option
to renew for two years, subject to the lessor's consent. The rent obligation
commenced in December 1996 and has been adjusted as of April 1998. At any time
during the term of the lease, the Company may purchase the land and buildings.
If the Company does not exercise its purchase option at the end of the lease,
the Company has guaranteed a residual value of approximately $41.0 million.

NET INCOME (LOSS) PER SHARE

The Company has adopted Statement of Financial Accounting Standards No. 128,
Earnings per Share ("FAS 128"). FAS 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options and warrants. Diluted earnings per share is very
similar to the previously reported fully diluted earnings per share. For the
quarter ended March 31, 1998, the effect of options and warrants has been
excluded from the diluted earnings per share calculation as it would be
anti-dilutive. The Company has restated all prior period per share information
as required by FAS 128.

                                       8
<PAGE>
 
                           ASCEND COMMUNICATIONS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)

 The computations of basic and diluted net income (loss) per share are as
follows (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                       Quarter Ended March 31,
                                                       -----------------------
                                                         1998           1997
                                                       --------       --------
<S>                                                <C>            <C>
Common stock.........................................   192,849        185,812
Common stock equivalents.............................    10,396         14,206
                                                       --------       --------
Total................................................   203,245        200,018
                                                       ========       ========

Net income (loss)....................................  $ 52,372      $(163,241)
                                                       ========       ========
Shares used in computing net income (loss)
per share - Basic....................................   192,849        185,812
                                                       ========       ========

Shares used in computing net income (loss)
per share - Diluted..................................   203,245        185,812
                                                       ========       ========

Net income (loss) per share - Basic..................  $   0.27      $   (0.88)
                                                       ========       ========

Net income (loss) per share - Diluted................  $   0.26      $   (0.88)
                                                       ========       ========
</TABLE>


BUSINESS COMBINATION

On June 30, 1997, the Company acquired Cascade in a transaction that was
accounted for as a pooling of interests. The Company issued approximately
66,346,000 shares of its common stock to Cascade stockholders in exchange for
all outstanding Cascade shares. Outstanding options to purchase Cascade common
stock were converted to options to purchase approximately 8,455,000 shares of
Ascend common stock. The historical consolidated financial results of Ascend for
prior periods have been restated to include the financial position and results
of operations of Cascade.

                                       9
<PAGE>
 
                           ASCEND COMMUNICATIONS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)

BUSINESS COMBINATIONS (continued)

The following table shows the historical results of Ascend and Cascade for the
periods prior to the consummation of the merger of the two entities:

<TABLE>
<CAPTION>
                                              QUARTER
                                               ENDED
                                              MARCH 31,    YEAR ENDED DEC. 31,
                                              ---------    -------------------
                                                1997         1996       1997
                                              ---------    --------   --------
<S>                                           <C>          <C>        <C>
Net Sales:
Ascend....................................... $ 202,412    $549,297   $152,604
Cascade......................................    90,328     340,976    134,834
                                              ---------    --------   --------
  Total...................................... $ 292,740    $890,273   $287,438
                                              =========    ========   ========
--------------------------------------------------------------------------------
Net Income:
Ascend....................................... $  35,093    $113,111   $ 27,535
Cascade......................................  (198,334)     70,779     25,410
                                              ---------    --------   --------
  Total......................................  (163,241)    183,890     52,945
                                              =========    ========   ========
</TABLE>

In February 1997, the Company acquired all of the outstanding stock of InterCon.
The purchase price consisted of a cash payment of $12.0 million, the assumption
of approximately $9.0 million of liabilities and transaction costs of
approximately $600,000. The acquisition was accounted for as a purchase.
Accordingly, the total purchase price of $21.6 million was allocated to the net
assets acquired based upon their estimated fair values. The estimated fair value
of tangible net assets acquired was $600,000. In addition, $18.0 million of the
purchase price was allocated to purchased research and development that had not
reached technological feasibility and that had no alternative future use, and
$3.0 million was allocated to purchased software.

On April 1, 1997, the Company acquired Whitetree in a transaction that was
accounted for as a pooling of interests. The Company issued approximately
1,315,000 shares of its common stock to Whitetree shareholders in exchange for
all outstanding Whitetree shares. In addition, the Company assumed all
outstanding Whitetree stock options to purchase approximately 99,000 shares of
the Company's stock. The results of operations of Whitetree, which have not been
material in relation to those of the Company, are included in the consolidated
results of operations for periods subsequent to the acquisition. The Company's
historical consolidated financial statements prior to the combination have not
been restated to reflect the financial results of Whitetree as these results
were not material to the Company.

                                       10
<PAGE>
 
                           ASCEND COMMUNICATIONS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)

BUSINESS COMBINATIONS (continued)

On January 28, 1997, Cascade completed its acquisition of Sahara. Cascade issued
approximately 3.4 million shares of Cascade common stock (or 2.4 million
equivalent shares of the Company's common stock) in exchange for all the
outstanding shares of Sahara. In addition, Cascade assumed all outstanding
Sahara stock options to purchase approximately 400,000 shares of Cascade common
stock. The acquisition was accounted for under the purchase method of
accounting. Accordingly, the purchase price of approximately $219.0 million was
allocated to the net assets acquired based upon their estimated fair market
value. The estimated fair value of the tangible net assets acquired was
approximately $6.0 million. In addition, approximately $213.0 million of the
purchase price was allocated to in-process research and development that had not
reached technological feasibility and that had no alternative future use.

LITIGATION

The Company and various of its current and former officers and directors are
parties to a number of related lawsuits which purport to be class actions filed
on behalf of all persons who purchased or acquired the Company's stock
(excluding the defendants and parties related to them) for the period November
5, 1996 to September 30, 1997. The lawsuits, which are substantially identical,
allege that the defendants violated the federal securities laws by engaging in a
scheme to artificially inflate and maintain the Company's stock price by
disseminating materially false and misleading information concerning its
business and earnings and the development, efficiency, introduction and
deployment of its digital modems based on 56K-bps technology.

All of these actions are in the early stages of proceedings and the Company is
currently investigating the allegations. Based on its current information, the
Company believes the suits to be without merit and intends to defend itself and
its officers and directors vigorously. Although it is reasonably possible the
Company may incur a loss upon the conclusion of these claims, an estimate of any
loss or range of loss cannot be made. No provision for any liability that may
result upon adjudication has been made in the Company's consolidated financial
statements. In the opinion of management, resolution of this matter is not
expected to have a material adverse effect on the financial position of the
Company. However, depending on the amount and timing, an unfavorable resolution
of this matter could materially affect the Company's future results or cash
flows in a particular period. In connection with these legal proceedings, the
Company expects to incur substantial legal and other expenses. Shareholder suits
of this kind are highly complex and can extend for a protracted period of time,
which can substantially increase the cost of such litigation and divert the
attention of the Company's management.

                                       11
<PAGE>
 
                           ASCEND COMMUNICATIONS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)

LITIGATION (continued)

On April 16, 1997, a civil action was filed against Sahara, its three founders
and ten employees of Sahara by General Datacomm Industries, Inc. in the Superior
Court for the State of Connecticut. The complaint alleges several causes of
action, including: breach of contract; tortious interference with contractual
relations; misappropriation of trade secrets; unfair competition and violation
of the Connecticut Unfair Trade Practices Act. The plaintiff seeks relief of
unspecified monetary damages, costs and injunctive relief. The Company has not
yet engaged in substantive discovery and the ultimate outcome of this matter
cannot yet be determined. The Company plans to vigorously defend this lawsuit.
No provision for any liability that may result from the action has been
recognized in the consolidated financial statements. In the opinion of
management, resolution of this litigation is not expected to have a material
adverse effect on the financial position of the Company. However, depending on
the amount and timing, an unfavorable resolution of this matter could materially
affect the Company's future results or cash flows in a particular period.

On April 18, 1997, the Company received a claim and request for royalties
alleging patent infringement on four separate patents. Subsequently, the claim
and request for royalties was amended to include four additional patents. The
Company is currently investigating the claims of such infringement and thus the
ultimate outcome of this claim cannot yet be determined. No provision for any
liability that may result from the claim has been recognized in the consolidated
financial statements. In the opinion of management, resolution of this matter is
not expected to have a material adverse effect on the financial position of the
Company. However, depending on the amount and timing, an unfavorable resolution
of this matter could materially affect the Company's future results or cash
flows in a particular period.

The Company is a party as a defendant in various other lawsuits, contractual
disputes and other legal claims, the results of which are not presently
determinable. However, in the opinion of management, after consultation with
legal counsel, the amount of losses that might be sustained, if any, from these
lawsuits would not materially affect the Company's financial position. However,
depending on the amount and timing, an unfavorable resolution of some or all of
these matters could materially affect the Company's future results of operations
or cash flows in a particular period.

                                       12
<PAGE>
 
ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

                           ASCEND COMMUNICATIONS, INC.

THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WHICH REFLECT THE CURRENT VIEWS
OF THE COMPANY WITH RESPECT TO FUTURE EVENTS THAT WILL HAVE AN EFFECT ON ITS
FUTURE FINANCIAL PERFORMANCE. THESE STATEMENTS INCLUDE THE WORDS "EXPECTS,"
"BELIEVES," "ESTIMATES," AND SIMILAR EXPRESSIONS. THESE FORWARD-LOOKING
STATEMENTS ARE SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES, INCLUDING THOSE
REFERRED TO UNDER "FACTORS THAT MAY AFFECT FUTURE RESULTS" AND ELSEWHERE HEREIN,
THAT COULD CAUSE ACTUAL FUTURE RESULTS TO DIFFER MATERIALLY FROM HISTORICAL
RESULTS OR THOSE CURRENTLY ANTICIPATED. READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS.

The information set forth below should be read in conjunction with the unaudited
interim condensed consolidated financial statements and notes thereto included
in Part 1 - Item 1 of this Quarterly Report and the audited financial statements
and notes thereto and Management's Discussion and Analysis of Financial
Condition and Results of Operations for the year ended December 31, 1997 
included in the Company's Annual Report on Form 10-K.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage of net
sales represented by certain line items from the Company's Condensed
Consolidated Statements of Operations for the quarters ended March 31, 1998 and
1997, respectively:

<TABLE>
<CAPTION>
                                             QUARTER ENDED MARCH 31, 1997
                                             ----------------------------
                                              1998                  1997
                                             ------                ------
<S>                                          <C>                   <C>
Net sales..................................    100%                  100%
Cost of sales..............................     36                    35
                                             ------                ------
  Gross margin.............................     64                    65

Operating expenses:
  Research and development.................     14                    12
  Sales and marketing......................     22                    18
  General and administrative...............      3                     3
  Purchased research and development.......      -                    79
                                             ------                ------
    Total operating expenses...............     39                   112
                                             ------                ------
Operating income (loss)....................     25                   (47)
Interest income, net.......................      2                     2
                                             ------                ------
Income (loss) before income taxes..........     27                   (45)
Provision for income taxes.................     10                    11
                                             ------                ------
Net income (loss)..........................     17%                  (56)%
                                             =======               ======

</TABLE>
                                       13
<PAGE>
 
                           ASCEND COMMUNICATIONS, INC.

NET SALES

Net sales for the quarter ended March 31, 1998 were $305.1 million, an increase
of 4% over net sales of $292.7 million for the first quarter of 1997. UUNet, an
Internet Service Provider, accounted for approximately 20% and 18% of net sales
for the quarters ended March 31, 1998 and 1997, respectively. International
sales accounted for approximately 26% of net sales for the quarter ended March
31, 1998 compared to 30% of net sales for the same period in 1997. This
decreases was principally due to decreased sales of the Company's products in
Europe.

The following table provides a breakdown of net sales by business unit as a
percentage of total net sales:

<TABLE>
<CAPTION>
                                             QUARTER ENDED MARCH 31,
                                             -----------------------
           BUSINESS UNIT                       1998           1997
----------------------------------------     --------       --------
<S>                                          <C>            <C>
Access Switching.........................       44%             59%
Core Systems.............................       41              30
Enterprise Access........................       10               8
Other....................................        5               3
                                             --------       --------
  Total Company..........................      100%            100%
                                             ========       ========
</TABLE>

ACCESS SWITCHING - The Access Switching business unit offers the MAX family of
products. Access Switching products accounted for 44% and 59% of total Company
net sales for the quarters ended March 31, 1998 and 1997, respectively. The
decrease in net sales of Access Switching products was primarily attributable to
large shipments of TNT product to customers in North America in the first
quarter of 1997. The TNT was first made available for commercial shipments in
the first quarter of 1997 and demand for the product had accumulated in
anticipation of its general release.

CORE SYSTEMS - The Core Systems business unit offers the B-STDX family of Frame
Relay switches, CBX500 and GX550 families of core ATM switches, the SA family of
broadband ATM switches and the GRF family of IP switches. Core Systems products
accounted for 41% and 30% of total Company net sales for the quarters ended
March 31, 1998 and 1997, respectively. The increase in net sales of Core Systems
products was primarily attributable to continuing market acceptance of the
CBX500 ATM switches.

ENTERPRISE ACCESS - The Enterprise Access business unit offers the Pipeline
family of remote access equipment as well as the Multiband MAX family of inverse
multiplexing equipment. Enterprise Access products accounted for 10% and 8% of
total Company net sales for the quarters ended March 31, 1998 and 1997,
respectively. The increase in net sales of Enterprise Access products was
primarily attributable to strength in demand for Pipelines from the Company's
indirect distribution channels.

                                       14
<PAGE>
 
                           ASCEND COMMUNICATIONS, INC.

GROSS MARGIN

Gross margin was 64% and 65% for the quarters ended March 31, 1998 and 1997,
respectively. The decrease in gross margin for the quarter ended March 31, 1998
was primarily due to increased manufacturing period costs. In the future, the
Company's gross margins may be affected by several factors, including the mix of
products sold, the price of products sold, the introduction of new products with
lower gross margins, the distribution channels used, price competition,
increases in material costs and changes in other components of cost of sales.

RESEARCH AND DEVELOPMENT

Research and development expenses increased 18% to $41.0 million in the first
quarter of 1998 from $34.7 million in the first quarter of 1997. Research and
development expenses as a percent of net sales increased to 14% for the first
quarter of 1998 compared to 12% for the same quarter of 1997. These increases
were primarily due to the addition of engineering personnel, payments for
consulting services in connection with developing and enhancing the Company's
existing and new products, payments for consulting services related to filing
applications and product testing required to obtain governmental approvals to
resell the Company's products outside of North America, addition of research and
development laboratory equipment, and material costs associated with new product
prototypes. In addition, research and development expenses increased in part
through the addition of engineering personnel and facilities as a result of the
Company's merger and acquisition activities.

SALES AND MARKETING

Sales and marketing expenses increased 27% to $67.3 million for the first
quarter of 1998 from $53.2 million for the first quarter of 1997. Sales and
marketing expenses as a percent of net sales increased to 22% for the first
quarter of 1998 as compared to 18% for the same quarter of 1997. These increases
were primarily due to the addition of sales, marketing and technical support
personnel, increased commissions, spending for marketing materials and trade
shows, advertising and promotions, expenditures for demonstration and loaner
equipment used by customers, and expenses associated with opening additional
sales offices in North America, Europe and Asia and the Pacific Basin. The
growth in sales, marketing and technical support personnel was primarily due to
the need to manage the activities of an increased number of value-added
resellers and distributors, end-user customers and new products.

GENERAL AND ADMINISTRATIVE

General and administrative expenses increased 11% to $10.0 million for the first
quarter of 1998 from $9.1 million for the first quarter of 1997. This increase
was primarily due to the addition of finance, information systems and
administrative personnel, accruals for performance bonuses, increased facilities
costs and the cost of investor relations activities. General and administrative
expenses as a percent of net sales were 3% for the quarters ended March 31, 1998
and 1997.

                                       15
<PAGE>
 
                           ASCEND COMMUNICATIONS, INC.

PURCHASED RESEARCH AND DEVELOPMENT

Purchased research and development costs were $231.1 million for the quarter
ended March 31, 1997. These costs were for the purchase of technology and
related assets associated with the acquisitions of InterCon Systems Corporation
and Sahara Networks, Inc. during the first quarter of 1997. These acquisitions
provided technology and expertise that the Company used to enhance and expand
the breadth of its offerings to end-user markets.

INTEREST INCOME, NET

Interest income (net) decreased by approximately $312,000 to $5.0 million (2% of
net sales) for the first quarter of 1998 compared to $5.3 million for the same
quarter of 1997. This decrease in interest income (net) is due primarily to
shifting investments from taxable securities to non-taxable securities.

PROVISION FOR INCOME TAXES

The Company's effective tax rate for the quarters ended March 31, 1998 and 1997
was 36.0% and 38.2%, respectively, exclusive of the effect of one-time
non-deductible in-process research and development expenses. The lower effective
tax rate for 1998 is primarily attributable to reduction in the overall state
effective tax rate and utilization of various tax credits. The Company
anticipates its 1998 effective tax rate to be approximately 36.0%, however, the
rate could change upon a change in the estimated amount or geographic mix of the
Company's earnings, changes in U.S. tax law such as reinstatement of the
research tax credit, or the effect of future acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 1998, the Company's principal sources of liquidity included $691.4
million of cash and cash equivalents, short-term investments and investments,
and an unsecured $25.0 million revolving line of credit which expires in June
1999. There were no borrowings or amounts outstanding under the line of credit
as of March 31, 1998. The increase in cash and cash equivalents of $100.2
million for the period was principally due to $107.7 million of funds provided
by operating activities and $33.2 million of funds provided by financing
activities, partially offset by $40.7 million of funds used in investing
activities. The net cash provided by operating activities for the three months
ended March 31, 1998 was primarily due to increases in accrued liabilities,
accrued compensation and accounts payable and increased net income, partially
offset by increases in other assets, accounts receivable and inventories.

Net cash used in investing activities of $40.7 million for the three months
ended March 31, 1998 related primarily to net purchases, maturities and sales of
investments and expenditures for furniture, fixtures, and equipment. Financing
activities provided $33.2 million for the three months ended March 31, 1998,
primarily due to proceeds from, and tax benefits related to, the exercise of
stock options and issuance of common stock in connection with the Company's
employee and outside director stock plans.

                                       16
<PAGE>
 
                           ASCEND COMMUNICATIONS, INC.

LIQUIDITY AND CAPITAL RESOURCES (continued)

At March 31, 1998, the Company had $823.0 million in working capital. The
Company currently has no significant capital commitments other than commitments
under facilities and operating leases. The Company believes that its available
sources of funds and anticipated cash flow from operations will be adequate to
finance current operations, anticipated investments and capital expenditures for
at least the next twelve months.

FACTORS THAT MAY AFFECT FUTURE RESULTS

The Company's quarterly and annual operating results are affected by a wide
variety of risks and uncertainties as discussed in the Company's 1997 Annual
Report on Form 10-K. This Report on Form 10-Q should be read in conjunction with
Form 10-K, particularly the section entitled "Factors That May Affect Future
Results." These risks and uncertainties include but are not limited to
competition, the mix of products sold, the mix of distribution channels
employed, the Company's success in developing, introducing and shipping new
products, the Company's ability to attract and retain key employees, the
Company's success in integrating acquired operations, the Company's dependence
on single or limited source suppliers for certain components used in its
products, price reductions for the Company's products, risks inherent in
international sales, changes in the levels of inventory held by third-party
resellers, the timing of orders from and shipments to customers, seasonality and
general economic conditions.

In particular, a substantial portion of the Company's sales of MAX and Pipeline
products is related to the Internet industry. In North America, the Company
sells a substantial percentage of its products, particularly its MAX products,
to ISPs. Additionally, a substantial portion of the Company's sales of core
systems products is related to the telecommunications carrier industry. In North
America, the Company sells a substantial percentage of the core systems products
to public carriers. There can be no assurance that these industries and their
infrastructure will continue to develop or that acceptance of the Company's
products by these industries will be sustained. The Company believes competition
in the Internet and public carrier industry will increase significantly in the
future and could adversely affect the Company's business, results of operations
and financial condition.

The Company expects that its gross margins could be adversely affected in future
periods by price changes as a result of increased competition. In addition,
increased sales of Pipeline products as a percentage of net sales may adversely
affect the Company's gross margins in future periods as these products have
lower gross margins than the Company's other products. Further, the
Company's use of third parties to distribute its products to other value-added
resellers may adversely affect the Company's gross margins.


                                       17
<PAGE>
 
                           ASCEND COMMUNICATIONS, INC.

FACTORS THAT MAY AFFECT FUTURE RESULTS (continued)
  
The Company expects that international sales will continue to account for a
significant portion of the Company's net sales in future periods. International
sales are subject to certain inherent risks, including unexpected changes in
regulatory requirements and tariffs, difficulties in staffing and managing
foreign operations, longer payment cycles, problems in collecting accounts
receivable and potentially adverse tax consequences. The Company depends on
third party resellers for a substantial portion of its international sales.
Certain of these third party resellers also act as resellers for competitors of
the Company that can devote greater effort and resources to marketing
competitive products. The loss of certain of these third party resellers could
have a material adverse effect on the Company's business and results of
operations. Although the Company's sales are denominated in U.S. dollars,
fluctuations in currency exchange rates could cause the Company's products to
become relatively more expensive to customers in a particular country, leading
to a reduction in sales and profitability in that country. Furthermore, future
international activity may result in foreign currency denominated sales, and, in
such event, gains and losses on the conversion to U.S. dollars of accounts
receivable and accounts payable arising from international operations may
contribute to fluctuations in the Company's results of operations. In addition,
sales in Europe and certain other parts of the world typically are adversely
affected in the third quarter of each calendar year as many customers reduce
their business activities during the summer months. These seasonal factors may
have an adverse effect on the Company's business, results of operations and
financial condition.

The Company typically operates with a relatively small backlog. As a result,
quarterly sales and operating results generally depend on the volume of, timing
of and ability to fulfill orders received within the quarter, which are
difficult to forecast. In the Company's most recent quarters, the sequential
sales growth slowed from prior levels, and a disproportionate share of the sales
occurred in the last month of the quarter. These occurrences are extremely
difficult to predict and may happen in the future. The Company's ability to meet
financial expectations could be hampered if the nonlinear sales pattern
continues in future periods. Accordingly, the cancellation or delay of even a
small percentage of customer purchases could adversely affect the Company's
results of operations in the quarter. A significant portion of the Company's net
sales in prior periods has been derived from relatively large sales to a limited
number of customers, and therefore the failure of the Company to secure expected
large sales may have a material adverse impact on results of operations. A
significant portion of the Company's expense levels is relatively fixed in
advance based in large part on the Company's forecasts of future sales. If sales
are below expectations in any given quarter, the adverse impact of the shortfall
on the Company's operating results may be magnified by the Company's inability
to adjust spending to compensate for the shortfall.

                                       18
<PAGE>
 
                           ASCEND COMMUNICATIONS, INC.

FACTORS THAT MAY AFFECT FUTURE RESULTS (continued)

The market for the Company's products is characterized by rapidly changing
technologies, evolving industry standards, frequent new product introductions
and short product life cycles. The introduction of new products requires the
Company to manage the transition from older products in order to minimize
disruption in customer ordering patterns, avoid excessive levels of older
product inventories and ensure that adequate supplies of new products can be
delivered to meet customer demand. Furthermore, products such as those offered
by the Company may contain undetected or unresolved hardware problems or
software errors when they are first introduced or as new versions are released.
There can be no assurance that, despite extensive testing by the Company,
hardware problems or software errors will not be found in new products after
commencement of commercial shipments, resulting in delay in or loss of market
acceptance. Future delays in the introduction or shipment of new or enhanced
products, the inability of such products to gain market acceptance or problems
associated with new product transitions could adversely affect the Company's
business, results of operations and financial condition.

Many computer systems were not designed to handle any dates beyond the Year
1999, and therefore computer hardware and software will need to be modified
prior to the Year 2000 in order to remian functional. The Company is concerned
that many enterprises will be devoting a substantial portion of their
information systems spending to resolving this upcoming Year 2000 problem. This
may result in spending being diverted from networking solutions over the next
three years. Additionally, the Company will have to devote resources to
providing the Year 2000 solution for its own products. The Year 2000 issue could
lower demand for the Company's products while increasing the Company's costs.
These factors could have a material adverse impact on the Company's
financial results.

The Company believes the majority of its major systems are currently Year 2000
compliant, and costs to transition the Company's remaining systems to Year 2000
compliance are not anticipated to be material. There can be no assurance that
systems operated by third parties that interfere with or contain the Company's
products will timely achieve Year 2000 compliance. Any failure of these third
parties' systems to timely achieve Year 2000 compliance could have a material
adverse effect on the Company's business, financial condition and results of
operations.

The Company mainly competes in four segments of the data networking market : (i)
wide area network ("WAN") and Internet access, (ii) WAN and Internet backbone
switching, (iii) remote LAN access and Internet subscriber access, and (iv)
videoconferencing and multimedia access. The Company competes in one or more of
these market segments with Cisco Systems, Inc., 3Com Corporation, Bay Networks,
Inc., Newbridge Networks, Inc., Shiva Corporation, Northern Telecom, Inc., and
many others. Some of these competitors have substantially greater financial,
marketing and technical resources than the Company. The Company expects
additional competition from existing competitors and from a number of other
companies, some of which may have substantially greater financial, marketing and
technical resources than the Company, that may enter the Company's existing and
future markets. Increased competition could result in price reductions, reduced
profit margins and loss of market share, each of which would adversely affect
the Company's business, results of operations and financial condition.

                                       19
<PAGE>
 
                           ASCEND COMMUNICATIONS, INC.

FACTORS THAT MAY AFFECT FUTURE RESULTS (continued)

The Company's sales are, to a significant degree, made through
telecommunications carriers, value-added resellers ("VARs") and distributors.
Accordingly, the Company is dependent on the continued viability and financial
stability of these companies. While the Company has contractual relationships
with many telecommunications carriers, VARs and distributors, these agreements
do not require these companies to purchase the Company's products and can be
terminated by these companies at any time. There can be no assurance that any
of the telecommunications carriers, VARs or distributors will continue to
market the Company's products. The telecommunications carrier customers, to
the extent they are resellers, VARs and distributors, generally offer products
of several different companies, including products that are competitive with
the Company's products. Accordingly, there is a risk that these companies may
give higher priority to products of other suppliers, thus reducing their
efforts to sell the Company's products. Any special distribution arrangement
and product pricing arrangement that the Company may implement in one or more
distribution channels for strategic purposes could adversely affect gross
profit margins.

The Company's success depends to a significant degree upon the continuing
contributions of its key management, sales, marketing and product development
personnel. The Company does not have employment contracts with its key personnel
and does not maintain any key person life insurance policies. The loss of key
personnel could adversely affect the Company.

The Company is currently experiencing rapid growth and expansion, which has
placed, and will continue to place, a significant strain on its administrative,
operational and financial resources and increased demands on its systems and
controls. This growth has resulted in a continuing increase in the level of
responsibility for both existing and new management personnel. The Company
anticipates that its continued growth will require it to recruit and hire a
substantial number of new engineering, sales, marketing and managerial
personnel. There can be no assurance that the Company will be successful at
hiring or retaining these personnel. The Company's ability to manage its growth
successfully will also require the Company to continue to expand and improve its
operational, management and financial systems and controls and to expand its
manufacturing capacity. If the Company's management is unable to manage growth
effectively, the Company's business, results of operations and financial
condition may be materially and adversely affected.

The Company relies on a combination of patents, copyright, and trade secret laws
and non-disclosure agreements to protect its proprietary technology. The Company
is currently involved in patent disputes the results of which are not presently
determinable. Such disputes could result in significant expenses to the Company
and divert the efforts of the Company's technical management personnel.

                                       20
<PAGE>
          
                           ASCEND COMMUNICATIONS, INC.

FACTORS THAT MAY AFFECT FUTURE RESULTS (continued)

Although the Company generally uses standard parts and components for its
products, certain components, including certain key microprocessors and
integrated circuits, are presently available only from a single source or from
limited sources. The Company has no supply commitments from its vendors and
generally purchases components on a purchase order basis as opposed to entering
into long term procurement agreements with vendors. The Company has generally
been able to obtain adequate supplies of components in a timely manner from
current vendors or, when necessary to meet production needs, from alternate
vendors. The Company believes that, in most cases, alternate vendors can be
identified if current vendors are unable to fulfill needs. However, delays or
failure to identify alternate vendors, if required, or a reduction or
interruption in supply, or a significant increase in the price of components
could adversely affect the Company's revenues and financial results and could
impact customer relations.

The Company has concluded the acquisition of four companies in 1997 and five
companies in 1996. Achieving the anticipated benefits of these acquisitions or
any other acquisitions the Company may undertake will depend in part upon
whether the integration of the acquired companies' products and technologies,
research and development activities, and sales, marketing and administrative
organizations is accomplished in an efficient and effective manner, and there
can be no assurance that this will occur. Moreover, the integration process may
temporarily divert management attention from the day-to-day business of the
Company. Failure to successfully accomplish the integration of the acquired
companies could have a material adverse effect on the Company's business,
financial condition and/or results of operations.

The Company's common stock has experienced significant price volatility, and
such volatility may occur in the future, particularly as a result of
quarter-to-quarter variations in the actual or anticipated financial results of
the Company or other companies in the networking industry, announcements by the
Company or competitors regarding new product introductions or other developments
affecting the Company and/or changes in financial estimates by public market
analysts. In addition, the market has experienced extreme price and volume
fluctuations that have affected the market price of many technology companies'
stocks and that have been unrelated or disproportionate to the operating
performance of these companies. These broad market fluctuations may adversely
affect the market price of the Company's common stock. Recent periods of
volatility in the market price of a Company's securities resulted in securities
class action litigation against the Company and various officers and directors.
Such litigation could result in substantial costs and a diversion of
management's attention and resources, which would have a material adverse effect
on the operating results and financial condition of the Company.

In consideration of these factors, there can be no assurance that the Company
will be able to sustain growth in revenues or profitability, particularly on a
period-to-period basis.

                                       21
<PAGE>
 
Item 6:  Exhibits and Reports on Form 8-K:

                A:       Exhibits


    No.                                 Description
-----------     --------------------------------------------------------------
(6)     3.1     Certificate of Incorporation.

(1)     3.2     By-Laws.

(1)    10.1     First Amended and Restated 1989 Stock Option Plan and forms of
                stock option agreements used thereunder. 

(1)    10.2     Ascend Communications, Inc. 1994 Employee Stock Purchase Plan.

(1)    10.3     Ascend Communications, Inc. 1994 Outside Directors Stock 
                Option Plan.

(1)    10.4     Loan Agreement and related agreements, dated October 21, 1993,
                by and between the Registrant and First Interstate Bank of
                California.

(1)    10.5     Lease dated August 8, 1991, by and between the Registrant and
                Harbor Bay Isle Associates, the First Addendum thereto, dated
                August 8, 1991, and the Second Addendum thereto, dated
                February 25,1994.

(1)    10.8     Form of Indemnity Agreement for directors and officers.

(2)    10.9     Loan Agreement and related agreements, date July 29, 1994, by
                and between the Registrant and First Interstate Bank of
                California.

(3)   10.10     Lease Agreement, Lease Rider and Second Lease Rider, dated May
                17, 1995 by and between the Registrant and Resurgence 
                Properties, Inc.

(4)   10.11     Loan Agreement and related agreements, dated November 30,
                1995, by and between the Registrant and Wells Fargo Bank of
                California.

(5)   10.12     Lease agreement dated March 27, 1996, by and between the 
                Registrant and Sumitomo Bank Leasing and Financing, Inc.

(7)   10.13     Ascend Communications, Inc. 1996 Restricted Stock Plan.

(8)   10.14     Cascade Communications Corp. Amended and Restated 1991 Stock 
                Plan.

(9)   10.15     Cascade Communications Corp. 1994 Employee Stock Purchase 
                Plan.



                                       22
<PAGE>
B. Exhibits (continued):
 

 
        No.                                   Description
------------------      ------------------------------------------------------
        (9)  10.16      Cascade Communications Corp. 1994 Non-Employee Director 
                        Stock Plan.

        (9)  10.17      Letter of Employment dated March 12, 1992 between the 
                        Registrant and Daniel E. Smith.

(9)(10)(11)  10.18      Lease dated July 27, 1993 between Glenborough
                        Corporation and the Registrant; as amended by the first
                        amendment thereto dated February 24, 1994; as amended by
                        the second amendment thereto dated July 24, 1994; as
                        amended by the third amendment thereto dated November
                        10, 1994; as amended by the fourth amendment thereto
                        dated December 1, 1995.

       (12)  10.19      Lease dated November 14, 1996 between the Registrant and
                        Nashoba View Associated, LLC.

       (13)  10.20      Loan Agreement and related agreements, dated November
                        30, 1995, by and between the Registrant and Wells Fargo
                        Bank of California, as amended by the first amendment
                        thereto, dated October 15, 1997.

             10.21      Lease agreement dated March 20, 1998, by and between
                        the Registrant and Sumitomo Bank Leasing and
                        Financing, Inc.
                        
             10.22      Form of Change in Control Agreement for CEO and 
                        Executive Vice Presidents.

             10.23      Form of Change in Control Agreement for Vice 
                        Presidents.

              27.0      Financial Data Schedule.

(1)  Incorporated by reference from the Company's Registration Statement (No. 
     33-77146), effective May 12, 1994.

(2)  Incorporated by reference from the Company's Form 10-Q for the quarter 
     ended September 30, 1994.

(3)  Incorporated by reference from the Company's Form 10-Q for the quarter 
     ended June 30, 1995.

(4)  Incorporated by reference from the Company's Form 10-K for the year
     ended December 31, 1995.

(5)  Incorporated by reference from the Company's Form 10-Q for the quarter 
     ended March 31, 1996.




                                       23
<PAGE>
 
A: Exhibits (continued):


 
(6)  Incorporated by reference from the Company's Form 10-Q for the quarter
     ended June 30, 1996.

(7)  Incorporated by reference from the Company's Form 10-K for the year ended 
     December 31, 1996.

(8)  Incorporated by reference from Cascade Communications Corp.'s Registration
     Statement on Form S-8 (File No. 33-93152) filed with the Securities
     Commission and Exchange Commission (the "Commission") on June 6, 1995.

(9)  Incorporated by reference from Cascade Communications Corp.'s Registration
     Statement on Form S-1 (File No. 33-79330) filed with the Commission on May
     26, 1994, as amended, which Registration Statement became effective on July
     28, 1994.

(10) Incorporated by reference to the corresponding exhibit previously filed as
     an exhibit to Cascade Communications Corp.'s Form 10-K filed for the fiscal
     year ended December 31, 1994 on March 29, 1995.

(11) Incorporated by reference to the corresponding exhibit previously filed as
     an exhibit to Cascade Communications Corp.'s Form 10-K filed for the fiscal
     year ended December 31, 1995 on March 1, 1996.

(12) Incorporated by reference to the corresponding exhibit previously filed as
     an exhibit to Cascade Communications Corp.'s Form 10-K filed for the fiscal
     year ended December 31, 1996 on March 14, 1997.

(13) Incorporated by reference from the Company's Form 10-K for the year ended 
     December 31, 1997.


B: Reports on Form 8K:

        No reports on Form 8-K were filed during the quarter ended March 31, 
        1998.


                                     24
<PAGE>
 
                           ASCEND COMMUNICATIONS, INC.

                                   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.

                                      ASCEND COMMUNICATIONS, INC.
                              
DATE     May 15, 1998          by   /S/ Michael F.G.Ashby
         ------------              -------------------------------------------
                                   Michael F.G. Ashby, Executive Vice President
                                   and Chief Financial Officer
                                  (Principal Financial Officer)
                              
DATE     May 15, 1998          by  /S/ Bernard V. Schneider
         ------------              -------------------------------------------
                                   Bernard V. Schneider, Vice President
                                   and Treasurer

                                       25
<PAGE>
 
                         ASCEND COMMUNICATIONS, INC.

                              INDEX TO EXHIBITS

    No.                                 Description
-----------     --------------------------------------------------------------
(6)     3.1     Certificate of Incorporation.

(1)     3.2     By-Laws.

(1)    10.1     First Amended and Restated 1989 Stock Option Plan and forms of
                stock option agreements used thereunder. 

(1)    10.2     Ascend Communications, Inc. 1994 Employee Stock Purchase Plan.

(1)    10.3     Ascend Communications, Inc. 1994 Outside Directors Stock 
                Option Plan.

(1)    10.4     Loan Agreement and related agreements, dated October 21, 1993,
                by and between the Registrant and First Interstate Bank of
                California.

(1)    10.5     Lease dated August 8, 1991, by and between the Registrant and
                Harbor Bay Isle Associates, the First Addendum thereto, dated
                August 8, 1991, and the Second Addendum thereto, dated
                February 25,1994.

(1)    10.8     Form of Indemnity Agreement for directors and officers.

(2)    10.9     Loan Agreement and related agreements, date July 29, 1994, by
                and between the Registrant and First Interstate Bank of
                California.

(3)   10.10     Lease Agreement, Lease Rider and Second Lease Rider, dated May
                17, 1995 by and between the Registrant and Resurgence 
                Properties, Inc.

(4)   10.11     Loan Agreement and related agreements, dated November 30,
                1995, by and between the Registrant and Wells Fargo Bank of
                California.

(5)   10.12     Lease agreement dated March 27, 1996, by and between the 
                Registrant and Sumitomo Bank Leasing and Financing, Inc.

(7)   10.13     Ascend Communications, Inc. 1996 Restricted Stock Plan.

(8)   10.14     Cascade Communications Corp. Amended and Restated 1991 Stock 
                Plan.

(9)   10.15     Cascade Communications Corp. 1994 Employee Stock Purchase 
                Plan.


                                     26

<PAGE>
INDEX TO EXHIBITS (CONTINUED)

 
        No.                                   Description
------------------      ------------------------------------------------------
        (9)  10.16      Cascade Communications Corp. 1994 Non-Employee Director 
                        Stock Plan.

        (9)  10.17      Letter of Employment dated March 12, 1992 between the 
                        Registrant and Daniel E. Smith.

(9)(10)(11)  10.18      Lease dated July 27, 1993 between Glenborough
                        Corporation and the Registrant; as amended by the first
                        amendment thereto dated February 24, 1994; as amended by
                        the second amendment thereto dated July 24, 1994; as
                        amended by the third amendment thereto dated November
                        10, 1994; as amended by the fourth amendment thereto
                        dated December 1, 1995.

       (12)  10.19      Lease dated November 14, 1996 between the Registrant and
                        Nashoba View Associated, LLC.

       (13)  10.20      Loan Agreement and related agreements, dated November
                        30, 1995, by and between the Registrant and Wells Fargo
                        Bank of California, as amended by the first amendment
                        thereto, dated October 15, 1997.

             10.21      Lease agreement dated March 20, 1998, by and between
                        the Registrant and Sumitomo Bank Leasing and
                        Financing, Inc.

             10.22      Form of Change in Control Agreement for CEO and 
                        Executive Vice Presidents.

             10.23      Form of Change in Control Agreement for Vice Presidents.

              27.0      Financial Data Schedule.

(1)  Incorporated by reference from the Company's Registration Statement (No. 
     33-77146), effective May 12, 1994.

(2)  Incorporated by reference from the Company's Form 10-Q for the quarter 
     ended September 30, 1994.

(3)  Incorporated by reference from the Company's Form 10-Q for the quarter 
     ended June 30, 1995.

(4)  Incorporated by reference from the Company's Form 10-K for the year
     ended December 31, 1995.

(5)  Incorporated by reference from the Company's Form 10-Q for the quarter 
     ended March 31, 1994.


                                      27

<PAGE>
INDEX TO EXHIBITS (CONTINUED)

 
(6)  Incorporated by reference from the Company's Form 10-Q for the quarter
     ended June 30, 1996.

(7)  Incorporated by reference from the Company's Form 10-K for the year ended 
     December 31, 1996.

(8)  Incorporated by reference from Cascade Communications Corp.'s Registration
     Statement on Form S-8 (File No. 33-93152) filed with the Securities
     Commission and Exchange Commission (the "Commission") on June 6, 1995.

(9)  Incorporated by reference from Cascade Communications Corp.'s Registration
     Statement on Form S-1 (File No. 33-79330) filed with the Commission on May
     26, 1994, as amended, which Registration Statement became effective on July
     28, 1994.

(10) Incorporated by reference to the corresponding exhibit previously filed as
     an exhibit to Cascade Communications Corp.'s Form 10-K filed for the fiscal
     year ended December 31, 1994 on March 29, 1995.

(11) Incorporated by reference to the corresponding exhibit previously filed as
     an exhibit to Cascade Communications Corp.'s Form 10-K filed for the fiscal
     year ended December 31, 1995 on March 1, 1996.

(12) Incorporated by reference to the corresponding exhibit previously filed as
     an exhibit to Cascade Communications Corp.'s Form 10-K filed for the fiscal
     year ended December 31, 1996 on March 14, 1997.

(13) Incorporated by reference from the Company's Form 10-K for the year ended 
     December 31, 1997.



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