UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

              |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended March 31, 2005

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the transition from __________ to __________.

                         Commission File Number 0-26634

                               LECROY CORPORATION
             (Exact Name of Registrant as Specified in Its Charter)

             DELAWARE                                  13-2507777
   (State or Other Jurisdiction                     (I.R.S. Employer
of Incorporation or Organization)                  Identification No.)

        700 CHESTNUT RIDGE ROAD
        CHESTNUT RIDGE, NEW YORK                           10977
(Address of Principal Executive Office)                 (Zip Code)

                                 (845) 425-2000
              (Registrant's Telephone Number, Including Area Code)

Indicate by check mark ("X") 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 twelve 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 [ ]

Indicate by check mark ("X") whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

                                 YES |X| NO [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

               CLASS                            OUTSTANDING AT APRIL 30, 2005
Common stock, par value $.01 share                         12,340,465


<PAGE>




                               LECROY CORPORATION
                                    FORM 10-Q

                                      INDEX

                                                                        PAGE NO.
PART I      FINANCIAL INFORMATION

 Item 1.    Financial Statements:
            Condensed Consolidated Balance Sheets (Unaudited)
              as of March 31, 2005 and June 30, 2004.........................3
            Condensed Consolidated Statements of Operations
              (Unaudited) for the Three and Nine Months
              ended March 31, 2005 and 2004..................................4
            Condensed Consolidated Statements of
              Cash Flows (Unaudited) for the Nine Months
              ended March 31, 2005 and 2004..................................5
            Notes to Condensed Consolidated
              Financial Statements (Unaudited) ..............................6
 Item 2.    Management's Discussion and Analysis of Financial Condition
              and Results of Operations.....................................24
 Item 3.    Quantitative and Qualitative Disclosures About Market Risk......47
 Item 4.    Controls and Procedures.........................................49

PART II     OTHER INFORMATION

 Item 1.    Legal Proceedings...............................................50
 Item 6.    Exhibits........................................................51

Signature     ..............................................................55


         LeCroy(R), Wavelink(TM), WaveMaster(R), WavePro(R), WaveRunner(R),
WaveSurfer(TM), WaveExpert(TM), MAUI(TM) and CATC(TM) are our trademarks, among
others not referenced in this document. All other trademarks, servicemarks or
tradenames referred to in this Form 10-Q are the property of their respective
owners.



<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                               LECROY CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                                                           MARCH 31,      JUNE 30,
IN THOUSANDS, EXCEPT PAR VALUE AND SHARE DATA                                                2005           2004
----------------------------------------------------------------                           --------       --------
ASSETS

<S>                                                                                      <C>          <C>
Current assets:
    Cash and cash equivalents........................................................      $    16,669  $    28,566
    Marketable securities............................................................               --        9,534
    Accounts receivable, net.........................................................           28,149       24,675
    Inventories, net.................................................................           28,220       21,978
    Other current assets.............................................................            9,916       11,921
                                                                                           -----------  -----------
      Total current assets...........................................................           82,954       96,674

Property and equipment, net..........................................................           19,472       19,778
Goodwill.............................................................................           81,767        1,874
Other non-current assets.............................................................           14,130       11,467
                                                                                           -----------  -----------
TOTAL ASSETS.........................................................................      $   198,323  $   129,793
                                                                                           ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Current portion of long-term debt and capital leases.............................      $     8,367  $       107
    Accounts payable.................................................................           14,398       12,097
    Accrued expenses and other current liabilities...................................           19,470       14,554
                                                                                           -----------  -----------
      Total current liabilities......................................................           42,235       26,758

Long-term debt.......................................................................           39,383           89
Deferred revenue and other non-current liabilities...................................            1,402        1,338
                                                                                           -----------  -----------
      Total liabilities..............................................................           83,020       28,185

Stockholders' equity:
  Common stock, $.01 par value (authorized 45,000,000 shares; 12,476,876 and
    11,973,830 shares issued and outstanding as of March 31, 2005 and June 30,
    2004, respectively)..............................................................              125          120
  Preferred stock, $.01 par value (authorized 5,000,000 shares; none issued and
   outstanding as of March 31, 2005 and June 30, 2004)...............................               --           --
  Additional paid-in capital.........................................................          111,034       98,421
  Warrants to purchase common stock..................................................            2,165        2,165
  Accumulated other comprehensive income.............................................            1,624          434
  Deferred stock compensation........................................................          (8,938)       (6,509)
  Retained earnings..................................................................            9,293        6,977
                                                                                           -----------  -----------
      Total stockholders' equity.....................................................          115,303      101,608
                                                                                           -----------  -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY...........................................      $   198,323  $   129,793
                                                                                           ===========  ===========
</TABLE>



              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.


                                       3

<PAGE>




                               LECROY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------
                                                            THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                 MARCH 31,                   MARCH 31,
IN THOUSANDS, EXCEPT PER SHARE DATA                        2005            2004           2005          2004
---------------------------------------------------------------------------------------------------------------
                                                        (13 WEEKS)      (13 WEEKS)     (40 WEEKS)    (39 WEEKS)
<S>                                                     <C>            <C>            <C>            <C>
Revenues:
   Test and measurement products......................... $40,879        $ 30,883       $114,564       $ 84,343
   Service and other.....................................   2,011           1,947          6,619          5,677
                                                          -------        --------       --------       --------
      Total revenues.....................................  42,890          32,830        121,183         90,020

Cost of revenues.........................................  16,947          13,684         53,902         38,174

     Gross profit........................................  25,943          19,146         67,281         51,846

Operating expenses:
   Selling, general and administrative...................  14,126          11,429         41,476         31,685
   Legal settlement......................................   1,000               -          1,000             -
   Research and development..............................   7,027           4,120         20,567         11,585
                                                          -------        --------       --------       --------
      Total operating expenses...........................  22,153          15,549         63,043         43,270

Operating income.........................................   3,790           3,597          4,238          8,576

   Interest income.......................................     148             157            457            555
   Interest expense......................................    (927)           (192)        (1,810)          (596)
   Other (expense) income, net...........................    (119)            182            395            (54)
                                                          -------        --------       --------       --------
     Other, net..........................................    (898)            147           (958)           (95)
                                                          -------        --------       --------       --------
Income before income taxes...............................   2,892           3,744          3,280          8,481
   Provision for income taxes............................      10           1,385            964          3,138
                                                          -------        --------       --------       --------
Net income...............................................   2,882           2,359          2,316          5,343
Redemption of convertible preferred stock................      -               -              -           7,665
                                                          -------        --------       --------       --------
Net income (loss) applicable to common stockholders...... $ 2,882        $  2,359       $  2,316       $ (2,322)
                                                          =======        ========       ========       ========

Net income (loss) per common share applicable
   to common stockholders:
         Basic........................................... $  0.24        $  0.22        $   0.20        $(0.22)
         Diluted......................................... $  0.23        $  0.21        $   0.19        $(0.22)

Weighted average number of common shares:
         Basic...........................................  11,847          10,721         11,702         10,545
         Diluted.........................................  12,672          11,271         12,262         10,545


</TABLE>


              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

                                      4
<PAGE>



                               LECROY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                 NINE MONTHS ENDED
                                                                                                     MARCH 31,
IN THOUSANDS                                                                                     2005        2004
------------------------------------------------------------------------------------------   -----------  ----------
<S>                                                                                        <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................................................   $     2,316  $    5,343
Adjustments to reconcile net income to net cash provided by operating activities:
  Write-off of acquired in-process research and development...............................         2,190          --
  Depreciation and amortization...........................................................         5,928       4,849
  Stock-based compensation................................................................         1,876          18
  Amortization of debt issuance costs.....................................................           268          51
  Deferred income taxes...................................................................          (592)      1,573
  Recognition of deferred license revenue.................................................          (972)       (972)
  Loss on disposal of property and equipment..............................................            91          76
  Tax benefit from exercise of stock options..............................................         1,026       1,067
  Write-off of inventory..................................................................         2,723         525
  Write-off of intangible assets..........................................................         1,500          --
Change in operating assets and liabilities, net of assets acquired and
  liabilities assumed in an acquisition:
  Accounts receivable.....................................................................          (513)     (2,811)
  Inventories.............................................................................        (5,060)      2,741
  Other current and non-current assets....................................................           527      (1,160)
  Accounts payable, accrued expenses and other liabilities................................         1,692       1,564
                                                                                             -----------  ----------
Net cash provided by operating activities.................................................        13,000      12,864
                                                                                             -----------  ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment......................................................        (2,661)     (3,861)
  Net proceeds from sale of property......................................................            --         584
  Proceeds from sale of marketable securities.............................................         9,534          --
  Business acquisition costs, net of acquired cash........................................       (80,402)         --
  Purchase of intangible assets...........................................................          (100)       (150)
                                                                                             -----------  ----------
Net cash used in investing activities.....................................................       (73,629)     (3,427)
                                                                                             -----------  ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayment of borrowings and capital leases..............................................        (3,579)     (6,070)
  Borrowings under line of credit.........................................................        50,000      10,000
  Redemption of convertible preferred stock...............................................            --      (23,000)
  Debt issuance costs.....................................................................        (1,378)         --
  Payments related to common stock offering...............................................            (7)       (285)
  Proceeds from employee stock purchase and option plans..................................         4,127       4,511
  Payment of seller-financed intangible assets............................................          (449)       (500)
                                                                                             -----------  ----------
Net cash provided by (used in) financing activities.......................................        48,714     (15,344)
                                                                                             -----------  ----------
Effect of exchange rate changes on cash...................................................            18           7
                                                                                             -----------  ----------
  Net decrease in cash and cash equivalents...............................................       (11,897)     (5,900)
  Cash and cash equivalents at beginning of the period....................................        28,566      30,851
                                                                                             -----------  ----------
  Cash and cash equivalents at end of the period..........................................   $    16,669  $   24,951
                                                                                             ===========  ==========


Non-cash investing and financing activities:
  Acquisition of seller-financed intangibles and related assets...........................   $     1,331          --
  Issuance of LeCroy stock options for business acquisition...............................         3,166          --

</TABLE>



              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

                                       5


<PAGE>

                               LECROY CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. BASIS OF PRESENTATION

    The accompanying interim condensed consolidated financial statements include
all the accounts of LeCroy Corporation and its wholly-owned subsidiaries
(collectively, the "Company" or "LeCroy", unless otherwise indicated). These
condensed consolidated financial statements are unaudited and should be read in
conjunction with the audited consolidated financial statements included in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2004.
The Condensed Consolidated Balance Sheet as of June 30, 2004 has been derived
from these audited consolidated financial statements. All inter-company
transactions and balances have been eliminated.

    Certain reclassifications have been made to prior-year amounts to conform to
the current-period presentation. These include reclassifications of service kit
revenue from service to product revenue, and the reclassification of certain
freight charges from Cost of revenues to Selling, general and administrative
expenses. The reclassifications do not affect the Company's results of
operations or its overall financial position.

    The Company's condensed consolidated financial statements have been prepared
in accordance with U.S. generally accepted accounting principles and pursuant to
the rules and regulations of the Securities and Exchange Commission (the "SEC"),
which require management to make estimates and assumptions. These estimates and
assumptions affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the condensed consolidated
financial statements and the revenues and expenses reported during the period.
The most significant of these estimates and assumptions relate to the allowance
for doubtful accounts, allowance for excess and obsolete inventory, warranty
accrual, stock-based compensation, intangible asset valuation, including
goodwill, determining if and when impairments have occurred, and the assessment
of the valuation of deferred income taxes and income tax reserves. These
estimates and assumptions are based on management's judgment and available
information and, consequently, actual results could differ from these estimates.

    These unaudited condensed consolidated financial statements reflect all
adjustments, consisting of normal recurring adjustments, that are, in the
opinion of management, necessary for a fair presentation of the financial
position and the results of operations for the interim periods presented.
Interim period operating results may not be indicative of the operating results
for a full year. The Company's fiscal period ends on the Saturday closest to
March 31, which resulted in the current period ending on April 2, 2005. For
clarity of presentation, the condensed consolidated financial statement
period-end references are stated as March 31.

2. ACQUISITION

    On October 29, 2004, the Company completed its acquisition of 100% of the
outstanding common stock of Computer Access Technology Corporation ("CATC") via
the merger of a newly-formed, wholly-owned subsidiary of LeCroy with and into
CATC, with CATC surviving as a wholly-owned subsidiary of LeCroy (the "Merger").
CATC is a provider of advanced verification systems for existing and emerging
digital communications standards. CATC's products are used by semiconductor,
device, system and software companies at each phase of their products'
lifecycles from development through production and market deployment. CATC had
approximately 70 employees at the time of the Merger. Through its acquisition of
CATC, LeCroy expects to capitalize on the increasing demand for serial data test
instruments, leverage its global, technical, direct sales force to accelerate
the growth of CATC's products, strengthen its position in the data storage
market, increase penetration into the computer market, expand gross margins,
increase operating leverage leading to expanded operating margins and increase
cash generation capabilities.

    Total consideration paid to acquire CATC was approximately $130.0 million.
The Merger was recorded under the purchase method of accounting, in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations," which requires that the total consideration be allocated to the
assets acquired and liabilities assumed based on their fair values. On the
effective date of the Merger, each share of CATC common

                                       6

<PAGE>



                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

stock issued and outstanding immediately prior thereto was canceled and
converted into the right to receive $6.00 in cash. In addition, LeCroy paid cash
to the holders of CATC's outstanding, vested, in-the-money stock options and
employee stock purchase plan (the "ESPP") purchase rights. Further, LeCroy
assumed CATC's outstanding unvested stock options, as well as certain vested but
unexercised stock options, by granting to CATC employees a total of 648,284
options to purchase LeCroy common stock (the "LeCroy Options"). The LeCroy
Options were recorded at their fair values using the Black-Scholes option
pricing model based on a stock price of $16.83 per share, which was the closing
price of LeCroy common stock on October 29, 2004, less the intrinsic value of
unvested options, which will be charged as compensation expense to operations as
earned by employees over their remaining vesting periods. LeCroy paid cash of
$80.4 million, net of cash acquired, using $30.4 million of cash on hand and
borrowings of $50.0 million under the Company's $75.0 million senior, secured,
five-year credit agreement entered into on October 29, 2004, with the lenders
listed therein and The Bank of New York, as administrative agent for such
lenders (the "Credit Agreement"). (See Note 15 - Debt). The Merger consideration
is summarized below:

 (IN THOUSANDS)
Cash for shares.................................................$  120,281
Cash for options and ESPP purchase rights.......................     3,966
Fair value of stock options assumed.............................     5,111
Unearned stock compensation on unvested options assumed.........   (1,945)
Transaction costs...............................................     2,621
                                                                 ----------
Total purchase price............................................$  130,034
                                                                 ==========

    The fair value of tangible and intangible assets acquired and liabilities
assumed was established based upon the unaudited October 28, 2004 consolidated
balance sheet of CATC, as well as certain assumptions made regarding fair
values. The fair value of finished goods and work in process inventory was based
on estimated selling prices less direct costs to sell and a reasonable profit
margin on the selling effort. The fair value of the in-process research and
development ("IPR&D"), purchased technology, trade name and purchase orders was
determined by an independent appraisal firm. The fair value of the IPR&D was
based on the total estimated costs to develop the related technologies less the
costs incurred to date for the projects, and the intangible asset values were
based on estimates of future cash flows associated with those assets. The
purchased technology, trade name and purchase orders related to this acquisition
are being amortized over their estimated economic useful lives ranging from two
to twenty-nine months. The excess of the purchase price over the fair value of
the net assets acquired was allocated to goodwill. The principle factors that
contributed to a purchase price that resulted in the recognition of goodwill was
the fair value of the going-concern element of the CATC business, which includes
the assembled workforce and their technology position within emerging
communication standards, as well as the expected synergies that will be achieved
by combining both companies. The goodwill is not deductible for tax purposes.
The purchase price allocation, which is subject to further changes resulting
from incremental direct acquisition costs, is summarized below:



                                       7
<PAGE>


                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)



 (IN THOUSANDS)
Cash and cash equivalents.............................$   46,466
Accounts receivable...................................     2,296
Inventory.............................................     3,710
Other current assets..................................       133
Property and equipment................................       663
Other non-current assets..............................        28
In-process research and development...................     2,190
Purchased technology..................................     3,080
Purchased trade name..................................        70
Purchased purchase orders.............................        90
Goodwill..............................................    79,893
Current liabilities assumed...........................    (5,875)
Long-term liabilities assumed.........................      (652)
Deferred tax liability................................    (2,058)
                                                       ----------
Total purchase price..................................$  130,034
                                                       ==========

    The following table presents the details of the amortizable intangible
assets acquired in the Merger and their carrying values as of March 31, 2005:

<TABLE>
<CAPTION>

                                                                     WEIGHTED               ACCUMULATED
                                                                   AVERAGE LIVES    COST    AMORTIZATION      NET
                                                                   -------------    -----   ------------   -------
                                                                                           (IN THOUSANDS)
<S>                                                                  <C>          <C>           <C>       <C>
   Amortizable intangible assets:
       Purchased technology.......................................   2.0 years    $    3,080    $     743 $    2,337
       Purchased tradename........................................   1.0 year             70           30         40
       Purchased purchase orders..................................   0.2 years            90           90         --
                                                                                  ----------    --------- ----------
     Total intangibles purchased..................................                $    3,240    $     863 $    2,377
                                                                                  ==========    ========= ==========

</TABLE>

    Amortization expense for intangible assets acquired in the Merger was $0.5
million and $0.9 million for the three and nine month periods ended March 31,
2005, respectively. Amortization expense for the intangible assets acquired in
the Merger has been recorded in the Condensed Consolidated Statements of
Operations as follows:


                                          THREE MONTHS ENDED  NINE MONTHS ENDED
                                                MARCH 31,          MARCH 31,
                                                ---------          --------
                                                 2005                2005
                                                 ----                -----
                                              (13 WEEKS)          (40 WEEKS)
                                                       (IN THOUSANDS)

   Cost of revenues......................      $ 446               $ 833
   General and administrative expense....         18                  30
                                               -----               -----
      Total..............................      $ 464               $ 863
                                               =====               =====

    The amortization expense of intangible assets acquired in the Merger for
fiscal 2005 and in future years is as follows:



                                       8
<PAGE>



                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)


                                           AMOUNT
                        FISCAL YEAR    (IN THOUSANDS)
                      ---------------- ----------------
                           2005                 $1,315
                           2006                  1,339
                           2007                    586
                                       ----------------
                                                $3,240
                                       ================



    The $2.2 million allocated to IPR&D was written off during the second
quarter of fiscal 2005 in accordance with FASB Interpretation No. ("FIN") 4,
"Applicability of FASB Statement No. 2 to Business Combinations Accounted for by
the Purchase Method." This charge is included in Research and development
expense in the Condensed Consolidated Statements of Operations.

    The Condensed Consolidated Statements of Operations include the results of
operations of CATC since October 29, 2004. The following (unaudited) pro forma
consolidated results of operations have been prepared as if the Merger had
occurred at the beginning of each period presented.


<TABLE>
<CAPTION>

                                                                    THREE MONTHS ENDED       NINE MONTHS ENDED
                                                                        MARCH 31,                MARCH 31,
                                                                        ---------                ---------
                                                                     2005        2004        2005         2004
                                                                     ----        ----        ----         ----
                                                                  (13 WEEKS)  (13 WEEKS)  (40 WEEKS)   (39 WEEKS)
                                                                        (IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                                               <C>         <C>        <C>          <C>
Revenues........................................................   $42,890     $37,475    $126,207    $102,797
Net income (loss) before non-recurring charges directly
  attributable to the Merger applicable to common stockholders..    $2,901      $1,761        $312     ($5,501)
Net income (loss) per share before non-recurring charges
  directly attributable to the Merger- basic....................     $0.24       $0.16       $0.03      ($0.52)
Net income (loss) per share before non-recurring charges
  directly attributable to the Merger - diluted.................     $0.23       $0.15       $0.03      ($0.52)

</TABLE>

    The write-off of IPR&D is excluded from the calculation of net income (loss)
and net income (loss) per share in the table shown above as the charge is
non-recurring.

    The pro forma information is presented for informational purposes only and
is not necessarily indicative of the results of operations that actually would
have been achieved had the Merger been consummated as of that time, nor is it
intended to be a projection of future results.

3. STOCKHOLDERS' EQUITY

     The Company accounts for stock-based compensation plans under the
recognition and measurement principles of Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25"), and related
interpretations.

    The following table illustrates the effect on net income and net income
(loss) per common share applicable to common stockholders as if the Company had
applied the fair value recognition provisions for stock-based employee
compensation of SFAS No. 123, "Accounting for Stock-Based Compensation," as
amended by SFAS No. 148, "Accounting for Stock-Based Compensation -- Transition
and Disclosure."


                                       9
<PAGE>

                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     THREE MONTHS ENDED        NINE MONTHS ENDED
                                                                          MARCH 31,                MARCH 31,
                                                                      2005          2004        2005        2004
                                                                      ----          ----        ----        ----
                                                                                             (40 WEEKS)  (39.WEEKS)
                                                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                                                   <C>       <C>        <C>        <C>
Net income, as reported.........................................        $2,882    $  2,359   $  2,316   $   5,343
Add: stock-based compensation expense included in reported
  net income, net of income taxes...............................           491           5      1,189          14
Deduct: stock-based compensation expense determined under
  the fair value-based method for all awards, net of income taxes       (1,359)       (587)    (2,991)     (2,445)
                                                                       -------    --------   --------   ---------
Pro forma net income............................................         2,014       1,777        514       2,912

Charges related to convertible preferred stock..................            --          --         --       7,665
Pro forma net income (loss) applicable to common stockholders...       $ 2,014    $  1,777   $    514   ($  4,753)
                                                                       =======    ========   ========   =========

Net income (loss) per common share applicable to common stockholders:
      Basic, as reported........................................        $0.24        $0.22       $0.20     ($0.22)
      Diluted, as reported......................................        $0.23        $0.21       $0.19     ($0.22)
      Basic, pro forma..........................................        $0.17        $0.17       $0.04     ($0.45)
      Diluted, pro forma........................................        $0.16        $0.16       $0.04     ($0.45)

</TABLE>

    In connection with the Merger, on October 29, 2004, the Company's Board of
Directors approved the LeCroy Corporation 2004 Employment Inducement Stock Plan
(the "2004 Plan") to promote the interests of the Company and its stockholders
by strengthening the Company's ability to attract and induce persons to become
employees of the Company, including certain of CATC's employees. The adoption of
the 2004 Plan did not require stockholder approval. The initial number of shares
of LeCroy common stock that may be issued or transferred pursuant to options or
restricted stock awards granted under the 2004 Plan is 750,000 shares. On
October 29, 2004, the Company issued the following grants under the 2004 Plan:
(i) 70,000 shares of restricted common stock to certain former officers of CATC,
and (ii) options to purchase an aggregate of 230,984 shares of common stock to
61 former CATC employees who became non-officer employees of LeCroy (none of
whom received an option grant of more than 20,000 shares).

    In connection with the Merger, LeCroy assumed CATC's 2000 Stock Option/Stock
Issuance Plan, Special 2000 Stock Option Plan, 2000 Stock Incentive Plan and
1994 Stock Option Plan (collectively, the "CATC Stock Plans"). On October 27,
2004, the Board of Directors of CATC approved technical amendments to each of
the CATC Stock Plans in anticipation of their assumption by LeCroy pursuant to
the Merger including, without limitation, amendments reflecting that any stock
option or other award granted thereunder would be exercisable for LeCroy common
stock. Pursuant to FIN 44, "Accounting for Certain Transactions Involving Stock
Compensation," the unvested stock options granted by the Company in exchange for
the stock options held by the employees of CATC were considered part of the
purchase price for CATC, and the fair value of the new awards were included in
the purchase price. A portion of the intrinsic value of the unvested awards has
been allocated to unearned compensation and will be recognized as compensation
expense over the remaining future vesting period. For the three and nine months
ended March 31, 2005, $0.1 million, net of tax, and $0.2 million, net of tax,
respectively, have been charged as compensation expense in the Condensed
Consolidated Statements of Operations related to the assumed options.

    With the exception of the CATC Stock Plans, no further compensation expense
related to stock options is reflected in the Company's Condensed Consolidated
Statements of Operations, as all options granted under past and existing plans
have an exercise price equal to the market value of the underlying common stock
on the date of grant. Compensation cost for restricted stock is recorded based
on its market value on the date of grant and is included in the Company's
Condensed Consolidated Statements of Operations ratably over the vesting period.
Upon the grant of restricted stock, deferred stock compensation is recorded as
an offset to additional paid-in capital and is amortized on a straight-line
basis as compensation expense over the vesting period.



                                       10
<PAGE>



                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)



    For the nine months ended March 31, 2005, the net adjustment to additional
paid in capital and deferred compensation, in the aggregate, was an increase of
$10.2 million, consisting of:

     o    $3.5 million related to the issuance of options in connection with the
          Merger (net of related amortization of deferred compensation since the
          Merger),
     o    $4.8 million from the exercise of stock options and related tax
          benefits,
     o    $1.6 million related to the issuance of restricted shares to employees
          and related compensation expense, and
     o    $0.3 million from the employee stock purchase plan.

4. REVENUE RECOGNITION

     LeCroy recognizes product and service revenue, net of allowances for
anticipated returns, provided that (1) persuasive evidence of an arrangement
exists, (2) delivery has occurred, (3) the selling price is fixed or
determinable and (4) collection is reasonably assured. Delivery is considered to
have occurred when title and risk of loss have transferred to the customer, or
when services have been provided. The price is considered fixed or determinable
when it is not subject to refund or adjustments.

     The Company maintains an allowance for doubtful accounts relating to
accounts receivable estimated to be non-collectible. The Company analyzes
historical bad debts, customer concentrations, customer creditworthiness,
current economic trends and changes in customer payment terms when evaluating
the adequacy of the allowance for doubtful accounts.

     Product revenue. The Company generates product revenue from the sales of
oscilloscopes and application solutions, protocol verification systems, probes
and accessories. Application solutions, which provide oscilloscopes with
additional analysis capabilities, are either delivered via compact disc
read-only memory or are already loaded in the oscilloscopes and activated via a
key code after the sale is made to the customer. All sales of these related
products are based upon separately established prices for these items and are
recorded as revenue according to the above revenue recognition criteria. No
post-contract support is provided on the application solutions. Provisions for
warranty costs are recorded at the time products are shipped. Revenues from
these related products are included in revenues from Test and measurement
products in the Condensed Consolidated Statements of Operations. Certain
software is embedded in the Company's oscilloscopes, but the embedded software
component is considered incidental.

     Software license revenue. The Company recognizes software license revenue
in accordance with American Institute of Certified Public Accountants Statement
of Position 97-2, "Software Revenue Recognition" ("SOP 97-2"), as amended by
Statement of Position 98-9, "Modifications of SOP 97-2 with Respect to Certain
Transactions" ("SOP 98-9").

     Due to the significant software content of its protocol verification
systems products, the Company recognizes revenue on the sale of these products
in accordance with SOP 97-2 upon shipment provided there is persuasive evidence
of an arrangement, the product has been delivered, the price is fixed or
determinable and collectibility is probable. When the Company ships a protocol
verification system but certain elements relating to the functionality of the
product are not delivered, revenue and the associated cost of revenue are
deferred until the remaining elements are delivered. Software maintenance
support revenue is deferred based on its vendor specific objective evidence of
fair value ("VSOE") and recognized ratably over the maintenance support periods.
Provisions for warranty costs are recorded at the time products are shipped.
Revenues from protocol verification system products are included in Test and
measurement products in the Condensed Consolidated Statements of Operations.


                                       11
<PAGE>


                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

     Revenues from perpetual software license agreements are recognized upon
delivery of the software if evidence of an arrangement exists, pricing is fixed
and determinable, and collectibility is probable. If an acceptance period is
required, revenues are recognized upon the earlier of customer acceptance or the
expiration of the acceptance period. The Company allocates revenue on software
arrangements involving multiple elements to each element based on the relative
fair values of the elements. The determination of fair value of each element in
multiple element-arrangements is based on VSOE. The Company analyzes all of the
elements and determines if there is sufficient VSOE to allocate revenue to
maintenance included in multiple element-arrangements. Accordingly, assuming all
other revenue recognition criteria are met, revenue is recognized upon delivery
using the residual method in accordance with SOP 98-9, where the VSOE of the
undelivered elements is deferred and the remaining portion of the arrangement
fee is recognized as license revenue. The revenue allocated to software
maintenance is recognized ratably over the term of the support agreement. The
revenue allocated to licenses is recognized upon delivery of the licenses.
Revenues from perpetual software license agreements are included in Service and
other in the Condensed Consolidated Statements of Operations.

     Service and other revenue. Service and other revenue includes extended
warranty contracts, software maintenance agreements and repairs and calibrations
performed on instruments after the expiration of their normal warranty period.
The Company records deferred revenue for extended warranty contracts, software
maintenance agreements and calibrations included within the sales contract
agreement. This deferred revenue is then recognized on a straight-line basis
over the related service period. When arrangements include multiple elements,
the Company uses relative fair values in accordance with Emerging Issues Task
Force ("EITF") Issue No. 00-21, "Revenue Arrangements with Multiple
Deliverables," to allocate revenue to the elements and recognize revenue when
the criteria for revenue recognition have been met for each element.

     Deferred product revenue. During the third quarter of fiscal 2004, the
Company began shipping the WaveSurfer oscilloscope product line. One component
of the Company's strategy for distributing this product line is the use of a
buy-sell distribution channel. This was the Company's initial entry into this
distribution channel and, because of the associated uncertainty about
sell-through volumes, the Company has determined that it is appropriate to
recognize revenue when a WaveSurfer oscilloscope is sold by the distributors to
their customers. Until revenue is recognized, WaveSurfer oscilloscopes shipped
to distributors are included in the Company's finished goods inventory and
recorded in deferred revenue, included in accrued expenses and other current
liabilities in the accompanying Condensed Consolidated Balance Sheets.

     Deferred license revenue. Revenue from license fees under agreements that
have exclusivity clauses and, from the licensee's perspective, have ongoing
requirements or expectations that are more than perfunctory, are recognized over
the terms of the related agreements. An ongoing requirement or expectation would
be considered more than perfunctory if any party to the contract considers it to
be "essential to the functionality" of the delivered product or service or
failure to complete the activities would result in the customer receiving a full
or partial refund or rejecting the products delivered or services performed to
date.

     Beginning in fiscal 2001 with the adoption of the SEC's Staff Accounting
Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements,"
(superseded by SAB 104), certain previously recognized license fee revenue was
deferred and recognized in future periods over the terms of the agreements. The
adoption of SAB 101 was recorded as of the beginning of fiscal 2001 and resulted
in a non-cash charge for the cumulative effect of an accounting change of $4.4
million, net of a tax benefit of $2.7 million. The deferred revenue is being
amortized into revenue over 5.5 years, the remaining terms of the license
agreements. The Company recognized pre-tax deferred license fee revenue of $0.3
million and $1.0 million during the three and nine months ended March 31, 2005
and 2004, respectively. Such license fees are included in Service and other
revenue in the Condensed Consolidated Statements of Operations. As of March 31,
2005, the remaining balance of pre-tax deferred license fee revenue was $1.0
million which is reflected in Accrued expenses and other current liabilities in
the accompanying Condensed Consolidated Balance Sheets.


                                       12
<PAGE>

                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

5. RESTRUCTURING

    During the second quarter of fiscal 2005, as a result of the Merger, the
Company adopted a plan to restructure its organization and streamline its
product strategy. In connection with the adoption of this plan, the Company
recorded a charge for severance and other related expenses in the second quarter
of fiscal 2005 of $0.6 million, all recorded in Selling, general and
administrative expense. The implementation of this plan resulted in headcount
reductions of six employees or approximately 2% of the workforce as compared to
June 30, 2004. As of March 31, 2005, $0.3 million has been paid and $0.3 million
remains in Accrued expenses and other current liabilities on the Condensed
Consolidated Balance Sheets. Severance and other related amounts under this plan
will be paid in full by the end of the second quarter of fiscal 2007.

    During the fourth quarter of fiscal 2003, the Company adopted a plan to
consolidate its probe development activities into its Chestnut Ridge, New York
facility. In connection with this plan, the Company closed its Beaverton, Oregon
facility and recorded lease termination costs of $0.3 million and a charge for
severance of $0.6 million ($0.1 million of which was recorded in Cost of
revenues, $0.6 million of which was recorded in Selling, general and
administrative expense and $0.2 million of which was recorded in Research and
development expense). The implementation of this plan resulted in headcount
reductions of 27 employees or approximately 7% of the workforce as compared to
June 30, 2002. Final payments for severance under this plan occurred in the
fourth quarter of fiscal 2004. On November 8, 2004, the Company entered into a
Lease Termination Agreement and made a final payment of $0.1 million releasing
the Company from any future rental obligations under the Beaverton, Oregon
facility lease. This amount had been previously accrued.

    During the first quarter of fiscal 2003, the Company adopted a plan to scale
down fixed infrastructure due to the difficult economic environment and to
implement new management operating systems designed to improve processes in
sales, order management, customer relationship management and financial
performance management. In connection with the adoption of this plan, the
Company recorded a charge for severance and other related expenses in the first
quarter of fiscal 2003 of $2.6 million ($2.1 million of which was recorded in
Selling, general and administrative expense and $0.5 million of which was
recorded in Research and development expense). The plan implemented during
fiscal 2003 resulted in improved operating efficiencies and headcount reductions
of 38 employees or approximately 9% of the workforce as compared to June 30,
2002. As of March 31, 2005, $2.5 million of the total $2.6 million has been paid
and $0.1 million remains in Accrued expenses and other current liabilities on
the Condensed Consolidated Balance Sheets. Severance and other related amounts
under this plan will be paid in full by the end of the second quarter of fiscal
2006.

6. DERIVATIVE INSTRUMENTS

    The Company accounts for qualifying derivatives and hedging activities in
accordance with SFAS No. 133, "Accounting for Derivative Investments and Hedging
Activities," as amended ("SFAS 133"), which requires that all derivative
instruments be recorded on the balance sheet at their respective fair values.
The accounting for changes in the fair value (i.e., gains or losses) of a
derivative instrument is dependent upon whether the derivative has been
designated and qualifies as part of a hedging relationship and further, on the
type of hedging relationship. A hedge is regarded as highly effective and
qualifies for hedge accounting if, at inception and throughout its life, it is
expected that changes in the cash flows of the hedged item are almost fully
offset by the changes in the fair value of changes in cash flows of the hedging
instrument and actual effectiveness is within a range of 80 percent to 125
percent.


                                       13
<PAGE>

                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

    For derivative instruments that are designated and qualify as a cash flow
hedge (such as the Company's interest rate variable-to-fixed swap agreement
discussed below), the effective portion of the gain or loss on the derivative
instrument is reported as a component of other comprehensive income (loss) and
reclassified into earnings in the same period or periods during which the hedged
transaction affects earnings. Any ineffective portion of the gain or loss on the
derivative instrument is recorded in the results of operations immediately.

    A cash flow hedge ceases to be highly effective as a hedge when the hedge
expires, is sold, terminated, or exercised; when the hedged item matures or is
sold or repaid; or when a forecasted transaction is no longer deemed highly
probable. At this time the hedge accounting would be discontinued, and the gain
or loss would be recognized in the results of operations immediately.

    For derivative instruments not designated as hedging instruments (such as
the Company's foreign currency forward exchange agreements discussed below), the
gain or loss is recognized in the results of operations immediately.

    The Company does not use derivative financial instruments for trading or
other speculative purposes and does not enter into fair value hedges.

    At March 31, 2005, the Company has the following derivative instruments
related to its various hedging programs:

Interest Rate Swaps Designated as Cash Flow Hedges

    As required by the terms of the Credit Agreement (See Note 15), on January
27, 2005 the Company entered into a Master Agreement with Manufacturers &
Traders Trust Co. ("M&T Bank"), the purpose of which is to hedge against rising
interest rates during the term of the Credit Agreement. The Credit Agreement
obligates the Company to enter into one or more hedging agreements covering the
interest payable with respect to at least 50% of the outstanding principal
amount of the Term Loan for a period of at least three years. In connection with
the Master Agreement, the Company entered into an interest rate swap transaction
effective January 31, 2005 and continuing through January 31, 2008,
corresponding with the repayment terms of the Credit Agreement. The swap
agreement is designated as a cash flow hedge under SFAS 133, and is being
utilized to moderate the Company's exposure to interest rate fluctuations on its
underlying variable rate long-term debt. In accordance with the interest rate
swap transaction, the Company pays quarterly interest on the notional amount at
a fixed annualized rate of 3.87% to M&T Bank, and receives interest quarterly on
the same notional amount at the three-month LIBOR rate in effect at the
beginning of each quarterly reset period; except for the initial period, which
covered the two months ending March 31, 2005, in which the Company received
interest at a LIBOR rate of 2.64%. The initial notional amount was $25.0 million
and resets quarterly to 50% of the outstanding principal balance with respect to
the original amortization schedule as set forth in the Credit Agreement. The net
interest expense incurred on the swap during the three months ended March 31,
2005 was approximately $50,000. The notional amount as of March 31, 2005 was
approximately $24.1 million. The fair value of the interest rate swap as of
March 31, 2005, is $0.2 million and approximates the amount that the Company
would have received from M&T Bank if the Company had canceled the transaction at
March 31, 2005. The fair value is recorded in Other current assets and
Accumulated other comprehensive income in the Condensed Consolidated Balance
Sheets as of March 31, 2005.

Other Hedges

    The Company may enter into short-term forward exchange agreements to
purchase foreign currencies at set rates in the future. These foreign currency
forward exchange agreements are used to limit exposure to fluctuations in
foreign currency exchange rates for all significant planned purchases of fixed
assets or commodities that are denominated in currencies other than the
subsidiaries' functional currency. Subsidiaries may also use forward exchange
agreements to offset the foreign currency risk for receivables and payables not
denominated in, or indexed


                                       14
<PAGE>

                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)


to, their functional currencies. The Company records
these short-term forward exchange agreements on the balance sheet at fair value
and changes in the fair value are recognized in current earnings.

    The Company enters into foreign exchange forward contracts to minimize the
risks associated with foreign currency fluctuations on assets or liabilities
denominated in other than the functional currency of the Company or its
subsidiaries. These foreign exchange forward contracts are not accounted for as
hedges in accordance with SFAS 133; therefore, any changes in fair value of
these contracts are recorded in Other (expense) income, net in the Condensed
Consolidated Statements of Operations. These foreign exchange forward contracts
are recorded on the Condensed Consolidated Balance Sheets at fair value. The
changes in fair value of these contracts are inversely correlated to changes in
the value of certain of the Company's foreign currency-denominated assets and
liabilities.

    There was a net loss resulting from changes in the fair value of these
derivatives and on transactions denominated in other than their functional
currencies of $0.1 million for the three months ended March 31, 2005, compared
to a net gain of $0.1 million for the comparable prior year period. There were
net gains resulting from changes in the fair value of these derivatives and on
transactions denominated in other than their functional currencies of $0.4
million and $0.3 million for the nine months ended March 31, 2005 and 2004,
respectively. These amounts are included in Other (expense) income, net in the
Condensed Consolidated Statements of Operations and include gross gains of zero
and $0.2 million for the three months ended March 31, 2005 and 2004,
respectively, and $0.6 million and $0.4 million for the nine months ended March
31, 2005 and 2004, respectively. At March 31, 2005 and June 30, 2004, the
notional amounts of the Company's open foreign exchange forward contracts, all
with maturities of less than six months, were approximately $8.0 million and
$8.2 million, respectively.

7. COMPREHENSIVE INCOME

    The following table presents the components of comprehensive income, net of
tax:

<TABLE>
<CAPTION>

                                                                THREE MONTHS ENDED       NINE MONTHS ENDED
                                                                    MARCH 31,                MARCH 31,
                                                                    --------                 ---------
                                                                 2005        2004        2005         2004
                                                                 ----        ----        ----         -----
                                                              (13 WEEKS)  (13 WEEKS)  (40 WEEKS)   (39 WEEKS)
                                                                               (IN THOUSANDS)

<S>                                                           <C>         <C>          <C>          <C>
Net income..................................................    $2,882      $2,359       $2,316       $5,343
Unrealized loss on marketable debt securities...............        --          --           (3)        --
Reclassification adjustment for realized losses
included in net income......................................        --          --           16         --
Change in fair value of derivative instruments..............       150          --          150         --
Foreign currency translation (losses) gains.................      (647)       (432)         939        1,775
                                                                ------      ------       ------       ------
Comprehensive income........................................    $2,385      $1,927       $3,418       $7,118
                                                                ======      ======       ======       ======

</TABLE>

    The Company's investments in marketable debt securities are classified as
available-for-sale and are reported at fair value based on quoted market prices.
Unrealized gains and losses, net of taxes, are reported as a component of
stockholders' equity. Realized gains and losses on investments are included in
Other (expense) income, net in the Condensed Consolidated Statements of
Operations when realized. Management has the ability, if necessary, to liquidate
any of these investments in order to meet its liquidity needs within the normal
operating cycle. Accordingly, all investments in debt securities are classified
as current assets. In the quarter ended December 31, 2004, all marketable debt
securities were liquidated and there was no activity for the three months ended
March 31, 2005.


                                       15
<PAGE>

                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)


8. ACCOUNTS RECEIVABLE, NET

    The Company has agreements with two of its customers, who are also vendors,
which provide the Company with the legal right to offset outstanding accounts
receivable balances against outstanding accounts payable balances. At March 31,
2005 and June 30, 2004, the Company netted approximately $3.0 million and $0.6
million, respectively, of accounts receivable against accounts payable on the
Condensed Consolidated Balance Sheets related to these agreements.

    The allowance for doubtful accounts was approximately $0.5 million and $0.4
million as of March 31, 2005 and June 30, 2004, respectively, and is entirely
related to trade accounts receivables.

9. INVENTORIES, NET

    Inventories, including demonstration units in finished goods, are stated at
the lower of cost (first-in, first-out method) or market. Inventories consist of
the following:

                                                   MARCH 31,   JUNE 30,
                                                    2005        2004
                                                 ---------   ----------
                                                     (IN THOUSANDS)
   Raw materials............................     $  10,859   $    6,617
   Work in process..........................         3,234        4,544
   Finished goods...........................        14,127       10,817
                                                 ---------   ----------
                                                 $  28,220   $   21,978
                                                 =========   ==========

    The value of demonstration units included in finished goods was $10.3
million and $8.0 million at March 31, 2005 and June 30, 2004, respectively. The
Company's demonstration units are held for sale and are sold regularly in the
ordinary course of business through its normal sales distribution channels and
existing customer base.

    In the quarter ended December 31, 2004, as a result of the Merger, the
Company reviewed the long-term product support policies in place at LeCroy and
at CATC prior to the Merger with an aim toward developing one policy to best
serve customers. In connection with the resultant change in policy, as well as
changes in the Company's product support strategy, the Company recorded a $2.7
million non-cash charge to Cost of revenues in the Condensed Consolidated
Statements of Operations for the write-off of excess parts. There were no such
activities in the quarter ended March 31, 2005.

10. OTHER CURRENT ASSETS

     Other current assets consist of the following:

                                                   MARCH 31,   JUNE 30,
                                                     2005        2004
                                                ----------   ----------
                                                     (IN THOUSANDS)
   Deferred tax assets, net.................    $    5,500   $    7,400
   Other receivables........................           638          511
   Prepaid probes and accessories...........           408          818
   Value-added tax..........................           435          595
   Other....................................         2,935        2,597
                                                ----------   ----------
                                                $    9,916   $   11,921
                                                ==========   ==========


                                       16
<PAGE>

                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)



11. PROPERTY AND EQUIPMENT, NET

    Property and equipment consist of the following:

                                                 MARCH 31,     JUNE 30,
                                                   2005         2004
                                              -----------   -----------
                                                    (IN THOUSANDS)
   Land, building and improvements..........  $    15,195   $    14,640
   Furniture, machinery and equipment.......       29,402        25,073
   Computer software and hardware...........       16,100        17,637
                                              -----------   -----------
                                                   60,697        57,350
   Less: accumulated depreciation and amorti      (41,225)      (37,572)
                                              -----------   -----------
                                              $    19,472   $    19,778
                                              ===========   ===========

    Depreciation and amortization expense was $1.3 million and $1.4 million for
the three months ended March 31, 2005 and 2004, respectively, and was $3.9
million and $3.8 million for the nine months ended March 31, 2005 and 2004,
respectively.

12. OTHER NON-CURRENT ASSETS

    Other non-current assets consist of the following:

                                                MARCH 31,    JUNE 30,
                                              -----------   -----------
                                                 2005          2004
                                                  (IN THOUSANDS)
   Intangibles, net.........................  $   6,839  $    5,802
   Deferred tax assets, net.................      5,556       4,771
   Other....................................      1,735         894
                                              ---------  ----------
                                              $  14,130  $   11,467
                                              =========  ==========

    Under SFAS No. 142 "Goodwill and Other Intangible Assets," goodwill is not
amortized but reviewed for impairment annually or more frequently if certain
indicators arise. The Company completed the annual impairment test required
under SFAS No. 142 during the fourth quarter of fiscal 2004 and determined that
there was no impairment to its recorded goodwill balances. No impairment
indicators arose during the first nine months of fiscal 2005.

    The following table reflects the gross carrying amount and accumulated
amortization of the Company's goodwill and intangible assets included in Other
non-current assets on the Condensed Consolidated Balance Sheets as of the dates
indicated:

<TABLE>
<CAPTION>

                                                                        WEIGHTED        MARCH 31,     JUNE 30,
                                                                      AVERAGE LIVES       2005         2004
                                                                     --------------     ---------    ---------
                                                                    (AS OF MARCH 31,        (IN THOUSANDS)
                                                                          2005)
<S>                                                                  <C>             <C>          <C>
   Amortizable intangible assets:
       Technology, manufacturing and distribution rights..........     3.6 years       $  11,827    $    8,897
       Patents and other intangible assets........................     3.5 years             812           661
       Effect of currency translation on intangible assets........                           178           148
       Accumulated amortization...................................                        (5,978)       (3,904)
                                                                                       ---------    ----------
     Net carrying amount..........................................                     $   6,839    $    5,802
                                                                                       =========    ==========
   Non-amortizable intangible assets:
       Goodwill...................................................                     $  81,767    $    1,874
                                                                                       =========    ==========

</TABLE>


                                       17
<PAGE>

                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

    Amortization expense for those intangible assets with finite lives was $0.9
million and $0.3 million for the three months ended March 31, 2005 and 2004,
respectively, and $2.1 million and $1.0 million for the nine months ended March
31, 2005 and 2004, respectively. The cost of technology, manufacturing and
distribution rights acquired is amortized primarily on the basis of the higher
of units shipped over the contract periods through June 2008 or on a
straight-line basis over the estimated economic life of the asset. Management
estimates that intangible assets amortization expense on a straight-line basis
in fiscal 2005 through 2008 will approximate $3.3 million, $2.7 million, $2.0
million, and $0.8 million, respectively.

     During the nine months ended March 31, 2005, the Company purchased a
license for approximately $1.0 million for the use of electronic design
automation software, a license for approximately $0.2 million for the ability to
use certain computer aided design software tools, and increased an existing
license by $0.1 million for the use of embedded memory macro technology. The
assets for the design software licenses have an amortization period of three
years based on the terms of the license agreements. The asset for the use of the
embedded memory technology has an amortization period of five years based on the
terms of the license agreement.

    As part of the Merger, LeCroy purchased technology, the CATC trade name and
purchase orders at their fair value of $3.2 million.

    In the second quarter of fiscal 2005, as a result of a change in the
Company's organization stemming from the Merger and a subsequent change in the
Company's low to mid-range oscilloscope manufacturing strategy, the Company took
a $1.5 million non-cash charge for the write-off of an intangible asset.


13. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

    Accrued expenses and other current liabilities consist of the following:

                                                           MARCH 31,  JUNE 30,
                                                             2005       2004
                                                          ---------  ----------
                                                             (IN THOUSANDS)
   Compensation and benefits............................. $   5,694  $    5,022
   Income taxes..........................................     3,253       2,938
   Legal settlement......................................     1,000          --
   Deferred license fee revenue, current portion.........       989       1,296
   Warranty..............................................       981       1,247
   Deferred revenue, current portion.....................     3,585       1,606
   Retained liabilities from discontinued operations.....       160         160
   Other.................................................     3,808       2,285
                                                          ---------  ----------
                                                          $  19,470  $   14,554
                                                          =========  ==========

14. WARRANTIES AND GUARANTEES

    The Company provides a warranty on its products, typically extending three
years after delivery. Estimated future warranty obligations related to products
are provided by charges to operations in the period that the related revenue is
recognized. These estimates are derived from historical data of product
reliability. The expected failure rate is arrived at in terms of units, which
are then converted into labor hours to which an average burdened cost per hour
is applied to derive the amount of accrued warranty required. On a quarterly
basis, the Company studies trends of warranty claims and performance of specific
products and adjusts its warranty obligation through charges or credits to
operations.

    The following table is a reconciliation of the changes in the Company's
aggregate product warranty liability during the three and nine months ended
March 31, 2005 and 2004:



                                       18
<PAGE>
                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED       NINE MONTHS ENDED
                                                                    MARCH 31,               MARCH 31,
                                                                ------------------       -----------------
                                                                2005         2004        2005        2004
                                                                -----        ----        ----        ----
                                                             (13 WEEKS)   (13 WEEKS)  (40 WEEKS)  (39 WEEKS)
                                                                              (IN THOUSANDS)
<S>                                                          <C>          <C>         <C>         <C>
Balance at beginning of period.............................    $1,372       $1,243      $ 1,247     $1,235
   Accruals for warranties entered into during the period..        24          345          892        983
   Warranty costs incurred during the period...............      (415)        (342)      (1,263)      (972)
   Warranty liability assumed in the Merger................        --           --          105        --
                                                               ------       ------      -------     ------
Balance at end of period ..................................    $  981       $1,246      $   981     $1,246
                                                               ======       ======      =======     ======
</TABLE>


    During the quarter ended March 31, 2005, the Company's management revisited
labor and cost estimates utilized in its existing warranty model in light of the
Company's recent new product introductions, and determined that the actual labor
and cost estimates to repair the warranty units were lower than previously
estimated given the Company's success in reducing the time and costs necessary
to fix the newer models currently under warranty. As a result of this evaluation
and conclusion the Company changed the labor and cost estimates used to
calculate the warranty accrual as of March 31, 2005. This change in estimate was
recorded in the current period and reduced the accrual required by approximately
$350,000, resulting in a $24,000 net charge for warranties entered into during
the quarter ended March 31, 2005.

    In connection with an agreement to license the Company's MAUI Instrument
Operating System technology entered into by the Company during the third quarter
of fiscal 2003, the Company agreed to indemnify the licensee against losses
arising from any third party claim to the extent such claim arose directly out
of the infringement of a U.S. or Japanese patent by any LeCroy software
components delivered under the license agreement. As of March 31, 2005, there
have been no claims under such indemnification provisions.

    As is customary in the Test and Measurement industry, and as provided for by
local law in the U.S. and other jurisdictions, the Company's standard terms of
sale provide remedies to customers, such as defense, settlement or payment of a
judgment for intellectual property claims related to the use of the Company's
products. Such indemnification provisions are accounted for when a loss becomes
probable and estimable. To date, there have been no claims under such
indemnification provisions.

15. DEBT

    On October 29, 2004, LeCroy entered into a $75.0 million senior, secured,
five-year credit agreement with the lenders listed therein and The Bank of New
York, as administrative agent for such lenders (the "Credit Agreement"), which
replaced LeCroy's existing credit facility with The Bank of New York that was
entered into on October 11, 2000 and subsequently amended. BNY Capital Markets,
Inc. acted as sole lead arranger and sole book runner in connection with
syndicating the credit facility. The terms of the Credit Agreement provide
LeCroy with a $50.0 million term loan (the "Term Loan") and a $25.0 million
revolving credit facility (the "Revolver"), which includes a $1.0 million
swingline loan subfacility and a $1.0 million letter of credit subfacility. The
performance by LeCroy of its obligations under the Credit Agreement is secured
by all of the assets of LeCroy and its domestic subsidiaries, and is guaranteed
by LeCroy's domestic subsidiaries. The proceeds under the Term Loan have been
used to finance the acquisition of CATC and pay transaction expenses related to
the Merger. Proceeds from the Revolver may be used for general corporate
purposes, including the financing of working capital requirements, capital
expenditures and acquisitions. As of March 31, 2005, the Company has not
borrowed against the Revolver.



                                       19
<PAGE>

                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)


    Borrowings under the Credit Agreement bear interest at variable rates equal
to, at the Company's election, (1) the higher of (a) the prime rate or (b) the
federal funds rate plus 0.5%, plus an applicable margin of between 0.00% and
1.50% based on the Company's leverage ratio, as defined in the Credit Agreement,
or (2) the London Interbank Offering Rate ("LIBOR") plus an applicable margin of
between 1.25% and 2.75% based on the Company's leverage ratio. In addition, the
Company must pay commitment fees on unused Revolver borrowings during the term
of the Credit Agreement at rates between 0.375% and 0.5% dependent upon its
leverage ratio.

    Under the Credit Agreement, the Company is required to comply with certain
financial covenants, measured quarterly, including a minimum interest coverage
ratio, minimum total net worth, maximum leverage ratio, minimum fixed charge
coverage ratio and limitations on capital expenditures. As of March 31, 2005,
the Company was in compliance with its financial covenants under the Credit
Agreement.

    Beginning March 31, 2005, outstanding borrowings of $50.0 million under the
Term Loan are required to be repaid quarterly through October 2009, based on an
annualized amortization rate starting at 15% in calendar year 2005 and
increasing 250 basis points per year during the remaining term of the Credit
Agreement. As of March 31, 2005, the Company has repaid $3.5 million of the
principal balance of this loan.

    The Company incurred approximately $1.4 million of transaction fees in
connection with entering into the Credit Agreement, which have been deferred and
are being amortized over the life of the Credit Agreement using the effective
interest method for the Term Loan and the straight-line method for the Revolver.
Transaction fees of approximately $87,000 from the previously amended credit
facility were charged to interest expense in the second fiscal quarter of 2005.
At March 31, 2005, unamortized fees of $0.5 million were included in Other
current assets, and $0.8 million were included in Other non-current assets on
the Condensed Consolidated Balance Sheets.

    As required by the terms of the Credit Agreement, the Company entered into
an interest rate swap transaction effective January 31, 2005 (see Note 6).

    In addition to the above U.S.-based credit facilities, the Company maintains
certain short-term foreign credit facilities, principally with two Japanese
banks totaling 150 million yen (approximately $1.4 million as of March 31,
2005). No amounts were outstanding under these facilities as of March 31, 2005.
The Company's Swiss subsidiary, LeCroy S.A., also has an overdraft facility
totaling 1.0 million Swiss francs (approximately $0.8 million as of March 31,
2005). As of March 31, 2005, there were no amounts outstanding under this
facility.

16. REDEEMABLE CONVERTIBLE PREFERRED STOCK

    On June 30, 1999, the Company completed a private placement of 500,000
shares of its redeemable convertible preferred stock for proceeds of $10.0
million. The shares of preferred stock were entitled to a 12% cumulative
dividend on the original purchase price of $10.0 million, with redemption rights
beginning on June 30, 2004 at the sole discretion of the holders of such shares.
On September 27, 2003, the Company repurchased from the holders of its
redeemable convertible preferred stock all 500,000 issued and outstanding shares
for $23.0 million in cash. In connection with the repurchase of preferred stock,
the Company recorded a charge of approximately $7.7 million to stockholders'
equity representing the premium paid to the holders of its preferred stock ($1.0
million charged to Retained earnings and $6.7 million charged to Additional
paid-in capital) and recognized transaction costs of $0.4 million included in
Other (expense) income, net in the Condensed Consolidated Statements of
Operations. In accordance with the SEC's position published in EITF Topic No.
D-42 relating to induced conversions of preferred stock, the Company recorded
the $7.7 million premium paid to purchase the preferred stock as a charge to
arrive at Net loss applicable to common stockholders in fiscal 2004.

    The Company and the holders of its preferred stock agreed that the final
repurchase of preferred stock would be negotiated as though the transaction had
occurred at the beginning of the first quarter of fiscal 2004. As a result, the
Company accounted for the transaction as though no dividends had accrued in
fiscal 2004 and that the charge for the value originally attributed to the
warrants at the point of issue that remained unaccreted at the time of
redemption


                                       20
<PAGE>
                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)


was accelerated and combined with the redemption premium to reflect the total
charge related to the redemption of convertible preferred stock in the Condensed
Consolidated Statements of Operations.

17. COMMITMENTS AND CONTINGENCIES

    On April 28, 2003, Tektronix, Inc. ("Tektronix") filed a complaint against
the Company in the United States District Court for the District of Oregon
claiming that the Company infringed on eight of Tektronix' U.S. patents. In the
Company's responsive pleading, the Company denied that it has infringed, or is
infringing, any of these patents, and contends that the patents are invalid. The
Company furthermore filed a counterclaim on August 5, 2003, claiming Tektronix
is infringing three of the Company's patents. On April 11, 2005, all claims
related to two of the Tektronix patents were voluntarily dismissed from the
Tektronix complaint and the Company's counterclaim. All claims related to one of
the Company's patents were also voluntarily dismissed from the Company's
counterclaim. On November 30, 2004, the Company filed a Motion for Summary
Judgment of Noninfringement concerning one of the six Tektronix patents. In
response, Tektronix filed a Cross-Motion for Summary Judgment of Infringement by
the Company concerning the same patent. By order dated May 4, 2005, the court
granted the Company's Motion for Summary Judgment of Noninfringement and denied
Tektronix' Cross-Motion for Summary Judgment of Infringement. On May 11, 2005,
Tektronix and the Company entered into an agreement settling all claims and
counterclaims between the parties in connection with their respective patents.
As part of the settlement agreement, the Company recorded $1.0 million in legal
expenses for the three months and nine months ended March 31, 2005.

    On January 15, 2003, LeCroy was sued by Sicom Systems ("Sicom") in the
United States District Court for the District of Delaware for patent
infringement of a U.S. patent relating to the graphical display of test limits.
LeCroy answered the complaint denying infringement and asserted a counterclaim
alleging the invalidity of the patent and that Sicom had abused the judicial
process by bringing a baseless patent infringement claim. On July 16, 2003,
LeCroy filed a Motion to Dismiss Sicom's case, contending that Sicom did not
have standing to bring the litigation. On November 20, 2003, the Court granted
LeCroy's Motion to Dismiss. On December 18, 2003, Sicom filed a Notice of Appeal
to the United States Court of Appeals for the Federal Circuit. On December 30,
2003, Sicom filed a new patent infringement lawsuit against LeCroy in the United
States District Court for the District of Delaware. Tektronix and Agilent
Technologies are also co-defendants in this new litigation. The complaint in
this new case is essentially the same as the complaint filed by Sicom on January
15, 2003, except that Sicom now states that it entered into an amendment to its
license agreement with the Canadian government on December 19, 2003, and that
Sicom now has the exclusive right to bring suit for infringement of the patent
in the United States. On January 5, 2004, Sicom filed a Notice and Order of
Dismissal of Appeal of its appeal to the Court of Appeals for the Federal
Circuit and the Order was entered on the following day. In LeCroy's responsive
pleading, LeCroy denied that it has infringed, or is infringing, the patent, and
contends that the patent is invalid. The defendants in this case, including us,
filed a Motion to Dismiss for lack of standing contending that Sicom's amended
license agreement with Canada does not cure the standing defects that caused the
Court to dismiss the original lawsuit. The court granted the Defendants' Motion
on October 5, 2004, dismissing the case with prejudice. On October 28, 2004,
Sicom filed a Notice of Appeal to the United States Court of Appeals for the
Federal Circuit from the September 30, 2004 order granting the Company's motion
to dismiss and the related memorandum opinion dated October 5, 2004. The appeal
is ongoing and the outcome cannot be predicted. LeCroy intends to defend itself
vigorously in this litigation.

    From time to time, the Company is involved in lawsuits, claims,
investigations and proceedings, including patent and environmental matters,
which arise in the ordinary course of business. There are no other matters
pending that the Company expects to be material to its business, results of
operations, financial condition or cash flows.

18. EARNINGS PER COMMON SHARE

    The following is a presentation of the numerators and the denominators of
the basic and diluted net income (loss) per share computations for the three and
nine months ended March 31, 2005 and 2004:


                                       21
<PAGE>

                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)



<TABLE>
<CAPTION>

                                                                THREE MONTHS ENDED       NINE MONTHS ENDED
                                                                    MARCH 31,               MARCH 31,
                                                                -----------------        -----------------
                                                                2005         2004        2005        2004
                                                                ----         ----        ----        ----
                                                             (13 WEEKS)   (13 WEEKS)  (40 WEEKS)  (39 WEEKS)
                                                                              (IN THOUSANDS)
<S>                                                          <C>          <C>          <C>         <C>
Numerator:
    Net income.............................................    $2,882       $2,359       $2,316      $5,343
    Redemption of convertible preferred stock..............        --          --            --       7,665
                                                               ------       ------       ------     -------
    Net income (loss) applicable to common stockholders....    $2,882       $2,359       $2,316     ($2,322)
                                                               ======       ======       ======     =======
Denominator:
    Weighted average shares outstanding:
         Basic.............................................    11,847       10,721       11,702      10,545
         Employee stock options and other..................       825          550          560        --
                                                               ------       ------       ------     -------
         Diluted...........................................    12,672       11,271       12,262      10,545
                                                               ======       ======       ======     =======
</TABLE>


    As defined in SFAS No. 128, "Earnings per Share," the computation of diluted
net income (loss) per common share for the three months ended March 31, 2005 and
2004 does not include approximately 0.6 million and 0.8 million, respectively,
and the nine months ended March 31, 2005 and 2004 does not include approximately
0.6 million and 2.7 million, respectively, of common stock options and
restricted shares, as the effect of including such awards would have been
antidilutive to earnings per share.

    During the quarter ended December 31, 2004, the Company issued additional
stock options and restricted stock in connection with the Merger. (See Note 3.)

19. INCOME TAXES

    The effective income tax rate for the third quarter of fiscal 2005 was 0.4%
compared to a 37.0% tax rate for the third quarter of fiscal 2004. The lower
effective tax rate comprises an annualized effective tax rate of 35% which is
offset in the quarter ended March 31, 2005 by two discrete tax benefits
aggregating $950,000 associated with the reversal of a prior year valuation
allowance related to a favorable conclusion to a tax audit and a fiscal 2004
provision-to-return adjustment determined when the Company filed its fiscal 2004
tax returns.

    On October 22, 2004, the American Jobs Creation Act (the "Act") was signed
into law. The Act includes a provision for the deduction of 85% of certain
foreign earnings that are repatriated, as defined in the Act. The Company has
elected to apply this provision to certain repatriations of qualifying earnings
in fiscal year 2005. The Company elected to repatriate $22.1 million during the
quarter ended December 31, 2004, pursuant to its approved domestic reinvestment
plan. The income tax effect recognized under the repatriation provision was
approximately $1.2 million which was substantially offset by the release of a
tax reserve related to a favorable foreign tax audit settlement during the three
months ended December 31, 2004.

20. REVENUES BY GEOGRAPHIC AREA

    The Company develops, manufactures, sells and licenses oscilloscopes,
protocol verification systems and other related test and measurement equipment.
The Company's oscilloscopes are tools used by designers and engineers to measure
and analyze complex electronic signals in order to develop high-performance
systems, to validate electronic designs and to improve time to market. Revenues
are attributed to countries based on customer ship-to addresses. Revenues by
geographic area are as follows:


                                       22
<PAGE>
                               LECROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                              THREE MONTHS ENDED        NINE MONTHS ENDED
                                                                   MARCH 31,                MARCH 31,

                                                               2005         2004        2005        2004
                                                       ----         ----        ----        ----


                                                            (13 WEEKS)   (13 WEEKS)  (40 WEEKS)  (39 WEEKS)
                                                                             (IN THOUSANDS)
<S>                                                     <C>          <C>         <C>        <C>
North America..........................................   $  15,260    $  9,644     $ 39,494  $  28,575
Europe/Middle East.....................................      11,497      10,396       36,626     27,501
Japan..................................................       5,101       5,667       15,925     12,381
Asia/Pacific...........................................      11,032       7,123       29,138     21,563
                                                          ---------    --------    ---------  ---------
  Total................................................   $  42,890    $ 32,830    $ 121,183  $  90,020
                                                          =========    ========    =========  =========

</TABLE>

21. RECENT ACCOUNTING PRONOUNCEMENTS

    In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an
amendment of ARB No. 43, Chapter 4." SFAS No. 151 amends the guidance in ARB No.
43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material
(spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that ". . .
under some circumstances, items such as idle facility expense, excessive
spoilage, double freight, and rehandling costs may be so abnormal as to require
treatment as current period charges. . . ." SFAS No. 151 requires that those
items be recognized as current-period charges regardless of whether they meet
the criterion of "so abnormal." In addition, SFAS No. 151 requires that
allocation of fixed production overheads to the costs of conversion be based on
the normal capacity of the production facilities. The provisions of SFAS No. 151
will apply to inventory costs beginning in fiscal year 2007. The Company is
currently assessing the impact of the adoption of SFAS No. 151 on its results of
operations and financial condition.

    In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets, an Amendment of APB Opinion No. 29." The guidance in APB Opinion No. 29,
"Accounting for Nonmonetary Transactions," is based on the principle that
exchanges of nonmonetary assets should be measured based on the fair value of
the assets exchanged. The guidance in APB Opinion No. 29, however, included
certain exceptions to that principle. SFAS No. 153 amends APB Opinion No. 29 to
eliminate the exception for nonmonetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of nonmonetary assets
that do not have commercial substance. A nonmonetary exchange has commercial
substance if the future cash flows of the entity are expected to change
significantly as a result of the exchange. The provisions of SFAS No. 153 will
be applied prospectively to nonmonetary asset exchange transactions in fiscal
year 2006. The Company is currently assessing the impact of the adoption of SFAS
No. 153 on its results of operations and financial condition.

    In December 2004, the FASB issued SFAS No. 123 (Revised 2004), "Share-Based
Payment" ("SFAS No. 123R"). This new pronouncement requires compensation cost
relating to share-based payment transactions to be recognized in financial
statements. That cost will be measured based on the fair value of the equity or
liability instruments issued. SFAS No. 123R covers a wide range of share-based
compensation arrangements including stock options, restricted stock plans,
performance-based awards, stock appreciation rights, and employee stock purchase
plans. SFAS No. 123R replaces SFAS No. 123, "Accounting for Stock-Based
Compensation," and supersedes APB Opinion No. 25, "Accounting for Stock Issued
to Employees." SFAS No. 123, as originally issued in 1995, established as
preferable a fair-value-based method of accounting for share-based payment
transactions with employees. However, SFAS No. 123 permitted entities to
continue to apply the guidance in APB Opinion No. 25, as long as the footnotes
to financial statements disclosed what net income would have been had the
preferable fair-value-based method been used. LeCroy will be required to adopt
the provisions of SFAS No. 123R in the first quarter of fiscal year 2006.
Management is currently evaluating the requirements of SFAS No. 123R. The
adoption of SFAS No. 123R is expected to have a significant effect on the
consolidated financial statements of LeCroy. See Note 3 to the Condensed
Consolidated Financial Statements for the pro forma impact on net income (loss)
and income (loss) per share from calculating stock-related compensation cost
under the fair value alternative of SFAS No. 123. However, the calculation of
compensation cost for share-based payment transactions after the effective date
of SFAS No. 123R may be different from the calculation of compensation cost
under SFAS No. 123, but such differences have not yet been quantified.


                                       23
<PAGE>


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

    The following discussion and analysis should be read in conjunction with the
other financial information and consolidated financial statements and related
notes appearing elsewhere in this Form 10-Q. This discussion contains
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in the forward-looking
statements as a result of a variety of factors, including those discussed in
"Risk Factors" and elsewhere in this Form 10-Q.

    We utilize fiscal quarters that end on the Saturday nearest to March 31,
June 30, September 30, and December 31. For clarity of presentation, we have
described all periods as if they end at the end of the calendar quarter.

OVERVIEW

    We were founded in 1964 to develop, manufacture and sell high performance
signal analysis tools to scientists engaged in high energy physics research. In
1985 we introduced our first oscilloscope using our core competency of designing
signal acquisition and digitizing technology.

    Presently, we develop, manufacture, sell and license oscilloscopes, protocol
verification systems and other related test and measurement equipment. Our
oscilloscopes are tools used by designers and engineers to measure and analyze
complex electronic signals in order to develop high-performance systems, to
validate electronic designs and to improve time to market. Through the quarter
ended March 31, 2005, we offered four families of oscilloscopes, which address
different solutions for the markets we serve: WaveMaster, one of our high
performance product families; WavePro, which is targeted at the mid- to
high-performance sector; WaveRunner, designed for the mid-performance sector;
and WaveSurfer, designed for value-oriented users in the low-performance
bandwidth sector of the market. Our protocol verification systems are used to
reliably and accurately monitor communications traffic and diagnose operational
problems in a variety of communications devices to ensure that they comply with
industry standards. Our protocol verification systems are used by designers and
engineers whose products are in development and production and also for products
deployed in the field. On April 4, 2005, we launched a fifth family of
oscilloscopes, the WaveExpert, which is our highest performance oscilloscope,
targeted at design engineers requiring a high bandwidth, accurate, fast and
flexible sampling oscilloscope.

    We generate revenue in a single segment within the Test and Measurement
market, primarily from the sale of our oscilloscopes, protocol verification
systems, probes, accessories, and applications solutions. To a lesser extent, we
also generate revenue from the sales of our extended warranty and software
maintenance contracts and repairs and calibrations on our instruments after
their warranties expire. Revenue is recognized when products are shipped or
services are rendered to customers net of allowances for anticipated returns. We
defer revenues on shipments of our WaveSurfer product line to buy-sell
distributors until the units are sold by the distributors to their end
customers. We sell our products into a broad range of end markets, including the
computer and semiconductor, data storage devices, automotive and industrial, and
military and aerospace markets. We believe designers in all of these markets are
developing products which rely on increasingly complex electronic signals to
provide the features and performance their customers require. Our customers
include leading original equipment manufacturers, such as BAE Systems, IBM,
Maxtor, Raytheon, Robert Bosch, Seagate, Samsung and Siemens VDO.

    We employ a direct sales model utilizing a highly skilled global sales force
where it makes economic sense to do so. We supplement our direct sales force
with a combination of manufacturers' representatives and distributors in areas
where demand levels do not justify direct distribution. We segment the world
into four areas - North America, Europe/Middle East, Japan and Asia/Pacific. In
North America we primarily sell our products directly in the United States. In
Europe/Middle East, we sell our products directly in Switzerland, Germany,
Italy, France, the United Kingdom and Sweden. In Japan, we sell our products
directly. In Asia/Pacific, we sell our products directly in South Korea,
Singapore and five regions in China. During the third quarter of fiscal 2004, we
commenced shipping our WaveSurfer product line, which is being distributed
through a combination of a buy-sell distribution channel and our direct channel.



                                       24
<PAGE>

    Generally, we transact revenues and pay our operating expenses in the local
currencies of the countries in which we have a direct distribution presence or
other operations, with limited exceptions, most notably in China where our sales
and operating expenses are denominated in U.S. dollars. In Europe/Middle East,
we transact business in Euros, Swiss francs, British pounds, Swedish krona and
U.S. dollars. In Japan, we transact business in Japanese yen. In South Korea, we
transact business in Korean won and in Singapore, we transact business in both
U.S. dollars and Singapore dollars. For a discussion of our foreign currency
exchange rate exposure, see Item 3 of this Part I entitled "Quantitative and
Qualitative Disclosure About Market Risk" below.

    Historically, we have, at times, experienced lower levels of demand during
our first fiscal quarter than in other fiscal quarters which, we believe, has
been principally due to the lower level of general market activity during the
summer months, particularly in Europe.

    Cost of revenues represents manufacturing and service costs, which primarily
comprise materials, labor and factory overhead. Gross margins represent revenues
less cost of revenues. Additional factors integral to gross margins earned on
our products are mix, as the list prices of our products range from $4,000 to
$105,000, and foreign currencies, as approximately two-thirds of our revenues
are derived overseas, much of which is denominated in local currencies while
manufacturing costs are U.S. dollar denominated.

    Selling, general and administrative expenses consist of salaries and related
overhead costs for sales, marketing and administrative personnel as well as
legal, accounting and other professional services.

    Research and development expenses consist primarily of salaries and related
overhead costs associated with employees engaged in research, design and
development activities, as well as the cost of masks, wafers and other materials
and related test services and equipment used in the development process.

    Our results of operations and financial condition are affected by a variety
of factors. As discussed below, we believe the most significant recurring
factors are the economic strength of the technology markets into which we sell
our products, our ability to timely identify market demands and develop
competitive products to meet those demands, the announcements and actions of our
competitors and our ability to enter into new markets and broaden our presence
in existing markets.

    Our sales are largely dependent on the health and growth of technology
companies whose operations tend to be cyclical. Consequently, demand for our
products tends to coincide with the increase or decrease in capital spending in
the technology industry. For example, in the late 1990s through 2001, our
business expanded along with the prosperity of the technology markets. From
early 2001 to 2003, demand for our products decreased along with the contraction
of the technology industry overall. As a result, our revenues decreased 8% from
the end of fiscal year 2000 through fiscal year 2002. Beginning in fiscal year
2003 our revenues have significantly increased concurrently with the recovery of
the technology industry.

    We believe our ongoing strategy of quickly identifying opportunities and
customer needs in fundamental technology markets and capitalizing on those
opportunities through well-planned, efficient and timely key product
introductions has also contributed to our recent increase in revenues. For
instance, in October 2003, in anticipation of renewed but tentative capital
spending in the technology industry, we introduced our WaveRunner 6000 family of
oscilloscopes, a unique software platform built upon a solid hardware platform
designed to take advantage of demand for mid-tier competitively priced, powerful
oscilloscopes. To date, sales of WaveRunner 6000 oscilloscopes have exceeded our
expectations.

    In addition, in response to fluctuations in the technology markets we
target, we continually assess and adopt programs aimed at positioning us for
long-term success. These programs may include streamlining operations,
discontinuing older and less profitable product lines, and reducing operating
expenses from time to time. As an example, in fiscal 2003 we implemented a
restructuring plan intended to reduce costs and more efficiently allocate
product development resources. For a more detailed discussion of our
restructuring efforts in fiscal 2003, see the Section entitled "Restructuring
and Asset Impairment," below. Moreover, in connection with the acquisition of
Computer Access Technology Corporation ("CATC"), we adopted a plan to
restructure our operations and streamline our product strategy. Further details
of this restructuring are described in the Section entitled "Acquisition,"
below.


                                       25
<PAGE>

    We face significant competition in our target markets. We believe that in
order to continue to compete successfully, we need to timely anticipate,
recognize and respond to changing market demands by providing products that
serve our customers' needs as they arise at prices acceptable to the market. We
believe that we compete favorably with our competition in each of these areas.
Consequently, we are constantly reviewing our product development strategy and
invest time, resources and capital in development projects we deem most likely
to succeed.

    In furtherance of our drive to meet our customers' changing demands, we also
look outside our organization for opportunities to expand our markets.
Accordingly, on October 29, 2004, we completed the acquisition of CATC to
complement our expanding portfolio of serial data test solutions. The
acquisition of CATC is described more fully below.

ACQUISITION

    On October 29, 2004, we completed our acquisition of CATC via the merger of
a newly-formed, wholly-owned subsidiary of LeCroy with and into CATC, with CATC
surviving as a wholly-owned subsidiary of LeCroy (the "Merger"). CATC is a
provider of advanced verification systems for existing and emerging digital
communications standards. CATC's products are used by semiconductor, device,
system and software companies at each phase of their products' lifecycles from
development through production and market deployment. CATC reported $17.7
million in revenues for the trailing 12 months ended June 30, 2004 and had
approximately 70 employees. Through our acquisition of CATC, we expect to
capitalize on the increasing demand for serial data test instruments, leverage
our global, technical, direct sales force to accelerate the growth of CATC's
products, strengthen our position in the data storage market, increase
penetration into the computer market, expand gross margins, increase operating
leverage leading to expanded operating margins and increase cash generation
capabilities.

    Total consideration paid to acquire CATC was approximately $130.0 million.
The Merger was recorded under the purchase method of accounting, which requires
that the total consideration be allocated to the assets acquired and liabilities
assumed based on their fair values. On the effective date of the Merger, each
share of CATC common stock issued and outstanding immediately prior thereto was
canceled and converted into the right to receive $6.00 in cash. In addition, we
paid cash to the holders of CATC's outstanding, vested, in-the-money stock
options and employee stock purchase plan (the "ESPP") purchase rights. Further,
we assumed CATC's outstanding unvested stock options, as well as certain vested
but unexercised stock options, by granting to CATC employees a total of 648,284
options to purchase LeCroy common stock (the "LeCroy Options"). The LeCroy
Options were recorded at their fair values using the Black-Scholes option
pricing model based on a stock price of $16.83 per share, which was the closing
price of LeCroy common stock on October 29, 2004, less the intrinsic value of
unvested options, which will be charged as compensation expense to operations as
earned by employees over their remaining vesting periods. We paid cash of $80.4
million, net of cash acquired, using $30.4 million of cash on hand and
borrowings of $50.0 million under our $75.0 million senior, secured, five-year
credit agreement entered into on October 29, 2004, with the lenders listed
therein and The Bank of New York, as administrative agent for such lenders (the
"Credit Agreement"). The Merger consideration is summarized below:

 (IN THOUSANDS)
Cash for shares                                                $  120,281
Cash for options and ESPP purchase rights                           3,966
Fair value of stock options assumed                                 5,111
Unearned stock compensation on unvested options assumed            (1,945)
Transaction costs                                                   2,621
                                                               ----------

Total purchase price                                           $  130,034
                                                               ==========



                                       26
<PAGE>

     The fair value of tangible and intangible assets acquired and liabilities
assumed was established based upon the unaudited October 28, 2004 consolidated
balance sheet of CATC, as well as certain assumptions made regarding fair
values. The fair value of finished goods and work in process inventory was
valued based on estimated selling prices less direct costs to sell and a profit
margin on the selling effort. The fair value of the in-process research and
development ("IPR&D"), purchased technology, trade name and purchase orders was
determined by an independent appraisal firm. The fair value of the IPR&D was
based on the total estimated costs to develop the related technologies less the
costs incurred to date for the projects, and the intangible asset values were
based on estimates of future cash flows associated with those assets. The excess
of the purchase price over the fair value of the net assets acquired was
allocated to goodwill. The purchased technology, trade name and purchase orders
related to this acquisition are being amortized over their estimated economic
useful lives ranging from two to twenty-nine months. The purchase price
allocation, which could be subject to further changes resulting from incremental
direct acquisition costs, is summarized below:



(IN THOUSANDS)
Cash                                                 $    46,466
Accounts receivable                                        2,296
Inventory                                                  3,710
Other current assets                                         133
Fixed assets                                                 663
Other assets                                                  28
In-process research and development                        2,190
Purchased technology                                       3,080
Purchased trade name                                          70
Purchased purchase orders                                     90
Goodwill                                                  79,893
Current liabilities assumed                               (5,875)
Long-term liabilities assumed                               (652)
Deferred tax liability                                    (2,058)
                                                      -----------
Total purchase price                                   $ 130,034
                                                      ===========


    The following table presents the details of the amortizable intangible
assets acquired in the Merger and their carrying value as of March 31, 2005:


<TABLE>
<CAPTION>

                                               WEIGHTED             ACCUMULATED
                                             AVERAGE LIVES   COST  AMORTIZATION     NET
                                             -------------   ----  ------------     ---
                                                                  (IN THOUSANDS)
<S>                                         <C>             <C>       <C>         <C>
   Amortizable intangible assets:
       Purchased technology................  2.0 years      $3,080    $    743    $ 2,337
       Purchased tradename.................   1.0 year          70          30         40
       Purchased purchase orders...........  0.2 years          90          90         --
                                                            ------    --------    -------
     Total intangibles purchased...........                 $3,240    $    863    $ 2,377
                                                            ======    ========    =======

</TABLE>

    Amortization expense for intangible assets acquired in the Merger was $0.5
million and $0.9 million for the three and nine month periods ended March 31,
2005, respectively. Amortization expense for the intangible assets acquired in
the Merger has been recorded in the Condensed Consolidated Statements of
Operations as follows:


                                       27
<PAGE>

                                           THREE MONTHS ENDED NINE MONTHS ENDED
                                               MARCH 31,         MARCH 31,
                                               --------          ---------
                                                  2005            2005
                                                  ----            ----
                                               (13 WEEKS)      (40 WEEKS)
                                                      (IN THOUSANDS)
Cost of revenues..........................       $ 446             $ 833
General and administrative expense........          18                30
                                                 -----             -----
   Total..................................       $ 464             $ 863
                                                 =====             =====



    The amortization expense of intangible assets acquired in the Merger for
fiscal 2005 and in future years is as follows:

                                            AMOUNT
                         FISCAL YEAR    (IN THOUSANDS)
                        --------------- ----------------
                            2005                 $1,315
                            2006                  1,339
                            2007                    586
                                        ----------------
                                                 $3,240
                                        ================

    The $2.2 million allocated to IPR&D was written off during the second
quarter of fiscal 2005 in accordance with FASB Interpretation No. 4,
"Applicability of FASB Statement No. 2 to Business Combinations Accounted for by
the Purchase Method." This charge is included in Research and development
expense in the Condensed Consolidated Statements of Operations.

RESTRUCTURING AND ASSET IMPAIRMENT

    In response to the continued economic downturn in 2003, we took steps to
change our manufacturing strategy, discontinue older product lines and reduce
our operating expenses in an effort to position our business better for the long
term. Additionally, in connection with the Merger, we took steps to change our
organization as well as implement a change in our low to mid-range oscilloscope
manufacturing strategy. The resultant charges taken to accomplish these efforts
were:

<TABLE>
<CAPTION>
                                                 NINE MONTHS ENDED         YEAR ENDED
                                                      MARCH 31,             JUNE 30,
                                                      --------              --------
                                                   2005       2004       2004      2003
                                                   ----      -----       ----      ----
                                                (40 WEEKS) (39 WEEKS)
                                                              (IN THOUSANDS)
<S>                                           <C>         <C>         <C>       <C>
     Charges for:
       Impaired intangible assets.............  $  1,500    $     --    $    --   $ 2,280
       Severance and related costs............        --          --         --       163
                                                --------    --------    -------   -------
          Cost of sales.......................  $  1,500    $     --    $    --   $ 2,443
                                                ========    ========    =======   =======

     Charges for:
       Severance and related costs............  $     --    $    --     $    --  $    670
                                                --------    -------     -------   -------
          Research and development............  $     --    $    --     $    --  $    670
                                                ========    =======     =======   =======

     Charges for:
       Severance and related costs............  $    629    $    --     $    --  $  2,382
       Plant closure..........................        --         --          --       286
       Unused restructuring reserve...........        --         --          --       (78)
                                                --------    -------     -------   -------
          Selling, general and administrative.  $    629    $    --     $    --   $ 2,590
                                                ========    =======     =======   =======
</TABLE>


                                       28
<PAGE>

    In connection with our fiscal 2003 restructuring, approximately $3.4 million
of the total $3.5 million severance, plant closure and related reserve has been
paid as of March 31, 2005. Severance and other related amounts of approximately
$0.1 million will be paid by the end of the second quarter of fiscal 2006.
Additionally, on November 8, 2004 we entered into a Lease Termination Agreement
and made a final payment of approximately $0.1 million releasing us of any
future rental obligations under the Beaverton, Oregon facility lease. This
amount had been previously accrued.

    No similar restructuring charges were incurred in fiscal 2004.

    During the second quarter of fiscal 2005, as a result of the Merger, the
Company adopted a plan to restructure its organization and fine tune its product
strategy. In connection with the adoption of this plan, the Company recorded a
charge for severance and other related expenses in the second quarter of fiscal
2005 of approximately $0.6 million in Selling, general and administrative
expense. The implementation of this plan resulted in headcount reductions of six
employees or approximately 2% of the workforce as compared to June 30, 2004. As
of March 31, 2005, approximately $0.3 million of severance has been paid and
approximately $0.3 million remains in Accrued expenses and other current
liabilities on the Condensed Consolidated Balance Sheets. Severance and other
related amounts under this plan will be paid by the end of the second quarter of
fiscal 2007. Additionally, in the second quarter of fiscal 2005, as a result of
a change in our organization stemming from the Merger and a subsequent change in
our low to mid-range oscilloscope manufacturing strategy, the Company took a
$1.5 million non-cash charge to Cost of revenues for the write-off of a
technology asset.

CRITICAL ACCOUNTING POLICIES

     The preparation of our Condensed Consolidated Financial Statements in
conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, revenues and expenses, and related disclosures of
contingent assets and liabilities in the Condensed Consolidated Financial
Statements and accompanying notes. These estimates and assumptions are based on
management's judgment and available information and, consequently, actual
results could be different from these estimates.

     These Condensed Consolidated Financial Statements should be read in
conjunction with the audited consolidated financial statements included in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2004,
which includes a description of our critical accounting policies involving
significant judgment by LeCroy's management. In particular, judgment is used in
areas such as revenue recognition, the allowance for doubtful accounts,
allowance for excess and obsolete inventory, valuation of long-lived and
intangible assets, valuation of deferred tax assets, estimation of warranty
liabilities and valuation of goodwill. There have been no changes in our
critical accounting policies since June 30, 2004.

CONSOLIDATED RESULTS OF OPERATIONS

    The following table indicates the percentage of total revenues represented
by each item in the Company's Condensed Consolidated Statements of Operations
for the three months and nine months ended March 31, 2005 and 2004.



                                       29
<PAGE>

<TABLE>
<CAPTION>



                                                          THREE MONTHS ENDED   NINE MONTHS ENDED
                                                              MARCH 31,            MARCH 31,
                                                              ---------            ---------
(UNAUDITED)                                                 2005      2004       2005      2004
                                                            ----      ----       ----      ----
<S>                                                       <C>       <C>        <C>        <C>
Revenues:
  Test and measurement products........................      95.3%     94.1%     94.5%      93.7%
  Service and other....................................       4.7%      5.9%      5.5%       6.3%
                                                            -----     -----     -----       -----
    Total revenues.....................................     100.0%    100.0%    100.0%     100.0%

Cost of revenues.......................................      39.5%     41.7%     44.5%      42.4%
                                                            -----     -----     -----       -----

    Gross profit.......................................      60.5%     58.3%     55.5%      57.6%

Operating expenses:
  Selling, general and administrative..................      32.9%     34.8%     34.2%      35.2%
  Legal settlement.....................................       2.4%                0.8%
  Research and development.............................      16.4%     12.5%     17.0%      12.9%
                                                            -----     -----     -----       -----
    Total operating  expenses..........................      51.7%     47.3%     52.0%      48.1%

Operating income.......................................       8.8%     11.0%      3.5%       9.5%

  Interest income......................................       0.4%      0.4%      0.4%       0.7%
  Interest expense.....................................      (2.2%)    (0.6%)    (1.5%)     (0.7%)
  Other (expense) income, net..........................      (0.3%)     0.6%      0.3%      (0.1%)
                                                            -----     -----     -----       -----
    Other, net.........................................      (2.1%)     0.4%     (0.8%)     (0.1%)
                                                            -----     -----     -----       -----
Income before income taxes.............................       6.7%     11.4%      2.7%       9.4%
  Provision for income taxes...........................       0.0%      4.2%      0.8%       3.5%
                                                            -----     -----     -----       -----
Net income.............................................       6.7%      7.2%      1.9%       5.9%
Redemption of convertible preferred stock..............       0.0%      0.0%      0.0%       8.5%
                                                            -----     -----     -----       -----
Net income (loss) applicable to common stockholders...        6.7%      7.2%      1.9%      (2.6%)
                                                            =====     =====     =====       =====
</TABLE>



COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004

    Total revenues were approximately $42.9 million for the quarter ended March
31, 2005, compared to approximately $32.8 million for the comparable prior year
period, representing an increase of 30.8%, or approximately $10.1 million,
primarily as a result of increased sales of Test and measurement products. The
increase in sales of Test and measurement products was largely driven by the
incremental revenue generated as a result of the Merger, the introduction of the
Wavesurfer oscilloscopes during the third quarter ended March 31, 2004, and the
introduction of new probes. The contribution to the total increase in revenue
from protocol verification systems was approximately 63%. During the quarter
ended March 31, 2005, as a result of a change in our business model, we now
classify certain service kit revenue as product rather than service revenue. The
comparable prior year period amounts have been reclassified to conform to the
current period presentation.

    Service and other revenues, which consist primarily of service revenues and
license and maintenance fees, were approximately $2.0 million for the quarter
ended March 31, 2005, representing an increase of 5.3%, or approximately $0.1
million, compared to approximately $1.9 million for the comparable prior year
period. Service and other revenue in the third quarter for both fiscal 2005 and
2004 includes approximately $0.3 million of revenue that was deferred with the
adoption of the SEC's Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue
Recognition in Financial Statements," as of the beginning of fiscal 2001.



                                       30
<PAGE>

    Foreign currency fluctuations contributed approximately $0.9 million to the
growth in total revenues for the quarter ended March 31, 2005. Revenues by
geographic location expressed in dollars and as a percentage of total revenues
were:

                                                  THREE MONTHS ENDED
                                                       MARCH 31,
                                                     (UNAUDITED)
                                                     ------------
                                                   2005          2004
                                                ---------     ---------
                                                    (IN THOUSANDS)
   North America............................    $  15,260     $   9,644
   Europe/Middle East.......................       11,497        10,396
   Japan....................................        5,101         5,667
   Asia/Pacific.............................       11,032         7,123
                                                ---------     ---------
      Total revenues........................    $  42,890     $  32,830
                                                =========     =========

                                                  THREE MONTHS ENDED
                                                       MARCH 31,
                                                     (UNAUDITED)
                                                     ------------
                                                   2005          2004
                                                ---------     ---------
   North America............................        35.6%          29.3%
   Europe/Middle East.......................        26.8           31.7
   Japan....................................        11.9           17.3
   Asia/Pacific.............................        25.7           21.7
                                                --------      ---------
      Total revenues........................       100.0%         100.0%
                                                ========      =========

    Gross profit for the quarter ended March 31, 2005 was $25.9 million, or
60.5% gross margin, compared to $19.1 million, or 58.3% gross margin, for the
comparable prior year period. The increase in both gross profit dollars and
gross margin percentage is primarily attributable to the sale of protocol
verification systems, which yield greater gross margins due to their higher
software content, and introduction of the Wavesurfer oscilloscope during the
quarter ended March 31, 2004. We expect the Merger to continue to have a
significant favorable effect on our overall gross margins in future periods.

    Selling, general and administrative ("SG&A") expense was $14.1 million for
the quarter ended March 31, 2005 compared to $11.4 million for the quarter ended
March 31, 2004, representing an increase of 23.7% or $2.7 million. Approximately
32.9% of the increase in the current quarter reflects the SG&A expenses incurred
as a result of the Merger. Also included in SG&A expense for the three months
ended March 31, 2005 is $0.6 million of non-cash amortization of deferred
compensation related to our equity-based long-term incentive plan introduced at
the end of fiscal 2004. The remaining increase in SG&A was largely attributable
to increases in certain legal and accounting expenses as well as less
significant increases in other general spending categories. As a percentage of
total revenues, SG&A expense decreased to 32.9% for the quarter ended March 31,
2005 from 34.8% for the comparable prior year period which resulted from the
strong operating leverage in our business model.

     Legal settlement expense for the quarter ended March 31, 2005, is related
to the patent litigation settlement agreement reached with Tektronix, Inc.
("Tektronix") on May 11, 2005. Please see Note 17 - Commitments and
Contingencies for more information.

    Research and development ("R&D") expense was $7.0 million for the quarter
ended March 31, 2005, compared to $4.1 million for the comparable prior year
period, an increase of 70.76% or $2.9 million. The increase in R&D expense, both
in dollars and as a percentage of revenues, for the current period is primarily
due to spending related to the development of the protocol verification system
products technology acquired in the Merger. Also included in R&D expense for the
current period is $0.2 million of non-cash amortization of deferred compensation
related to our equity-based long-term incentive plan introduced at the end of
fiscal 2004. As a percentage of total revenues, R&D expense was 16.3% for the
quarter ended March 31, 2005 compared to 12.5% for the comparable prior year
period.


                                       31
<PAGE>

    In the current fiscal year we intend to continue to invest a substantial
percentage of our revenues into R&D. We expect to periodically introduce new
products that address customer needs for solutions in a variety of market
sectors. We believe that our advanced hardware and software technologies
incorporated into our core products can be adapted to address additional sectors
of the large and diverse Test and Measurement market where we have not
historically focused.

    Other, net, which consists primarily of net interest income and expense and
foreign exchange gains and losses, was an expense of approximately $0.9 million
for the quarter ended March 31, 2005, compared to income of $0.1 million for the
comparable prior year period. Other, net for the current period comprised
primarily interest expense of approximately $0.9 million, compared to
approximately $0.2 million for the comparable prior year period, which increase
is due to the $50.0 million Term Loan outstanding under our current Credit
Agreement. In addition, there were foreign exchange losses of approximately $0.1
million for the quarter ended March 31 2005, resulting from the changes in our
foreign exchange forward contracts and on transactions denominated in other than
their functional currencies, compared to foreign exchange gains of approximately
$0.1 million for the comparable prior year period.

    Our effective income tax rate for the quarter ended March 31, 2005 was 0.4%
compared to a 37.0% tax rate for the comparable prior year period. The lower
effective tax rate comprises an annualized effective tax rate of 35%, which is
offset in the quarter by two discrete tax benefits aggregating $950,000
associated with the reversal of a prior year valuation allowance related to a
favorable conclusion to a tax audit and a fiscal 2004 provision-to-return
adjustment determined when we filed our fiscal 2004 tax returns.

COMPARISON OF THE NINE MONTHS ENDED MARCH 31, 2005 AND 2004

     Total revenues were $121.2 million for the nine months ended March 31,
2005, compared to $90.0 million for the comparable prior year period,
representing an increase of 34.7%, or $31.2 million. The increased revenue,
which was almost entirely derived from sales of our Test and measurement
products, resulted from the sales of our protocol verification systems, record
demand for our Serial Data Analyzers ("SDAs"), an increase in demand for our
WaveRunner oscilloscopes driven by the launch of the "A" versions of our
WaveRunner 6000 product line and the WaveSurfer product line launched in the
fourth quarter of fiscal 2004.

    Foreign currency fluctuations contributed approximately $2.0 million to the
growth in total revenues for the nine months ended March 31, 2005. Revenues by
geographic location expressed in dollars and as a percentage of total revenues
were:

                                                      NINE MONTHS ENDED
                                                         MARCH  31,
                                                         (UNAUDITED)
                                                   ---------------------
                                                      2005          2004
                                                      -----         ----
                                                  (40 WEEKS)    (39 WEEKS)
                                                       (IN THOUSANDS)
   North America...............................    $  39,494     $  28,575
   Europe/Middle East..........................       36,626        27,501
   Japan.......................................       15,925        12,381
   Asia/Pacific................................       29,138        21,563
                                                   ---------     ---------
      Total revenues...........................    $ 121,183     $  90,020
                                                   =========     =========

                                                      NINE MONTHS ENDED
                                                         MARCH  31,
                                                         (UNAUDITED)
                                                   ---------------------
                                                     2005          2004
                                                     ----          ----
   North America...............................      32.6%         31.7%
   Europe/Middle East..........................      30.2          30.5
   Japan.......................................      13.2          13.8
   Asia/Pacific................................      24.0          24.0
                                                   ------        ------
      Total revenues...........................     100.0%        100.0%
                                                   ======        ======



                                       32
<PAGE>

    Gross profit for the nine months ended March 31, 2005 was $67.3 million, or
55.5% gross margin, compared to $51.8 million, or 57.6% gross margin, for the
comparable prior year period. The increase in gross profit dollars is primarily
attributable to the introduction of the Wavesurfer oscilloscope and to the
incremental profit contributed by sales of protocol verification systems,
partially offset by non-cash charges of $2.7 million for the write-down of
inventory related to the changes in our long-term product support policy and
product roadmap strategy as well as $1.5 million for the write-down of a
technology license due to a change in our manufacturing strategy; which charges
did contribute to a lower gross margin percentage for the nine months ended
March 31, 2005. As a result of the amortization of acquired intangible assets,
as well as the incremental cost of sales related to the write-up of acquired
inventory to its fair value that lowered the impact of the higher margin
protocol verification sales, the net impact on gross margin from sales of
protocol verification systems for the nine months ended March 31, 2005 was
immaterial. We expect the Merger to have a more significant favorable effect on
our overall gross margins in future periods.

     SG&A expense for the nine months ended March 31, 2005 was $41.5 million,
representing an increase of $9.8 million compared to $31.7 million for the
comparable prior year period. Approximately 20.1% of the increase for the nine
months ended March 31, 2005 reflects the SG&A expenses incurred as a result of
the Merger. Included in SG&A in the nine months ended March 31, 2005 is $1.5
million of non-cash amortization of deferred compensation related to our
equity-based long-term incentive plan introduced at the end of fiscal 2004 and
$0.6 million of severance and other related expenses related to the
restructuring plan we undertook in connection with the Merger. The remaining
increase was largely attributable to increases in compensation and certain legal
and accounting expenses as well as less significant increases in other general
spending categories. As a percentage of total revenues, SG&A expense decreased
to 34.2% for the nine months ended March 31, 2005 from 35.2% for the nine months
ended March 31, 2004.

     Legal settlement expense for the nine months ended March 31, 2005, is
related to the patent litigation settlement agreement reached with Tektronix on
May 11, 2005. Please see Note 17 - Commitments and Contingencies for more
information.

     R&D expense was $20.6 million for the nine months ended March 31, 2005,
compared to $11.6 million for the comparable prior year period, representing an
increase of 77.6% or $9.0 million. The primary driver of the increase is the
inclusion of R&D expenses from the Merger. Also, in connection with the Merger,
included for the nine months ended March 31, 2005, is the $2.2 million charge
for IPR&D. The remaining increase is due to salary increases, $0.4 million in
non-cash amortization of deferred compensation related to our equity-based
long-term incentive plan introduced at the end of fiscal year 2004, and the
timing of certain project specific engineering expenses related to new product
introductions. As a percentage of total revenues, R&D expense increased to 17.0%
for the nine months ended March 31, 2005 from 12.9% for the comparable prior
year period, primarily attributable to the IPR&D charge, and to a lesser extent,
increased spending on new product development.

     Other, net, was an expense of $1.0 million for the nine months ended March
31, 2005 compared to an expense of $0.1 million for the comparable prior year
period. Other, net, for the nine months ended March 31, 2005 includes interest
expense of approximately $1.8 million due to the $50.0 million Term Loan issued
in connection with the Merger as well as the write-off of unamortized fees of
$0.1 million associated with our previous credit facility, partially offset by
interest income of approximately $0.5 million and the net foreign exchange gains
of $0.4 million resulting from the changes in our foreign exchange forward
contracts and on transactions denominated in other than their functional
currencies. Other, net, for the nine months ended March 31, 2004 includes
interest expense of approximately $0.6 million and a non-recurring charge of
$0.4 million for transaction costs associated with the redemption of preferred
stock, partially offset by interest income of approximately $0.6 million and
$0.3 million in net foreign exchange gains resulting from the changes in our
foreign exchange forward contracts and on transactions denominated in other than
their functional currencies.

    Our effective tax rate was 29.4% for the nine months ended March 31, 2005,
compared to 37.0% for the nine months ended March 31, 2004. The effective tax
rate for the nine months ended March 31, 2005 was based on the estimated annual
effective tax rate of 35.0%, increased by the discrete nondeductible IPR&D tax
expense of $2.2 million associated with the Merger, and decreased by two
discrete tax benefits aggregating $950,000 associated with the reversal of a
prior year valuation allowance related to a favorable conclusion to a tax audit
and a fiscal 2004 provision-to-return adjustment determined when we filed our
fiscal 2004 tax returns.


                                       33
<PAGE>

    On October 22, 2004, the American Jobs Creation Act (the "Act") was signed
into law. The Act includes a provision for the deduction of 85% of certain
foreign earnings that are repatriated, as defined in the Act. We have elected to
apply this provision to certain repatriations of qualifying earnings in fiscal
year 2005. We elected to repatriate $22.1 million during the quarter ended
December 31, 2004, pursuant to our approved domestic reinvestment plan. The
income tax effect recognized under the repatriation provision was approximately
$1.2 million which was substantially offset by the release of a tax reserve
related to a favorable foreign tax audit settlement during the three months
ended December 31, 2004.

    On September 27, 2003, we purchased from the holders of our preferred stock
all 500,000 issued and outstanding shares of the preferred stock for $23.0
million in cash. In accordance with the SEC's position published in Emerging
Issues Task Force ("EITF") Topic No. D-42 relating to induced conversions of
preferred stock, we recorded a charge of approximately $7.7 million representing
the premium paid to the holders of our preferred stock as a charge to arrive at
a net loss applicable to common stockholders for the nine months ended March 31,
2004.

LIQUIDITY AND CAPITAL RESOURCES

    Cash, cash equivalents and marketable securities at March 31, 2005 were
approximately $16.7 million, compared to approximately $38.1 million at June 30,
2004. In connection with the Merger, we spent $80.4 million, net of cash
acquired, comprised of $30.4 million of our cash and $50.0 million of borrowings
under the Credit Agreement.

     We generated $13.0 million of Net cash provided by operating activities for
the nine months ended March 31, 2005, compared to $12.9 million for the
comparable prior year period. The main components of cash provided by operating
activities during the nine months ended March 31, 2005 were:



     o    net income of $2.3 million;

     o    depreciation and amortization of $5.9 million, including $0.8 million
          of amortization related to intangible assets acquired in the Merger;

     o    other non-cash expense of $8.1 million which primarily consisted of:

          o    write-off of inventory and intangible assets of $4.2 million
               in the aggregate as a result of changes in product support
               policies and manufacturing strategies contemplated as a result of
               the Merger;
          o    write-off of IPR&D acquired in the Merger of $2.2 million;
          o    stock compensation expense of $1.9 million;
          o    tax benefit from employees' exercise of incentive stock options
               of $1.0 million; partially offset by
          o    an increase in the net deferred tax asset of $0.6 million and
               the recognition of $1.0 million in non-cash deferred license
               revenue;

     o    partially offset by a net investment in working capital of
          $3.3 million.

     The net investment in working capital of $3.3 million for the nine months
ended March 31, 2005, was driven mainly by increases in inventory primarily due
to the receipt of a substantial quantity of parts in anticipation of a new
product cycle as well as deployment of WaveRunner oscilloscope demonstration
units in support of the launch of the WaveRunner 6000A family.

    Net cash used in investing activities was approximately $73.6 million for
the nine months ended March 31, 2005, compared to net cash used of approximately
$3.4 million for the comparable prior year period. This increase was primarily
due to the investment of $80.4 million, net of acquired cash for the acquisition
of CATC, partially offset by the liquidation of $9.5 million of investments to
partially fund such acquisition (see Acquisition in this Discussion and Analysis
of Financial Condition and Results of Operations above).


                                       34
<PAGE>

    Net cash generated by financing activities was approximately $48.7 million
for the nine months ended March 31, 2005, compared to net cash used of
approximately $15.3 million for the comparable prior year period. This increase
in net cash generated by financing activities was primarily due to borrowings
under the Credit Agreement used in connection with the Merger net of the cost of
such issuance, and the use of $23.0 million in the comparable prior year period
to redeem our preferred stock as well as the repayment of borrowings and capital
lease obligations of $6.1 million.

    We have a $2.0 million capital lease line of credit to fund certain capital
expenditures. As of March 31, 2005, we had $0.1 million outstanding under this
line of credit, all of which was current and included within Accrued expenses
and other current liabilities on the Condensed Consolidated Balance Sheets. This
line of credit expires November 2005 and outstanding borrowings thereunder bear
interest at an annual rate of 12.2%.

    On October 29, 2004, we entered into a $75.0 million senior, secured,
five-year credit agreement with the lenders listed therein and The Bank of New
York, as administrative agent for such lenders (the "Credit Agreement"), which
replaced our existing credit facility with The Bank of New York that was entered
into on October 11, 2000 and subsequently amended. BNY Capital Markets, Inc.
acted as sole lead arranger and sole book runner in connection with syndicating
the credit facility. The terms of the Credit Agreement provide us with a $50.0
million Term Loan and a $25.0 million revolving credit facility (the
"Revolver"), which includes a $1.0 million swingline loan subfacility and a $1.0
million letter of credit subfacility. The borrowings by us under the Credit
Agreement are secured by all of our assets and the assets of our domestic
subsidiaries, and our performance thereunder is guaranteed by our domestic
subsidiaries. Proceeds of $50.0 million under the Term Loan were used to finance
the acquisition of CATC and pay transaction expenses related to the Merger.
Proceeds from the Revolver may be used for general corporate purposes, including
the financing of working capital requirements, capital expenditures and
acquisitions. As of March 31, 2005, we have not borrowed against the Revolver.

    Borrowings under the Credit Agreement bear interest at variable rates equal
to, at our election, (1) the higher of (a) the prime rate or (b) the federal
funds rate plus 0.5%, plus an applicable margin of between 0.00% and 1.50% based
on our leverage ratio, as defined in the Credit Agreement, or (2) LIBOR plus an
applicable margin of between 1.25% and 2.75% based on our leverage ratio. In
addition, we must pay commitment fees on unused Revolver borrowings during the
term of the Credit Agreement at rates between 0.375% and 0.5% dependent upon our
leverage ratio.

    Under the Credit Agreement, we are required to comply with certain financial
covenants, measured quarterly, including a minimum interest coverage ratio,
minimum total net worth, maximum leverage ratio, minimum fixed charge coverage
ratio and limitations on capital expenditures. As of March 31, 2005, we were in
compliance with our financial covenants under the Credit Agreement.

    Beginning March 31, 2005, outstanding borrowings of $50.0 million under the
Term Loan are required to be repaid quarterly through October 2009, based on an
annualized amortization rate starting at 15% in calendar year 2005 and
increasing 250 basis points per year during the term of the Credit Agreement. As
of March 31, 2005, we have repaid $3.5 million of the principal balance of this
loan.

    We incurred approximately $1.4 million of transaction fees in connection
with entering into the Credit Agreement, which have been deferred and are being
amortized over the life of the Credit Agreement using the effective interest
method for the Term Loan and the straight-line method for the Revolver.
Transaction fees of approximately $87,000 from the previously amended credit
facility were charged to interest expense for the three months ended December
31, 2004. At March 31, 2005, unamortized fees of $0.5 million were included in
Other current assets, and $0.8 million were included in Other non-current assets
on the Condensed Consolidated Balance Sheets.


                                       35
<PAGE>

    In addition to the above U.S.-based credit facilities, we maintain certain
short-term foreign credit facilities, principally with two Japanese banks
totaling 150 million yen (approximately $1.4 million as of March 31, 2005). No
amounts were outstanding under these facilities as of March 31, 2005. Our Swiss
subsidiary, LeCroy S.A., also has an overdraft facility totaling 1.0 million
Swiss francs (approximately $0.8 million as of March 31, 2005). As of March 31,
2005, there were no amounts outstanding under this facility.

    We believe that our cash on hand, cash equivalents, cash flow generated by
our continuing operations and our availability under our revolving credit lines
will be sufficient to fund working capital, capital expenditure and debt service
requirements for at least the next twelve months.

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

    Our contractual obligations and commitments include obligations associated
with our capital and operating leases, employee severance agreements, technology
license agreements and Term Loan as set forth in the table below:


<TABLE>
<CAPTION>

                                                            PAYMENTS DUE BY PERIOD AS OF MARCH 31, 2005
                                                     ----------------------------------------------------------
                                                                LESS THAN                          MORE THAN 5
                                                       TOTAL     1 YEAR     1-3 YEARS  3-5 YEARS      YEARS
                                                     ---------  --------    --------    ---------    ----------
                                                                          (IN THOUSANDS)
<S>                                                <C>        <C>         <C>        <C>           <C>
   Capital lease obligations...................      $    117   $    117    $     --   $      --     $      --
   Employee severance agreements...............           365        269          96          --            --
   Operating lease obligations.................         5,158      1,379       3,524         172            83
   Intangible asset obligations................         1,206        362         844          --            --
   Term Loan obligations.......................        46,500      5,250      18,750      22,500            --
                                                     --------   --------    --------   ---------      --------
   Total.......................................      $ 53,346   $  7,377    $ 23,214   $  22,672      $     83
                                                     ========   ========    ========   =========      ========

</TABLE>

RECENT ACCOUNTING PRONOUNCEMENTS

     In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an
amendment of ARB No. 43, Chapter 4" ("SFAS No. 51"). SFAS No. 151 amends the
guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the
accounting for abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4,
previously stated that ". . . under some circumstances, items such as idle
facility expense, excessive spoilage, double freight, and rehandling costs may
be so abnormal as to require treatment as current period charges. . . ." SFAS
No. 151 requires that those items be recognized as current-period charges
regardless of whether they meet the criterion of "so abnormal." In addition,
SFAS No. 151 requires that allocation of fixed production overheads to the costs
of conversion be based on the normal capacity of the production facilities. The
provisions of SFAS No. 151 will apply to inventory costs beginning in fiscal
year 2007. We are currently assessing the impact of the adoption of SFAS No. 151
on our results of operations and financial condition.

     In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets, an Amendment of APB Opinion No. 29" ("SFAS No. 153"). The guidance in
Accounting Principles Board ("APB") Opinion No. 29, "Accounting for Nonmonetary
Transactions," is based on the principle that exchanges of nonmonetary assets
should be measured based on the fair value of the assets exchanged. The guidance
in APB Opinion No. 29, however, included certain exceptions to that principle.
SFAS No. 153 amends APB Opinion No. 29 to eliminate the exception for
nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. The provisions of SFAS No. 153 will be applied prospectively to
nonmonetary asset exchange transactions in fiscal year 2006. We are currently
assessing the impact of the adoption of SFAS No. 153 on our results of
operations and financial condition.



                                       36
<PAGE>

    In December 2004, the FASB issued SFAS No. 123 (Revised 2004), "Share-Based
Payment" ("SFAS No. 123R"). This new pronouncement requires compensation cost
relating to share-based payment transactions be recognized in financial
statements. That cost will be measured based on the fair value of the equity or
liability instruments issued. SFAS No. 123R covers a wide range of share-based
compensation arrangements including stock options, restricted stock plans,
performance-based awards, stock appreciation rights, and employee stock purchase
plans. SFAS No. 123R replaces SFAS No. 123, "Accounting for Stock-Based
Compensation," and supersedes APB Opinion No. 25, "Accounting for Stock Issued
to Employees." SFAS No. 123, as originally issued in 1995, established as
preferable a fair-value-based method of accounting for share-based payment
transactions with employees. However, SFAS No. 123 permitted entities to
continue to apply the guidance in APB Opinion No. 25, as long as the footnotes
to financial statements disclosed what net income would have been had the
preferable fair-value-based method been used. LeCroy will be required to adopt
the provisions of SFAS No. 123R in the first quarter of fiscal year 2006.
Management is currently evaluating the requirements of SFAS No. 123R. The
adoption of SFAS No. 123R is expected to have a significant effect on the
consolidated financial statements of LeCroy. See Note 3 to the Condensed
Consolidated Financial Statements for the pro forma impact on net income (loss)
and income (loss) per share from calculating stock-related compensation cost
under the fair value alternative of SFAS No. 123. However, the calculation of
compensation cost for share-based payment transactions after the effective date
of SFAS No. 123R may be different from the calculation of compensation cost
under SFAS No. 123, but such differences have not yet been quantified.


FORWARD-LOOKING INFORMATION

    This Form 10-Q contains forward-looking statements. When used in this Form
10-Q, the words "anticipate," "believe," "estimate," "will," "plan," "intend,"
and "expect" and similar expressions identify forward-looking statements.
Although we believe that our plans, intentions, and expectations reflected in
any forward-looking statements are reasonable, these plans, intentions, or
expectations may not be achieved. Our actual results, performance, or
achievements could differ materially from those contemplated, expressed, or
implied, by the forward-looking statements contained in this Form 10-Q.
Important factors that could cause actual results to differ materially from our
forward-looking statements are set forth in this Form 10-Q, including under the
heading "Risk Factors." All forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by the
cautionary statements set forth in this Form 10-Q. Except as required by federal
securities laws, we are under no obligation to update any forward-looking
statement, whether as a result of new information, future events, or otherwise.

RISK FACTORS

     An investment in our common stock involves a high degree of risk. You
should carefully consider the risks described below together with all of the
other information included in this Form 10-Q when evaluating the Company and its
business. If any of the following risks actually occurs, our business, financial
condition, or results of operations could suffer. In that case, the trading
price of our common stock could decline and our stockholders may lose all or
part of their investment.

RISKS RELATED TO OUR BUSINESS

     OUR OPERATING RESULTS ARE EXPECTED TO CONTINUE TO FLUCTUATE AND MAY NOT
     MEET OUR FINANCIAL GUIDANCE OR PUBLISHED ANALYST FORECASTS, WHICH MAY CAUSE
     THE PRICE OF OUR COMMON STOCK TO DECLINE SIGNIFICANTLY.

     Our past operating results, including our gross margins, have fluctuated
from fiscal period to fiscal period. We expect our future operating results and
gross margins will continue to fluctuate from fiscal period to fiscal period due
to a number of factors, many of which are outside our control and any of which
could cause our stock price to fluctuate. The primary factors that affect our
operating results include the following:


                                       37
<PAGE>

          o    changes in overall demand for our products;

          o    the timing of the, announcement, introduction and market
               acceptance of new products by us or competing companies;

          o    the timing and magnitude of research and development expenses;

          o    changes in the estimation of the future size and growth rates of
               our markets;

          o    changes in our production efficiency;

          o    disruptions in operations at any of our facilities or the
               facilities of any of our contract manufacturers for any reason;

          o    changes in the selling prices of our products; and

          o    changes in foreign currency exchange risks.

     In addition, we have historically experienced somewhat lower activity
during our first fiscal quarter than in other fiscal quarters which, we believe,
is due principally to the lower level of orders and market activity during the
summer months, particularly in Europe. We believe this seasonal aspect of our
business is likely to continue in the future.

     OUR STOCK PRICE MAY BE VOLATILE IN THE FUTURE, AND OUR STOCKHOLDERS MAY BE
     UNABLE TO RESELL THEIR SHARES AT OR ABOVE THE PRICE THEY PAID.

     The market price of our common stock fluctuates significantly. The stock
price could fluctuate in the future due to a number of factors, some of which
are beyond our control. These factors include:

          o    historically low trading volume in our stock;

          o    announcements of developments related to our business, including
               additions or departures of key personnel;

          o    announcements of technological innovations or new products or
               enhancements by us or our competitors;

          o    sales by competitors, including sales to our customers;

          o    sales of common stock into the public market, including those by
               directors and members of management;

          o    developments in our relationships with our customers, partners,
               distributors, and suppliers;

          o    shortfalls or changes in revenue, gross margins, earnings or
               losses, or other financial results from analysts' expectations;

          o    regulatory developments;

          o    fluctuations in results of operations;

          o    failure to meet our financial obligations under any loans or
               financing agreements;

          o    trends in the seasonality of our sales; and

          o    general conditions in our market or the markets served by our
               customers.

    In addition, in recent years the stock market in general and the market for
shares of technology stocks in particular have experienced extreme price
fluctuations, which have often been due largely to factors other than the
operating performance of the affected companies. We cannot ensure that the
market price of our common stock will not decline substantially, or otherwise
continue to experience significant fluctuations in the future, including
fluctuations that are unrelated to our operating performance.


                                       38
<PAGE>

     IF DEMAND FOR OUR PRODUCTS DOES NOT MATCH MANUFACTURING CAPACITY, WE MAY
     UNDERUTILIZE OUR CAPACITY OR, ALTERNATIVELY, BE UNABLE TO FULFILL ORDERS IN
     A TIMELY MANNER, AND IN EITHER SITUATION OUR OPERATING RESULTS MAY SUFFER.

     The sale of our products is dependent, to a large degree, on customers
whose industries are subject to cyclical trends in the demands for their
products. We may not be able to adapt production capacity and related cost
structures to rapidly changing market conditions in a timely manner. When demand
does not meet expectations, manufacturing capacity will likely exceed production
requirements. We have at times increased our production capacity and the
overhead that supports production based on anticipated market demand which has
not always developed as expected. As a result, we have periodically
underutilized our capacity, which has adversely affected our earnings due to
existing fixed costs. In addition, conversely, if during a market upturn we
cannot increase manufacturing capacity to meet product demand, we will be unable
to fulfill orders in a timely manner, which in turn may have a negative effect
on operating results and our overall business.

     IF OUR OPERATING RESULTS DO NOT CONTINUE TO IMPROVE IN THE LONG-TERM, WE
     MAY BE REQUIRED TO ESTABLISH AN ADDITIONAL VALUATION ALLOWANCE AGAINST OUR
     NET DEFERRED TAX ASSETS.

     We evaluate whether our deferred tax assets can be realized and assess the
need for a valuation allowance on an ongoing basis. As of March 31, 2005, we had
recorded $10.7 million of net deferred tax assets related to the future tax
benefit of certain expenses reported for financial statement purposes that have
not yet been deducted on our tax returns. Realization of our net deferred tax
assets is dependent on our ability to generate future taxable income. As of
March 31, 2005, we had recorded a valuation allowance of $9.4 million, of which
$4.4 million was attributable to our acquisition of CATC, to reserve for those
deferred tax assets we believe are not likely to be realized in future periods.
An additional valuation allowance would be recorded if it was more likely than
not that some or all of our net deferred assets will not be realized. If we
establish additional valuation allowances, we would record a tax expense in our
Condensed Consolidated Statements of Operations, which would have an adverse
impact on our operating results. However, the recognition of any future tax
benefit resulting from the reduction of the $4.4 million valuation allowance
associated with the CATC purchase will be recorded as a reduction of goodwill.

     WE FACE RISKS FROM FLUCTUATIONS IN THE VALUE OF FOREIGN CURRENCY VERSUS THE
     U.S. DOLLAR AND THE COST OF CURRENCY EXCHANGE, WHICH AFFECT OUR REVENUE,
     COST OF REVENUE AND OPERATING MARGINS AND COULD RESULT IN EXCHANGE LOSSES.

     A large portion of our sales and expenses are denominated in foreign
currencies. We purchase materials from suppliers and sell our products around
the world and maintain investments in foreign subsidiaries, all denominated in a
variety of currencies. As a consequence, we are exposed to risks from
fluctuations in foreign currency exchange rates with respect to a number of
currencies, changes in government policies and legal and regulatory
requirements, political instability, transportation delays and the imposition of
tariffs and export controls. Changes in the relation of foreign currencies to
the U.S. dollar will affect revenues, our cost of revenue and operating margins
and could result in exchange losses. Among the more significant potential risks
to us of relative fluctuations in foreign currency exchange rates is the
relationship among and between the U.S. dollar, European monetary unit, Swiss
franc, British pound, Swedish krona, Japanese yen, Korean won, and Singapore
dollar.

     We have a program of entering into foreign exchange forward contracts to
minimize the risks associated with currency fluctuations on assets or
liabilities denominated in other than the functional currency of us or our
subsidiaries. It cannot be assured, however, that this program will effectively
offset all of our foreign currency risk related to these assets or liabilities.
These foreign exchange forward contracts do not qualify for hedge accounting.
Other than this program, we do not attempt to reduce our foreign currency
exchange risks by entering into foreign currency management programs. As a
consequence, there can be no assurance that fluctuations in foreign currency
exchange rates in the future as a result of mismatches between local currency
revenues and expenses, the translation of foreign currencies into the U.S.
dollar, our financial reporting currency, or otherwise, will not adversely
affect our results of operations. Moreover, fluctuations in exchange rates could
affect the demand for our products.


                                       39
<PAGE>

     No assurance can be given that our strategies will prevent future currency
fluctuations from having a material adverse affect on our business, financial
condition, results of operations or liquidity.

     WE FACE NUMEROUS RISKS ASSOCIATED WITH OUR INTERNATIONAL OPERATIONS, WHICH
     COULD CAUSE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND RESULTS OF
     OPERATIONS SINCE APPROXIMATELY TWO-THIRDS OF OUR REVENUES ARE DERIVED FROM
     INTERNATIONAL SALES.

     We market and sell our products and services outside the United States, and
currently have employees located in China, France, Germany, Hong Kong, Italy,
Japan, Singapore, South Korea, Sweden, Switzerland and the United Kingdom. Many
of our customers and licensees are located outside the United States. As part of
our strategy, we have expanded our international sales, particularly in China.
We face numerous risks in doing business outside the United States, including:

          o    dependence on sales representatives or foreign distributors and
               their sales channels;

          o    longer accounts receivable collection cycles;

          o    less effective and less predictable recognition, protection and
               enforcement of intellectual property rights, specifically in
               areas of Asia and particularly in China;

          o    trade protection measures, import or export licensing
               requirements, tariffs and other trade barriers;

          o    highly cyclical business environments;

          o    unusual or burdensome foreign laws or regulatory requirements or
               unexpected changes to those laws or requirements;

          o    a stronger U.S. dollar, which could make our products more
               expensive;

          o    changes in the political or economic condition of a specific
               country or region, particularly in emerging markets; and

          o    potentially adverse tax consequences.

     Such factors could cause our future international sales to decline.

     Our business practices in international markets are also subject to the
requirements of the Foreign Corrupt Practices Act. If any of our employees are
found to have violated these requirements, we could be subject to significant
fines and other penalties.

     Our products are also subject to United States export control restrictions.
In certain cases, we may not be permitted to export products without obtaining
an export license. U.S. export laws also prohibit the export of our products to
a number of countries deemed by the United States to be hostile. The export of
our high-performance oscilloscopes from the United States, which accounts for a
material portion of our internationally derived revenue, is also subject to
regulation under the Treaty for Nuclear Non-Proliferation. However, only a small
portion of those oscilloscopes are sold in countries where that treaty restricts
the end-user. These restrictions may make foreign competitors facing less
stringent controls on their products more competitive in the global market. We
cannot be certain that the U.S. government will approve any pending or future
export license requests. In addition, the list of products and countries for
which export approval is required, and the regulatory policies with respect
thereto, could be revised. Our international sales and, because approximately
two-thirds of our revenue is derived from sales outside the United States, our
sales in general, could be materially harmed by our inability to obtain required
licenses or by the costs of compliance.


                                       40
<PAGE>

     We may be greatly impacted by the political, economic, and military
conditions in China, Taiwan, North Korea, and South Korea. These countries have
recently conducted military exercises in or near the others' territorial waters
and airspace. Such disputes may continue or escalate, resulting in economic
embargoes, disruptions in shipping, or even military hostilities. This could
severely harm our business by interrupting or delaying shipment of our products
to or through these areas and/or reducing our sales in these areas.

     WE DEPEND ON SINGLE-SOURCE SUPPLIERS FOR SOME OF OUR PRODUCTS, AND THE LOSS
     OF THESE SUPPLIERS COULD HARM OUR BUSINESS BY INTERRUPTING OR TERMINATING
     OUR MANUFACTURE OF THOSE PRODUCTS.

     We purchase a small number of parts from single-source suppliers. In
particular, several key integrated circuits that we use are made by
International Business Machines, or IBM. Although we have not experienced
significant production delays attributable to supply changes, we believe that,
for integrated circuits in particular, alternative sources of supply would be
difficult to develop over a short period of time. Because we have no direct
control over our third-party suppliers, interruptions or delays in the products
and services provided by these third parties may be difficult to remedy in a
timely fashion. In addition, if such suppliers are unable or unwilling to
deliver the necessary parts or products, we may be unable to redesign or adapt
our technology to work without such parts or find alternative suppliers or
manufacturers. In such events, we could experience interruptions, delays,
increased costs, or quality control problems.

     WE DEPEND UPON KEY PERSONNEL AND QUALIFIED FUTURE HIRES TO IMPLEMENT OUR
     EXPANSION STRATEGY, AND IF WE ARE UNABLE TO RETAIN OR ATTRACT PERSONNEL WE
     MAY NOT BE ABLE TO MANAGE AND OPERATE SUCCESSFULLY AND WE MAY NOT BE ABLE
     TO MEET OUR STRATEGIC OBJECTIVES.

     Our success depends on the efforts and abilities of senior management and
key employees in the sales, marketing, research and development, and
manufacturing areas. Many of these employees would be difficult to replace. We
do not have employment contracts with most of our key personnel. If we cannot
retain existing key managers and employ additional qualified senior employees,
our business, financial condition, and results of operations could be materially
and adversely affected. We do not maintain "key man" life insurance policies on
any of our personnel. Future expansion of operations will require us to attract,
train and retain new personnel. In addition, we may be limited by
non-solicitation agreements entered into by our key personnel with respect to
hiring employees from our competitors. These factors could increase our
operating expenses. If we are unable to recruit or retain a sufficient number of
qualified employees, or the costs of compensation or employee benefits increase
substantially, our business, results of operations or financial condition could
be materially and adversely affected.

     WE MAY NOT BE SUCCESSFUL IN PROTECTING OUR INTELLECTUAL AND PROPRIETARY
     RIGHTS, WHICH WOULD DEPRIVE US OF A COMPETITIVE ADVANTAGE AND THEREBY
     NEGATIVELY IMPACT OUR ABILITY TO COMPETE.

     As a technology-based company, our success depends on developing and
protecting our intellectual property. We rely generally on patent, copyright,
trademark and trade secret laws in the United States and abroad. Electronic
equipment as complex as most of our products, however, is generally not
patentable in its entirety. We also license intellectual property from third
parties and rely on those parties to maintain and protect their technology. We
cannot be certain that actions we take to establish and protect proprietary
rights will be adequate, particularly in countries where intellectual property
rights are not highly developed or protected. If we are unable to adequately
protect our technology, or if we are unable to continue to obtain or maintain
licenses for protected technology from third parties, it may be difficult to
design alternatives to such technology without incurring significant costs.
Thus, the loss of intellectual property rights to technology could have a
material adverse effect on our business, results of operations or financial
condition. We are engaged in intellectual property litigation. From time to
time, in the ordinary course of business, we receive notices from third parties
regarding intellectual property infringement or take action against others with
regard to intellectual property rights. Even where we are successful in
defending or pursuing such claims, we may incur significant costs. In the event
of a successful claim against us, we could lose our rights to needed technology
or be required to pay license fees for the infringed rights, either of which
could have an adverse impact on our business.


                                       41
<PAGE>

     WE LICENSE CERTAIN INTELLECTUAL PROPERTY FROM THIRD PARTIES, AND THE LOSS
     OF THESE LICENSES COULD DELAY DEVELOPMENT OF FUTURE PRODUCTS OR PREVENT THE
     SALE OR ENHANCEMENT OF EXISTING PRODUCTS.

     We rely on licenses of intellectual property for our businesses, including
technology used in our products. We cannot ensure that these licenses will be
available in the future on favorable terms or at all. The loss of these licenses
or the ability to maintain any of them on acceptable terms could delay
development of future products or prevent the further sale or enhancement of
existing products. Such loss could adversely affect our business, results of
operations and financial condition.

     POTENTIAL ACQUISITIONS, STRATEGIC ALLIANCES, AND JOINT VENTURES MAY RESULT
     IN FINANCIAL RESULTS THAT ARE DIFFERENT THAN EXPECTED.

     In the normal course of business, we engage in discussions with third
parties relating to possible acquisitions, strategic alliances and joint
ventures. On October 29, 2004, we acquired all of the outstanding shares of
common stock of CATC. As a result of our acquisition of CATC or other
transactions which may be consummated, our financial results may differ from the
investment community's expectations in a given quarter. In addition,
acquisitions and strategic alliances may require us to integrate a different
company culture, management team and business infrastructure. We may have
difficulty developing, manufacturing and marketing the products of a
newly-acquired company in a way that enhances the performance of our combined
businesses or product lines to realize the value from expected synergies.
Depending on the size and complexity of an acquisition, our successful
integration of the entity depends on a variety of factors, including:

          o    the retention of key employees;

          o    the management of facilities and employees in different
               geographic areas;

          o    the retention of key customers; and

          o    the integration or coordination of different research and
               development, product manufacturing and sales programs and
               facilities.

    Any impairment of the value of purchased assets or goodwill could have a
significant negative impact on our future operating results.

     All of these efforts require varying levels of management resources, which
may divert our attention from other business operations. Further, if market
conditions or other factors lead us to change our strategic direction, we may
not realize the expected value from such transactions. If we do not realize the
expected benefits or synergies of such transactions, our consolidated financial
position, results of operations, cash flows and stock price could be negatively
impacted.


                                       42
<PAGE>

     WE MAY NOT BE ABLE TO OBTAIN THE CAPITAL WE NEED TO MAINTAIN OR GROW OUR
     BUSINESS.

     Our ability to execute our long-term strategy may depend to a significant
degree on our ability to obtain long-term debt and equity capital. We have no
commitments for additional borrowings at this time, other than $25.0 million
remaining under the Revolver with The Bank of New York and the other lenders
party thereto, or for sales of equity, other than under our existing employee
benefit plans. We cannot determine the precise amount and timing of our funding
needs at this time. We may be unable to obtain future additional financing on
terms acceptable to us, or at all. If we fail to comply with certain covenants
relating to our indebtedness, we may need to refinance our indebtedness to repay
it. We also may need to refinance our indebtedness at maturity. We may not be
able to obtain additional capital on favorable terms to refinance our
indebtedness.

     The following factors could affect our ability to obtain additional
financing on favorable terms, or at all:

          o    our results of operations;

          o    general economic conditions and conditions in our industry;

          o    the perception in the capital markets of our business;

          o    our ratio of debt to equity;

          o    our financial condition;

          o    our business prospects; and

          o    changes in interest rates.

     In addition, certain covenants relating to our $75.0 million credit
facility impose limitations on additional indebtedness. If we are unable to
obtain sufficient capital in the future, we may have to curtail our capital
expenditures and reduce research and development expenditures. Any such actions
could have a material adverse effect on our business, financial condition,
results of operations and liquidity.

     WE COULD INCUR SUBSTANTIAL COSTS AS A RESULT OF VIOLATIONS OF OR
     LIABILITIES UNDER ENVIRONMENTAL LAWS.

     Our operations are subject to laws and regulations relating to the
protection of the environment, including those governing the discharge of
pollutants into the air or water, the management and disposal of hazardous
substances or wastes and the cleanup of contaminated sites. Some of our
operations require environmental permits and controls to prevent and reduce air
and water pollution, and these permits are subject to modification, renewal and
revocation by issuing authorities. We could incur substantial costs, including
cleanup costs, fines and civil or criminal sanctions and third-party claims for
property damage and personal injury as a result of violations of or liabilities
under environmental laws or noncompliance with environmental permits.

     Our former subsidiary, Digitech Industries, Inc., has been involved in
environmental remediation activities, the liability for which was retained by us
and entirely reserved for after the sale of the Vigilant Networks segment and
the residual assets of Digitech. Any liability beyond what is currently expected
and reserved for could have a material adverse affect on our results of
operations.





                                       43
<PAGE>

     WE ARE SUBJECT TO LAWS AND REGULATIONS GOVERNING GOVERNMENT CONTRACTS, AND
     FAILURE TO ADDRESS THESE LAWS AND REGULATIONS OR COMPLY WITH GOVERNMENT
     CONTRACTS COULD HARM OUR BUSINESS BY LEADING TO A REDUCTION IN REVENUE
     ASSOCIATED WITH THESE CUSTOMERS.

     We have agreements relating to the sale of our products to government
entities and, as a result, we are subject to various statutes and regulations
that apply to companies doing business with the government. The laws governing
government contracts differ from the laws governing private contracts. For
example, many government contracts contain pricing terms and conditions that are
not applicable to private contracts. We are also subject to investigation for
compliance with the regulations governing government contracts. A failure to
comply with these regulations might result in suspension of these contracts, or
administrative penalties.

     BEGINNING IN JULY 2005, WE WILL BE REQUIRED TO EXPENSE THE FAIR VALUE OF
     STOCK OPTIONS GRANTED UNDER OUR EMPLOYEE STOCK PLANS AND OUR NET INCOME AND
     EARNINGS PER SHARE WILL BE SIGNIFICANTLY REDUCED AS A RESULT.

     In December 2004, the Financial Accounting Standards Board, or FASB, issued
SFAS No. 123 (Revised 2004) entitled "Share-Based Payment" ("SFAS 123R"), an
amendment of FASB Statements No. 123 and No. 95," requiring companies to expense
the fair value of all employee equity-based awards granted, modified or settled.
SFAS 123R will be effective for us in our 2006 fiscal year commencing July 2005
and accordingly, will require any options and stock awards issued or vesting on
or after that date and shares issued under our employee stock purchase plan to
be recognized as compensation expense. Currently, we record compensation expense
using the intrinsic value method in accordance with Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations, for option grants that have an exercise price below fair value.
The adoption of SFAS No. 123R is expected to have a significant effect on our
consolidated financial statements from the calculation of compensation cost
under SFAS No. 123, but such differences have not yet been quantified. An
explanation of the estimated impact of expensing stock compensation on our
results of operations is provided in Item I, Part I, Note 3, entitled
"Stockholders' Equity," above. However, the calculation of compensation cost for
share-based payment transactions after the effective date of SFAS No. 123R may
be different

     WE HAVE A CREDIT FACILITY THAT CONTAINS FINANCIAL COVENANTS, AND THE
     FAILURE TO COMPLY WITH THESE COVENANTS COULD HARM OUR FINANCIAL CONDITION
     BECAUSE OUR CREDIT FACILITY MAY BE UNAVAILABLE TO US.

     We have a $75.0 million credit facility with The Bank of New York and the
other lenders party thereto. We are subject to financial covenants under our
credit facility, including interest coverage ratio, minimum total net worth,
leverage ratio and fixed charge coverage ratio requirements. We expect that
existing cash and cash equivalents, cash provided from operations, and
borrowings pursuant to our credit facility will be sufficient to meet ongoing
cash requirements, including debt service requirements. Failure to generate
sufficient cash or comply with the financial covenants under our credit facility
may adversely affect our business, results of operations, liquidity and
financial condition.

     ISSUANCE OF SHARES IN CONNECTION WITH FINANCING TRANSACTIONS OR UNDER STOCK
     PLANS AND OUTSTANDING WARRANTS WILL DILUTE CURRENT STOCKHOLDERS.

     Pursuant to our stock plans, our management is authorized to grant
restricted stock awards or stock options to our employees, directors and
consultants. In addition, we also have warrants outstanding to purchase shares
of our common stock. Our stockholders will incur dilution upon exercise of any
outstanding stock options or warrants. In addition, if we raise additional funds
by issuing additional common stock, or securities convertible into or
exchangeable or exercisable for common stock, further dilution to our existing
stockholders will result, and new investors could have rights superior to
existing stockholders.


                                       44
<PAGE>

     ANTI-TAKEOVER PROVISIONS UNDER OUR STOCKHOLDER RIGHTS PLAN, CHARTER
     DOCUMENTS AND DELAWARE LAW COULD DELAY OR PREVENT A CHANGE OF CONTROL AND
     COULD ALSO LIMIT THE MARKET PRICE OF OUR STOCK.

    Our stockholder rights plan, certificate of incorporation and bylaws contain
provisions that could delay or prevent a change of control of our company that
our stockholders might consider favorable. Certain provisions of our certificate
of incorporation and bylaws allow us to:

     o    authorize the issuance of preferred stock which can be created and
          issued by the board of directors without prior stockholder approval,
          with rights senior to those of the common stock;

     o    provide for a classified board of directors, with each director
          serving a staggered three-year term;

     o    prohibit stockholders from filling board vacancies, calling special
          stockholder meetings, or taking action by written consent; and

     o    require advance written notice of stockholder proposals and director
          nominations.

     In addition, we are governed by the provisions of Section 203 of the
Delaware General Corporate Law, which may prohibit certain business combinations
with stockholders owning 15% or more of our outstanding voting stock. These and
other provisions in our certificate of incorporation, bylaws and stockholder
rights plan and Delaware law could make it more difficult for stockholders or
potential acquirers to obtain control of our board of directors or initiate
actions that are opposed by the then-current board of directors, including delay
or impede a merger, tender offer, or proxy contest involving our company. Any
delay or prevention of a change of control transaction or changes in our board
of directors could cause the market price of our common stock to decline.

     WE FACE BURDENS RELATING TO THE RECENT TREND TOWARD STRICTER CORPORATE
     GOVERNANCE AND FINANCIAL REPORTING STANDARDS.

    Recently adopted or new legislation or regulations that follow the trend of
imposing stricter corporate governance and financial reporting standards,
including compliance with Section 404 of the Sarbanes-Oxley Act of 2002, have
lead to an increase in our costs of compliance. A failure to comply with these
new laws and regulations may impact market perception of our financial condition
and could materially harm our business. Additionally, it is unclear what
additional laws or regulations may develop, and we cannot predict the ultimate
impact of any future changes.

RISKS RELATED TO OUR INDUSTRY

     WE OPERATE IN HIGHLY COMPETITIVE MARKETS AND THIS COMPETITION COULD REDUCE
     OUR MARKET SHARE AND HARM OUR BUSINESS.

     The oscilloscope and protocol analysis markets are highly competitive and
characterized by rapid and continual advances in technology. Our principal
competitors in these markets are Tektronix and Agilent Technologies, Inc. Both
of our principal competitors have substantially greater sales and marketing,
development and financial resources. We believe that Tektronix, Agilent and
other competitors each offer a wide range of products that attempt to address
most sectors of the oscilloscope and many sectors of the protocol analysis
markets.

     We have historically engaged in intense competition with Tektronix. Some of
our senior managers, including our chief executive officer and chief operating
officer, are former employees of Tektronix. In 1994, we settled litigation with
Tektronix alleging that our oscilloscope products infringed certain patents held
by Tektronix by entering into a license agreement for the right to use that
intellectual property. We are currently engaged in intellectual property
litigation with Tektronix in which both sides have claimed that the other is
infringing its patents. This litigation is described in more detail under Item
1, "Legal Proceedings," of Part II of this Form 10-Q.


                                       45
<PAGE>

     We believe that the principal bases of competition in the oscilloscope and
protocol analysis markets are a product's performance (bandwidth, sample rate,
memory length and processing power), its price and quality, the vendor's name
recognition and reputation, product availability and the quality of post-sale
support. If any of our competitors surpass us or are perceived to have surpassed
us with respect to one or more of these factors, we may lose customers. We also
believe that our success will depend in part on our ability to maintain and
develop the advanced technology used in our oscilloscope products and protocol
verification systems and our ability to timely offer high-performance products
at a favorable "price-to-performance" ratio. We cannot assure that we will
continue to compete effectively.

     A PROLONGED ECONOMIC DOWNTURN COULD MATERIALLY HARM OUR BUSINESS BY
     DECREASING CAPITAL SPENDING.

     Negative trends in the general economy, including trends resulting from
actual or threatened military action by the United States and threats of
terrorist attacks on the United States and abroad, could cause a decrease in
capital spending in many of the markets we serve. In particular, a downward
cycle affecting the computer and semiconductor, data storage devices, automotive
and industrial, and military and aerospace markets would likely result in a
reduction in demand for our products and would have a material adverse effect on
our business, results of operations, financial condition and liquidity. In
addition, if customers' markets decline, we may not be able to collect
outstanding amounts due to us. Such declines could harm our consolidated
financial position, results of operations, cash flows and stock price, and could
limit our ability to maintain profitability.

     WE MUST SUCCESSFULLY EXECUTE OUR STRATEGY TO INTRODUCE NEW PRODUCTS.

     One of our key strategies is to expand our addressable portion of the
oscilloscope and protocol analysis markets by introducing new products such as
sampling oscilloscopes and protocol exercisers and probes. We have in the past
withdrawn a product line due to implementation concerns. In August 2000, we
divested our Vigilant Networks, Inc. subsidiary because, while its technology
was potentially viable, the additional capital investment required for its
commercial success was judged to be too high. The success of our new product
offerings will depend on a number of factors, including our ability to identify
customers' existing and future needs properly and quickly, timely manufacture
and deliver products that address these needs in sufficient volumes,
differentiate offerings from competitors' offerings, price products
competitively and anticipate competitors' development of new products or
technological innovations.

     WITHOUT THE TIMELY INTRODUCTION OF COMPETITIVE PRODUCTS, OUR PRODUCTS MAY
     BECOME TECHNOLOGICALLY OBSOLETE.

     We generally sell our products in industries that are characterized by
rapid technological changes, frequent new product announcements and
introductions and changing industry standards. The development of new,
technologically advanced products is a complex and uncertain process requiring
high levels of innovation, highly skilled engineering and development personnel
and accurate anticipation of technological and market trends. Consequently,
product development delays are typical in our industry. If we fail to timely
introduce competitive products, customers may defer placing orders in
anticipation of future releases or purchase products from competitors. Product
development delays may result from numerous factors, including:

     o    changing product specifications and customer requirements;

     o    unanticipated engineering complexities;

     o    difficulties with or delays by contract manufacturers or suppliers of
          key components or technologies;

     o    difficulties in allocating engineering resources and overcoming
          resource limitations; and

     o    difficulties in hiring and retaining necessary technical personnel.


                                       46
<PAGE>

     Without the timely introduction of new products, services and enhancements,
our products may become technologically obsolete, in which case our revenue and
operating results could suffer.

     IF WE DEVOTE RESOURCES TO DEVELOPING PRODUCTS FOR EMERGING COMMUNICATIONS
     STANDARDS THAT ULTIMATELY ARE NOT WIDELY ACCEPTED, OUR BUSINESS COULD BE
     HARMED.

     Our future growth depends, in part, upon our ability to develop,
manufacture and sell in volume advanced verification systems for existing,
emerging and yet unforeseen communications standards. We have little or no
control over the conception, development or adoption of new standards. Moreover,
even as it relates to currently emerging standards, the markets are rapidly
evolving and we have virtually no ability to impact the adoption of those
standards. As a result, there is significant uncertainty as to whether markets
for new and emerging standards ultimately will develop at all or, if they do
develop, their potential size or future growth rate. We may incur significant
expenses and dedicate significant time and resources to develop products for
standards that fail to gain broad acceptance. Failure of a standard for which we
devote substantial resources to gain widespread acceptance would likely harm our
business.

     IF WE FAIL TO MAINTAIN AND EXPAND OUR RELATIONSHIPS WITH THE CORE OR
     PROMOTER COMPANIES IN OUR TARGET MARKETS, WE MAY HAVE DIFFICULTY DEVELOPING
     AND MARKETING CERTAIN PROTOCOL VERIFICATION PRODUCTS.

     It is important to our success that we establish, maintain and expand our
relationships with technology and infrastructure leader companies developing
emerging communications standards in our target markets. We must work closely
with these companies to gain valuable insights into new market demands, obtain
early access to standards as they develop and help us design new or enhanced
products. Generally, we do not enter into contracts obligating these companies
to work or share their technology. Industry leaders could choose to work with
other companies in the future. If we fail to establish, maintain and expand our
industry relationships, we could lose first-mover advantage with respect to
emerging standards and it would likely be more difficult for us to develop and
market products that address these standards.

     WE COULD BE AFFECTED BY GOVERNMENT REGULATION AND OTHER LEGAL
     UNCERTAINTIES.

     We manufacture our products in the United States, and sell our products and
purchase parts, components and sub-assemblies in a number of countries. We are
therefore subject to various significant international, federal, state and local
regulations, including but not limited to health and safety, product content,
labor and import/export regulations. For example, the export of high-performance
oscilloscopes from the United States is subject to regulation under the Treaty
for Nuclear Non-Proliferation. These regulations are complex, change frequently
and have tended to become more stringent over time. We may be required to incur
significant expenses to comply with these regulations or to remedy violations of
these regulations. Any failure by us to comply with applicable government
regulations could also result in cessation of our operations or portions of our
operations, product recalls or impositions of fines and restrictions on our
ability to carry on or expand our operations. In addition, because many of our
products are regulated or sold into regulated industries, we must comply with
additional regulations in marketing our products.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    We purchase materials from suppliers and sell our products around the world
and maintain investments in foreign subsidiaries, all denominated in a variety
of currencies. As a consequence, we are exposed to risks from fluctuations in
foreign currency exchange rates with respect to a number of currencies, changes
in government policies and legal and regulatory requirements, political
instability, transportation delays and the imposition of tariffs and export
controls. Among the more significant potential risks to us of relative
fluctuations in foreign currency exchange rates is the relationship among and
between the U.S. dollar, Euro, Swiss franc, British pound, Swedish krona,
Japanese yen, Korean won and Singapore dollar.


                                       47
<PAGE>

    We have a program of entering into foreign exchange forward contracts to
minimize the risks associated with currency fluctuations on assets or
liabilities denominated in other than the functional currency of us or our
subsidiaries. It cannot be assured, however, that this program will effectively
offset all of our foreign currency risk related to these assets or liabilities.
These foreign exchange forward contracts do not qualify for hedge accounting in
accordance with SFAS No. 133, "Accounting for Derivative Investments and Hedging
Activities" ("SFAS No. 133").

    Other than this program, we do not attempt to reduce our foreign currency
exchange risks by entering into foreign currency management programs. As a
consequence, there can be no assurance that fluctuations in foreign currency
exchange rates in the future as a result of mismatches between local currency
revenues and expenses, the translation of foreign currencies into the U.S.
dollar, our financial reporting currency, or otherwise, will not adversely
affect our results of operations. Moreover, fluctuations in exchange rates could
affect the demand for our products.

    There was a net loss resulting from changes in the fair value of these
derivatives and on transactions denominated in other than their functional
currencies of $0.1 million for the three months ended March 31, 2005, compared
to a net gain of $0.1 million for the comparable prior year period. There were
net gains resulting from changes in the fair value of these derivatives and on
transactions denominated in other than their functional currencies of $0.4
million and $0.3 million for the nine months ended March 31, 2005 and 2004,
respectively. These amounts are included in Other (expense) income, net in the
Condensed Consolidated Statements of Operations and include gross gains of zero
and $0.2 million for the three months ended March 31, 2005 and 2004,
respectively, and $0.6 million and $0.4 million for the nine months ended March
31, 2005 and 2004, respectively. At March 31, 2005 and June 30, 2004, the
notional amounts of our open foreign exchange forward contracts, all with
maturities of less than six months, were approximately $8.0 million and $8.2
million, respectively.

     We performed a sensitivity analysis for the third quarter of fiscal 2005
assuming a hypothetical 10% adverse change in foreign currency exchange rates on
our foreign exchange forward contracts and our assets or liabilities denominated
in other than their functional currencies. In management's opinion, a 10%
adverse change in foreign currency exchange rates would have an immaterial
effect on these instruments or, therefore, our results of operations, financial
position or cash flows.

     We are exposed to adverse changes in interest rates primarily due to our
investment in cash, cash equivalents, marketable securities as well as our $75.0
million credit facility. Market risk is estimated as the potential change in
fair value resulting from a hypothetical 1% adverse change in interest rates,
which would have been immaterial to our results of operations, financial
position or cash flows. Please refer to Note 15 - Debt for specifics related to
our credit facility.

    As required by the terms of the Credit Agreement (See Note 15), on January
27, 2005 we entered into a Master Agreement with Manufacturers & Traders Trust
Co. ("M&T Bank"), the purpose of which is to hedge against rising interest rates
during the term of the Credit Agreement. Under the Credit Agreement we are
obligated to enter into one or more hedging agreements covering the interest
payable with respect to at least 50% of the outstanding principal amount of the
Term Loan for a period of at least three years. In connection with the Master
Agreement (See Note 6), we entered into an interest rate swap transaction
effective January 31, 2005 and continuing through January 31, 2008,
corresponding with the repayment terms of the Credit Agreement. The swap
agreement is designated as a cash flow hedge under SFAS 133, and is being
utilized to moderate our exposure to interest rate fluctuations on its
underlying variable rate long-term debt. In accordance with the interest rate
swap transaction we pay quarterly interest on the notional amount at a fixed
annualized rate of 3.87% to M&T Bank, and receive interest quarterly on the same
notional amount at the three-month LIBOR rate in effect at the beginning of each
quarterly reset period; except for the initial period, which covered the two
months ending March 31, 2005, in which the Company received interest at a LIBOR
rate of 2.64%. The initial notional amount was $25.0 million and resets
quarterly to 50% of the outstanding principal balance with respect to the
original amortization schedule as set forth in the Credit Agreement. The net
interest expense incurred on the swap during the three months ended March 31,
2005 was approximately $50,000. The notional amount as of March 31, 2005 was
approximately $24.1 million.


                                       48
<PAGE>

The fair value of the interest rate swap as of March 31, 2005, is $0.2 million
and approximates the amount that we would have received from M&T Bank if the
Company had canceled the transaction at March 31, 2005. The fair value is
recorded in Other current assets and Accumulated other comprehensive income in
the Condensed Consolidated Balance Sheets as of March 31, 2005.

ITEM 4. CONTROLS AND PROCEDURES

    The Company, under the supervision and with the participation of its
management, including the Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of the design and operation of the Company's
"disclosure controls and procedures" (as defined in Rule 13a-15(e) under the
Exchange Act) as of the end of the period covered by this report. Based on that
evaluation, the Chief Executive Officer and the Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective in
timely making known to them material information relating to the Company and the
Company's consolidated subsidiaries required to be disclosed in the Company's
reports filed or submitted under the Exchange Act.

    There have not been any changes in the Company's internal control over
financial reporting during the quarter ended March 31, 2005 that have materially
affected, or are reasonably likely to materially affect, its internal control
over financial reporting.



                                       49
<PAGE>

                               LECROY CORPORATION

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

    On April 28, 2003, Tektronix, Inc. ("Tektronix") filed a complaint against
the Company in the United States District Court for the District of Oregon
claiming that the Company infringed on eight of Tektronix' U.S. patents. In the
Company's responsive pleading, the Company denied that it has infringed, or is
infringing, any of these patents, and contends that the patents are invalid. The
Company furthermore filed a counterclaim on August 5, 2003, claiming Tektronix
is infringing three of the Company's patents. On April 11, 2005, all claims
related to two of the Tektronix patents were voluntarily dismissed from the
Tektronix complaint and the Company's counterclaim. All claims related to one of
the Company's patents were also voluntarily dismissed from the Company's
counterclaim. On November 30, 2004, the Company filed a Motion for Summary
Judgment of Noninfringement concerning one of the six Tektronix patents. In
response, Tektronix filed a Cross-Motion for Summary Judgment of Infringement by
the Company concerning the same patent. By order dated May 4, 2005, the court
granted the Company's Motion for Summary Judgment of Noninfringement and denied
Tektronix' Cross-Motion for Summary Judgment of Infringement. On May 11, 2005,
Tektronix and the Company entered into an agreement settling all claims and
counterclaims between the parties in connection with their respective patents.

    On January 15, 2003, LeCroy was sued by Sicom Systems ("Sicom") in the
United States District Court for the District of Delaware for patent
infringement of a U.S. patent relating to the graphical display of test limits.
LeCroy answered the complaint denying infringement and asserted a counterclaim
alleging the invalidity of the patent and that Sicom had abused the judicial
process by bringing a baseless patent infringement claim. On July 16, 2003,
LeCroy filed a Motion to Dismiss Sicom's case, contending that Sicom did not
have standing to bring the litigation. On November 20, 2003, the Court granted
LeCroy's Motion to Dismiss. On December 18, 2003, Sicom filed a Notice of Appeal
to the United States Court of Appeals for the Federal Circuit. On December 30,
2003, Sicom filed a new patent infringement lawsuit against LeCroy in the United
States District Court for the District of Delaware. Tektronix and Agilent
Technologies are also co-defendants in this new litigation. The complaint in
this new case is essentially the same as the complaint filed by Sicom on January
15, 2003, except that Sicom now states that it entered into an amendment to its
license agreement with the Canadian government on December 19, 2003, and that
Sicom now has the exclusive right to bring suit for infringement of the patent
in the United States. On January 5, 2004, Sicom filed a Notice and Order of
Dismissal of Appeal of its appeal to the Court of Appeals for the Federal
Circuit and the Order was entered on the following day. In LeCroy's responsive
pleading, LeCroy denied that it has infringed, or is infringing, the patent, and
contends that the patent is invalid. The defendants in this case, including us,
filed a Motion to Dismiss for lack of standing, contending that Sicom's amended
license agreement with Canada does not cure the standing defects that caused the
Court to dismiss the original lawsuit. The Court granted the Defendants' Motion
on October 5, 2004, dismissing the case with prejudice. On October 28, 2004,
Sicom filed a Notice of Appeal to the United States Court of Appeals for the
Federal Circuit from the September 30, 2004 order granting the Company's motion
to dismiss and the related memorandum opinion dated October 5, 2004. The appeal
is ongoing and the outcome cannot be predicted. LeCroy intends to defend itself
vigorously in this litigation.

    From time to time, the Company is involved in lawsuits, claims,
investigations and proceedings, including patent and environmental matters,
which arise in the ordinary course of business. There are no other matters
pending that the Company expects to be material to its business, results of
operations, financial condition or cash flows.




                                       50
<PAGE>



    ITEM 6. EXHIBITS

The following exhibits are filed herewith or incorporated by reference to
exhibits previously filed with the SEC.

    EXHIBIT NO.                           EXHIBIT

       2.1    Agreement and Plan of Merger, dated as of September 1, 2004, among
              the Registrant, Cobalt Acquisition Corporation and Computer Access
              Technology Corporation, filed as Exhibit 2.1 to Form 8-K filed on
              September 2, 2004, incorporated herein by reference.

       3.1    Certificate of Incorporation of the Registrant dated as of July
              24, 1995, filed as Exhibit 3.1 to Form S-1 Registration Statement
              No. 33-95620, incorporated herein by reference.

       3.2    Amendment to the Amended By-Laws of the Registrant, dated August
              16, 2000, filed as Exhibit 3.3 to Form 10-Q for the quarterly
              period ended September 30, 2000, incorporated herein by reference.

       4.1    Shares Purchase Agreement for the purchase of 517,520 shares of
              the Registrant's Common Stock, dated August 15, 2000, between the
              Registrant and the State of Wisconsin Investment Board, filed as
              Exhibit 4.1 to Form 10-K for the fiscal year ended June 30, 2000,
              incorporated herein by reference.

       4.2    Placement Agent Agreement, dated August 15, 2000, between the
              Registrant and SG Cowen Securities Corporation, filed as Exhibit
              4.2 to Form 10-K for the fiscal year ended June 30, 2000,
              incorporated by reference.

       4.3    Warrant to purchase 250,000 shares of the Registrant's Common
              Stock, dated June 30, 1999, issued by the Registrant to certain
              investors named therein filed as Exhibit 2.2 to Form S-3 filed on
              October 1, 1999, incorporated herein by reference.

       4.4    Warrant to purchase 28,571 shares of the Registrant's Common
              Stock, dated June 15, 2004, issued by the Registrant to Capital
              Ventures International filed as Exhibit 10.52 to Form S-3 filed on
              October 13, 2004, incorporated herein by reference.

       10.1   Employee Agreement Regarding Inventions, Confidentiality and
              Non-Competition, dated as of March 28, 1995, between the
              Registrant and Lutz P. Henckels, filed as Exhibit 10.12 to Form
              S-1 Registration Statement No. 33-95620, incorporated herein by
              reference.*

       10.2   Employee Agreement Regarding Inventions, Confidentiality and
              Non-Competition, dated as of March 28, 1995, between the
              Registrant and Walter O. LeCroy, Jr., filed as Exhibit 10.13 to
              Form S-1 Registration Statement No. 33-95620, incorporated herein
              by reference.*

       10.3   LeCroy Corporation Amended and Restated 1993 Stock Incentive Plan,
              filed as Exhibit 10.1 to Form S-1 Registration Statement No.
              33-95620, incorporated herein by reference.*

       10.4   LeCroy Corporation 1995 Non-Employee Director Stock Option Plan,
              filed as Exhibit 10.2 to Form S-1 Registration Statement No.
              33-95620, incorporated herein by reference.*

       10.5   LeCroy Corporation 1995 Employee Stock Purchase Plan, filed as
              Exhibit 10.3 to Form S-1 Registration Statement No. 33-95620,
              incorporated herein by reference.*

       10.6   Form of Indemnification Agreement between the Registrant and each
              of its executive officers and directors, filed as Exhibit 10.29 to
              Form S-1 Registration Statement No. 33-95620, incorporated herein
              by reference.*

       10.7   Series A Convertible, Redeemable Preferred Stock Purchase
              Agreement between the Registrant and the purchasers named therein,
              dated as of June 30, 1999, filed as Exhibit 10.22 to Form 10-K for
              the fiscal year ended June 30, 1999, incorporated herein by
              reference.


                                       51
<PAGE>

       10.8   Amendment to the LeCroy Corporation Amended and Restated 1993
              Stock Incentive Plan, filed as Exhibit 10.33 to Form 10-Q for the
              quarterly period ended September 30, 2000, incorporated herein by
              reference.*

       10.9   LeCroy Corporation 1998 Non-Employee Director Stock Option Plan,
              incorporated by reference to Appendix A to the Registrant's
              Definitive Proxy Statement filed on September 18, 1998.*

       10.10  Amendment to the LeCroy Corporation 1998 Non-Employee Director
              Stock Option Plan, dated August 16, 2000, filed as Exhibit 10.34
              to Form 10-Q for the quarterly period ended September 30, 2000,
              incorporated herein by reference.*

       10.11  Amendment to the LeCroy Corporation 1998 Non-Employee Director
              Stock Option Plan, dated October 25, 2000, filed as Exhibit 10.35
              to Form 10-Q for the quarterly period ended September 30, 2000,
              incorporated herein by reference.*

       10.12  Employment Agreement between the Registrant and Scott Bausback,
              dated August 13, 2001, filed as Exhibit 10.38 to Form 10-Q for the
              quarterly period ended December 31, 2001, incorporated herein by
              reference.*

       10.13  Amended and Restated Employment Agreement between the Registrant
              and Lutz P. Henckels, dated January 18, 2002, filed as Exhibit
              10.39 to Form 10-Q for the quarterly period ended December 31,
              2001, incorporated herein by reference.*

       10.14  Employment Agreement between the Registrant and Thomas H.
              Reslewic, dated January 1, 2002, filed as Exhibit 10.40 to Form
              10-Q for the quarterly period ending December 31, 2001,
              incorporated herein by reference.*

       10.15  Form of Restricted Stock Purchase Agreement, filed as Exhibit
              10.41 to Form 10-K for the fiscal year ended June 30, 2002,
              incorporated herein by reference.*

       10.16  Separation Agreement between the Registrant and Raymond F.
              Kunzmann, dated January 6, 2003, filed as Exhibit 10.42 to Form
              10-Q for the quarterly period ended December 31, 2002,
              incorporated herein by reference.*

       10.17  Amendment Number 1 to Employment Agreement between the Registrant
              and Thomas H. Reslewic, dated December 16, 2002, filed as Exhibit
              10.43 to Form 10-Q for the quarterly period ended March 31, 2003,
              incorporated herein by reference.*

       10.18  LeCroy Corporation 2003 Stock Incentive Plan, incorporated by
              reference to Appendix A to the Registrant's Definitive Proxy
              Statement filed on September 26, 2003.*

       10.19  LeCroy Corporation Amended and Restated Employee Stock Purchase
              Plan, incorporated by reference to Appendix B to the Registrant's
              Definitive Proxy Statement filed on September 26, 2003.*

       10.20  Amendment No. 1 to the Amended and Restated Employment Agreement
              between the Registrant and Lutz P. Henckels, dated November 25,
              2003, incorporated by reference to the Registrant's Form 8-K filed
              on December 11, 2003.*

       10.21  Separation Agreement between the Registrant and Thomas H.
              Reslewic, dated August 19, 2004, filed as Exhibit 10.49 to Form
              10-K for the fiscal year ended June 30, 2004, incorporated herein
              by reference.*

       10.22  Separation Agreement between the Registrant and R. Scott Bausback,
              dated August 19, 2004, filed as Exhibit 10.50 to Form 10-K for the
              fiscal year ended June 30, 2004, incorporated herein by
              reference.*

       10.23  Form of Separation Agreement, filed as Exhibit 10.51 to Form 10-K
              for the fiscal year ended June 30, 2004, incorporated herein by
              reference.*


                                       53
<PAGE>

       10.24  Employment Agreement between the Registrant and Carmine
              Napolitano, effective October 29, 2004, filed as Exhibit 10.1 to
              Form 8-K filed on November 2, 2004, incorporated herein by
              reference.*

       10.25  Amendment No. 1 to Employment Agreement between the Registrant and
              Carmine Napolitano, effective October 29, 2004, filed as Exhibit
              10.2 to Form 8-K filed on November 2, 2004, incorporated herein by
              reference.*

       10.26  LeCroy Corporation (CATC) 1994 Stock Option Plan, filed as Exhibit
              10.9 to Form 8-K filed on November 2, 2004, incorporated herein by
              reference.*

       10.27  LeCroy Corporation (CATC) 2000 Special Stock Option Plan, filed as
              Exhibit 10.7 to Form 8-K filed on November 2, 2004, incorporated
              herein by reference.*

       10.28  LeCroy Corporation (CATC) 2000 Stock Incentive Plan, filed as
              Exhibit 10.8 to Form 8-K filed on November 2, 2004, incorporated
              herein by reference.*

       10.29  LeCroy Corporation 2004 Employment Inducement Stock Plan, filed as
              Exhibit 10.5 to Form 8-K filed on November 2, 2004, incorporated
              herein by reference.*

       10.30  Credit Agreement among the Registrant, the lenders party thereto,
              and the Bank of New York as Administrative Agent, dated October
              29, 2004, filed as Exhibit 10.14 to Form 8-K filed on November 2,
              2004, incorporated herein by reference.

       10.31  Amendment to LeCroy Corporation (CATC) Special 2000 Stock Option
              Plan, filed as Exhibit 10.2 to Form 8-K filed on November 19,
              2004, incorporated herein by reference.*

       10.32  Amendment to LeCroy Corporation (CATC) 2000 Incentive Plan, filed
              as Exhibit 10.3 to Form 8-K filed on November 19, 2004,
              incorporated herein by reference.*

       10.33  Amendment to LeCroy Corporation (CATC) 1994 Stock Option Plan,
              filed as Exhibit 10.4 to Form 8-K filed on November 19, 2004,
              incorporated herein by reference.*

       31.1   Certification by the Chief Executive Officer pursuant to Rule
              13a-14(a) under the Securities Exchange Act of 1934.

       31.2   Certification by the Chief Financial Officer pursuant to Rule
              13a-14(a) under the Securities Exchange Act of 1934.

       32.1   Certification by the Chief Executive Officer pursuant to 18 U.S.C.
              Section 1350.

       32.2   Certification by the Chief Financial Officer pursuant to 18 U.S.C.
              Section 1350.


* Denotes management contract or compensation plan, contract or arrangement.



                                       54
<PAGE>



                                    SIGNATURE

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.

Date: May 12, 2005                LeCROY CORPORATION

                                  /s/   Scott D. Kantor
                                  ----------------------------------------------
                                     Scott D. Kantor
                                     Vice President and Chief Financial Officer,
                                     Secretary and Treasurer



                                       55
<PAGE>



                                  EXHIBIT INDEX



     EXHIBIT NO.                        DESCRIPTION

       2.1    Agreement and Plan of Merger, dated as of September 1, 2004, among
              the Registrant, Cobalt Acquisition Corporation and Computer Access
              Technology Corporation, filed as Exhibit 2.1 to Form 8-K filed on
              September 2, 2004, incorporated herein by reference.

       3.1    Certificate of Incorporation of the Registrant dated as of July
              24, 1995, filed as Exhibit 3.1 to Form S-1 Registration Statement
              No. 33-95620, incorporated herein by reference.

       3.2    Amendment to the Amended By-Laws of the Registrant, dated August
              16, 2000, filed as Exhibit 3.3 to Form 10-Q for the quarterly
              period ended September 30, 2000, incorporated herein by reference.

       4.1    Shares Purchase Agreement for the purchase of 517,520 shares of
              the Registrant's Common Stock, dated August 15, 2000, between the
              Registrant and the State of Wisconsin Investment Board, filed as
              Exhibit 4.1 to Form 10-K for the fiscal year ended June 30, 2000,
              incorporated herein by reference.

       4.2    Placement Agent Agreement, dated August 15, 2000, between the
              Registrant and SG Cowen Securities Corporation, filed as Exhibit
              4.2 to Form 10-K for the fiscal year ended June 30, 2000,
              incorporated by reference.

       4.3    Warrant to purchase 250,000 shares of the Registrant's Common
              Stock, dated June 30, 1999, issued by the Registrant to certain
              investors named therein, filed as Exhibit 2.2 to Form S-3 filed on
              October 1, 1999, incorporated herein by reference.

       4.4    Warrant to purchase 28,571 shares of the Registrant's Common
              Stock, dated June 15, 2004, issued by the Registrant to Capital
              Ventures International, filed as Exhibit 10.52 to Form S-3 filed
              on October 13, 2004, incorporated herein by reference.

       10.1   Employee Agreement Regarding Inventions, Confidentiality and
              Non-Competition, dated as of March 28, 1995, between the
              Registrant and Lutz P. Henckels, filed as Exhibit 10.12 to Form
              S-1 Registration Statement No. 33-95620, incorporated herein by
              reference.*

       10.2   Employee Agreement Regarding Inventions, Confidentiality and
              Non-Competition, dated as of March 28, 1995, between the
              Registrant and Walter O. LeCroy, Jr., filed as Exhibit 10.13 to
              Form S-1 Registration Statement No. 33-95620, incorporated herein
              by reference.*

       10.3   LeCroy Corporation Amended and Restated 1993 Stock Incentive Plan,
              filed as Exhibit 10.1 to Form S-1 Registration Statement No.
              33-95620, incorporated herein by reference.*

       10.4   LeCroy Corporation 1995 Non-Employee Director Stock Option Plan,
              filed as Exhibit 10.2 to Form S-1 Registration Statement No.
              33-95620, incorporated herein by reference.*

       10.5   LeCroy Corporation 1995 Employee Stock Purchase Plan, filed as
              Exhibit 10.3 to Form S-1 Registration Statement No. 33-95620,
              incorporated herein by reference.*

       10.6   Form of Indemnification Agreement between the Registrant and each
              of its executive officers and directors, filed as Exhibit 10.29 to
              Form S-1 Registration Statement No. 33-95620, incorporated herein
              by reference.*

       10.7   Series A Convertible, Redeemable Preferred Stock Purchase
              Agreement between the Registrant and the purchasers named therein,
              dated as of June 30, 1999, filed as Exhibit 10.22 to Form 10-K for
              the fiscal year ended June 30, 1999, incorporated herein by
              reference.

       10.8   Amendment to the LeCroy Corporation Amended and Restated 1993
              Stock Incentive Plan, dated August 16, 2000, filed as Exhibit
              10.33 to Form 10-Q for the quarterly period ended September 30,
              2000, incorporated herein by reference.*


                                       56
<PAGE>

       10.9   LeCroy Corporation 1998 Non-Employee Director Stock Option Plan,
              filed as Appendix A to the Registrant's Definitive Proxy Statement
              filed on September 18, 1998, incorporated herein by reference.*

       10.10  Amendment to the LeCroy Corporation 1998 Non-Employee Director
              Stock Option Plan, dated August 16, 2000, filed as Exhibit 10.34
              to Form 10-Q for the quarterly period ended September 30, 2000,
              incorporated herein by reference.*

       10.11  Amendment to the LeCroy Corporation 1998 Non-Employee Director
              Stock Option Plan, dated October 25, 2000, filed as Exhibit 10.35
              to Form 10-Q for the quarterly period ended September 30, 2000,
              incorporated herein by reference.*

       10.12  Employment Agreement between the Registrant and Scott Bausback,
              dated August 13, 2001, filed as Exhibit 10.38 to Form 10-Q for the
              quarterly period ended December 31, 2001, incorporated herein by
              reference.*

       10.13  Amended and Restated Employment Agreement between the Registrant
              and Lutz P. Henckels, dated January 18, 2002, filed as Exhibit
              10.39 to Form 10-Q for the quarterly period ended December 31,
              2001, incorporated herein by reference.*

       10.14  Employment Agreement between the Registrant and Thomas H.
              Reslewic, dated January 1, 2002, filed as Exhibit 10.40 to Form
              10-Q for the quarterly period ending December 31, 2001,
              incorporated herein by reference.*

       10.15  Form of Restricted Stock Purchase Agreement, filed as Exhibit
              10.41 to Form 10-K for the fiscal year ended June 30, 2002,
              incorporated herein by reference.*

       10.16  Separation Agreement between the Registrant and Raymond F.
              Kunzmann, dated January 6, 2003, filed as Exhibit 10.42 to Form
              10-Q for the quarterly period ended December 31, 2002,
              incorporated herein by reference.*

       10.17  Amendment Number 1 to Employment Agreement between the Registrant
              and Thomas H. Reslewic, dated December 16, 2002, filed as Exhibit
              10.43 to Form 10-Q for the quarterly period ended March 31, 2003,
              incorporated herein by reference.*

       10.18  LeCroy Corporation 2003 Stock Incentive Plan, incorporated by
              reference to Appendix A to the Registrant's Definitive Proxy
              Statement filed on September 26, 2003.*

       10.19  LeCroy Corporation Amended and Restated Employee Stock Purchase
              Plan, incorporated by reference to Appendix B to the Registrant's
              Definitive Proxy Statement filed on September 26, 2003.*

       10.20  Amendment No. 1 to the Amended and Restated Employment Agreement
              between the Registrant and Lutz P. Henckels, dated November 25,
              2003, incorporated by reference to the Registrant's Form 8-K filed
              on December 11, 2003.*

       10.21  Separation Agreement between the Registrant and Thomas H.
              Reslewic, dated August 19, 2004, filed as Exhibit 10.49 to Form
              10-K for the fiscal year ended June 30, 2004, incorporated herein
              by reference.*

       10.22  Separation Agreement between the Registrant and R. Scott Bausback,
              dated August 19, 2004, filed as Exhibit 10.50 to Form 10-K for the
              fiscal year ended June 30, 2004, incorporated herein by
              reference.*

       10.23  Form of Separation Agreement, filed as Exhibit 10.51 to Form 10-K
              for the fiscal year ended June 30, 2004, incorporated herein by
              reference.*

       10.24  Employment Agreement between the Registrant and Carmine
              Napolitano, effective October 29, 2004, filed as Exhibit 10.1 to
              Form 8-K filed on November 2, 2004, incorporated herein by
              reference.*


                                       57
<PAGE>

       10.25  Amendment No. 1 to Employment Agreement between the Registrant and
              Carmine Napolitano, effective October 29, 2004, filed as Exhibit
              10.2 to Form 8-K filed on November 2, 2004, incorporated herein by
              reference.*

       10.26  LeCroy Corporation (CATC) 1994 Stock Option Plan, filed as Exhibit
              10.9 to Form 8-K filed on November 2, 2004, incorporated herein by
              reference.*

       10.27  LeCroy Corporation (CATC) 2000 Special Stock Option Plan, filed as
              Exhibit 10.7 to Form 8-K filed on November 2, 2004, incorporated
              herein by reference.*

       10.28  LeCroy Corporation (CATC) 2000 Stock Incentive Plan, filed as
              Exhibit 10.8 to Form 8-K filed on November 2, 2004, incorporated
              herein by reference.*

       10.29  LeCroy Corporation 2004 Employment Inducement Stock Plan, filed as
              Exhibit 10.5 to Form 8-K filed on November 2, 2004, incorporated
              herein by reference.*

       10.30  Credit Agreement among the Registrant, the lenders party thereto,
              and the Bank of New York, as Administrative Agent, dated October
              29, 2004, filed as Exhibit 10.14 to Form 8-K filed on November 2,
              2004, incorporated herein by reference.

       10.31  Amendment to LeCroy Corporation (CATC) Special 2000 Stock Option
              Plan, filed as Exhibit 10.2 to Form 8-K filed on November 19,
              2004, incorporated herein by reference.*

       10.32  Amendment to LeCroy Corporation (CATC) 2000 Incentive Plan, filed
              as Exhibit 10.3 to Form 8-K filed on November 19, 2004,
              incorporated herein by reference.*

       10.33  Amendment to LeCroy Corporation (CATC) 1994 Stock Option Plan,
              filed as Exhibit 10.4 to Form 8-K filed on November 19, 2004,
              incorporated herein by reference.*

       31.1   Certification by the Chief Executive Officer pursuant to Rule
              13a-14(a) under the Securities Exchange Act of 1934.

       31.2   Certification by the Chief Financial Officer pursuant to Rule
              13a-14(a) under the Securities Exchange Act of 1934.

       32.1   Certification by the Chief Executive Officer pursuant to 18 U.S.C.
              Section 1350.

       32.2   Certification by the Chief Financial Officer pursuant to 18 U.S.C.
              Section 1350.



* Denotes management contract or compensation plan, contract or arrangement.