================================================================================

                                  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 DECEMBER 31, 2005

                                       OR

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

                         Commission File Number: 0-26634

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

                  DELAWARE                              13-2507777
      (State or other jurisdiction of       (I.R.S. Employer Identification No.)
       incorporation or organization)

          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)

                                 Not Applicable
              (Former name, former address and former fiscal year,
                         if changed since last report)

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 a large accelerated
filer, an accelerated filer, or a non-accelerated filer (as defined in Rule
12b-2 of the Exchange Act).

   Large accelerated filer | | Accelerated filer |X| Non-Accelerated filer | |

Indicate by check mark ("X") whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
                                 YES | | NO |X|

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 FEBRUARY 3, 2006
-----------------------------------            --------------------------------
Common stock, par value $.01 share                        12,812,529

<PAGE>

================================================================================

                               LECROY CORPORATION
                                    FORM 10-Q

                                      INDEX
<TABLE>
<CAPTION>

                                                                                                      PAGE NO.
PART I     FINANCIAL INFORMATION

<S>                                                                                                      <C>
 Item 1.   Financial Statements:
           Consolidated Balance Sheets (Unaudited) as of December 31, 2005 and June 30, 2005.......      3
           Consolidated Statements of Operations (Unaudited) for the Three and Six Months ended
             December 31, 2005 and 2004............................................................      4
           Consolidated Statements of Cash Flows (Unaudited) for the Six Months ended  December
             31, 2005 and 2004.....................................................................      5
           Notes to Consolidated Financial Statements (Unaudited) .................................      6
 Item 2.   Management's Discussion and Analysis of Financial Condition
             and Results of Operations.............................................................     28
 Item 3.   Quantitative and Qualitative Disclosures About Market Risk..............................     37
 Item 4.   Controls and Procedures.................................................................     39

PART II    OTHER INFORMATION

 Item 1.   Legal Proceedings.......................................................................     40
 Item 4.   Submission of Matters to a Vote of Security Holders.....................................     40
 Item 6.   Exhibits................................................................................     42

Signature    .....................................................................................      45

</TABLE>


         LeCroy(R), Wavelink(TM), WaveMaster(R), WavePro(R), WaveJet(R),
WaveRunner(R), WaveSurfer(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.


                                       2
<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                               LECROY CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
                                                                                           DECEMBER 31,   JUNE 30,
IN THOUSANDS, EXCEPT PAR VALUE AND SHARE DATA                                                  2005         2005
-------------------------------------------------------------------------------------    -------------  --------

                                         ASSETS

<S>                                                                                        <C>          <C>
Current assets:
    Cash and cash equivalents........................................................      $    16,134  $    13,866
    Accounts receivable, net.........................................................           28,029       28,275
    Inventories, net.................................................................           29,624       27,661
    Other current assets.............................................................           14,281       12,681
                                                                                           -----------  -----------
      Total current assets...........................................................           88,068       82,483

Property and equipment, net..........................................................           18,669       19,078
Goodwill.............................................................................           78,848       78,848
Other non-current assets.............................................................            9,912       12,759
                                                                                           -----------  -----------
TOTAL ASSETS.........................................................................      $   195,497  $   193,168
                                                                                            ==========  ===========

                         LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable.................................................................      $    15,377  $    14,806
    Accrued expenses and other current liabilities...................................           14,052       14,642
    Current portion of long-term debt and capital leases.............................            9,203        8,656
                                                                                           -----------  -----------
      Total current liabilities......................................................           38,632       38,104


Long-term debt and capital leases....................................................           30,397       36,833
Deferred revenue and other non-current liabilities...................................            1,403        1,413
                                                                                           -----------  -----------
      Total liabilities..............................................................           70,432       76,350

Commitments and contingencies

Stockholders' equity:
  Preferred stock, $.01 par value (authorized 5,000,000 shares of preferred stock;
    none issued and outstanding as of December 31, 2005 and June 30, 2005)...........               --           --
  Common stock, $.01 par value (authorized 45,000,000 shares; 12,773,872 and
    12,634,233 shares issued and outstanding as of December 31, 2005 and June 30,
    2005, respectively)..............................................................              128          127
  Additional paid-in capital.........................................................          110,788      115,394
  Accumulated other comprehensive income.............................................              619          779
  Deferred stock compensation........................................................               --       (8,602)
  Retained earnings..................................................................           13,530        9,120
                                                                                           -----------  -----------
      Total stockholders' equity.....................................................          125,065      116,818
                                                                                           -----------  -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY...........................................      $   195,497  $   193,168
                                                                                           ===========  ===========
</TABLE>


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

                                       3
<PAGE>



                               LECROY CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                  Three months ended                      Six months ended
                                                                     December 31,                           December 31,
In thousands, except per share data                           2005                  2004                2005                2004
--------------------------------------------------   ------------------    -----------------   -----------------   -----------------
                                                         (13 weeks)            (13 weeks)          (26 weeks)          (27 weeks)
<S>                                                 <C>                  <C>                 <C>                 <C>
Revenues:
    Test and measurement products ................            $ 39,996             $ 40,380            $ 79,120            $ 73,685
    Service and other ............................               2,026                2,408               3,960               4,608
                                                     ------------------    -----------------   -----------------   -----------------
         Total revenues ..........................              42,022               42,788              83,080              78,293

Cost of revenues .................................              16,434               22,182              32,499              36,955
                                                     ------------------    -----------------   -----------------   -----------------
         Gross profit ............................              25,588               20,606              50,581              41,338

Operating expenses:
    Selling, general and administrative ..........              13,594               15,044              26,837              27,354
    Research and development .....................               7,806                8,800              15,230              13,536
                                                     ------------------    -----------------   -----------------   -----------------
         Total operating expenses ................              21,400               23,844              42,067              40,890
                                                     ------------------    -----------------   -----------------   -----------------

Operating income (loss) ..........................               4,188               (3,238)              8,514                 448

Other (expense) income:
    Interest income ..............................                 176                  121                 508                 309
    Interest expense .............................                (776)                (726)             (1,692)               (884)
    Other, net ...................................                 (82)                 576                (207)                514
                                                     ------------------    -----------------   -----------------   -----------------
    Other expense, net ...........................                (682)                 (29)             (1,391)                (61)
                                                     ------------------    -----------------   -----------------   -----------------
Income (loss) before income taxes ................               3,506               (3,267)              7,123                 387
    Provision for (benefit from) income taxes ....               1,329                 (398)              2,713                 954
                                                     ------------------    -----------------   -----------------   -----------------
Net income (loss) ................................             $ 2,177             $ (2,869)            $ 4,410              $ (567)
                                                     ==================    =================   =================   =================

Net income (loss) per common share :
              Basic ..............................              $ 0.18              $ (0.25)             $ 0.36             $ (0.05)
              Diluted ............................              $ 0.17              $ (0.25)             $ 0.36             $ (0.05)

Weighted average number of common shares:
              Basic ..............................              12,195               11,655              12,149              11,633
              Diluted ............................              12,467               11,655              12,402              11,633


</TABLE>


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

                                       4
<PAGE>


                               LECROY CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                                  SIX MONTHS ENDED
                                                                                                    DECEMBER 31,
IN THOUSANDS                                                                                     2005         2004
------------------------------------------------------------------------------------------   ------------ --------

<S>                                                                                          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).........................................................................   $     4,410  $      (567)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
  Write-off of acquired in-process research and development...............................            --        2,190
  Depreciation and amortization...........................................................         3,948        3,683
  Share-based compensation................................................................         2,870        1,112
  Amortization of debt issuance costs.....................................................           204          163
  Deferred income taxes...................................................................         1,795          162
  Recognition of deferred license revenue.................................................          (648)        (648)
  Loss on disposal of property and equipment, net.........................................            --           67
  Tax benefit from exercise of stock options..............................................            --          142
  Write-off of inventory..................................................................            --        2,723
  Impairment of intangible assets.........................................................            --        1,500
Change in operating assets and liabilities, net of assets acquired and liabilities
  assumed in an acquisition:
  Accounts receivable.....................................................................            (8)         531
  Inventories.............................................................................        (2,141)      (2,980)
  Other current and non-current assets....................................................          (107)         340
  Accounts payable, accrued expenses and other liabilities................................        (1,528)       3,045
                                                                                             ------------ -----------
Net cash provided by operating activities.................................................         8,795       11,463
                                                                                             -----------  -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment......................................................        (1,892)      (1,424)
  Proceeds from sale of marketable securities.............................................             --       9,534
  Business acquisition costs, net of acquired cash........................................             --     (80,345)
                                                                                             ------------  ------------
Net cash used in investing activities.....................................................        (1,892)     (72,235)
                                                                                             ------------ ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayment of borrowings of long-term debt and capital leases............................        (5,830)         (52)
  Borrowings under long-term debt.........................................................            --       50,000
  Debt issuance costs.....................................................................            --       (1,378)
  Payments related to issuance of common stock............................................            --           (7)
  Proceeds from employee stock purchase and option plans..................................         1,182          993
  Payment of seller-financed intangible assets............................................            --         (314)
                                                                                             -----------  -----------
Net cash (used in) provided by financing activities.......................................        (4,648)      49,242
                                                                                             ------------ -----------
Effect of exchange rate changes on cash and cash equivalents..............................            13         (103)
                                                                                             -----------  ------------
  Net increase (decrease) in cash and cash equivalents....................................         2,268      (11,633)
  Cash and cash equivalents at beginning of the period....................................        13,866       28,566
                                                                                             -----------  -----------
  Cash and cash equivalents at end of the period..........................................   $    16,134  $    16,933
                                                                                             ===========  ===========

Supplemental Cash Flow Disclosure Cash paid during the period for:
    Interest..............................................................................   $     1,376  $       261
    Income taxes..........................................................................           744          771

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

</TABLE>

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

                                       5
<PAGE>



                               LECROY CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1. BASIS OF PRESENTATION

    The accompanying interim Consolidated Financial Statements include all the
accounts of LeCroy Corporation (the "Company" or "LeCroy") and its wholly-owned
subsidiaries. These 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, 2005. The Consolidated Balance Sheet as of June 30, 2005 has been
derived from those audited Consolidated Financial Statements. Certain
reclassifications have been made to prior-period amounts to conform to the
current-period presentation. Inter-company transactions and balances have been
eliminated in consolidation.

    The Company's Consolidated Financial Statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America, 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
Consolidated Financial Statements and the revenues and expenses reported during
the period. The most significant of these estimates and assumptions relate to
revenue recognition, allowance for doubtful accounts, allowance for excess and
obsolete inventory, deferred tax assets, share-based compensation, valuation of
long-lived and intangible assets, goodwill and warranty. These estimates and
assumptions are based on management's judgment and available information and,
consequently, actual results could differ from these estimates.

    These unaudited Consolidated Financial Statements reflect all adjustments,
of a normal recurring nature, 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. 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 the end of the period, which resulted in the periods
ending December 31, 2005 and January 1, 2005. For clarity of presentation, the
Consolidated Financial Statements period-end references are stated as December
31. Fiscal 2006 is a fifty-two week period and, as a result, the first half of
fiscal 2006 was a 26-week period compared with a 27-week period for the first
half of fiscal 2005 which was a fifty-three week period. The three months ended
December 2005 and 2004 were both 13-week periods.

2. CATC 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 profit,
increase operating leverage leading to expanded operating profit 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 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 "CATC ESPP") purchase rights. Further, LeCroy assumed CATC's outstanding

                                       6
<PAGE>

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


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 was to be
charged as compensation expense to operations as earned by employees over their
remaining vesting periods. (For the disposition of the remaining unamortized
deferred compensation expense see Note 3 - Share-Based Compensation). 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 - Long-term Debt and Capital
Leases). The Merger consideration is summarized below (in thousands):


Cash for shares.................................................  $120,242
Cash for options and CATC ESPP purchase rights..................     3,965
Fair value of stock options assumed.............................     5,111
Unearned stock compensation on unvested options assumed.........    (1,945)
Transaction costs...............................................     2,622
                                                                 ---------
     Total purchase price.......................................  $129,995
                                                                 =========

    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 is 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 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 preliminary purchase price over the fair
value of the net assets acquired has been 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. During the fourth quarter of fiscal 2005, the Company reduced its CATC
goodwill by approximately $2.0 million as a result of a reversal of a valuation
allowance against the CATC deferred tax assets and a reversal of a
pre-acquisition contingency reserve. The final purchase price allocation is
summarized below (in thousands):




                                       7




<PAGE>

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


     Cash                                                   $    46,466
     Accounts receivable                                          2,296
     Inventory                                                    3,710
     Other current assets                                           133
     Fixed assets                                                   663
     Other assets                                                    28
     Deferred tax asset, net                                        367
     In-process research and development                          2,190
     Purchased technology                                         3,080
     Purchased trade name                                            70
     Purchased purchase orders                                       90
     Goodwill                                                    76,974
     Current liabilities assumed                                 (5,420)
     Long-term liabilities assumed                                 (652)
                                                            -----------
     Total purchase price                                      $129,995
                                                            ===========


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

<TABLE>
<CAPTION>

                                                                   WEIGHTED
                                                                   AVERAGE                    ACCUMULATED
                                                                    LIVES          COST      AMORTIZATION      NET
                                                                   -------        ------     ------------     -----
<S>                                                               <C>               <C>         <C>         <C>
   Amortizable intangible assets:
       Purchased technology...................................... 2.0 years        $3,080          2,023   $    1,057

       Purchased trade name.......................................1.0 year             70             70           -

       Purchased purchase orders..................................0.2 years            90             90           -
                                                                              -----------   ------------  -----------
     Total intangibles purchased..................................               $  3,240      $   2,183    $   1,057
                                                                              ===========   ============  ===========
</TABLE>

    Amortization expense for intangible assets acquired in the Merger was $0.5
million and $0.9 million for the three and six months ended December 31, 2005,
respectively, of which $0.5 million and $0.9 million was recorded in Cost of
revenues and $6,000 and $23,000 was recorded in Selling, general and
administrative expense in the Consolidated Statements of Operations,
respectively.

    The amortization expense related to intangible assets acquired in the Merger
for the remainder of fiscal 2006 and 2007 is expected to be $0.5 million and
$0.6 million, respectively.

    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 was included in Research and development
expense in the Consolidated Statement of Operations for that period.

    The Consolidated Statements of Operations for the three and six months ended
December 31, 2005 includes the results of operations of CATC. The following
(unaudited) pro forma consolidated results of operations for the three and six
months ended December 31, 2004 have been prepared as if the Merger had occurred
at the beginning of each period (in thousands, except per share data):

                                       8
<PAGE>

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

<TABLE>
<CAPTION>

                                                                  THREE MONTHS ENDED              SIX MONTHS ENDED
(In thousands, except per share data)                              December 31, 2004             December 31, 2004
                                                                   -----------------             -----------------

<S>                                                                 <C>                            <C>
Revenues.........................................................      $43,235                         $83,317
Net loss before non-recurring charges directly attributable to
the Merger applicable to common stockholders ....................      ($1,884)                        ($3,725)
Net loss per share before non-recurring charges directly
attributable to the Merger- basic ...............................       ($0.16)                         ($0.32)
Net loss per share before non-recurring charges directly
attributable to the Merger - diluted ............................       ($0.16)                         ($0.32)
</TABLE>


     The write-off of IPR&D is excluded from the calculation of net loss and net
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. SHARE-BASED COMPENSATION

         Share-Based Compensation

    Historically, the Company accounted for stock-based compensation under the
recognition and measurement principles of Accounting Principles Board Opinion
("APB") No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and
related interpretations. No compensation expense related to stock option plans
was reflected in the Company's Consolidated Statements of Operations as all
options had an exercise price equal to the market value of the underlying common
stock on the date of grant. Compensation cost for restricted stock was recorded
based on its market value on the date of grant and was included in the Company's
Consolidated Statements of Operations ratably over the vesting period. Upon the
grant of restricted stock, deferred stock compensation was recorded as an offset
to additional paid-in capital and was amortized on a straight-line basis as
compensation expense over the vesting period. Statement of Financial Accounting
Standards ("SFAS") 123, "Accounting for Stock-Based Compensation," established
accounting and disclosure requirements using a fair-value-based method of
accounting for stock-based employee compensation plans. As permitted by SFAS
123, the Company elected to continue to apply the intrinsic-value-based method
of APB No. 25 described above, and adopted only the disclosure requirements of
SFAS 123, as amended by SFAS No. 148, "Accounting For Stock-Based Compensation -
Transition and Disclosure."

    On July 3, 2005, the start of the first quarter of fiscal 2006, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 123
(revised 2004), "Share-Based Payment" ("SFAS 123R") which requires that the
costs resulting from all share-based payment transactions be recognized in the
financial statements at their fair values. The Company adopted SFAS 123R using
the modified prospective application method under which the provisions of SFAS
123R apply to new awards and to awards modified, repurchased, or cancelled after
the adoption date. Additionally, compensation cost for the portion of the awards
for which the requisite service has not been rendered that are outstanding as of
the adoption date is recognized in the Consolidated Statement of Operations over
the remaining service period after the adoption date based on the award's
original estimate of fair value. In connection with the adoption of SFAS 123R,
the deferred stock compensation at June 30, 2005 of $8.6 million relating to
previous grants of restricted stock and stock options assumed in the Merger were
offset against additional paid-in capital during the first quarter of fiscal
2006. Results for prior periods have not been restated. Total share-based
compensation expense recorded in the Consolidated Statement of Operations for
the three and six months ended December 31, 2005 is $1.5 million and $2.9
million, respectively.

                                       9
<PAGE>

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


    As a result of adopting SFAS 123R on July 3, 2005, the Company's income
before income taxes and net income for the three months ended December 31, 2005
are $0.9 million and $0.6 million lower, respectively, than if it had continued
to account for share-based compensation under APB No. 25. For the six months
ended December 31, 2005, the Company's income before income taxes and net income
are $1.4 million and $1.0 million lower, respectively, under SFAS 123R. Basic
and diluted earnings per share for the three months ended December 31, 2005
would both have been $0.23 per share if the Company had not adopted SFAS 123R,
compared to reported basic and diluted earnings per share of $0.18 and $0.17,
respectively. Basic and diluted earnings per share for the six months ended
December 31, 2005 would have been $0.45 and $0.44, respectively, compared to
reported basic and diluted earnings per share of $0.36. Under APB No. 25,
restricted stock was historically being expensed.

    On November 10, 2005, the FASB issued FASB Staff Position 123(R)-3 ("FSP
123R-3"), "Transition Election Related to Accounting for the Tax Effects of
Share-based Payment Awards," that provides an elective alternative transition
method of calculating the pool of excess tax benefits available to absorb tax
deficiencies recognized subsequent to the adoption of SFAS 123R (the "APIC
Pool") to the method otherwise required by paragraph 81 of SFAS 123R. The
Company may take up to one year from the effective date of this FSP to evaluate
its available alternatives and make its one-time election. The Company is
currently evaluating the alternative methods; however, neither alternative would
have an impact on the Company's results of operations or financial condition for
the three and six months ended December 31, 2005, due to the fact that the
Company is currently using prior period net operating losses and has not
realized any tax benefits under SFAS 123R. Until and unless the Company elects
the transition method described in this FSP, the Company will follow the
transition method described in paragraph 81 of SFAS 123R.

    The following table illustrates the effect on net income and net income per
common share applicable to common stockholders for the three and six months
ended December 31, 2004, as if the Company had applied the fair value
recognition provisions for stock-based employee compensation of SFAS 123, as
amended. For purposes of the pro forma presentation, option forfeitures are
accounted for as they occurred and no amounts of compensation expense have been
capitalized into inventory or other assets, but instead were considered as
period expenses (in thousands, except per share data):

<TABLE>
<CAPTION>

                                                                            Three Months Ended           Six Months Ended
                                                                             December 31, 2004            December 31, 2004
                                                                         --------------------------   -----------------------

<S>                                                                                <C>                          <C>
Net loss, as reported ................................................             $ (2,869)                    $ (567)
Add: stock-based compensation expense included in reported ...........                  416                        698
  net loss, net of income taxes
Deduct: stock-based compensation expense determined under ............                 (964)                    (1,632)
  fair value-based method for all awards, net of income taxes
                                                                                ------------               ------------
Pro forma net loss applicable to common stockholders .................             $ (3,417)                   $(1,501)
                                                                                ============               ============

Net loss per common share applicable to common stockholders:
  Basic and diluted, as reported .....................................              $ (0.25)                   $ (0.05)
  Basic and diluted, pro forma .......................................              $ (0.29)                   $ (0.13)

</TABLE>


    Prior to the adoption of SFAS 123R, the Company presented all tax benefits
of deductions resulting from the exercise of stock options as operating cash
flows in the Statement of Cash Flows. SFAS 123R requires the cash flows
resulting from tax benefits resulting from tax deductions in excess of the
compensation cost recognized for those options (excess tax benefits) to be
classified as financing cash flows. For the three and six months ended December
31, 2005, there was no excess tax benefit recognized resulting from share-based
compensation cost.

                                       10
<PAGE>

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


    The fair value of options granted is estimated on the date of grant using a
Black-Scholes option pricing model. Expected volatilities are calculated based
on the historical volatility of the Company's stock. Management monitors share
option exercise and employee termination patterns to estimate forfeiture rates
within the valuation model. Separate groups of employees that have similar
historical exercise behavior are considered separately for valuation purposes.
The expected holding period of options represents the period of time that
options granted are expected to be outstanding. The risk-free interest rate for
periods within the contractual life of the option is based on the interest rate
of a 5-year U.S. Treasury note in effect on the date of the grant.

    The table below presents the assumptions used to calculate the fair value of
options granted during the three and six months ended December 31, 2005 and
2004.

<TABLE>
<CAPTION>

                                               THREE MONTHS                          THREE MONTHS
                                                   ENDED        SIX MONTHS ENDED        ENDED            SIX MONTHS ENDED
                                             DECEMBER 31, 2005  DECEMBER 31, 2005   DECEMBER 31,2004     DECEMBER 31, 2004
                                             -----------------  -----------------   ----------------    ------------------
<S>                                              <C>                 <C>                <C>               <C>
Expected holding period (years)................   5.0                 5.0                5.9                     5.9
Risk-free interest rate .......................   4.23%           3.86% - 4.23%      3.31% - 3.72%           3.31% - 3.72%
Weighted average risk-free interest rate ......   4.23%              4.08%               3.34%                   3.34%
Dividend yield.................................   0.0%                0.0%               0.0%                     0.0%
Expected volatility............................  61.8%            61.8% - 64.9%      67.3% - 69.1%           67.3% - 69.1%
Weighted average expected volatility...........  61.8%               62.9%              69.0%                    69.0%
Fair value of options granted..................  $8.43            $7.91 - $8.43     $10.03 - $12.67         $10.03 - $12.67
Weighted  average  fair  value  of  options
granted........................................  $8.43               $8.25              $11.04                  $11.04
</TABLE>

         Stock Option Plans

    The Company maintains share-based payment arrangements under the following
plans: (i) the Amended and Restated 1993 Stock Incentive Plan ("1993 Plan"),
(ii) the Amended and Restated 1995 Employee Stock Purchase Plan ("ESPP"), (iii)
the Amended and Restated 1998 Non-Employee Director Stock Plan ("1998 Plan"),
(iv) the 2003 Stock Incentive Plan ("2003 Plan"), (v) the 2004 Employment
Inducement Stock Plan ("2004 Plan"), (vi) the LeCroy Corporation (CATC) Special
2000 Stock Option Plan, (vii) the LeCroy Corporation (CATC) 2000 Stock Incentive
Plan, and (viii) the LeCroy Corporation (CATC) 1994 Stock Option Plan (items
(vi), (vii) and (viii) collectively the "LeCroy (CATC) Plans"). The Company has
a policy of issuing new shares to satisfy share option exercises.

    The 1993 Plan expired on January 4, 2003. All options outstanding under the
1993 Plan at the time of its expiration will continue in full force and effect
in accordance with their terms. No more than 2,608,696 shares of Common Stock
were allowed to be issued pursuant to the exercise of incentive stock options
granted under the 1993 Plan. This limitation did not apply to non-qualified
stock options or restricted stock awards that were granted under the 1993 Plan.
The vesting period and expiration of each grant was determined by the
Compensation Committee of the Board of Directors. In general, the vesting period
is 25% per annum over a four-year period, or 50% after the second year and 25%
for the third and fourth years. The lives of the options are generally ten years
from the date of grant. As of December 31, 2005, there were 1,460,438 options
outstanding under the 1993 Plan, of which 1,321,068 options were vested.

    In July 1995, the Company adopted the 1995 Employee Stock Purchase Plan (the
"ESPP") and reserved for issuance an aggregate of 434,783 shares of Common
Stock. The purpose of the ESPP is twofold: first, to encourage stock ownership
by employees by establishing a program that permits them to purchase shares of
Common Stock on a regular basis through payroll deductions; and second, to offer
employees an opportunity, without adverse tax consequences, to purchase stock at
a price equal to 85% of the market value on the first or last business day of

                                       11
<PAGE>

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


the offering period. On October 29, 2003, the Company's shareholders approved
the extension of the expiration of the ESPP from June 7, 2005 to November 30,
2006 and increased the number of shares available for issuance under the ESPP
from 434,783 to 684,783 shares. On October 26, 2005, the Company's shareholders
approved the extension of the expiration of the ESPP from November 30, 2006 to
November 30, 2011 and increased the number of shares available for issuance
under the ESPP from 684,783 to 1,060,000 shares. Through December 31, 2005, a
total of 532,962 shares have been issued under the ESPP including 40,449 shares
for the six months ended December 31, 2005 and 56,214, 49,141 and 45,820 shares
for the years ended June 30, 2005, 2004 and 2003, respectively. As of December
31, 2005, 527,038 shares are available for future issuance.

    In October 1998, the Board of Directors and stockholders terminated the 1995
Non-Employee Director Stock Option Plan ("1995 Plan") and adopted the 1998 Plan.
As of December 31, 2005, stock options to purchase 901 shares of Common Stock
issued pursuant to the 1995 Plan are outstanding and fully vested. On October
26, 2005, the Company's shareholders approved amendments to the 1998 Plan to
extend the termination date of the 1998 Plan to October 27, 2010 and to provide
for the ability to grant restricted stock awards under the 1998 Plan. Pursuant
to the 1998 Plan, each non-employee director receives either a stock option
grant of 15,000 shares to vest ratably over 36 months, or a restricted stock
award of 10,000 shares of Common Stock, subject to such vesting and other
conditions and restrictions as the Board may determine in its discretion.
Additionally, each non-employee director will receive annually a restricted
stock award of 5,000 shares of Common Stock subject to such vesting and other
conditions and restrictions as the Board may determine in its discretion. Prior
to the amendments dated October 26, 2005 and October 25, 2000, the annual award
to each non-employee director was 7,000 stock options and 5,000 stock options,
respectively, all exercisable at the market price on the date of grant and
vesting immediately. A total of 500,000 shares of Common Stock can be issued
during the term of the 1998 Plan. As of December 31, 2005, there were 238,670
options outstanding under the 1998 Plan, of which 231,586 options were vested.

    On October 29, 2003, the Company's shareholders approved the 2003 Plan. The
2003 Plan provides for the grant of incentive stock options, nonqualified stock
options and restricted stock awards to employees (including officers and
employee directors) and consultants. Unless approved by stockholders owning a
majority of shares present and entitled to vote at a duly convened meeting of
stockholders of the Company, the purchase price of any option granted under the
2003 Plan may not be less than 100% of the fair value of the Company's common
stock on the date of grant. The initial aggregate number of shares of Common
Stock that may be issued or transferred pursuant to options or restricted stock
awards under the 2003 Plan shall not exceed 910,167 shares. On October 26, 2005,
the Company's shareholders approved amendments to the 2003 Plan to allow for
awards under the 2003 Plan based on performance criteria which awards may then
qualify as "performance-based compensation" under Section 162(m) of the Internal
Revenue Code and to increase from 910,167 to up to 1,560,167 shares the number
of shares of Common Stock reserved for issuance under the 2003 Plan. The
Compensation Committee of the Board of Directors administers the 2003 Plan and
has the authority to determine the terms of such options or awards including the
number of shares, exercise or purchase prices and times at which the options
become and remain exercisable or restricted stock is no longer restricted. There
are no performance-based awards approved for fiscal 2006. The 2003 Plan expires
on October 29, 2013. As of December 31, 2005, there were 70,068 options
outstanding under the 2003 Plan, of which 15,818 options were vested.

    In connection with the Merger, on October 29, 2004, the Company's Board of
Directors approved 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). The options were issued with vesting periods of four
to six years. On September 13, 2005, the Board of Directors resolved that no
further grants would be made under the 2004 Plan. The 2004 Plan expires on
October 29, 2014. As of December 31, 2005, there were 189,377 options
outstanding under the 2004 Plan, of which 17,036 were vested.


                                       12
<PAGE>

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


    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, the 648,284 unvested stock options, as well as
certain vested but unexercised 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. The $5.1 million fair value of the new awards was
included in the purchase price, less the intrinsic value of unvested options of
$1.9 million, which, during the period from October 29, 2004 to June 30, 2005,
was being charged as compensation expense to operations on a straight-line basis
as earned by employees over their remaining vesting periods. In connection with
the adoption of SFAS 123R, the remaining unamortized deferred compensation was
offset against additional paid-in capital on the date of adoption and
compensation cost for unvested options under the LeCroy (CATC) Plans is being
recognized over the remaining vesting period using the fair value of the options
on the date of the Merger. On September 13, 2005, the Board of Directors
resolved that no further grants would be made under the LeCroy (CATC) Plans. As
of December 31, 2005, there were 487,237 options outstanding under the LeCroy
(CATC) Plans, of which 241,350 options were vested.

    Stock option transactions for the six months ended December 31, 2005 under
all plans are as follows:

<TABLE>
<CAPTION>

                                                                               WEIGHTED
                                                                                AVERAGE      AGGREGATE
                                                                               REMAINING     INTRINSIC
                                            NUMBER OF     WEIGHTED AVERAGE    CONTRACTUAL      VALUE
                                             SHARES        EXERCISE PRICE     TERMS (YEARS)    ($000)
                                           ----------     ----------------    -------------  ---------
<S>                                          <C>                 <C>           <C>            <C>
   Outstanding at June 30, 2005...........   2,784,288         $ 16.05

   Granted................................      16,500           14.56
   Exercised..............................     (65,690)          11.16
   Expired................................      (6,000)          15.75
   Forfeited .............................    (282,407)          18.45
                                              --------
   Outstanding at December 31, 2005.......   2,446,691           15.88         5.26           $4,509
                                             =========

   Vested and expected to vest at
   December 31, 2005......................   2,302,504         $  15.92        6.40           $4,162
                                            +=========
   Exercisable at December 31, 2005.......   1,827,759         $  16.61        5.57           $3,060
                                            ==========
</TABLE>


    The weighted-average grant-date fair value of the stock options granted
during the three and six months ended December 31, 2005 was $8.43 and $8.25 per
share, respectively. The weighted-average grant-date fair value of the stock
options granted during the three and six months ended December 31, 2004 was
$11.04 per share for both periods. The total intrinsic value of stock options
exercised during the three and six months ended December 31, 2005 was $0.2
million and $0.3 million, respectively as compared to $0.5 million and $0.6
million for the three and six months ended December 31, 2004, respectively. The
fair value of stock options vested during the three and six months ended
December 31, 2005 was $0.7 million and $2.0 million, respectively.

    As of December 31, 2005, there was approximately $3.1 million of total
unrecognized compensation cost related to stock options granted under the plans.
That cost is expected to be recognized over a weighted-average period of 2.74
years. No compensation cost related to stock options was capitalized in
inventory or any other assets for the three and six months ended December 31,
2005 and 2004.

                                       13

<PAGE>

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


         Restricted Stock

    Compensation expense for restricted stock was historically recorded based on
its market value on the date of grant and recognized ratably over the associated
service period, the period in which restrictions are removed. Compensation
expense for unvested restricted stock was reported as deferred stock
compensation on the Consolidated Balance Sheets. With the adoption of SFAS 123R,
effective July 3, 2005, deferred stock compensation has been offset against
additional paid-in capital where it is reflected on the Consolidated Balance
Sheet as of December 31, 2005. During the six months ended December 31, 2005
there were 66,000 shares of restricted stock granted. Of these shares, 25,000
were issued under the 1998 Plan to non-employee directors and were immediately
vested and 41,000 shares were issued to employees under the 2003 Plan with
4-year vesting. In fiscal 2005, 198,030 and 70,000 shares of restricted stock
were granted under the 2003 Plan and 2004 Plan, respectively, with various
vesting conditions ranging from three to four years. During fiscal 2005, 2,300
of shares issued under the 2003 Plan were forfeited as a result of employee
terminations and the corresponding compensation expense and remaining deferred
compensation amounts were reversed. An additional 86,130 shares vested during
the fiscal 2005 period. In fiscal 2004, 365,000 shares of restricted stock were
granted under the 2003 Plan with long-term cliff vesting conditions of three to
five years to certain key employees. During the six months ended December 31,
2005, 32,000 of these shares were forfeited as a result of employee terminations
and corresponding compensation expense of $0.1 million recorded in previous
periods was reversed. An additional 17,650 shares vested during the six months
ended December 31, 2005. Under the 2004 Plan, 5,000 shares vested during the six
months ended December 31, 2005. As of December 31, 2005, 465,950 shares are
unvested under the 2003 Plan and 65,000 shares are unvested under the 2004 Plan.

    The following table summarizes transactions related to restricted
(non-vested) stock for the six months ended December 31, 2005:

<TABLE>
<CAPTION>

                                                                      WEIGHTED AVERAGE
                                                          NUMBER OF      GRANT DATE
                                                           SHARES        FAIR VALUE
                                                         ----------   -----------------
<S>                                                      <C>            <C>
Restricted (non-vested) stock at June 30, 2005.......      544,600        $  17.40

Granted..............................................       66,000           15.34
Vested...............................................      (47,650)          15.57
Forfeited ...........................................      (32,000)          17.79
                                                           -------
Restricted (non-vested) stock at December 31, 2005...      530,950           17.33
                                                           =======
</TABLE>

    As of December 31, 2005, there was approximately $6.3 million of total
unrecognized compensation cost related to restricted (non-vested) stock granted
under the plans. That cost is expected to be recognized over a weighted-average
period of 2.62 years. No compensation cost related to restricted stock grants
was capitalized in inventory or any other assets for the three and six months
ended December 31, 2005 and 2004.


                                       14


<PAGE>

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


    The following table summarizes information about stock options outstanding
at December 31, 2005:

<TABLE>
<CAPTION>

                                                         OPTIONS OUTSTANDING AT               OPTIONS EXERCISABLE AT
                                                            DECEMBER 31, 2005                    DECEMBER 31, 2005
                                               -----------------------------------------     ---------------------
                                                                WEIGHTED   WEIGHTED AVERAGE                  WEIGHTED
                                                                 AVERAGE       REMAINING                      AVERAGE
    OPTION EXERCISE PRICE                       NUMBER OF       EXERCISE   CONTRACTUAL LIFE    NUMBER OF     EXERCISE
         RANGE                                   SHARES           PRICE         (YEARS)         SHARES         PRICE
   ---------------                             ----------     ----------- -----------------  -----------   ---------
<S>                                            <C>          <C>               <C>             <C>        <C>
   $ 1.35 - $12.00..........................       494,216      $  8.58           6.26            338,281    $  8.29
   $12.01 - $18.00..........................     1,175,042        14.89           6.00            750,379      14.90
   $18.01 - $24.00..........................       715,122        21.39           3.60            676,788      21.51
   $24.01 - $37.00..........................        62,311        29.16           2.52             62,311      29.16
                                                ----------                                     ----------
     Total..................................     2,446,691        15.88           5.26          1,827,759      16.61
                                                 =========                                     ==========
</TABLE>

    Of the total stock options outstanding, 1,827,759 and 1,860,699 options were
exercisable at December 31, 2005 and June 30, 2005, respectively. Stock options
and restricted stock awards available for grant under all plans were 1,170,581
and 1,223,502 at December 31, 2005 and June 30, 2005, respectively.

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.

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

     In the first quarter of fiscal 2006, in an effort to provide end-user
customers an alternative to purchasing the Company's higher end products under
its standard terms and conditions, the Company began offering customers an
opportunity to enter into sales-type or direct financing leases for these
products. The Company is accounting for these leases in accordance with SFAS
Statement No. 13, " Accounting for Leases." Lease and rental revenues are
reported within Test and measurement product revenue and were not material in
the first half of fiscal 2006.

     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").

                                       15

<PAGE>

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


     Due to the significant software content of its protocol analyzer 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 analyzer 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 recognized as revenue. Revenues from protocol
analyzer products are included in Test and measurement products in the
Consolidated Statements of Operations.

     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 Consolidated Statements of Operations. There was no revenue from
perpetual software license agreements for the three and six months ended
December 31, 2005 and 2004.

     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 was 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 was unable to sufficiently estimate the
amounts of potential product returns. In the fourth quarter of fiscal 2005,
having had four full quarters of experience with this product and channel with
no significant returns, the Company had sufficient data to estimate potential
returns and in accordance with SFAS No. 48, "Revenue Recognition When Right of
Return Exists" ("SFAS 48"), recognized previously deferred revenue of $2.6
million. Revenue related to WaveSurfers sold to distributors is now being
recognized upon shipment to the distributor, rather than upon the sale of the
unit by the distributor to the end user and a provision for expected returns is
recognized.

     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.


                                       16
<PAGE>

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


     Beginning in fiscal 2001 with the adoption of the SEC's Staff Accounting
Bulletin, ("SAB") 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 pretax license fee
revenue of $0.3 million for each of the three months ended December 31, 2005 and
2004 and $0.6 million for each of the six months ended December 31, 2005 and
2004. Such license fees were included in Service and other revenue in the
Consolidated Statements of Operations. As of December 31, 2005, the remaining
deferred license fees balance from the adoption of SAB 101 was $17,000 which is
reflected in Accrued expenses and other current liabilities in the accompanying
Consolidated Balance Sheet.

5. RESTRUCTURING AND ASSET IMPAIRMENT

    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. As of December 31, 2005, all of the
accrued severance costs and other related expenses have been paid.

    During the second quarter of fiscal 2005, as a result of the Merger, the
Company adopted a plan to restructure the organization and refine 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 December 31, 2005, approximately $0.5 million of severance has been paid and
approximately $0.1 million remains in Accrued expenses and other current
liabilities on the Consolidated Balance Sheet. 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 recorded a $1.5
million non-cash charge to Cost of revenues for the impairment of a related
intangible asset.

    Finally, in the fourth quarter of fiscal 2005, the Company realigned some of
its business processes and, as a result, incurred expenses of approximately $1.0
million, consisting of $0.7 million of severance and related expenses and $0.3
million of facility closure expenses which included lease termination costs and
asset write-downs. As of December 31, 2005, approximately $0.7 million of
severance has been paid and $0.2 million of facility charges have been paid in
cash or written off and approximately $0.1 million remains in Accrued expenses
and other current liabilities on the Consolidated Balance Sheet. The remaining
balance is expected to be paid by the end of fiscal 2006.

6. DERIVATIVES

    The Company accounts for 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.


                                       17
<PAGE>

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


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 on the type of
hedging relationship. The Company's foreign exchange forward contracts and
interest rate swap agreements 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, net in the Consolidated Statements of Operations.

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

    As of December 31, 2005, the Company has the following derivative
instruments:

    Interest Rate Swap

     As required by the terms of the Credit Agreement (See Note 15 - Long-term
Debt and Capital Leases), 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 protect against rising interest rates during the term of the Credit
Agreement.

    The Credit Agreement obligates the Company to enter into one or more
interest rate swap agreements covering the interest payable with respect to at
least 50% of the outstanding principal amount of the Term Loan (see Note 15) 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 not designated as a cash
flow hedge under SFAS 133. Accordingly, changes in the fair value of the swap
are charged or credited to operations. In accordance with the interest rate swap
transaction, the Company pays interest quarterly 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 was a benefit of approximately ($8,000)
during the three months ended December 31, 2005 and was expense of approximately
$14,000 during the six months ended December 31, 2005. The notional amount as of
December 31, 2005 and June 30, 2005 was approximately $21.3 million and $23.1
million, respectively. The fair value of the interest rate swap as of December
31, 2005 is $0.3 million compared to $66,000 at June 30, 2005 and approximates
the amount that the Company would have received from M&T Bank if the Company had
canceled the transaction at each respective date. The fair value is recorded in
Other non-current assets in the Consolidated Balance Sheet as of December 31,
2005 and the change in fair value of $56,000 and $0.3 million is recognized in
Interest income in the Consolidated Statement of Operations for the three and
six months ended December 31, 2005, respectively.

    Forward foreign exchange contracts

    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 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 currently as Other (expense)
income, net in the Consolidated Statement of Operations.

                                       18


<PAGE>

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


    The net losses resulting from changes in the fair value of these derivatives
and on transactions denominated in other than their functional currencies were
$82,000 and $0.2 million for the three and six months ended December 31, 2005,
respectively, as compared to net gains of $0.6 million and $0.5 million for the
three and six months ended December 31, 2004, respectively. These amounts are
included in Other expense, net in the Consolidated Statements of Operations and
include gross foreign exchange contract gains of $9,000 and $57,000 for the
three and six months ended December 31, 2005, respectively, and $0.6 million for
each of the three and six month periods ended December 31, 2004. At December 31,
2005 and June 30, 2005, the notional amounts of the Company's open foreign
exchange forward contracts, all with maturities of less than six months, were
approximately $9.2 million and $9.8 million, respectively.

7. COMPREHENSIVE INCOME (LOSS)

    The following table presents the components of comprehensive income (loss)
(in thousands):

<TABLE>
<CAPTION>

                                                       Three months ended          Six months ended
                                                           December 31,              December 31,
                                                  -------------------------  ------------------------
                                                       2005           2004        2005          2004
                                                  ----------     ----------  ----------   -----------

<S>                                                  <C>           <C>          <C>            <C>
Net income (loss) ..............................     $2,177        ($2,869)     $4,410         ($567)
Unrealized loss on marketable securities .......         --             --          --            (3)
Plus: reclassification adjustment for realized
losses incl ded in net (loss) ..................         --             16          --            16
Foreign currency translation (loss) gain .......        (60)         1,690        (160)        1,586
                                                  ----------     ----------  ----------   -----------
Comprehensive income (loss) ....................     $2,117        ($1,163)     $4,250        $1,032
                                                  ==========     ==========  ==========   ===========

</TABLE>


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 both
December 31, 2005 and June 30, 2005, the Company netted approximately $2.3
million of accounts receivable against accounts payable on the Consolidated
Balance Sheets related to these agreements.

9. INVENTORIES, NET

    Inventories, with the exception of demonstration units in finished goods,
are stated at the lower of cost (first-in, first-out method) or market.
Demonstration units are stated at lower of cost (specific identification method)
or market. Inventories consist of the following (in thousands):

                                                  DECEMBER 31,  JUNE 30,
                                                      2005      2005 (1)
                                                  ----------  ----------

   Raw materials.............................      $   4,957   $    4,284
   Work in process...........................          5,997        3,425
   Finished goods............................         18,670       19,952
                                                   ---------   ----------
                                                   $  29,624   $   27,661
                                                   =========   ==========

    (1) Approximately $5.6 million of inventory classified as raw materials as
of June 30, 2005 has been reclassified to finished goods to conform to the
current year presentation.


                                       19

<PAGE>



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


    The value of demonstration units included in finished goods was $10.4
million and $10.8 million at December 31, 2005 and June 30, 2005, 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 second quarter of fiscal 2005, 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 revenue in the Consolidated Statement of Operations
for the write-off of excess parts.

10. OTHER CURRENT ASSETS

    Other current assets consist of the following (in thousands):

                                                       DECEMBER 31,  JUNE 30,
                                                           2005        2005
                                                      ----------     ----------
   Deferred tax assets, net.......................... $    9,000     $    9,000
   Other receivables.................................        829            456
   Value-added tax...................................        616            565
   Other.............................................      3,836          2,660
                                                      ----------     ----------
                                                      $   14,281     $   12,681
                                                      ==========     ==========

11. PROPERTY AND EQUIPMENT, NET

    Property and equipment consist of the following (in thousands):

                                                       DECEMBER 31,   JUNE 30,
                                                           2005         2005
                                                      ------------  -----------
   Land, building and improvements................... $    15,515   $    15,494
   Furniture, machinery and equipment................      28,999        28,638
   Computer software and hardware....................      16,098        15,712
                                                      -----------   -----------
                                                           60,612        59,844
   Less: Accumulated depreciation and amortization...     (41,943)      (40,766)
                                                      -----------   -----------
                                                      $    18,669   $    19,078
                                                      ===========   ===========

    Depreciation and amortization expense was $1.2 million and $1.3 million for
the three-month periods ended December 31, 2005 and 2004, respectively.
Depreciation and amortization for the six-month periods ended December 31, 2005
and 2004 was $2.5 million for each period.




<PAGE>

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



12. GOODWILL AND OTHER NON-CURRENT ASSETS

    Goodwill and Other non-current assets consist of the following (in
thousands):

                                                     DECEMBER 31,  JUNE 30,
                                                         2005        2005

   Goodwill........................................   $  78,848   $   78,848
                                                      =========   ==========

   Intangibles, net................................   $   4,313   $    5,783
   Deferred tax assets, net........................       3,651        5,446
   Other...........................................       1,948        1,530
                                                      ---------   ----------
                                                      $   9,912   $   12,759
                                                      =========   ==========

    Under SFAS No. 142 "Goodwill and Other Intangible Assets," ("SFAS 142")
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 142 during the fourth quarter of fiscal 2005
and determined that there was no impairment to the recorded goodwill balances.
No impairment indicators arose during the first half of fiscal 2006.

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

<TABLE>
<CAPTION>

                                                                       ORIGINAL
                                                                       WEIGHTED      DECEMBER 31,     JUNE 30,
                                                                     AVERAGE LIVES       2005           2005
                                                                     -------------  ---------------   --------

<S>                                                                   <C>              <C>          <C>
   Amortizable intangible assets:
       Technology, manufacturing and distribution rights..........    2.96 years       $   6,737    $   11,737
       Patents and other intangible assets........................    3.39 years           1,073         1,073
       Accumulated amortization...................................                        (3,497)       (7,027)
                                                                                       ---------    ----------
     Net carrying amount..........................................                     $   4,313    $    5,783
                                                                                       =========    ==========
</TABLE>


    Amortization expense for intangible assets, all with finite lives, was $0.7
million and $1.5 million for the three and six months ended December 31, 2005,
respectively as compared to $0.9 million and $1.2 million for the three and six
months ended December 31, 2004, respectively. The cost of technology,
manufacturing and distribution rights acquired is amortized on a straight-line
basis over the estimated economic life of the asset. For the six months ended
December 31, 2005, certain technology rights totaling $5.0 million were fully
amortized and removed from the Consolidated Balance Sheet due to contract
expiration. Management estimates intangible assets amortization expense on a
straight-line basis will approximate $1.1 million for the remainder of fiscal
2006 and $1.8 million, $0.9 million, and $0.5 million for fiscal 2007, 2008 and
2009, respectively.




                                       21



<PAGE>

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



13. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

    Accrued expenses and other current liabilities consist of the following (in
thousands):
<TABLE>
<CAPTION>

                                                               DECEMBER 31,  JUNE 30,
                                                                   2005        2005
                                                               -----------  ----------
<S>                                                           <C>         <C>
   Compensation and benefits...............................     $   5,602   $    5,279
   Income taxes............................................         3,178        3,046
   Deferred license fee revenue, current portion...........            17          665
   Warranty................................................           932          971
   Deferred revenue, current portion.......................         1,132        1,049
   Retained liabilities from discontinued operations.......           160          160
   Other current liabilities...............................         3,031        3,472
                                                                ---------   ----------
                                                                $  14,052   $   14,642
                                                                =========   ==========
</TABLE>

14. WARRANTIES

    The Company provides a warranty on its products, typically extending three
years after delivery and accounted for in accordance with SFAS No. 5,
"Accounting for Contingencies." 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 fully 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 six months ended
December 31, 2005 and 2004 (in thousands):

<TABLE>
<CAPTION>

                                                                      Three months ended    Six months ended
                                                                         December 31,         December 31,
                                                                  ---------------------   ---------------------
                                                                     2005         2004        2005        2004
                                                                     ----         ----        ----        ----
<S>                                                                <C>        <C>           <C>       <C>
Balance at beginning of period .............................         $962       $1,241        $971      $1,247
Accruals for warranties entered into during the period .....          300          451         646         868
Warranty costs incurred during the period ..................         (330)        (425)       (685)       (848)
Warranty liability assumed in the Merger ...................            -          105           -         105
                                                                  --------   ----------   ---------    --------
Balance at end of period ...................................         $932       $1,372        $932      $1,372
                                                                  ========   ==========   =========    ========
</TABLE>

    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 against the licensee 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 December
31, 2005, there have been no claims under such indemnification provisions.

                                       22

<PAGE>

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



    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 in accordance with
SFAS No. 5, "Accounting for Contingencies." To date, there have been no claims
under such indemnification provisions.

15. LONG-TERM DEBT AND CAPITAL LEASES

    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 prior $25.0 million revolving credit facility with The Bank of
New York. 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 swing-line loan sub-facility and a
$1.0 million letter of credit sub-facility. 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 December 31, 2005, the Company has not borrowed against the
Revolver or the letter of credit sub-facility.

    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 December 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 were 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 December 31, 2005, the Company has repaid $11.2 million of the principal
balance of this loan. The outstanding balance to be repaid is approximately $4.4
million for the remainder of fiscal 2006 and $9.4 million, $10.6 million, $11.9
million and $2.5 million for the fiscal years ending June 2007, 2008, 2009 and
2010, respectively.

    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.
At December 31, 2005, the remaining balance of unamortized fees of $0.4 million
were included in Other current assets and $0.5 million were included in Other
non-current assets on the 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 -
Derivative Instruments).

    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 150.0 million yen (approximately $1.3 million as of December 31,
2005). No amounts were outstanding under these facilities as of December 31,
2005 and June 30, 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 December 31, 2005). As of December 31, 2005 and June 30, 2005,
approximately 0.4 million Swiss francs were held against supplier obligations
leaving an available balance of 0.6 million Swiss francs under this credit
facility. These obligations to suppliers, such as rent and utilities, are
payable under the credit facility only in the event that the Company is unable
to meet its financial obligations to those suppliers.

                                       23

<PAGE>


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


    The Company had a five year $2.0 million capital lease line of credit that
expired in November 2005, that bore interest at 12.2%, to fund certain capital
expenditures. As of December 31, 2005, there were no outstanding borrowings
under this line of credit.

    During fiscal 2005, the Company entered into vendor supplied capital lease
agreements for technology rights of $1.3 million. These leases bear interest at
4.5% to 4.88% with three-year terms. At December 31, 2005, the Company's
outstanding balance under these agreements was $0.8 million of which $0.5
million was included within Current portion of long-term debt and capital leases
and $0.3 million was included within Long-term debt in the Consolidated Balance
Sheet. Under these capital lease obligations, payments, including interest, are
$0.2 million for the remainder of fiscal 2006 and $0.5 million and $0.1 million
for fiscal years 2007 and 2008, respectively.

16. COMMITMENTS AND CONTINGENCIES

    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 the
Company, 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. On October 18, 2005 the United States Court of Appeals for the Federal
Circuit affirmed the dismissal with prejudice. The appeal is ongoing and the
outcome cannot be predicted. The Company 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 matters pending,
including that described above, that the Company expects to be material to its
business, results of operations, financial condition or cash flows.

17. 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
six months ended December 31, 2005 and 2004:


                                       24
<PAGE>

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

<TABLE>
<CAPTION>

                                                                      Three months ended            Six months ended
                                                                         December 31,                  December 31,
                                                                   --------------------------   -------------------------
                                                                      2005           2004         2005           2004
                                                                      ----           ----         ----           ----
<S>                                                               <C>           <C>           <C>             <C>
Numerator:
Net income (loss) .............................................        $2,177        $(2,869)      $4,410          $(567)
                                                                   ===========    ===========   ==========    ===========

Denominator:
Weighted average shares outstanding:
        Basic .................................................        12,195         11,655       12,149         11,633
        Employee stock options and other ......................           272             --          253             --
                                                                   -----------    -----------   ----------    -----------
        Diluted ...............................................        12,467         11,655       12,402         11,633
                                                                   ===========    ===========   ==========    ===========
</TABLE>

    The computation of diluted net income per common share for the three and six
months ended December 31, 2005 does not include approximately 2.0 million of
stock options and warrants to purchase common stock as the effect of their
inclusion would have been antidilutive to earnings per share. The computation
for both the three and six months ended December 31, 2004 does not include
approximately 3.8 million of stock options and warrants to purchase common stock
as the effect of their inclusion would have been antidilutive to earnings per
share.

18. INCOME TAXES

    The effective income tax rate for the three and six months ended December
31, 2005 was 37.9% and 38.1%, respectively, compared to an effective income tax
(benefit) rate of (12.2%) and 247.0% for the three and six months ended December
31, 2004, respectively. Under the provisions of SFAS 123R, which the Company
adopted on July, 3, 2005, only the portion of share-based compensation expense
that is expected to result in a future tax deduction is considered deductible
for tax accounting purposes. The non-deductible portion represents permanent
differences which resulted in the higher effective tax rate in the three months
ended December 31, 2005 than in the comparable prior year period. In addition,
the effective income tax benefit rate for the three months end December 31, 2004
of (12.2%) was impacted by nondeductible purchased IPR&D charges associated with
the Merger. The effective tax rate for the six months ended December 31, 2004
was based on the estimated annual normalized projected effective tax rate of
37%, increased by the discrete nondeductible IPR&D charges associated with the
Merger. The increase for the nondeductible IPR&D charges resulted in the higher
effective rate as compared to the six months ended December 31, 2005.

    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
elected to apply this provision to certain repatriations of qualifying earnings
in fiscal year 2005. The Company elected to repatriate $22.1 million 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-month period ended December 31,
2004.

19. SEGMENT AND GEOGRAPHIC REVENUE

    The Company operates in a single segment in the test and measurement market,
in which it develops, manufactures, sells and licenses high-performance
oscilloscopes, serial data analyzers and global communication protocol test
solutions. These products are used by design engineers and researchers to
measure and analyze complex electronic signals in order to develop high
performance systems, to validate electronic designs and to improve time to
market.

                                       25

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


    Revenues are attributed to countries based on customer ship-to addresses.
Revenues by geographic area are as follows (in thousands):

<TABLE>
<CAPTION>


                               Three Months Ended               Six Months Ended
                                  December 31,                     December 31,
                          -----------------------------   ----------------------------
                                 2005             2004            2005           2004
                          ------------  ---------------   -------------   ------------

<S>                           <C>             <C>              <C>            <C>
North America                 $14,066         $ 14,125         $28,392        $24,234
Europe/Middle East             14,558           14,300          24,994         25,130
Japan                           5,022            4,312          10,588         10,823
Asia/Pacific                    8,376           10,051          19,106         18,106
                          ------------  ---------------   -------------   ------------
  Total Revenues              $42,022         $ 42,788         $83,080        $78,293
                          ============  ===============   =============   ============
</TABLE>


    Total net assets by geographic area are as follows (in thousands):


                                               December 31,     June 30,
                                                  2005            2005
                                              -------------   -------------

North America ............................        $173,011        $170,685
Europe/Middle East .......................          12,097          11,241
Japan ....................................           5,141           6,328
Asia/Pacific .............................           5,248           4,914
                                              -------------   -------------
  Total net assets .......................        $195,497        $193,168
                                              =============   =============

    Total long-lived assets (1) by geographic area are as follows (in
thousands):

                                              December 31,     June 30,
                                                 2005            2005
                                             -------------   -------------

North America ............................      $ 104,295       $ 103,921
Europe/Middle East .......................            528             525
Japan ....................................            329             456
Asia/Pacific .............................            399             419
                                             -------------   -------------
  Total long-lived assets ................      $ 105,551       $ 105,321
                                             =============   =============

(1) Long-lived assets presented in the table above exclude non-current deferred
tax assets.

20. NEW ACCOUNTING PRONOUNCEMENTS

    In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an
amendment of ARB No. 43, Chapter 4" ("SFAS 151"). SFAS 151 amends the guidance
in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for
abnormal amounts of idle facility


                                       26

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


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
re-handling  costs may be so abnormal as to require  treatment as current period
charges...."  SFAS 151 requires that those items be recognized as current-period
charges  regardless  of whether  they meet the  criterion of "so  abnormal."  In
addition, SFAS 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 151 apply to inventory  costs  beginning in
fiscal year 2006.  The adoption of SFAS 151 on July 3, 2005 had no impact on the
Company's results of operations or financial condition.

    In December 2004, the FASB issued SFAS No. 153, "Exchanges of Non-monetary
Assets, an Amendment of APB Opinion No. 29" ("SFAS 153"). The guidance in APB
Opinion No. 29, "Accounting for Non-monetary Transactions," ("APB 29") is based
on the principle that exchanges of non-monetary assets should be measured based
on the fair value of the assets exchanged. The guidance in APB 29, however,
included certain exceptions to that principle. SFAS 153 amends APB 29 to
eliminate the exception for non-monetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of non-monetary assets
that do not have commercial substance. A non-monetary exchange has commercial
substance if the future cash flows of the entity are expected to change
significantly as a result of the exchange. The adoption of SFAS 153 on July 3,
2005 did not have an impact on the Company's results of operations or financial
condition.

    In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections," ("SFAS 154") which will be effective for the Company for reporting
changes in accounting principles for correction of errors beginning fiscal year
2007. SFAS 154 changes the reporting of a change in accounting principle to
require retrospective application to prior periods' financial statements, unless
explicit transition provisions are provided for in new accounting pronouncements
or existing pronouncements that are in the transition phase when SFAS 154
becomes effective.

    In June 2005, the FASB issued FASB Staff Position ("FSP") 143-1, "Accounting
for Electronic Equipment Waste Obligations." This FSP 143-1 addresses the
accounting related to obligations associated with Directive 2002/96/ EC on Waste
Electrical and Electronic Equipment (the "Directive") adopted by the European
Union. Under the Directive, the waste management obligation for historical
equipment (products put on the market on or prior to August 13, 2005) remains
with the commercial user until the equipment is replaced. This FSP 143-1 is
effective the later of the end of the first quarter of fiscal year 2006 or the
date of adoption of the law by the applicable EU-member country. It is expected
that the law will be adopted by certain EU countries in fiscal 2006 and that the
Company will be required to adopt the provisions of FSP-143-1 at that time.
Management is currently evaluating the impact of FSP 143-1. The effects will
depend on the respective laws adopted by the EU member countries.

                                       27
<PAGE>


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

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.

    We sell our products into a broad range of end markets, including the
Computer/Semiconductor/Consumer Electronics, Data Storage,
Automotive/Industrial, and Military/Aerospace markets. We believe that our
products offer the strongest value proposition in these markets by providing
advanced analysis capabilities coupled with innovative and proprietary
technology features. 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 divide 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.

    We generate revenue in a single segment within the Test and Measurement
market, primarily from the sale of our oscilloscopes, protocol analyzers,
probes, accessories and applications solutions. To a lesser extent, we also
generate revenue from the sales of our extended warranty, maintenance contracts
and repairs and calibrations on our instruments after their warranties expire.

    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 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 profits represent revenues
less cost of revenues. Additional factors integral to gross profit earned on our
products are mix, as the list prices of our products range from $3,000 to
$106,000, and the effects of foreign currencies, as approximately two-thirds of
our revenues are derived overseas, much of which is denominated in local
currencies while product manufacturing costs are primarily 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.

                                       28

<PAGE>

    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 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. During the third quarter of fiscal 2006, we introduced a new line
of mid-range, high performance, WaveRunner(R) digital oscilloscopes that feature
big, bright displays while occupying minimal space on a crowded bench.

    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 2005 we implemented
restructuring and business realignment plans intended to reduce costs and more
efficiently allocate product development resources. For a more detailed
discussion of our restructuring efforts in fiscal 2005 see the Section entitled
"Restructuring" below.

    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 Computer
Access Technology Corporation ("CATC") to complement our expanding portfolio of
serial data test solutions. This division, Protocol Solutions Group, has grown
significantly over the previous year and now represents about 15% of our total
business. The acquisition of CATC is described more fully below. Also, in
January 2006 we announced that we have entered into a memorandum of
understanding with Iwatsu Electric Corporation to acquire a new low-end product
line, to be launched as the WaveJet Family, that should expand our presence in
the low-end oscilloscope market. The transaction, which is expected to cost
between $2.0 and $3.0 million, is expected to close in the middle of the third
quarter of fiscal 2006.

                                       29
<PAGE>

CATC ACQUISITION

    On October 29, 2004, we completed our acquisition of 100% of the outstanding
common stock of CATC(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 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 profit, increase operating leverage leading to
expanded operating profit 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 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 was to be charged as compensation expense to operations
as earned by employees over their remaining vesting periods. As a result of the
adoption of SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123R"),
which requires that the cost resulting from all share-based payment transactions
be recognized in the financial statements at their fair values, the remaining
unamortized deferred compensation was charged off to Additional paid-in capital
in the Consolidated Balance Sheet in the first fiscal quarter of 2006. (See
"Critical Accounting Policies" below). 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 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. For more information see
Notes 2 and 15 to the Consolidated Financial Statements.

RESTRUCTURING

    During the second quarter of fiscal 2005, as a result of the Merger, we
adopted a plan to restructure our organization and fine tune our product
strategy. In connection with the adoption of this plan, we 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 December
31, 2005, $0.5 million of severance has been paid and $0.1 million remains in
accrued expenses and other current liabilities in the Consolidated Balance
Sheet. 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, we took a $1.5 million non-cash charge to cost of
revenue for the impairment of a technology asset.

    Finally, in the fourth quarter of fiscal 2005, we realigned some of our
business processes and, as a result, incurred expenses of approximately $1.0
million, consisting of $0.7 million of severance and related expenses and $0.3
million of facility closure expenses which included lease termination costs and
asset write-downs. As of December 31, 2005, approximately $0.7 million of
severance has been paid and $0.2 million of facility charges have been paid in
cash or written off and approximately $0.1 million remains in Accrued expenses
and other current liabilities on the Consolidated Balance Sheet. The remaining
balance is expected to be paid by the end of fiscal 2006.

                                       30
<PAGE>

CRITICAL ACCOUNTING POLICIES

     The preparation of our Consolidated Financial Statements in conformity with
accounting principles generally accepted in the United States 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 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 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, 2005, which include 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.

    In the first quarter of fiscal 2006, we adopted the provisions of SFAS 123R
which requires that the cost resulting from all share-based payment transactions
be recognized in the financial statements at their fair values. We adopted SFAS
123R using the modified prospective application method under which the
provisions of SFAS 123R apply to new awards and to awards modified, repurchased,
or cancelled after the adoption date. We use the Black Scholes option pricing
model to estimate the fair value of options on the date of grant which requires
certain estimates by management including the expected forfeiture rate and
expected term of the option. Management also makes decisions regarding the
method of calculating expected volatilities and the risk free interest rate used
in the model. Fluctuations in the market that effect these estimates could have
an impact on the resulting compensation cost. Additionally, compensation cost
for the portion of awards for which the requisite service has not been rendered
that are outstanding as of the adoption date is recognized over the remaining
service period after the adoption date. (See Note 3 to the Consolidated
Financial Statements for additional information.) There have been no other
changes in our critical accounting policies since June 30, 2005.

CONSOLIDATED RESULTS OF OPERATIONS

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

                                       31
<PAGE>

<TABLE>
<CAPTION>
                                                Three months ended              Six months ended
                                                   December 31,                    December 31,
                                            ---------------------------   -----------------------------
<S>                                         <C>            <C>            <C>             <C>
(Unaudited)                                     2005           2004           2005            2004
                                            -------------    ----------   -------------   -------------
Revenues:
  Test and measurement products .........           95.2 %        94.4 %          95.2 %          94.1%
  Service and other .....................            4.8           5.6             4.8             5.9
                                            -------------    ----------   -------------   -------------

    Total revenues ......................          100.0         100.0           100.0           100.0
Cost of revenues ........................           39.1          51.8            39.1            47.2
                                            -------------    ----------   -------------   -------------

    Gross profit ........................           60.9          48.2            60.9            52.8

Operating expenses:
  Selling, general and administrative ...           32.3          35.1            32.3            34.9
  Research and development ..............           18.6          20.6            18.3            17.3
                                            -------------    ----------   -------------   -------------
    Total operating  expenses ...........           50.9          55.7            50.6            52.2

Operating income (loss) .................           10.0          (7.5)           10.3             0.6
  Other (expense), net ..................           (1.6)         (0.1)           (1.7)           (0.1)
                                            -------------    ----------   -------------   -------------

Income (loss) before income taxes .......            8.4          (7.6)            8.6             0.5
  Provision for (benefit from) income taxes          3.2          (0.9)            3.3             1.2
                                            -------------    ----------   -------------   -------------
Net income (loss) .......................            5.2 %        (6.7)%           5.3 %          (0.7)%
                                            =============    ==========   =============   =============

</TABLE>


COMPARISON OF THE THREE-MONTH PERIODS ENDED DECEMBER 31, 2005 AND 2004

    Total revenues were $42.0 million in the second quarter of fiscal 2006,
compared to $42.8 million in the second quarter of fiscal 2005, a decrease of
1.8%, or $0.8 million, in both Test and measurement products and in Services.
Foreign currency fluctuations reduced total revenues by approximately $1.4
million in the second quarter of fiscal 2006 compared to the same period last
year. In Test and measurement products, offsetting the decrease from currency
fluctuations were sales from the Protocol Solutions Group ("PSG," formally
"CATC") which increased significantly from the prior year resulting in a net
decrease of only 1.0% in total Test and measurement products. In addition, there
were three months of revenue and expenses related to PSG in the second quarter
of fiscal 2006 compared to only two months in the comparable prior year period.
Demand for oscilloscopes remained stable in the high-end and mid-range products,
but there was a slowing of orders at the low end of our product range in
anticipation of impending product introductions in this market space in the
third quarter of fiscal 2006.

    Service and other revenues primarily consist of service revenues and license
and maintenance fees. Service revenue decreased 15.9% to $2.0 million in the
second quarter of fiscal 2006 from $2.4 million in the same period last year.
The decrease primarily resulted from a decrease in other service revenues from
the sale of locally provided items in our foreign operations, but was also
impacted by the foreign currency fluctuations. In the third quarter of fiscal
2005, based on our review and analysis of the then current classification of
service kits, we made the decision to reclassify service kit revenue to product
revenue from its historical classification. For the three months ended December
31, 2004, $1.1 million of service kit revenue was reclassified as product
revenue to conform to the fiscal 2006 presentation. Service and other revenue in
the second quarter of both fiscal 2006 and 2005 includes $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.


                                       32
<PAGE>

    Revenues by geographic location expressed in dollars and as a percentage of
total revenues were:

                                                    THREE MONTHS ENDED
                                                       DECEMBER  31,
   (IN THOUSANDS)                                       (UNAUDITED)
                                                  -----------------------
                                                     2005          2004
                                                  ---------     ---------
   North America..............................    $  14,066     $  14,125
   Europe/Middle East.........................       14,558        14,300
   Japan......................................        5,022         4,312
   Asia/Pacific...............................        8,376        10,051
                                                  ---------     ---------
      Total revenues..........................    $  42,022     $  42,788
                                                  =========     =========

                                                        THREE MONTHS ENDED
                                                            DECEMBER 31,
                                                            (UNAUDITED)
                                                      ----------------------
                                                       2005            2004
                                                      ------          ------
   North America..............................          33.5%           33.0%
   Europe/Middle East.........................          34.6            33.4
   Japan......................................          12.0            10.1
   Asia/Pacific...............................          19.9            23.5
                                                      ------          ------
      Total revenues..........................         100.0%          100.0%
                                                      ======          ======

    Gross profit in the second quarter of fiscal 2006 was $25.6 million, or
60.9% gross margin, compared to $20.6 million, or 48.2% gross margin in the same
period in fiscal 2005. The lower gross margin in fiscal 2005 was primarily
attributable to Merger-related 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 impairment
of an intangible asset due to a change in our manufacturing strategy. In the
second quarter of fiscal 2006 there were no similar write-downs effecting gross
margin, however, we received a price reduction from a vendor for inventory
purchases which positively impacted our gross margin by about 2.0%.

    Selling, general and administrative ("SG&A") expense was $13.6 million in
the second quarter of fiscal 2006 compared to $15.0 million in the second
quarter of fiscal 2005, a decrease of 9.6% or $1.4 million. The decrease was
mainly the result of approximately $2.2 million in personnel-related expenses
due to lower headcount and prior year office closings, and lower legal and
consulting expenses. These decreases were partially offset by an increase of
$0.5 million in non-cash share-based compensation expense and $0.3 million in
travel and other expenses. As a percentage of total revenues, SG&A expense
decreased from 35.1% in the second quarter of fiscal 2005 to 32.3% in the second
quarter of fiscal 2006.

    Research and development ("R&D") expense was $7.8 million in the second
quarter of fiscal 2006, compared to $8.8 million in the second quarter of fiscal
2005, a decrease of 11.3% or $1.0 million. In the second quarter of fiscal 2005,
R&D expense included a one-time $2.2 million write-off for acquired IPR&D in
connection with the Merger. Excluding this charge, R&D expense increased
approximately $1.2 million for the second quarter of fiscal 2006 over the
comparable prior year period due to $0.9 million in higher personnel-related
expenses resulting from the Merger and $0.3 million in non-cash share based
compensation expense. As a percentage of total revenues, R&D expense decreased
from 20.6% in the second quarter of fiscal 2005 to 18.6% in the second quarter
of fiscal 2006, primarily attributable to the IPR&D write-off in fiscal 2005.

    Other expense, net, which consists primarily of net interest income and
expense and foreign exchange gains and losses, was an expense of ($0.7) million
in the second quarter of fiscal 2006, compared to ($29,000) in the second
quarter of fiscal 2005. Net interest expense was approximately ($0.6) million
for both periods, but there was a foreign exchange loss of ($0.1) million in the
second quarter of fiscal 2006 compared to a foreign exchange gain of $0.6
million in the comparable prior year period. The net interest expense is due to
the Term Loan outstanding under our current Credit Agreement, as well as
interest on capital leases.

                                       33
<PAGE>

    Our effective tax rate was 37.9% in the second quarter of fiscal 2006
compared to a tax benefit of (12.2%) in the second quarter of fiscal 2005 and
35% for the full fiscal 2005. The increase in our effective tax rate from the
full year fiscal 2005 rate is the result of certain non-deductible share-based
compensation costs in connection with our adoption of SFAS 123R. The effective
income tax benefit rate for the three months ended December 31, 2004 of (12.2%)
was impacted by nondeductible purchased in-process R&D charges associated with
the Merger.

COMPARISON OF THE SIX-MONTH PERIODS ENDED DECEMBER 31, 2005 AND 2004

    Total revenues were $83.1 million in the six months ended December 31, 2005,
compared to $78.3 million in the six months ended December 31, 2004, an increase
of 6.1% or $4.8 million. Foreign currency fluctuations reduced total revenues by
approximately $1.1 million in the first half of fiscal 2006 compared to the same
period last year. An increase of $5.4 million in Test and measurement products
was partially offset by a decrease in Services of $0.6 million. The increase in
Test and measurement products, which more than offset the decrease from foreign
currency fluctuations, was mainly from sales from PSG purchased in the Merger,
especially our lines of PCI Express and SAS/SATA data storage protocol
analyzers. Also, there were six months of revenue related to PSG in fiscal 2006
which resulted in an additional contribution to total revenue of approximately
9.0% over the comparable prior year period that only included two months of PSG
revenue. The demand for our oscilloscopes remained stable.

    Service and other revenue decreased primarily from the sale of locally
provided items in our foreign operations. As discussed above, in the third
quarter of fiscal 2005, we made the decision to reclassify service kit revenue
to product revenue from its historical classification. For the six months ended
December 31, 2004, $2.1 million of service kit revenue was reclassified as
product revenue to conform to the fiscal 2006 presentation. Service and other
revenue in the first half of both fiscal 2006 and 2005 includes $0.6 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.

    Revenues by geographic location expressed in dollars and as a percentage of
total revenues were:

                                                 SIX MONTHS ENDED
                                                   DECEMBER  31,
   (IN THOUSANDS)                                   (UNAUDITED)
                                              -----------------------
                                                 2005          2004
                                              ---------     ---------
   North America..........................    $  28,392     $  24,234
   Europe/Middle East.....................       24,994        25,130
   Japan..................................       10,588        10,823
   Asia/Pacific...........................       19,106        18,106
                                              ---------     ---------
      Total revenues......................    $  83,080     $  78,293
                                              =========     =========

                                                     SIX MONTHS ENDED
                                                       DECEMBER 31,
                                                        (UNAUDITED)
                                                  ----------------------
                                                   2005            2004
                                                  ------          ------
   North America..........................          34.2%           31.0%
   Europe/Middle East.....................          30.1            32.1
   Japan..................................          12.7            13.8
   Asia/Pacific...........................          23.0            23.1
                                                  ------          ------
      Total revenues......................         100.0%          100.0%
                                                  ======          ======

    Gross margin was 60.9% in the six months ended December 31, 2005 compared to
52.8% in the same period in fiscal 2005. As discussed above, the lower gross
margin in fiscal 2005 was primarily attributable to Merger-related 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 impairment of an intangible asset due to a change in our
manufacturing strategy. In the six months ended December 31, 2005 there were no
similar write-downs effecting gross margin; however, we received a price
reduction from a vendor for inventory purchases which increased the margin on
resulting product sales. In addition, gross margins benefited from higher PSG
margins which increased gross margin by approximately 3.9 percentage points over
the full six month period in fiscal 2006 as compared to 1.6 percentage points
for the six-month period in fiscal 2005 that included only two months of PSG
activity.

                                       34
<PAGE>

     SG&A expense for the six months ended December 31, 2005 was $26.8 million
compared to $27.4 million in the six months ended December 31, 2004. The
decrease was mainly attributable to $2.3 million in personnel-related expenses
and prior year office closings, and lower legal and consulting expenses. These
decreases were partially offset by an increase of $1.2 million in non-cash
share-based compensation expense and travel expenses. As a percentage of sales,
SG&A expense decreased from 34.9% in the six months ended December 31, 2004 to
32.3% in the six months ended December 31, 2005. This decrease as a percentage
of revenues was primarily due to our continued ability to leverage expenses over
the incremental revenues.

     R&D expense was $15.2 million for the six months ended December 31, 2005,
compared to $13.5 million in the same period in fiscal 2005, an increase of
12.5% or $1.7 million. There was approximately $3.9 million of higher expense
primarily attributable to six months of personnel-related expenses, due to
higher headcount, as a result of the Merger compared to only two months of
expenses in the prior fiscal six-month period. These increases were partially
offset by a $2.2 million charge for IPR&D included in the second fiscal quarter
of 2005 in connection with the Merger. There is no similar charge in the fiscal
2006 period. As a percentage of total revenues, R&D expense increased from 17.3%
in the six months ended December 31, 2004 to 18.3% in the six months ended
December 31, 2005, primarily attributable to the inclusion of PSG for the entire
period.

     Other expense, net, was ($1.4) million for the six months ended December
31, 2005 compared to ($61,000) for the six months ended December 31, 2004. Other
expense, net, for the six months ended December 31, 2005 includes six months of
interest expense, or ($1.6) million, related to the Term Loan as compared to two
months of interest expense in the fiscal 2005 period, or ($0.5) million.
Interest expense for both periods also includes interest on capital lease
agreements and, for the fiscal 2005 period only, the write-off of unamortized
fees associated with a previous credit facility. For the six months ended
December 31, 2005, other expense also includes a foreign exchange loss of ($0.2)
million resulting from the changes in our foreign exchange forward contracts and
on transactions denominated in other than their functional currencies. These
expenses were partially offset by interest income of $0.5 million for the
period. For the six months ended December 31, 2004, interest expense was
partially offset by interest income of $0.3 million and by net foreign exchange
gains of $0.5 million for the period.

    Our effective tax rate was 38.1% for the six months ended December 31, 2005,
compared to 247% for the six months ended December 31, 2004. Our effective tax
rate for the fiscal 2006 period includes the effect of certain non-deductible
share-based compensation costs in connection with the adoption of SFAS 123R. The
effective tax rate for the six months ended December 31, 2004 was based on the
estimated annual normalized projected effective tax rate of 37%, increased by
the discrete nondeductible IPR&D charges associated with the Merger.

LIQUIDITY AND CAPITAL RESOURCES

    Cash and cash equivalents at December 31, 2005 were $16.1 million compared
to $13.9 million at June 30, 2005.

    We provided $8.8 million of net cash from operating activities in the six
months ended December 31, 2005 compared to $11.5 million in the same period last
year. The net income and cash generative effects of non-cash charges in net
income were partially offset by $3.8 million of cash consumed by working capital
requirements in the first half of fiscal 2006. This compared to $0.9 million of
cash generated by working capital in the same period last year. Cash consumed by
working capital in fiscal 2006 resulted primarily from a $1.5 million decrease
in current liabilities, a prepaid technology engineering services agreement and
continued strategic investments in inventory. Cash provided by operating
activities in the fiscal 2005 period was mostly the result of the generative
effects of non-cash charges which more than offset the net loss for the period.

                                       35
<PAGE>

    Net cash used in investing activities was ($1.9) million in the six months
ended December 31, 2005 compared to ($72.2) million in the same period in fiscal
2005. Net cash used in the fiscal 2006 period was for the purchase of property
and equipment. Net cash used in the fiscal 2005 period was primarily due to
$80.3 million, net of cash acquired, in the second quarter of fiscal 2005 as a
result of the Merger and the liquidation of $9.5 million of investments to
partially fund such acquisition (see CATC Acquisition in this Discussion and
Analysis of Financial Condition and Results of Operations above) partially
offset by $1.4 million in capital expenditures.

    Net cash used in financing activities was ($4.6) million in the six months
ended December 31, 2005 compared to net cash provided of $49.2 million in the
same period in fiscal 2005. Net cash used in financing activities in the fiscal
2006 period was mainly for re-payment of the Term Loan partially offset by
proceeds received from the exercise of stock options and purchase of stock under
the employee stock purchase plan. Net cash provided by financing activities in
the fiscal 2005 period was primarily due to the borrowings under the Credit
Agreement used in connection with the acquisition of CATC, net of the cost of
such issuance, and employee stock-related transactions, partially offset by the
costs of the Term Loan.

    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"). The
terms of the Credit Agreement provide us 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 swing-line loan sub-facility and a $1.0 million
letter of credit sub-facility. 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 December 31, 2005, there were no outstanding borrowings
against the Revolver or letter of credit sub-facility.

    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 December 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 were 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 December 31, 2005, we have repaid $11.2 million of the principal balance of
this loan.

    In addition to the above U.S.-based credit facilities, we maintain certain
short-term foreign credit facilities, principally with two Japanese banks
totaling 150.0 million yen (approximately $1.3 million as of December 31, 2005).
No amounts were outstanding under these facilities as of December 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 December 31, 2005). As of
December 31, 2005 and June 30, 2005, approximately 0.4 million Swiss francs were
held against supplier obligations leaving an available balance of 0.6 million
Swiss francs under this credit facility. These obligations to suppliers, such as
rent and utilities, are payable under the credit facility only in the event that
we are unable to meet our financial obligations to those suppliers.

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

                                       36
<PAGE>

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 our Term Loan as set forth in the table below:

<TABLE>
<CAPTION>

                                           PAYMENTS DUE BY PERIOD AS OF DECEMBER 31, 2005
                                      -------------------------------------------------------
                                                 LESS THAN                        MORE THAN 5
                                        TOTAL     1 YEAR     1-3 YEARS  3-5 YEARS    YEARS
                                      --------   --------    --------   -------- ------------
<S>                                   <C>        <C>         <C>        <C>        <C>
   (IN THOUSANDS)
   Capital lease - technology rights. $    806   $    453    $    353   $     --   $    --
   Realignment charges - severance...      224        224          --         --        --
   Operating lease obligations.......    5,020      1,962       2,485        489        84
   Term Loan obligations ............   38,800      8,750      21,250      8,800        --
                                        ------   ---------   --------   --------    ------
   Total............................. $ 44,850   $ 11,389    $ 24,088   $  9,289    $   84
                                      ========   ========    ========   ========    ------
</TABLE>

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 our 2005 Annual Report on Form 10-K
under the heading "Risks Related to Our Business." 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.

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 the 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.

    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") as amended.

    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.

                                       37
<PAGE>

    The net losses resulting from changes in the fair value of these derivatives
and on transactions denominated in other than their functional currencies were
$82,000 and $0.2 million for the three and six months ended December 31, 2005,
respectively. For the three and six months ended December 31, 2004 there were
gains of $0.6 million and $0.5 million, respectively. These amounts are included
in Other expense, net in the Consolidated Statements of Operations and include
gross foreign exchange contract gains of $9,000 and $57,000 for the three-and
six months ended December 31, 2005, respectively, and $0.6 million for each of
the three and six month periods ended December 31, 2004. At December 31, 2005
and June 30, 2005, the notional amounts of the Company's open foreign exchange
forward contracts, all with maturities of less than six months, were
approximately $9.2 million and $9.8 million, respectively.

     We performed a sensitivity analysis for the first half of fiscal 2006
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 not have a material
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 and cash equivalents 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 for the three and six months ended December 31, 2005. Please refer to Note
15 - Long Term Debt and Capital Leases, for specifics related to our credit
facility.

    As required by the terms of the Credit Agreement (see Note 15 - Long Term
Debt and Capital Leases), on January 27, 2005 we entered into a Master Agreement
with Manufacturers & Traders Trust Co. ("M&T Bank"), the purpose of which is to
protect against rising interest rates during the term of the Credit Agreement.
Under the Credit Agreement we are obligated to enter into one or more interest
rate swap 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 compliance with the Master Agreement, 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. In accordance with the interest rate swap transaction, we pay
interest quarterly 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 was a benefit of approximately ($8,000) during the three months ended
December 31, 2005 and was expense of approximately $14,000 during the six months
ended December 31, 2005. The notional amount as of December 31, 2005 and June
30, 2005 was approximately $21.3 million and $23.1 million, respectively. The
fair value of the interest rate swap as of December 31, 2005 is $0.3 million
compared to $66,000 at June 30, 2005 and approximates the amount that the
Company would have received from M&T Bank if the Company had canceled the
transaction on each respective date. The fair value is recorded in Other
non-current assets in the Consolidated Balance Sheet as of December 31, 2005 and
the change in fair value of $56,000 and $0.3 million for the three and six
months ended December 31, 2005, respectively, is recognized in Interest income
in the Consolidated Statement of Operations. This interest rate swap does not
qualify for hedge accounting in accordance with SFAS No. 133.


                                       38
<PAGE>

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure 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
recording, processing, summarizing and reporting, on a timely basis, 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.

Changes in Internal Controls Over Financial Reporting

    There have been no changes in the Company's internal control over financial
reporting during the quarter ended December 31, 2005 that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.

                                       39
<PAGE>
                              LECROY CORPORATION

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

    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. On October
18, 2005 the United States Court of Appeals for the Federal Circuit affirmed the
dismissal with prejudice. The appeal is ongoing and the outcome cannot be
predicted. The Company 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 matters pending,
including that described above, that the Company expects to be material to its
business, results of operations, financial condition or cash flows.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Our 2005 annual meeting of stockholders was held on October 26, 2005.
At the meeting, our stockholders approved five proposals presented to them
pursuant to the vote totals indicated below:
<TABLE>
<CAPTION>

Proposal I                                                                     Vote (No. of Shares)
                                                                   For            Against/Withheld
                                                               ----------      --------------------
<S>                                                            <C>               <C>                 <C>
Election of Charles A. Dickinson as a Class I Director         10,948,905              918,093
Election of Norman R. Robertson as a Class I Director          11,350,904              516,094


Proposal II                                                        For            Against/Withheld    Broker Non-votes*
-----------                                                        ---            ----------------    -----------------
To  approve   amendments  to  LeCroy   Corporation's  1998
     Non-Employee Director Stock Option Plan                    7,099,650             1,820,801           2,946,547



                                       40
<PAGE>

Proposal III                                                       For            Against/Withheld    Broker Non-votes*
------------                                                       ---            ----------------    -----------------
To approve  amendments to LeCroy  Corporation's 2003 Stock
     Incentive Plan                                             8,141,478              778,973            2,946,547

Proposal IV                                                        For            Against/Withheld    Broker Non-votes*
-----------                                                        ---            ----------------    -----------------
To approve amendments to LeCroy Corporation's  Amended and
     Restated 1995 Employee Stock Purchase Plan                 6,434,084             2,486,367           2,946,547

Proposal V                                                         For            Against/Withheld    Broker Non-votes*
----------                                                         ---            ----------------    -----------------
To approve LeCroy Corporation's Executive Incentive Plan        8,043,285              877,166            2,946,547
</TABLE>

* Shares that reflect abstentions or "broker non-votes" are counted for purposes
of determining whether a quorum is present for the transaction of business at
the annual meeting but are not counted as votes on any proposals presented at
the annual meeting.

    As of October 26, 2005, Robert E. Anderson, Walter O. LeCroy, Thomas H.
Reslewic, William G. Scheerer and Allyn C. Woodward, Jr. were members of the
Board of Directors whose terms of office continued after the annual meeting of
stockholders.

                                       41
<PAGE>



ITEM 6. EXHIBITS

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

        Exhibit
        Number                           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  dated September 2, 2004, incorporated
                   herein by reference.
      3.1          Certificate of  Incorporation  of the  Registrant 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 Certificate of Designation of the Series A
                   Convertible Redeemable Preferred Stock as of April 9, 2001,
                   filed as Exhibit 10.37 to Form 10-Q for the quarterly period
                   ended March 31, 2001, incorporated herein by reference.
      3.3          By-Laws of the Registrant,  as amended, 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.
      10.1         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 Registration Statement No. 333-1119730, incorporated
                   herein by reference.
      10.2         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 Registration Statement No. 333-88239, incorporated herein
                   by reference.
      10.3         Credit Agreement, dated as of October 29, 2004, among the
                   Registrant, the lenders party thereto and The Bank of New
                   York, as Administrative Agent, filed as Exhibit 10.14 to Form
                   8-K filed on November 2, 2004, incorporated herein by
                   reference.
      10.4         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.*
      10.5         Amendment to 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.*
      10.6         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.*
      10.7         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.*
      10.8         LeCroy Corporation 1998 Non-Employee Director Stock Option
                   Plan, incorporated by reference to Appendix A to the
                   Company's Definitive Proxy Statement filed on September 18,
                   1998.
      10.9         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.*
      10.10        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.*
      10.11        LeCroy Corporation's 2003 Stock Incentive Plan, incorporated
                   by reference to Appendix A to the Company's Definitive Proxy
                   Statement filed on September 26, 2003.*
      10.12        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.*
      10.13        LeCroy Corporation Amended and Restated 1995 Employee Stock
                   Purchase Plan, incorporated by reference to Appendix B to the
                   Registrant's Definitive Proxy Statement filed on September
                   26, 2003.*
      10.14        LeCroy Corporation's 2004 Employment Inducement Stock Plan,
                   filed as Exhibit 10.5 to Form 8-K filed on
                   November 2, 2004, incorporated herein by reference.*

                                       42
<PAGE>

      10.15        Computer Access  Technology  Corporation  Special 2000 Stock
                   Option Plan,  filed as Exhibit 10.7 to Form 8-K filed on
                   November 2, 2004, incorporated herein by reference.*
      10.16        Amendments to Computer Access Technology Corporation 2000
                   Special Stock Option Plan, filed as Exhibit 10.11 to Form 8-K
                   filed on November 2, 2004, incorporated herein by reference.*
      10.17        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.*
      10.18        Computer Access  Technology  Corporation  2000 Stock
                   Incentive Plan,  filed as Exhibit 10.8 to Form 8-K
                   filed on November 2, 2004, incorporated herein by reference.*
      10.19        Amendments to Computer Access Technology Corporation 2000
                   Stock Incentive Plan, filed as Exhibit 10.12 to Form 8-K
                   filed on November 2, 2004, incorporated herein by reference.*
      10.20        Amendment to LeCroy  Corporation  (CATC) 2000 Stock Incentive
                   Plan,  filed as Exhibit 10.3 to Form 8-K  filed on November
                   19, 2004, incorporated herein by reference.*
      10.21        Computer Access  Technology  Corporation 1994 Stock Option
                   Plan, filed as Exhibit 10.9 to Form 8-K filed on November 2,
                   2004, incorporated herein by reference.*
      10.22        Amendments to Computer Access  Technology  Corporation 1994
                   Stock Option Plan, filed as Exhibit 10.13 to Form 8-K filed
                   on November 2, 2004, incorporated herein by reference.*
      10.23        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.*
      10.24        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.*
      10.25        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.*
      10.26        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.*
      10.27        Employment Agreement, dated August 13, 2001, between the
                   Registrant and R. Scott Bausback, filed as Exhibit 10.38 to
                   Form 10-Q for the quarterly period ended December 31, 2001,
                   incorporated herein by reference.*
      10.28        Separation Agreement, dated August 19, 2004, between the
                   Registrant and R. Scott Bausback, filed as Exhibit 10.50 to
                   Form 10-K for the fiscal year ended June 30, 2004,
                   incorporated herein by reference.*
      10.29        Amended and Restated Employment Agreement, dated January 18,
                   2002, between the Registrant and Lutz P. Henckels, filed as
                   Exhibit 10.39 to Form 10-Q for the quarterly period ended
                   December 31, 2001, incorporated herein by reference.*
      10.30        Amendment No. 1 to the Amended and Restated Employment
                   Agreement, dated November 25, 2003, between the Registrant
                   and Lutz P. Henckels, filed as Exhibit 99.1 to Form 8-K filed
                   on December 1, 2003, incorporated by reference herein.*
      10.31        Employment Agreement, dated January 1, 2002, between the
                   Registrant and Thomas H. Reslewic, filed as Exhibit 10.40 to
                   Form 10-Q for the quarterly period ended March 31, 2003,
                   incorporated herein by reference.*
      10.32        Amendment No. 1 to Employment Agreement, dated December 16,
                   2002, between the Registrant and Thomas H. Reslewic, filed as
                   Exhibit 10.43 to Form 10-Q for the quarterly period ended
                   March 31, 2003, incorporated herein by reference.*
      10.33        Separation Agreement, dated August 19, 2004, between the
                   Registrant and Thomas H. Reslewic, filed as Exhibit 10.49 to
                   Form 10-K for the fiscal year ended June 30, 2004,
                   incorporated herein by reference.*
      10.34        Separation Agreement, dated January 6, 2003, between the
                   Registrant and Raymond F. Kunzmann, filed as Exhibit 10.42 to
                   Form 10-Q for the quarterly period ended December 31, 2002,
                   incorporated herein by reference.*
      10.35        Form of Separation Agreement between the Registrant and
                   certain of its executive officers, filed as Exhibit 10.51 to
                   Form 10-K for the fiscal year ended June 30, 2004,
                   incorporated herein by reference.*
                                       43

<PAGE>

      10.36        Employment Agreement, dated September 1, 2004 and effective
                   October 29, 2004, between the Registrant and Carmine
                   Napolitano, filed as Exhibit 10.1 to Form 8-K filed on
                   November 2, 2004, incorporated herein by reference.*
      10.37        Amendment No. 1 to Employment Agreement, dated September 30,
                   2004 and effective October 29, 2004, between the Registrant
                   and Carmine Napolitano, filed as Exhibit 10.2 to Form 8-K
                   filed on November 2, 2004, incorporated herein by reference.*
      10.38        Services Agreement, dated August 31, 2004, between Computer
                   Access Technology Corporation and Dan Wilnai, filed as
                   Exhibit 10.3 to Form 8-K filed on November 2, 2004,
                   incorporated herein by reference.*
      10.39        Employment Agreement, dated August 31, 2004, between Computer
                   Access Technology Corporation and Peretz Tzarnotsky, filed as
                   Exhibit 10.4 to Form 8-K filed on November 2, 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.


* Indicates management contract or compensatory plan, contract or arrangement.

                                       44
<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: February 8, 2006          LeCROY CORPORATION

                                /s/ Sean B. O'Connor
                                -----------------------------------------------
                                   Sean B. O'Connor
                                   Vice President and Chief Financial Officer,
                                   Secretary and Treasurer

                                       45
<PAGE>


                                  EXHIBIT INDEX


        Exhibit
        Number                            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 dated September 2, 2004, incorporated herein
                   by reference.
      3.1          Certificate of  Incorporation  of the  Registrant 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 Certificate of Designation of the Series A
                   Convertible Redeemable Preferred Stock as of April 9, 2001,
                   filed as Exhibit 10.37 to Form 10-Q for the quarterly period
                   ended March 31, 2001, incorporated herein by reference.
      3.3          By-Laws of the Registrant,  as amended, 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.
      10.1         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 Registration Statement No. 333-1119730, incorporated
                   herein by reference.
      10.2         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 Registration Statement No. 333-88239, incorporated herein
                   by reference.
      10.3         Credit Agreement, dated as of October 29, 2004, among the
                   Registrant, the lenders party thereto and The Bank of New
                   York, as Administrative Agent, filed as Exhibit 10.14 to Form
                   8-K filed on November 2, 2004, incorporated herein by
                   reference.
      10.4         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.*
      10.5         Amendment to 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.*
      10.6         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.*
      10.7         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.*
      10.8         LeCroy Corporation 1998 Non-Employee Director Stock Option
                   Plan, incorporated by reference to Appendix A to the
                   Company's Definitive Proxy Statement filed on September 18,
                   1998.
      10.9         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.*
      10.10        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.*
      10.11        LeCroy Corporation's 2003 Stock Incentive Plan, incorporated
                   by reference to Appendix A to the Company's Definitive Proxy
                   Statement filed on September 26, 2003.*
      10.12        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.*
      10.13        LeCroy Corporation Amended and Restated 1995 Employee Stock
                   Purchase Plan, incorporated by reference to Appendix B to the
                   Registrant's Definitive Proxy Statement filed on September
                   26, 2003.*
      10.14        LeCroy  Corporation's 2004 Employment  Inducement Stock Plan,
                   filed as Exhibit 10.5 to Form 8-K filed on November 2, 2004,
                   incorporated herein by reference.*
      10.15        Computer Access  Technology  Corporation  Special 2000 Stock
                   Option Plan,  filed as Exhibit 10.7 to Form 8-K filed on
                   November 2, 2004, incorporated herein by reference.*

                                       46
<PAGE>

      10.16        Amendments to Computer Access Technology Corporation 2000
                   Special Stock Option Plan, filed as Exhibit 10.11 to Form 8-K
                   filed on November 2, 2004, incorporated herein by reference.*
      10.17        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.*
      10.18        Computer Access  Technology  Corporation  2000 Stock
                   Incentive Plan,  filed as Exhibit 10.8 to Form 8-K
                   filed on November 2, 2004, incorporated herein by reference.*
      10.19        Amendments to Computer Access Technology Corporation 2000
                   Stock Incentive Plan, filed as Exhibit 10.12 to Form 8-K
                   filed on November 2, 2004, incorporated herein by reference.*
      10.20        Amendment to LeCroy  Corporation  (CATC) 2000 Stock
                   Incentive  Plan,  filed as Exhibit 10.3 to Form 8-K
                   filed on November 19, 2004, incorporated herein by
                   reference.*
      10.21        Computer Access  Technology  Corporation 1994 Stock Option
                   Plan, filed as Exhibit 10.9 to Form 8-K filed on November 2,
                   2004, incorporated herein by reference.*
      10.22        Amendments to Computer Access  Technology  Corporation 1994
                   Stock Option Plan, filed as Exhibit 10.13 to Form 8-K filed
                   on November 2, 2004, incorporated herein by reference.*
      10.23        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.*
      10.24        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.*
      10.25        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.*
      10.26        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.*
      10.27        Employment Agreement, dated August 13, 2001, between the
                   Registrant and R. Scott Bausback, filed as Exhibit 10.38 to
                   Form 10-Q for the quarterly period ended December 31, 2001,
                   incorporated herein by reference.*
      10.28        Separation Agreement, dated August 19, 2004, between the
                   Registrant and R. Scott Bausback, filed as Exhibit 10.50 to
                   Form 10-K for the fiscal year ended June 30, 2004,
                   incorporated herein by reference.*
      10.29        Amended and Restated Employment Agreement, dated January 18,
                   2002, between the Registrant and Lutz P. Henckels, filed as
                   Exhibit 10.39 to Form 10-Q for the quarterly period ended
                   December 31, 2001, incorporated herein by reference.*
      10.30        Amendment No. 1 to the Amended and Restated Employment
                   Agreement, dated November 25, 2003, between the Registrant
                   and Lutz P. Henckels, filed as Exhibit 99.1 to Form 8-K filed
                   on December 1, 2003, incorporated by reference herein.*
      10.31        Employment Agreement, dated January 1, 2002, between the
                   Registrant and Thomas H. Reslewic, filed as Exhibit 10.40 to
                   Form 10-Q for the quarterly period ended March 31, 2003,
                   incorporated herein by reference.*
      10.32        Amendment No. 1 to Employment Agreement, dated December 16,
                   2002, between the Registrant and Thomas H. Reslewic, filed as
                   Exhibit 10.43 to Form 10-Q for the quarterly period ended
                   March 31, 2003, incorporated herein by reference.*
      10.33        Separation Agreement, dated August 19, 2004, between the
                   Registrant and Thomas H. Reslewic, filed as Exhibit 10.49 to
                   Form 10-K for the fiscal year ended June 30, 2004,
                   incorporated herein by reference.*
      10.34        Separation Agreement, dated January 6, 2003, between the
                   Registrant and Raymond F. Kunzmann, filed as Exhibit 10.42 to
                   Form 10-Q for the quarterly period ended December 31, 2002,
                   incorporated herein by reference.*
      10.35        Form of Separation Agreement between the Registrant and
                   certain of its executive officers, filed as Exhibit 10.51 to
                   Form 10-K for the fiscal year ended June 30, 2004,
                   incorporated herein by reference.*
      10.36        Employment Agreement, dated September 1, 2004 and effective
                   October 29, 2004, between the Registrant and Carmine
                   Napolitano, filed as Exhibit 10.1 to Form 8-K filed on
                   November 2, 2004, incorporated herein by reference.*

                                       47
<PAGE>

      10.37        Amendment No. 1 to Employment Agreement, dated September 30,
                   2004 and effective October 29, 2004, between the Registrant
                   and Carmine Napolitano, filed as Exhibit 10.2 to Form 8-K
                   filed on November 2, 2004, incorporated herein by reference.*
      10.38        Services Agreement, dated August 31, 2004, between Computer
                   Access Technology Corporation and Dan Wilnai, filed as
                   Exhibit 10.3 to Form 8-K filed on November 2, 2004,
                   incorporated herein by reference.*
      10.39        Employment Agreement, dated August 31, 2004, between Computer
                   Access Technology Corporation and Peretz Tzarnotsky, filed as
                   Exhibit 10.4 to Form 8-K filed on November 2, 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.

* Indicates management contract or compensatory plan, contract or arrangement.

                                       48