##### Table of Contents





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 April 3, 2010

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
incorporation or organization) |  | (I.R.S. Employer
Identification No.)



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

(845)
425-2000

(Registrants Telephone Number, Including Area Code)

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    YES   ̈    NO   ̈

Indicate by check mark (X) whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer
or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-Accelerated filer   |  | x |  | Smaller Reporting Company |  |  ̈

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

The number of shares of common stock outstanding as of April 26, 2010 was 12,659,011.









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##### Table of Contents

LeCROY CORPORATION

FORM 10-Q

INDEX



|                      |  |                                                                                                                                                                                                                 |  |         
|--------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------
|                      |  |                                                                                                                                                                                                                 |  | Page No.
|PART I                |  |                                                                                                                                                                                                                
|FINANCIAL INFORMATION |  |                                                                                                                                                                                                                
|                      |  |                                                                                                                                                                                                                
|Item 1.               |  | Financial Statements:                                                                                                                                                                                           |  | 1       
|                      |  |                                                                                                                                                                                                                
|                      |  | Consolidated Balance Sheets (Unaudited) as of April 3, 2010 and June 27, 2009                                                                                                                                   |  | 1       
|                      |  |                                                                                                                                                                                                                
|                      |  | Consolidated Statements of Operations (Unaudited) for the Quarter ended April 3, 2010 (13 weeks) and March
 28, 2009 (13 weeks) and Three Quarters ended April 3, 2010 (40 weeks) and March 28, 2009 (39 weeks) |  | 2       
|                      |  |                                                                                                                                                                                                                
|                      |  | Consolidated Statements of Cash Flows (Unaudited) for the Three Quarters ended April 3, 2010 (40 weeks) and
 March 28, 2009 (39 weeks)                                                                          |  | 3       
|                      |  |                                                                                                                                                                                                                
|                      |  | Notes to Consolidated Financial Statements (Unaudited)                                                                                                                                                          |  | 4       
|                      |  |                                                                                                                                                                                                                
|Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                                                                                                                           |  | 25      
|                      |  |                                                                                                                                                                                                                
|Item 3.               |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                                      |  | 30      
|                      |  |                                                                                                                                                                                                                
|Item 4.               |  | Controls and Procedures                                                                                                                                                                                         |  | 31      
|                      |  |                                                                                                                                                                                                                
|                      |  | PART II                                                                                                                                                                                                         |  |         
|                      | 
|OTHER INFORMATION     |  |                                                                                                                                                                                                                
|                      |  |                                                                                                                                                                                                                
|Item 1.               |  | Legal Proceedings                                                                                                                                                                                               |  | 32      
|                      |  |                                                                                                                                                                                                                
|Item 1A.              |  | Risk Factors                                                                                                                                                                                                    |  | 32      
|                      |  |                                                                                                                                                                                                                
|Item 6.               |  | Exhibits                                                                                                                                                                                                        |  | 33      
|                      |  |                                                                                                                                                                                                                
|Signature             |  |                                                                                                                                                                                                                 |  | 34      

LeCroy®, Wavelink®,
WaveMaster®,
WavePro®,
WaveJet®,
WaveRunner®, WaveScan, WaveSurfer, WaveExpert, MAUI, CATC,
WaveAce® and
QualiPHY® are our trademarks, among others not referenced in this document. All other trademarks or servicemarks
referred to in this Form 10-Q are the property of their respective owners.



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##### Table of Contents

PART I. FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

LeCROY CORPORATION

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)



|                                                                                                                                                                     |  |              |          |   |                                  |   |          |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | -------- | - | -------------------------------- | - | -------- | -
|In thousands, except par value and share data                                                                                                                        |  | April 3,2010 |          |   | June 27,2009As Adjusted(Note 12) |  
|ASSETS                                                                                                                                                               |  |              |          |   |                                  |   |          |  
|                                                                                                                                                                     |  |             
|Current assets:                                                                                                                                                      |  |              |          |   |                                  |   |          |  
|Cash and cash equivalents                                                                                                                                            |  | $            | 8,721    |   |                                  | $ | 6,413    |  
|Accounts receivable, net of reserves of $652 and $692 at April 3, 2010 and June 27, 2009, respectively                                                               |  |              | 25,511   |   |                                  |   | 25,209   |  
|Inventories, net                                                                                                                                                     |  |              | 30,665   |   |                                  |   | 34,987   |  
|Other current assets                                                                                                                                                 |  |              | 10,865   |   |                                  |   | 11,564   |  
|                                                                                                                                                                     |  |              |          |   |                                  |   |          |  
|Total current assets                                                                                                                                                 |  |              | 75,762   |   |                                  |   | 78,173   |  
|Property, plant and equipment, net                                                                                                                                   |  |              | 20,250   |   |                                  |   | 21,817   |  
|Intangible assets, net                                                                                                                                               |  |              | 432      |   |                                  |   | 502      |  
|Other non-current assets                                                                                                                                             |  |              | 7,766    |   |                                  |   | 7,186    |  
|                                                                                                                                                                     |  |              |          |   |                                  |   |          |  
|Total assets                                                                                                                                                         |  | $            | 104,210  |   |                                  | $ | 107,678  |  
|                                                                                                                                                                     |  |              |          |   |                                  |   |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                 |  |              |          |   |                                  |   |          |  
|                                                                                                                                                                     |  |             
|Current liabilities:                                                                                                                                                 |  |              |          |   |                                  |   |          |  
|Accounts payable                                                                                                                                                     |  | $            | 12,607   |   |                                  | $ | 14,169   |  
|Accrued expenses and other current liabilities                                                                                                                       |  |              | 12,775   |   |                                  |   | 12,983   |  
|                                                                                                                                                                     |  |              |          |   |                                  |   |          |  
|Total current liabilities                                                                                                                                            |  |              | 25,382   |   |                                  |   | 27,152   |  
|Long-term bank debt                                                                                                                                                  |  |              | 20,000   |   |                                  |   | 17,500   |  
|Convertible notes, net of unamortized discount of $3,578 and $6,277, respectively                                                                                    |  |              | 36,072   |   |                                  |   | 42,073   |  
|Deferred revenue and other non-current liabilities                                                                                                                   |  |              | 3,541    |   |                                  |   | 3,635    |  
|                                                                                                                                                                     |  |              |          |   |                                  |   |          |  
|Total liabilities                                                                                                                                                    |  |              | 84,995   |   |                                  |   | 90,360   |  
|Commitments and contingencies                                                                                                                                        |  |              |          |   |                                  |   |          |  
|Stockholders equity:                                                                                                                                                |  |              |          |   |                                  |   |          |  
|Preferred stock, $.01 par value (authorized 5,000,000 shares; none issued and outstanding as of April 3, 2010 and
June 27, 2009)                                     |  |              |         |   |                                  |   |         |  
|Common stock, $.01 par value (authorized 45,000,000 shares; 12,658,466 shares issued and outstanding at April 3, 2010 and
12,900,551 shares issued at June 27, 2009) |  |              | 127      |   |                                  |   | 129      |  
|Additional paid-in capital                                                                                                                                           |  |              | 124,575  |   |                                  |   | 125,904  |  
|Accumulated other comprehensive income                                                                                                                               |  |              | 2,425    |   |                                  |   | 1,862    |  
|Accumulated deficit                                                                                                                                                  |  |              | (107,912 | ) |                                  |   | (107,479 | )
|Treasury stock, at cost (403,215 shares at June 27, 2009)                                                                                                            |  |              |         |   |                                  |   | (3,098   | )
|                                                                                                                                                                     |  |              |          |   |                                  |   |          |  
|Total stockholders equity                                                                                                                                           |  |              | 19,215   |   |                                  |   | 17,318   |  
|                                                                                                                                                                     |  |              |          |   |                                  |   |          |  
|Total liabilities and stockholders equity                                                                                                                           |  | $            | 104,210  |   |                                  | $ | 107,678  |  
|                                                                                                                                                                     |  |              |          |   |                                  |   |          |  

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



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LeCROY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



|                                                                        |  |                          |        |   |                                   |   |        |                        |  |   |                                             |   |  |   |          |  
|----------------------------------------------------------------------- |  | ------------------------ | ------ | - | --------------------------------- | - | ------ | ---------------------- |  | - | ------------------------------------------- | - |  | - | -------- | -
|                                                                        |  | Quarter Ended (13 weeks) |        |   | Three Quarters Ended              |  
|In thousands, except per share data                                     |  | April 3,2010             |        |   | March 28,2009As Adjusted(Note 12) |   |        | April 3,2010(40 weeks) |  |   | March 28,2009As Adjusted(Note 12)(39 weeks) |  
|Revenues:                                                               |  |                          |        |   |                                   |   |        |                        |  |   |                                             |   |  |   |          |  
|Test and measurement products                                           |  | $                        | 31,150 |   |                                   | $ | 24,725 |                        |  | $ | 85,341                                      |   |  | $ | 100,103  |  
|Service and other                                                       |  |                          | 2,433  |   |                                   |   | 2,198  |                        |  |   | 7,241                                       |   |  |   | 6,651    |  
|                                                                        |  |                          |        |   |                                   |   |        |                        |  |   |                                             |   |  |   |          |  
|Total revenues                                                          |  |                          | 33,583 |   |                                   |   | 26,923 |                        |  |   | 92,582                                      |   |  |   | 106,754  |  
|Cost of revenues                                                        |  |                          | 13,502 |   |                                   |   | 12,621 |                        |  |   | 38,656                                      |   |  |   | 49,149   |  
|                                                                        |  |                          |        |   |                                   |   |        |                        |  |   |                                             |   |  |   |          |  
|Gross profit                                                            |  |                          | 20,081 |   |                                   |   | 14,302 |                        |  |   | 53,926                                      |   |  |   | 57,605   |  
|Operating expenses:                                                     |  |                          |        |   |                                   |   |        |                        |  |   |                                             |   |  |   |          |  
|Selling, general and administrative                                     |  |                          | 11,889 |   |                                   |   | 11,352 |                        |  |   | 30,959                                      |   |  |   | 36,774   |  
|Research and development                                                |  |                          | 7,232  |   |                                   |   | 8,185  |                        |  |   | 20,190                                      |   |  |   | 24,797   |  
|Impairment of goodwill                                                  |  |                          |       |   |                                   |   |       |                        |  |   |                                            |   |  |   | 105,771  |  
|                                                                        |  |                          |        |   |                                   |   |        |                        |  |   |                                             |   |  |   |          |  
|Total operating expenses                                                |  |                          | 19,121 |   |                                   |   | 19,537 |                        |  |   | 51,149                                      |   |  |   | 167,342  |  
|                                                                        |  |                          |        |   |                                   |   |        |                        |  |   |                                             |   |  |   |          |  
|Operating income (loss)                                                 |  |                          | 960    |   |                                   |   | (5,235 | )                      |  |   | 2,777                                       |   |  |   | (109,737 | )
|Other income (expense):                                                 |  |                          |        |   |                                   |   |        |                        |  |   |                                             |   |  |   |          |  
|Gain on extinguishment of convertible debt, net of issue cost write-off |  |                          | 150    |   |                                   |   | 8,597  |                        |  |   | 761                                         |   |  |   | 8,889    |  
|Interest income                                                         |  |                          | 2      |   |                                   |   | 19     |                        |  |   | 31                                          |   |  |   | 80       |  
|Interest expense                                                        |  |                          | (780   | ) |                                   |   | (896   | )                      |  |   | (2,423                                      | ) |  |   | (2,662   | )
|Amortization of debt discount on convertible notes                      |  |                          | (543   | ) |                                   |   | (743   | )                      |  |   | (1,753                                      | ) |  |   | (2,262   | )
|Other, net                                                              |  |                          | 109    |   |                                   |   | 242    |                        |  |   | (161                                        | ) |  |   | 531      |  
|                                                                        |  |                          |        |   |                                   |   |        |                        |  |   |                                             |   |  |   |          |  
|Other (expense) income, net                                             |  |                          | (1,062 | ) |                                   |   | 7,219  |                        |  |   | (3,545                                      | ) |  |   | 4,576    |  
|                                                                        |  |                          |        |   |                                   |   |        |                        |  |   |                                             |   |  |   |          |  
|(Loss) income before income taxes                                       |  |                          | (102   | ) |                                   |   | 1,984  |                        |  |   | (768                                        | ) |  |   | (105,161 | )
|(Benefit) provision for income taxes                                    |  |                          | (432   | ) |                                   |   | 419    |                        |  |   | (335                                        | ) |  |   | (549     | )
|                                                                        |  |                          |        |   |                                   |   |        |                        |  |   |                                             |   |  |   |          |  
|Net income (loss)                                                       |  | $                        | 330    |   |                                   | $ | 1,565  |                        |  | $ | (433                                        | ) |  | $ | (104,612 | )
|                                                                        |  |                          |        |   |                                   |   |        |                        |  |   |                                             |   |  |   |          |  
|Net income (loss) per common share:                                     |  |                          |        |   |                                   |   |        |                        |  |   |                                             |   |  |   |          |  
|Basic                                                                   |  | $                        | 0.03   |   |                                   | $ | 0.13   |                        |  | $ | (0.03                                       | ) |  | $ | (8.75    | )
|Diluted                                                                 |  | $                        | 0.03   |   |                                   | $ | 0.13   |                        |  | $ | (0.03                                       | ) |  | $ | (8.75    | )
|Weighted average number of common shares:                               |  |                          |        |   |                                   |   |        |                        |  |   |                                             |   |  |   |          |  
|Basic                                                                   |  |                          | 12,476 |   |                                   |   | 12,037 |                        |  |   | 12,373                                      |   |  |   | 11,960   |  
|Diluted                                                                 |  |                          | 12,678 |   |                                   |   | 12,098 |                        |  |   | 12,373                                      |   |  |   | 11,960   |  

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



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LeCROY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



|                                                                                          |                        |                      |        |                                              |  |   |          |  
|----------------------------------------------------------------------------------------- | ---------------------- | -------------------- | ------ | -------------------------------------------- |  | - | -------- | -
|In thousands                                                                              |                        | Three Quarters ended |       
|                                                                                          | April 3,2010(40 weeks) |                      |        | March 28,2009As 
Adjusted(Note 12)(39 weeks) | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                     |                        |                      |        |                                              |  |   |          |  
|Net loss                                                                                  |                        | $                    | (433   | )                                            |  | $ | (104,612 | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |                        |                      |        |                                              |  |   |          |  
|Impairment of goodwill                                                                    |                        |                      |       |                                              |  |   | 105,771  |  
|Depreciation and amortization                                                             |                        |                      | 3,960  |                                              |  |   | 4,925    |  
|Share-based compensation                                                                  |                        |                      | 3,737  |                                              |  |   | 1,759    |  
|Amortization of debt issuance costs                                                       |                        |                      | 356    |                                              |  |   | 405      |  
|Amortization of debt discount on convertible notes                                        |                        |                      | 1,753  |                                              |  |   | 2,262    |  
|Deferred income taxes                                                                     |                        |                      | 7      |                                              |  |   | (1,233   | )
|Gain on extinguishment of convertible debt, net of issue cost write-off                   |                        |                      | (761   | )                                            |  |   | (8,889   | )
|Loss on disposal of property, plant and equipment                                         |                        |                      | 24     |                                              |  |   | 40       |  
|Change in operating assets and liabilities:                                               |                        |                      |        |                                              |  |   |          |  
|Accounts receivable                                                                       |                        |                      | 133    |                                              |  |   | 5,773    |  
|Inventories                                                                               |                        |                      | 3,557  |                                              |  |   | (4,994   | )
|Other current and non-current assets                                                      |                        |                      | (137   | )                                            |  |   | (154     | )
|Accounts payable, accrued expenses and other liabilities                                  |                        |                      | (2,344 | )                                            |  |   | (7,444   | )
|                                                                                          |                        |                      |        |                                              |  |   |          |  
|Net cash provided by (used in) operating activities                                       |                        |                      | 9,852  |                                              |  |   | (6,391   | )
|                                                                                          |                        |                      |        |                                              |  |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                     |                        |                      |        |                                              |  |   |          |  
|Purchase of property, plant and equipment                                                 |                        |                      | (1,519 | )                                            |  |   | (2,950   | )
|                                                                                          |                        |                      |        |                                              |  |   |          |  
|Net cash used in investing activities                                                     |                        |                      | (1,519 | )                                            |  |   | (2,950   | )
|                                                                                          |                        |                      |        |                                              |  |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                     |                        |                      |        |                                              |  |   |          |  
|Borrowings under credit line                                                              |                        |                      | 8,500  |                                              |  |   | 18,500   |  
|Repurchase of convertible notes                                                           |                        |                      | (8,603 | )                                            |  |   | (8,378   | )
|Payments made on capital leases                                                           |                        |                      | (188   | )                                            |  |   | (174     | )
|Repayment of borrowings under credit line                                                 |                        |                      | (6,000 | )                                            |  |   | (3,000   | )
|Proceeds from employee stock purchase and option plans                                    |                        |                      | 234    |                                              |  |   | 397      |  
|Purchase of treasury shares                                                               |                        |                      |       |                                              |  |   | (685     | )
|                                                                                          |                        |                      |        |                                              |  |   |          |  
|Net cash (used in) provided by financing activities                                       |                        |                      | (6,057 | )                                            |  |   | 6,660    |  
|                                                                                          |                        |                      |        |                                              |  |   |          |  
|Effect of exchange rate changes on cash and cash equivalents                              |                        |                      | 32     |                                              |  |   | (741     | )
|                                                                                          |                        |                      |        |                                              |  |   |          |  
|Net increase (decrease) in cash and cash equivalents                                      |                        |                      | 2,308  |                                              |  |   | (3,422   | )
|Cash and cash equivalents at beginning of the period                                      |                        |                      | 6,413  |                                              |  |   | 10,224   |  
|                                                                                          |                        |                      |        |                                              |  |   |          |  
|Cash and cash equivalents at end of the period                                            |                        | $                    | 8,721  |                                              |  | $ | 6,802    |  
|                                                                                          |                        |                      |        |                                              |  |   |          |  
|Supplemental Cash Flow Disclosure                                                         |                        |                      |        |                                              |  |   |          |  
|Cash paid during the period for:                                                          |                        |                      |        |                                              |  |   |          |  
|Interest                                                                                  |                        | $                    | 1,548  |                                              |  | $ | 1,517    |  
|Income taxes, net of refunds                                                              |                        |                      | 69     |                                              |  |   | 246      |  
|Non-cash transactions:                                                                    |                        |                      |        |                                              |  |   |          |  
|Transfer of inventory into property, plant and equipment                                  |                        |                      | 803    |                                              |  |   | 1,629    |  

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



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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 27, 2009. The accompanying Consolidated Balance Sheet as of June 27, 2009 has been derived from those audited Consolidated Financial Statements, as adjusted for the
retrospective adoption of the Financial Accounting Standards Board (FASB) staff position related to the accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement), which
was adopted by the Company on June 28, 2009. See Note 12 Debt and Capital Leases for further details regarding the adoption.

The Companys Consolidated Financial Statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles
(US GAAP), 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 as well as the revenues and expenses reported during the period. The most significant of these estimates and assumptions relate to revenue recognition, reserves for accounts receivable, allowance for excess and
obsolete inventory, uncertain tax positions, valuation of deferred tax assets, the effective income tax rate and geographical distribution of taxable income, valuation of long-lived assets, share-based compensation expense, estimation of warranty
liabilities and the separation of the convertible notes between debt and equity. 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 presented. Interim period operating results may not be indicative of the operating results for a full year.
Inter-company transactions and balances have been eliminated in consolidation.

The Companys fiscal years end on the
Saturday closest to June 30, resulting in an extra week of results every five or six years. Fiscal 2010 is a fifty-three week year and, as a result, the three quarters ended April 3, 2010 represent a 40-week period compared to a 39-week
period for the three quarters ended March 28, 2009.

2. Share-Based Compensation

Total share-based compensation expense recorded in the Consolidated Statement of Operations for the quarter ended April 3, 2010 and
March 28, 2009 is approximately $1.8 million and $0.7 million, respectively. For the three quarters ended April 3, 2010 and March 28, 2009, total share-based compensation is approximately $3.7 million and $1.8 million, respectively.

Stock Options

The table below presents the assumptions used to calculate the fair value of options granted during the quarter and three quarters ended
April 3, 2010 and March 28, 2009:



|                                               |  |                           |  |                                  |  |                            |  |                                   
|---------------------------------------------- |  | ------------------------- |  | -------------------------------- |  | -------------------------- |  | ----------------------------------
|                                               |  | QuarterEndedApril 3, 2010 |  | Three quartersEndedApril 3,
2010 |  | QuarterEndedMarch 28, 2009 |  | Three quartersEndedMarch 
28, 2009
|Expected holding period (years)                |  | 5.0                       |  | 5.0                              |  | 5.0                        |  | 5.0                               
|Risk-free interest rate                        |  | 2.32%-2.47%               |  | 2.19%-2.57%                      |  | 1.97%-1.99%                |  | 1.97%-3.23%                       
|Dividend yield                                 |  | 0.0%                      |  | 0.0%                             |  | 0.0%                       |  | 0.0%                              
|Expected volatility                            |  | 56.07%-56.10%             |  | 56.07%-59.01%                    |  | 49.96%-51.11%              |  | 41.12%-51.11%                     
|Weighted average fair value of options granted |  | $2.01                     |  | $1.97                            |  | $0.70                      |  | $1.05                             



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##### Table of Contents

LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



Changes in the Companys stock options for the quarter and three quarters ended
April 3, 2010:



|                                             |  |                |   |  |                              |       |                                                  |      |                                 |   |      
|-------------------------------------------- |  | -------------- | - |  | ---------------------------- | ----- | ------------------------------------------------ | ---- | ------------------------------- | - | -----
|                                             |  | NumberofShares |   |  | WeightedAverageExercisePrice |       | WeightedAverageRemainingContractualTerms (Years) |      | AggregateIntrinsic 
Value($000)
|Outstanding at June 27, 2009                 |  | 2,426,394      |   |  | $                            | 7.45  |                                                  |      |                                 |   |      
|Granted                                      |  | 4,000          |   |  | $                            | 3.89  |                                                  |      |                                 |   |      
|Exercised                                    |  | (3,351         | ) |  | $                            | 0.45  |                                                  |      |                                 |   |      
|Expired                                      |  | (44,829        | ) |  | $                            | 17.00 |                                                  |      |                                 |   |      
|Forfeited                                    |  | (11,535        | ) |  | $                            | 2.49  |                                                  |      |                                 |   |      
|                                             |  |                |   |  |                              |       |                                                  |      |                                 |   |      
|Outstanding at October 3, 2009               |  | 2,370,679      |   |  | $                            | 7.30  |                                                  | 5.14 |                                 | $ | 1,154
|Granted                                      |  | 126,429        |   |  | $                            | 3.93  |                                                  |      |                                 |   |      
|Exercised                                    |  | (1,675         | ) |  | $                            | 0.45  |                                                  |      |                                 |   |      
|Expired                                      |  | (31,568        | ) |  | $                            | 9.36  |                                                  |      |                                 |   |      
|Forfeited                                    |  | (3,240         | ) |  | $                            | 2.33  |                                                  |      |                                 |   |      
|                                             |  |                |   |  |                              |       |                                                  |      |                                 |   |      
|Outstanding at January 2, 2010               |  | 2,460,625      |   |  | $                            | 7.11  |                                                  | 5.09 |                                 | $ | 1,011
|Granted                                      |  | 13,500         |   |  | $                            | 4.01  |                                                  |      |                                 |   |      
|Exercised                                    |  | (21,460        | ) |  | $                            | 1.56  |                                                  |      |                                 |   |      
|Expired                                      |  |               |   |  | $                            |      |                                                  |      |                                 |   |      
|Forfeited                                    |  | (41,195        | ) |  | $                            | 3.38  |                                                  |      |                                 |   |      
|                                             |  |                |   |  |                              |       |                                                  |      |                                 |   |      
|Outstanding at April 3, 2010                 |  | 2,411,470      |   |  | $                            | 7.20  |                                                  | 4.82 |                                 | $ | 2,736
|                                             |  |                |   |  |                              |       |                                                  |      |                                 |   |      
|Vested and expected to vest at April 3, 2010 |  | 2,325,910      |   |  | $                            | 7.32  |                                                  | 4.59 |                                 | $ | 2,631
|                                             |  |                |   |  |                              |       |                                                  |      |                                 |   |      
|Exercisable at April 3, 2010                 |  | 1,243,998      |   |  | $                            | 10.44 |                                                  | 3.75 |                                 | $ | 1,021
|                                             |  |                |   |  |                              |       |                                                  |      |                                 |   |      

Approximately 121,000 immediately vested options were granted during the second quarter ended
January 2, 2010, representing an annual grant to the board of directors.

The total intrinsic value of stock options
exercised during the quarter and three quarters ended April 3, 2010 was approximately $0.1 million as compared to approximately zero for the quarter and three quarters ended March 28, 2009.

As of April 3, 2010, there was approximately $1.6 million of total unrecognized compensation cost, net of estimated forfeitures,
related to stock options granted under the plans. That cost is expected to be recognized over a remaining weighted-average period of approximately 2.7 years. Less than $0.1 million of compensation cost was capitalized in inventory for the quarters
ended April 3, 2010 and March 28, 2009. For the three quarters ended April 3, 2010 and March 28, 2009, approximately $0.1 million and less than $0.1 million was capitalized in inventory, respectively.



5



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##### Table of Contents

LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



Non-Vested Stock

The following table summarizes transactions related to non-vested stock for the quarter and three quarters ended April 3, 2010:



|                                    |  |                 |   |  |                                      |      
|----------------------------------- |  | --------------- | - |  | ------------------------------------ | -----
|                                    |  | Number ofShares |   |  | Weighted AverageGrant DateFair Value
|Non-vested stock at June 27, 2009   |  | 251,784         |   |  | $                                    | 10.47
|Granted                             |  |                |   |  | $                                    |     
|Vested                              |  | (35,816         | ) |  | $                                    | 12.32
|Forfeited                           |  | (2,608          | ) |  | $                                    | 11.53
|                                    |  |                 |   |  |                                      |      
|Non-vested stock at October 3, 2009 |  | 213,360         |   |  | $                                    | 10.14
|Granted                             |  | 47,702          |   |  | $                                    | 3.92 
|Vested                              |  | (81,451         | ) |  | $                                    | 8.08 
|Forfeited                           |  | (642            | ) |  | $                                    | 8.46 
|                                    |  |                 |   |  |                                      |      
|Non-vested stock at January 2, 2010 |  | 178,969         |   |  | $                                    | 9.43 
|Granted                             |  |                |   |  | $                                    |     
|Vested                              |  | (9,187          | ) |  | $                                    | 9.50 
|Forfeited                           |  | (2,993          | ) |  | $                                    | 9.28 
|                                    |  |                 |   |  |                                      |      
|Non-vested stock at April 3, 2010   |  | 166,789         |   |  | $                                    | 9.43 
|                                    |  |                 |   |  |                                      |      

Non-vested stock is included in the issued number of shares presented on the Consolidated Balance
Sheets. Non-vested stock is not included in the weighted average share calculation for basic earnings per share. However, the dilutive effect of the non-vested stock is included in the weighted average share calculation for diluted earnings per
share. Non-vested stock granted in the second quarter ended January 2, 2010 represents the annual grant of immediately vested awards for the board of directors.

As of April 3, 2010, there was approximately $1.0 million of total unrecognized compensation cost, net of estimated forfeitures,
related to non-vested stock granted under the plans. That cost is expected to be recognized over a remaining weighted-average period of approximately 1.4 years.

Employee Stock Purchase Plan (ESPP)

As of April 3, 2010 and June 27, 2009, there was approximately $0.1 million of liability classified share-based compensation
expense for the ESPP included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets.



6



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##### Table of Contents

LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



Cash Settled Stock Appreciation Rights (SARs)

The Company records compensation expense ratably over the service period and adjusts for changes in the fair value of SARs at each
reporting period. At April 3, 2010, there was approximately $3.8 million of unrecognized compensation cost, net of estimated forfeitures related to the SARs. That cost is expected to be recognized over a weighted average period of approximately
2.6 years.

The table below presents the assumptions used to remeasure the value of the SARs at each reporting period:



|                                                            |  |                            |  |                           
|----------------------------------------------------------- |  | -------------------------- |  | --------------------------
|                                                            |  | Quarter EndedApril 3, 2010 |  | Quarter EndedJune 27, 2009
|Expected holding period (years)                             |  | 3.8                        |  | 4.4                       
|Risk-free interest rate                                     |  | 1.87% - 2.11%              |  | 1.40% - 2.53%             
|Dividend yield                                              |  | 0.0%                       |  | 0.0%                      
|Expected volatility                                         |  | 57.67% -62.90%             |  | 56.91% -61.53%            
|Weighted average fair value of SARs granted and outstanding |  | $2.02                      |  | $1.12                     

The fair value of
the SARs is liability classified because the awards are payable in cash. As of April 3, 2010 and June 27, 2009, there was approximately $2.5 million and $0.7 million, respectively, of liability classified share-based compensation expense
for the SARs included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets.

Changes in the
Companys SARs for the quarter and three quarters ended April 3, 2010 are as follows:



|                                             |  |                 |  |                              |      |                                                  |      |                                |   |    
|-------------------------------------------- |  | --------------- |  | ---------------------------- | ---- | ------------------------------------------------ | ---- | ------------------------------ | - | ---
|                                             |  | Number ofShares |  | WeightedAverageExercisePrice |      | WeightedAverageRemainingContractualTerms (Years) |      | AggregateIntrinsic Value($000)
|Outstanding at June 27, 2009                 |  | 3,329,000       |  | $                            | 6.81 |                                                  |      |                                |   |    
|                                             |  |                 |  |                              |      |                                                  |      |                                |   |    
|Outstanding at October 3, 2009               |  | 3,329,000       |  | $                            | 6.81 |                                                  | 5.41 |                                | $ |   
|                                             |  |                 |  |                              |      |                                                  |      |                                |   |    
|Outstanding at January 2, 2010               |  | 3,329,000       |  | $                            | 6.81 |                                                  | 5.16 |                                | $ |   
|                                             |  |                 |  |                              |      |                                                  |      |                                |   |    
|Outstanding at April 3, 2010                 |  | 3,329,000       |  | $                            | 6.81 |                                                  | 4.91 |                                | $ | 973
|                                             |  |                 |  |                              |      |                                                  |      |                                |   |    
|Vested and expected to vest at April 3, 2010 |  | 3,203,892       |  | $                            | 6.83 |                                                  | 4.86 |                                | $ | 918
|                                             |  |                 |  |                              |      |                                                  |      |                                |   |    
|Exercisable at April 3, 2010                 |  | 742,000         |  | $                            | 7.87 |                                                  | 3.16 |                                | $ |   
|                                             |  |                 |  |                              |      |                                                  |      |                                |   |    



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##### Table of Contents

LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



3. 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.

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.

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. Revenues from oscilloscope products are
included in Test and measurement products in the Consolidated Statements of Operations, net of any applicable sales or value added taxes. Certain software is embedded in the Companys oscilloscopes, but the embedded software component is
considered incidental.

Software maintenance support revenue on protocol analyzer products is deferred based on its vendor
specific objective evidence of fair value (VSOE) and recognized ratably over the maintenance support periods. In limited circumstances where VSOE does not exist for software maintenance support, the Company recognizes revenues and
accrues costs, if applicable, by the facts and circumstances of each transaction. Revenues from protocol analyzer products are included in Test and measurement products in the Consolidated Statements of Operations, net of any applicable sales or
value added taxes.

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 offers customers an opportunity to enter into sales-type or direct financing leases for these products. Lease and rental revenues are reported within Test and measurement product revenue
and were approximately $0.1 million and $0.5 million for the quarter and three quarters ended April 3, 2010, respectively as compared to approximately $0.1 million and $0.3 million for the quarter and three quarters ended March 28, 2009,
respectively.

Service and other revenue

Service and other revenue includes extended warranty contracts, software maintenance agreements, repairs and calibrations performed on
instruments after the expiration of their normal warranty period, direct service accessories and packages and payments for research and development activities, in accordance with a third party agreement. The Company records deferred revenue for
extended warranty contracts, software maintenance agreements and calibration services and recognizes such revenue on a straight-line basis over the related service period. When arrangements include multiple elements, the Company uses relative fair
values to allocate revenue to the elements and recognizes revenue when the criteria for revenue recognition have been met for each element.

Effective in the first quarter of fiscal 2010, the Company entered into a research and development and distribution agreement with a
third party. Both the Company and the third party are active participants in the development efforts and are exposed to risks and rewards dependent on the commercial success of the product development. LeCroy is solely responsible for providing the
development efforts contemplated under the agreement and will retain all title and intellectual property rights for any product



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##### Table of Contents

LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



developed under the agreement. The Company will utilize its own personnel, facilities, equipment, computer software and information in order to meet the obligations under the agreement. The
payments owed by the third party are nonrefundable and are not based on milestone deliverables and are not tied directly to any development spending made by the Company. The Company recognized approximately $0.3 million and $0.8 million in other
revenue related to this agreement in the quarter and three quarters ended April 3, 2010, respectively. Revenue is being recognized ratably over the three year term of the agreement. Any research and development costs incurred in conjunction
with this arrangement are recognized as incurred.

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 on a straight-line basis 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.

4. Business Realignment and Restructuring Initiatives

Fiscal 2010 Business Realignment

In the third quarter of fiscal 2010, as a result of administrative changes, the Company recorded severance of approximately $0.2 million,
which was expensed to Selling, general and administrative (SG&A), resulting from a headcount reduction. As of April 3, 2010 approximately $0.2 remains in Accrued expenses and other current liabilities on the Consolidated Balance
Sheet. Severance is estimated to be paid by the end of the third quarter of fiscal 2011.

In the second quarter of fiscal 2010,
as a result of continued efforts to streamline expenses internationally, the Company recorded severance of approximately $0.1 million, which was expensed to SG&A. This resulted from headcount reduction of three employees or approximately 0.8% of
the workforce as compared to June 27, 2009. As of April 3, 2010, approximately $0.1 million has been paid in cash and no liability remains.

In the first quarter of fiscal 2010, as a result of a further effort to streamline expenses internationally, the Company recorded
severance of approximately $0.1 million, which was expensed to SG&A. This resulted from headcount reductions of four employees or approximately 1.0% of the workforce as compared to June 27, 2009. As of April 3, 2010, approximately $0.1
million has been paid in cash and no liability remains.

Fiscal 2009 Restructuring Initiatives

In the fourth quarter of fiscal 2009, as a result of the economic downturn and resulting business realignment decisions affecting
personnel in Europe, the Company vacated certain space at its Swiss facility. This resulted in a restructuring charge to SG&A expense of approximately $0.7 million, which represented the present value of the estimated future cash payments, net
of estimated subrental income and expense, through the remainder of the lease term which will expire in the first quarter of fiscal 2014. As of April 3, 2010, approximately $0.2 million remains in Accrued expenses and other current liabilities
and approximately $0.4 million remains in Deferred revenue and other non-current liabilities on the Consolidated Balance Sheet.

Fiscal 2009 Business Realignment

In the fourth quarter of fiscal 2009, in an effort to further streamline expenses in response to the economic environment, the Company
recorded severance of approximately $0.2 million, of which less than $0.1 million was expensed to Cost of revenues, approximately $0.1 million was expensed to SG&A and less than $0.1 million was expensed to Research and development. This
resulted from headcount reductions of twelve employees or approximately 2.6% of the workforce as compared to June 28, 2008. As of April 3, 2010, approximately $0.2 million has been paid in cash and no liability remains.

In the third quarter of fiscal 2009, in an effort to further streamline expenses in response to the dramatic deterioration in economic and
market conditions, the Company recorded severance of approximately $2.6 million, of which approximately $0.6 million was expensed to Cost of revenues, approximately $1.1 million was expensed to SG&A and approximately $0.9 million was expensed to
Research and development. This resulted from headcount reductions of sixty-two employees or approximately 13.6% of the workforce as compared to June 28, 2008. As of April 3, 2010, approximately $2.3 million has been paid in cash, and
approximately $0.2 million remains in Accrued expenses and other current liabilities and approximately $0.1 million remains in Deferred revenue and other non-current liabilities on the Consolidated Balance Sheet. Severance is estimated to be paid by
the end of the third quarter of fiscal 2012.



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##### Table of Contents

LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



In the second quarter of fiscal 2009, in an effort to streamline expenses in
anticipation of further deterioration in the economic environment, the Company recorded severance of approximately $1.5 million, of which approximately $0.1 million was expensed to Cost of revenues, approximately $0.8 million was expensed to
SG&A and approximately $0.6 million was expensed to Research and development. This resulted from headcount reductions of ten employees or 2.2% of the workforce as compared to June 28, 2008. As of April 3, 2010, approximately $1.5
million has been paid in cash and no liability remains.

5. Derivative Instruments and Fair Value

The Company is exposed to global market exchange rate risks and, as a result, enters into forward foreign exchange contracts to manage
financial exposures resulting from changes in foreign currency rates. These forward exchange agreements are 30-day forward contracts, which are monitored and updated on a monthly basis, and used to reduce exposure to fluctuation on foreign currency
exchange rates on assets and liabilities denominated in currencies other than the Companys functional currency. The Company does not use derivative financial instruments for trading or other speculative purposes.

The Companys forward contracts are not accounted for as hedges. The Company records these short-term forward exchange agreements on
the balance sheet at fair value in Other current assets and Accrued expenses and other current liabilities. The changes in the fair value are recognized in Other, net in the Consolidated Statement of Operations.

The effect of derivative instruments on the Consolidated Statement of Operations for the quarter and three quarters ended April 3,
2010 is as follows (in thousands):



|                                   |  |                                                           |  |                                                                                    |     |                                                                                           |   |    
|---------------------------------- |  | --------------------------------------------------------- |  | ---------------------------------------------------------------------------------- | --- | ----------------------------------------------------------------------------------------- | - | ---
|Derivatives                        |  | Location of Gain/(Loss)Recognized in Income onDerivatives |  | Quarter endedApril 3, 2010
Amount of Gain/(Loss)Recognized in Income onDerivatives |     | Three quarters endedApril 3, 2010
Amount of Gain/(Loss)Recognized in Income onDerivatives
|Foreign exchange forward contracts |  | Other, net                                                |  | $                                                                                  | 178 |                                                                                           | $ | 619

The net gains or losses
resulting from changes in the fair value of these derivatives, as presented above, combined with the net gains or losses resulting from transactions denominated in other than their functional currencies were approximately $0.1 million gain for the
quarter ended April 3, 2010 and approximately $0.2 million loss for the three quarters ended April 3, 2010, as compared to net gains of approximately $0.3 and $0.5 million for the quarter and three quarters ended March 28, 2009,
respectively.



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##### Table of Contents

LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



The U.S. dollar equivalent of outstanding forward foreign exchange contracts, all with
maturities of less than six months, is summarized below (in millions):



|                                |  |                                 |      |                                 |   |     
|------------------------------- |  | ------------------------------- | ---- | ------------------------------- | - | ----
|Contracts                       |  | Notional Amount atApril 3, 2010 |      | Notional Amount atJune 27, 2009
|Buy Swiss Francs for US Dollars |  | $                               | 8.8  |                                 | $ | 9.4 
|Buy Japanese Yen for US Dollars |  |                                 | 2.2  |                                 |   | 0.4 
|Sell Euros for US Dollars       |  |                                 | 3.5  |                                 |   | 3.1 
|Sell Euros for Swiss francs     |  |                                 | 2.3  |                                 |   | 3.2 
|Other foreign currency forwards |  |                                 | 1.1  |                                 |   | 1.4 
|                                |  |                                 |      |                                 |   |     
|Total                           |  | $                               | 17.9 |                                 | $ | 17.5
|                                |  |                                 |      |                                 |   |     

The fair value framework requires the categorization
of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment.
The three levels are defined as follows:



| |  |  | Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or
quoted prices for identical assets or liabilities in inactive markets.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3: Unobservable inputs reflecting managements own assumptions about the inputs used in pricing the asset or liability.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------

As of April 3, 2010, the fair values of the Companys financial assets and liabilities are
categorized as follows (in thousands):



|                                                |  |       |    |         |   |         |   |         |  |  
|----------------------------------------------- |  | ----- | -- | ------- | - | ------- | - | ------- |  | -
|                                                |  | Total |    | Level 1 |   | Level 2 |   | Level 3
|Other current assets:                           |  |       |    |         |   |         |   |         |  |  
|Foreign exchange forward contracts              |  | $     | 22 |         |  |         | $ | 22      |  | 
|Accrued expenses and other current liabilities: |  |       |    |         |   |         |   |         |  |  
|Foreign exchange forward contracts              |  | $     | 26 |         |  |         | $ | 26      |  | 

The fair
values above were based on observable market transactions of spot currency rates and forward currency prices. The net fair value of the open foreign exchange forward contracts is a net asset of almost zero at April 3, 2010 as compared to a net
asset of approximately $0.1 million at June 27, 2009.



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##### Table of Contents

LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



6. Comprehensive (Loss) Income



|                                          |  |               |      |   |                      |   |        |              |  |   |               |   |  |   |          |  
|----------------------------------------- |  | ------------- | ---- | - | -------------------- | - | ------ | ------------ |  | - | ------------- | - |  | - | -------- | -
|                                          |  | Quarter ended |      |   | Three quarters ended |  
|                                          |  | April 3,2010  |      |   | March 28,2009        |   |        | April 3,2010 |  |   | March 28,2009 |  
|Net income (loss) , as adjusted (Note 12) |  | $             | 330  |   |                      | $ | 1,565  |              |  | $ | (433          | ) |  | $ | (104,612 | )
|Foreign currency translation (loss) gain  |  |               | (346 | ) |                      |   | (1,278 | )            |  |   | 563           |   |  |   | (2,694   | )
|                                          |  |               |      |   |                      |   |        |              |  |   |               |   |  |   |          |  
|Comprehensive (loss) income               |  | $             | (16  | ) |                      | $ | 287    |              |  | $ | 130           |   |  | $ | (107,306 | )
|                                          |  |               |      |   |                      |   |        |              |  |   |               |   |  |   |          |  

7. Inventories, net

Inventories consist of the following (in thousands):



|                |  |              |        |              |   |       
|--------------- |  | ------------ | ------ | ------------ | - | ------
|                |  | April 3,2010 |        | June 27,2009
|Raw materials   |  | $            | 8,583  |              | $ | 8,351 
|Work in process |  |              | 7,031  |              |   | 6,590 
|Finished goods  |  |              | 15,051 |              |   | 20,046
|                |  |              |        |              |   |       
|Total           |  | $            | 30,665 |              | $ | 34,987
|                |  |              |        |              |   |       

The value of demonstration units included in finished
goods was approximately $10.1 million and $11.3 million at April 3, 2010 and June 27, 2009, 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 to its existing customer base.The allowance for excess and obsolete inventory included above, amounted to approximately $3.6 million and $5.8 million at April 3, 2010 and June 27, 2009, respectively.

8. Other Current Assets

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



|                           |  |              |        |              |   |       
|-------------------------- |  | ------------ | ------ | ------------ | - | ------
|                           |  | April 3,2010 |        | June 27,2009
|Deferred tax assets, net   |  | $            | 5,831  |              | $ | 6,399 
|Prepaid taxes              |  |              | 376    |              |   | 619   
|Prepaid deposits           |  |              | 832    |              |   | 729   
|Other receivables          |  |              | 1,269  |              |   | 776   
|Value-added tax receivable |  |              | 496    |              |   | 820   
|Other                      |  |              | 2,061  |              |   | 2,221 
|                           |  |              |        |              |   |       
|Total                      |  | $            | 10,865 |              | $ | 11,564
|                           |  |              |        |              |   |       



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##### Table of Contents

LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



9. Intangible Assets and Other Non-current Assets

Intangible Assets

The following table reflects the gross carrying amount and accumulated amortization of the Companys amortizable intangible assets
(in thousands):



|                                                  |  |                               |  |              |        |   |              |   |        |  
|------------------------------------------------- |  | ----------------------------- |  | ------------ | ------ | - | ------------ | - | ------ | -
|                                                  |  | OriginalWeightedAverage Lives |  | April 3,2010 |        |   | June 27,2009 |  
|Amortizable intangible assets:                    |  |                               |  |              |        |   |              |   |        |  
|Technology, manufacturing and distribution rights |  | 2.9 years                     |  | $            | 8,296  |   |              | $ | 8,296  |  
|Accumulated amortization                          |  |                               |  |              | (8,178 | ) |              |   | (8,147 | )
|                                                  |  |                               |  |              |        |   |              |   |        |  
|Net carrying amount                               |  |                               |  | $            | 118    |   |              | $ | 149    |  
|                                                  |  |                               |  |              |        |   |              |   |        |  
|Patents and other intangible assets               |  | 5.9 years                     |  |              | 1,592  |   |              |   | 1,592  |  
|Accumulated amortization                          |  |                               |  |              | (1,278 | ) |              |   | (1,239 | )
|                                                  |  |                               |  |              |        |   |              |   |        |  
|Net carrying amount                               |  |                               |  | $            | 314    |   |              | $ | 353    |  
|                                                  |  |                               |  |              |        |   |              |   |        |  
|Total Net carrying amount                         |  | 3.4 years                     |  | $            | 432    |   |              | $ | 502    |  
|                                                  |  |                               |  |              |        |   |              |   |        |  

Amortization expense for intangible assets, all with finite lives, was less than $0.1 million and
approximately $0.1 million for the quarter and three quarters ended April 3, 2010, as compared to approximately $0.1 million and $0.4 million for the quarter and three quarters ended March 28, 2009, respectively. The cost of an amortizable
intangible asset is expensed on a straight-line basis over the estimated economic life of the asset.

Other Non-Current
Assets

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



|                                                                     |  |              |       |              |   |      
|-------------------------------------------------------------------- |  | ------------ | ----- | ------------ | - | -----
|                                                                     |  | April 3,2010 |       | June 27,2009
|Deferred tax assets, net, as adjusted (Note 12)                      |  | $            | 6,553 |              | $ | 5,646
|Deferred financing costs on convertible notes, as adjusted (Note 12) |  |              | 475   |              |   | 784  
|Other                                                                |  |              | 738   |              |   | 756  
|                                                                     |  |              |       |              |   |      
|Total                                                                |  | $            | 7,766 |              | $ | 7,186
|                                                                     |  |              |       |              |   |      

The Company recorded a goodwill impairment charge of
approximately $105.8 million in the quarter ended December 27, 2008.

10. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):



|                                                  |  |              |        |              |   |       
|------------------------------------------------- |  | ------------ | ------ | ------------ | - | ------
|                                                  |  | April 3,2010 |        | June 27,2009
|Compensation and benefits, including severance    |  | $            | 6,889  |              | $ | 6,479 
|Income taxes                                      |  |              |       |              |   | 135   
|Warranty                                          |  |              | 851    |              |   | 905   
|Deferred revenue, current portion (a)             |  |              | 1,236  |              |   | 1,366 
|Accrued interest on debt                          |  |              | 858    |              |   | 447   
|Retained liabilities from discontinued operations |  |              | 160    |              |   | 160   
|Capital leases                                    |  |              | 131    |              |   | 253   
|Professional fees                                 |  |              | 445    |              |   | 896   
|Other current liabilities                         |  |              | 2,205  |              |   | 2,342 
|                                                  |  |              |        |              |   |       
|Total                                             |  | $            | 12,775 |              | $ | 12,983
|                                                  |  |              |        |              |   |       



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LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)





|(a) | The long term portion of Deferred revenue is approximately $0.8 million and $0.9 million for the period ended April 3, 2010 and June 27, 2009, respectively,
and is classified within Deferred revenues and other non-current liabilities on the Consolidated Balance Sheet.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11.
Warranties

The following table is a reconciliation of the changes in the Companys aggregate product warranty
liability (in thousands):



|                                                 |  |              |      |   |              |   |       |  
|------------------------------------------------ |  | ------------ | ---- | - | ------------ | - | ----- | -
|                                                 |  | April 3,2010 |      |   | June 27,2009 |  
|Balance at beginning of period                   |  | $            | 905  |   |              | $ | 1,313 |  
|Accruals for warranties issued during the period |  |              | 484  |   |              |   | 538   |  
|Warranty costs incurred during the period        |  |              | (538 | ) |              |   | (754  | )
|Change in accrual estimate                       |  |              |     |   |              |   | (192  | )
|                                                 |  |              |      |   |              |   |       |  
|Balance at end of period                         |  | $            | 851  |   |              | $ | 905   |  
|                                                 |  |              |      |   |              |   |       |  

12. Debt and Capital Leases

Credit Agreement

The Company has a $50.0 million senior, secured, four-year credit agreement which includes a $5.0 million swingline loan subfacility and a
$5.0 million letter of credit subfacility. The Credit Agreement will expire on July 15, 2011, unless, in the absence of any default it is extended by LeCroy to April 1, 2012, contingent on the waiver or extension of the first redemption
date of the Companys convertible notes. As of April 3, 2010, the Company had $20.0 million outstanding against the credit facility and zero outstanding against the letter of credit subfacility and the swingline loan subfacility.

Borrowings under the credit facility bear interest at variable rates equal to, at LeCroys election, (1) the higher
of (a) the prime rate or (b) the federal funds rate plus 0.5% plus an applicable margin based on LeCroys leverage ratio or (2) LIBOR plus an applicable margin based on LeCroys leverage ratio. In addition, LeCroy must pay
commitment fees during the term of the Credit Agreement at rates dependent on LeCroys leverage ratio.

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
April 3, 2010, the Company was in compliance with its financial covenants.

Convertible Debt

On October 12, 2006, the Company sold and issued $72.0 million in convertible senior subordinated notes to qualified
institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended (the Notes). The Notes bear interest at a rate of 4.00% per annum, payable in cash semi-annually in arrears on each April 15 and
October 15. The Notes are direct, unsecured, senior subordinated obligations of the Company and rank: (i) subordinate in right of payment to all of the Companys existing and future secured indebtedness; (ii) equal in right of
payment with all of the Companys existing and future senior unsecured indebtedness, and (iii) senior in right of payment to all of the Companys existing and future subordinated indebtedness. In connection with the issuance and sale
of the Notes, the Company entered into an indenture dated as of October 12, 2006, with U.S. Bank National Association as trustee. The terms of the Notes are governed by the indenture.

The Notes mature on October 15, 2026 unless earlier redeemed, repurchased or converted. Holders of the Notes will have the right to
require the Company to repurchase for cash, all or a portion of their Notes on each of October 15, 2011, October 15, 2016 and October 15, 2021, at a repurchase price equal to 100% of the principal amount of the Notes to be
repurchased plus accrued and unpaid interest, if any, up to but not including, the repurchase date. The Company may, from time to time, at its option repurchase the Notes in the open market. In addition, the Company may redeem the Notes for cash,
either in whole or in part, anytime after October 20, 2011 at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest, if any, up to but not including the redemption date. The Notes
are convertible into Company common stock by the holders at an initial conversion rate equal to 68.7285 shares per $1,000 principal amount of the Notes (equal to an initial conversion price of approximately $14.55 per share), subject to adjustment
as described in the indenture. Upon conversion, the Company will deliver for each $1,000 principal amount of Notes, an amount consisting of cash equal to the lesser of $1,000 and the conversion value (as defined in the indenture) and, to the extent
that the conversion value exceeds $1,000, at the Companys election, cash or shares of Company common stock in respect of the remainder. Prior to September 15, 2026, holders may convert their notes into cash and



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LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



shares of the Companys common stock, if any, at the applicable conversion rate, at their option, only under limited circumstances described in the indenture. On or after September 15,
2026, holders may convert their notes into cash and shares of the Companys common stock, if any, at the applicable conversion price, at the Companys option, at any time prior to the close of business on the business day immediately
preceding the maturity date. Upon conversion of each $1,000 principal amount of the notes, the holder will receive an amount in cash equal to the lesser of (i) $1,000 or (ii) the conversion value, as described in the indenture; if the
conversion value exceeds $1,000 on the conversion date, the Company will also deliver, at the Companys election, cash or common stock or combination of each with a value equal to such excess.

It is the Companys intention to repay the convertible notes in fiscal 2012 and the outstanding borrowings under the credit facility
maturing in fiscal 2012, though a combination of cash generated from operations and working capital, and repayment will also likely require future financing sources such as: (i) new secured bank debt; (ii) the sale or monetization of
certain assets; (iii) new unsecured debt; and (iv) issuance of equity and/or equity-like securities.

Accounting for Convertible Debt Instruments

During the first fiscal quarter of 2010, ending on October 3, 2009, LeCroy was required to adopt new accounting guidance which
requires issuers of certain types of convertible notes to separately account for the liability and equity components of such convertible notes in a manner that reflects the entitys nonconvertible debt borrowing rate when interest cost is
recognized in subsequent periods. Prior to adoption, the liability of the convertible notes was carried at its principal value and only the contractual interest expense was recognized in LeCroys Consolidated Statements of Operations. Because
the new guidance requires retrospective application, LeCroy was required to adjust all periods for which the convertible notes were outstanding prior to the date of adoption.

Upon adoption and effective as of the issuance date of the convertible notes, LeCroy recorded approximately $17.9 million of the
principal amount to equity, representing a debt discount for the difference between LeCroys estimated nonconvertible debt borrowing rate of 10.5% at the time and the 4.0% coupon rate of the convertible notes. This debt discount is amortized as
interest expense over the contractual term of the notes using the effective interest method. In addition, LeCroy allocated approximately $0.7 million of the issuance costs to the equity component of the convertible notes and approximately $2.3
million of the issuance costs to the debt component of the convertible notes. The issuance costs were allocated pro rata based on the initial allocation of debt and equity components. The approximate $2.3 million of debt issuance costs allocated to
the debt component is amortized as interest expense over the contractual term of the convertible notes using the effective interest method, while the portion allocated to the equity component was charged to Additional paid-in capital at issuance
date. The term of the convertible notes for amortization purposes is considered to be five years, as that is the first period in which the redemption feature of the notes can be executed by either the Noteholders or LeCroy and therefore is
considered the mandatory redemption date. As of April 3, 2010, approximately $0.5 million of unamortized fees related to the Notes was included in Other non-current assets on the Consolidated Balance Sheet.

The Company also retroactively applied the derecognition guidance. Upon repurchase, the fair value of the liability component immediately
prior to extinguishment was measured first and the difference between the fair value of the aggregate consideration paid and the fair value of the liability component was attributed to the reacquisition of the equity component.

Below is a summary of the Companys repurchases for the quarter and three quarters ended April 3, 2010 and March 28, 2009
(in thousands):



|                                                                        |  |               |       |                      |   |              |  |               |       |  |   |       
|----------------------------------------------------------------------- |  | ------------- | ----- | -------------------- | - | ------------ |  | ------------- | ----- |  | - | ------
|                                                                        |  | Quarter ended |       | Three quarters ended
|                                                                        |  | April 3,2010  |       | March 28,2009        |   | April 3,2010 |  | March 28,2009
|Face value repurchased                                                  |  | $             | 5,300 |                      | $ | 14,500       |  | $             | 8,700 |  | $ | 17,150
|Gain on extinguishment of convertible debt, net of issue cost write-off |  |               | 150   |                      |   | 8,597        |  |               | 761   |  |   | 8,889 



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LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



The carrying amount of the equity component of the convertible notes and the principal
amount, unamortized discount and net carrying amount of the liability component of the convertible notes as of April 3, 2010 and June 27, 2009 were as follows (in thousands):



|                                          |  |              |        |   |                           |   |        |  
|----------------------------------------- |  | ------------ | ------ | - | ------------------------- | - | ------ | -
|                                          |  | April 3,2010 |        |   | June 27,2009(As adjusted) |  
|Equity component of convertible notes     |  | $            | 8,492  |   |                           | $ | 8,849  |  
|                                          |  |              |        |   |                           |   |        |  
|Principal amount of convertible notes     |  | $            | 39,650 |   |                           | $ | 48,350 |  
|Unamortized discount of convertible notes |  |              | (3,578 | ) |                           |   | (6,277 | )
|                                          |  |              |        |   |                           |   |        |  
|Liability component of convertible notes  |  | $            | 36,072 |   |                           | $ | 42,073 |  
|                                          |  |              |        |   |                           |   |        |  

The effective interest rate, contractual interest expense and amortization of debt discount for the
convertible notes for the quarter and three quarters ended April 3, 2010 and March 28, 2009 were as follows:



|                              |  |                        |      |   |                                      |   |      |                        |  |   |                                      |   |  |   |       |  
|----------------------------- |  | ---------------------- | ---- | - | ------------------------------------ | - | ---- | ---------------------- |  | - | ------------------------------------ | - |  | - | ----- | -
|                              |  | Quarter ended          |      |   | Three quarters ended                 |  
|                              |  | April 3,2010(13 weeks) |      |   | March 28,2009(As adjusted)(13 weeks) |   |      | April 3,2010(40 weeks) |  |   | March 28,2009(As adjusted)(39 weeks) |  
|Effective interest rate       |  |                        | 10.5 | % |                                      |   | 10.5 | %                      |  |   | 10.5                                 | % |  |   | 10.5  | %
|(in thousands):               |  |                        |      |   |                                      |   |      |                        |  |   |                                      |   |  |   |       |  
|Interest expensecontractual  |  | $                      | 401  |   |                                      | $ | 509  |                        |  | $ | 1,371                                |   |  | $ | 1,821 |  
|Amortization of debt discount |  | $                      | 543  |   |                                      | $ | 743  |                        |  | $ | 1,753                                |   |  | $ | 2,262 |  



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LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



Retrospective Adoption

The retrospective adoption of the new convertible debt accounting guidance resulted in the following adjustments to the Companys
Consolidated Balance Sheet as of June 27, 2009:



|                                                   |  |                       |          |   |             |   |        |            |  |   |          |  
|-------------------------------------------------- |  | --------------------- | -------- | - | ----------- | - | ------ | ---------- |  | - | -------- | -
|                                                   |  | As of June 27, 2009   |         
|(in thousands):                                    |  | As PreviouslyReported |          |   | Adjustments |   |        | AsAdjusted | 
|Current assets                                     |  | $                     | 78,173   |   |             |   |        |            |  | $ | 78,173   |  
|Property, plant and equipment, net                 |  |                       | 21,817   |   |             |   |        |            |  |   | 21,817   |  
|Intangible assets, net                             |  |                       | 502      |   |             |   |        |            |  |   | 502      |  
|Other non-current assets                           |  |                       | 9,545    |   |             |   | (2,359 | )(1)       |  |   | 7,186    |  
|                                                   |  |                       |          |   |             |   |        |            |  |   |          |  
|Total assets                                       |  | $                     | 110,037  |   |             | $ | (2,359 | )          |  | $ | 107,678  |  
|                                                   |  |                       |          |   |             |   |        |            |  |   |          |  
|Current liabilities                                |  | $                     | 27,152   |   |             | $ |        |            |  | $ | 27,152   |  
|Long-term bank debt                                |  |                       | 17,500   |   |             |   |        |            |  |   | 17,500   |  
|Convertible notes, net of unamortized discount     |  |                       | 48,350   |   |             |   | (6,277 | )(2)       |  |   | 42,073   |  
|Deferred revenue and other non-current liabilities |  |                       | 3,635    |   |             |   |        |            |  |   | 3,635    |  
|                                                   |  |                       |          |   |             |   |        |            |  |   |          |  
|Total liabilities                                  |  |                       | 96,637   |   |             |   | (6,277 | )          |  |   | 90,360   |  
|Commitments and contingencies                      |  |                       |          |   |             |   |        |            |  |   |          |  
|Common stock                                       |  |                       | 129      |   |             |   |        |            |  |   | 129      |  
|Additional paid-in capital                         |  |                       | 117,055  |   |             |   | 8,849  | (3)        |  |   | 125,904  |  
|Accumulated other comprehensive income             |  |                       | 1,862    |   |             |   |        |            |  |   | 1,862    |  
|Accumulated deficit                                |  |                       | (102,548 | ) |             |   | (4,931 | )(4)       |  |   | (107,479 | )
|Treasury stock, at cost                            |  |                       | (3,098   | ) |             |   |        |            |  |   | (3,098   | )
|                                                   |  |                       |          |   |             |   |        |            |  |   |          |  
|Total stockholders equity                         |  |                       | 13,400   |   |             |   | 3,918  |            |  |   | 17,318   |  
|                                                   |  |                       |          |   |             |   |        |            |  |   |          |  
|Total liabilities and stockholders equity         |  | $                     | 110,037  |   |             | $ | (2,359 | )          |  | $ | 107,678  |  
|                                                   |  |                       |          |   |             |   |        |            |  |   |          |  

The retrospective adoption of the new convertible debt accounting guidance resulted in the following
adjustments to the Companys Consolidated Statements of Operations for the quarter ended March 28, 2009 (13 weeks):



|                                                                            |  |                              |        |   |             |       |      |            |   |        |  
|--------------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ----------- | ----- | ---- | ---------- | - | ------ | -
|                                                                            |  | Quarter ended March 28, 2009 |       
|(in thousands):                                                             |  | As PreviouslyReported        |        |   | Adjustments |       |      | AsAdjusted |  
|Total revenues                                                              |  | $                            | 26,923 |   |             |       |      |            | $ | 26,923 |  
|Costs and expenses                                                          |  |                              | 32,158 |   |             |       |      |            |   | 32,158 |  
|                                                                            |  |                              |        |   |             |       |      |            |   |        |  
|Operating loss                                                              |  |                              | (5,235 | ) |             |       |      |            |   | (5,235 | )
|Gain on the extinguishment of convertible debt, net of issue cost write-off |  |                              | 8,570  |   |             | 27    | (5)  |            |   | 8,597  |  
|Interest income                                                             |  |                              | 19     |   |             |       |      |            |   | 19     |  
|Interest expense                                                            |  |                              | (925   | ) |             | 29    | (6)  |            |   | (896   | )
|Amortization of debt discount on convertible notes                          |  |                              |       |   |             | (743  | )(7) |            |   | (743   | )
|Other, net                                                                  |  |                              | 242    |   |             |       |      |            |   | 242    |  
|                                                                            |  |                              |        |   |             |       |      |            |   |        |  
|Income before income taxes                                                  |  |                              | 2,671  |   |             | (687  | )    |            |   | 1,984  |  
|Provision for income taxes                                                  |  |                              | 663    |   |             | (244  | )(8) |            |   | 419    |  
|                                                                            |  |                              |        |   |             |       |      |            |   |        |  
|Net income                                                                  |  |                              | 2,008  |   |             | (443  | )    |            |   | 1,565  |  
|                                                                            |  |                              |        |   |             |       |      |            |   |        |  
|Net income per sharebasic                                                  |  | $                            | 0.17   |   |             | (0.04 | )    |            | $ | 0.13   |  
|Net income per sharediluted                                                |  | $                            | 0.17   |   |             | (0.04 | )    |            | $ | 0.13   |  



17



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LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



The retrospective adoption of the new convertible debt accounting guidance resulted in
the following adjustments to the Companys Consolidated Statements of Operations for the three quarters ended March 28, 2009 (39 weeks):



|                                                                            |  |                                     |          |   |             |        |      |            |   |          |  
|--------------------------------------------------------------------------- |  | ----------------------------------- | -------- | - | ----------- | ------ | ---- | ---------- | - | -------- | -
|                                                                            |  | Three quarters ended March 28, 2009 |         
|(in thousands):                                                             |  | As PreviouslyReported               |          |   | Adjustments |        |      | AsAdjusted |  
|Total revenues                                                              |  | $                                   | 106,754  |   |             |        |      |            | $ | 106,754  |  
|Costs and expenses                                                          |  |                                     | 216,491  |   |             |        |      |            |   | 216,491  |  
|                                                                            |  |                                     |          |   |             |        |      |            |   |          |  
|Operating loss                                                              |  |                                     | (109,737 | ) |             |        |      |            |   | (109,737 | )
|Gain on the extinguishment of convertible debt, net of issue cost write-off |  |                                     | 8,822    |   |             | 67     | (5)  |            |   | 8,889    |  
|Interest income                                                             |  |                                     | 80       |   |             |        |      |            |   | 80       |  
|Interest expense                                                            |  |                                     | (2,750   | ) |             | 88     | (6)  |            |   | (2,662   | )
|Amortization of debt discount on convertible notes                          |  |                                     |         |   |             | (2,262 | )(7) |            |   | (2,262   | )
|Other, net                                                                  |  |                                     | 531      |   |             |        |      |            |   | 531      |  
|                                                                            |  |                                     |          |   |             |        |      |            |   |          |  
|Loss before income taxes                                                    |  |                                     | (103,054 | ) |             | (2,107 | )    |            |   | (105,161 | )
|Provision (benefit) for income taxes                                        |  |                                     | 199      |   |             | (748   | )(8) |            |   | (549     | )
|                                                                            |  |                                     |          |   |             |        |      |            |   |          |  
|Net loss                                                                    |  |                                     | (103,253 | ) |             | (1,359 | )    |            |   | (104,612 | )
|                                                                            |  |                                     |          |   |             |        |      |            |   |          |  
|Net loss per share - basic                                                  |  | $                                   | (8.63    | ) |             | (0.12  | )    |            | $ | (8.75    | )
|Net loss per share - diluted                                                |  | $                                   | (8.63    | ) |             | (0.12  | )    |            | $ | (8.75    | )



|(1) | This amount represents the cumulative adjustments to debt issuance costs associated with the convertible notes and the cumulative impact on the net deferred tax asset
related to the amortization of the debt discount.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | This amount represents the remaining unamortized debt discount on the convertible notes.
|--- | ----------------------------------------------------------------------------------------

|(3) | This amount represents the equity component of the convertible notes, net of tax adjustments, due to the amortization of the debt discount.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------

|(4) | This amount represents the cumulative net income impact of the amortization of debt discount, the adjustment to the gain on the extinguishment of convertible debt, net
of issue cost write-off (see explanation (6) below) and the associated tax adjustments since inception of the convertible notes.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | This amount represents the adjustment to the gain on the extinguishments of debt, net of issue cost write-off in accordance with the derecognition guidance.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | This amount represents a decrease in interest expense associated with the debt issuance costs, as a portion was written-off to Additional paid-in capital at issue date
and a portion is written off at each extinguishment date.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | This amount represents the amortization of the debt discount.
|--- | -------------------------------------------------------------

|(8) | This amount represents the tax effect of the amortization of the debt discount, debt issuance costs and gain on extinguishment of debt, net of issue cost write-off.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

LeCroys retrospective adoption does not affect LeCroys balance of Cash and cash equivalents and as
a result did not change its Net cash flows from operating, investing or financing activities in its Consolidated Statement of Cash Flows for the three quarters ended March 28, 2009.



18



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LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



The retrospective adoption resulted in the following adjustments to our Consolidated
Statements of Stockholders Equity:



|                                                                                                                                                                                        |  |                            |         |   |                                       |   |          |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------- | - | ------------------------------------- | - | -------- | -
|(in thousands)                                                                                                                                                                          |  | Additional 
Paid-InCapital |         |   | Retained Earnings(AccumulatedDeficit) |  
|Balance at June 30, 2007, as reported                                                                                                                                                   |  | $                          | 108,713 |   |                                       | $ | 2,486    |  
|Equity component of convertible notes                                                                                                                                                   |  |                            | 17,929  |   |                                       |   |          |  
|Equity component of debt issuance costs                                                                                                                                                 |  |                            | (748    | ) |                                       |   |          |  
|Amortization of debt discount                                                                                                                                                           |  |                            |         |   |                                       |   | (2,077   | )
|Amortization of debt issuance costs, net of reversal of previously recorded amortization of debt issuance costs                                                                         |  |                            |         |   |                                       |   | 97       |  
|Tax adjustments                                                                                                                                                                         |  |                            | (6,099  | ) |                                       |   | 703      |  
|                                                                                                                                                                                        |  |                            |         |   |                                       |   |          |  
|Balance at June 30, 2007, as adjusted                                                                                                                                                   |  |                            | 119,795 |   |                                       |   | 1,209    |  
|Fiscal 2008 equity activity, as reported                                                                                                                                                |  |                            | 4,980   |   |                                       |   | 1,616    |  
|Reacquisition of conversion option                                                                                                                                                      |  |                            | (739    | ) |                                       |   |          |  
|Amortization of debt discount                                                                                                                                                           |  |                            |         |   |                                       |   | (3,083   | )
|Amortization of debt issuance costs, net of reversal of previously recorded amortization of debt issuance costs                                                                         |  |                            |         |   |                                       |   | 203      |  
|Gain on extinguishment of convertible debt, net of issue cost write-off, net of reversal of previously recorded gain on
extinguishment of convertible debt, net of issue cost write-off |  |                            |         |   |                                       |   | (46      | )
|Tax adjustments                                                                                                                                                                         |  |                            | 262     |   |                                       |   | 1,039    |  
|                                                                                                                                                                                        |  |                            |         |   |                                       |   |          |  
|Balance at June 28, 2008, as adjusted                                                                                                                                                   |  |                            | 124,298 |   |                                       |   | 938      |  
|Fiscal 2009 equity activity, as reported                                                                                                                                                |  |                            | 3,362   |   |                                       |   | (106,650 | )
|Reacquisition of conversion option                                                                                                                                                      |  |                            | (2,722  | ) |                                       |   |          |  
|Amortization of debt discount                                                                                                                                                           |  |                            |         |   |                                       |   | (2,872   | )
|Amortization of debt issuance costs, net of reversal of previously recorded amortization of debt issuance costs                                                                         |  |                            |         |   |                                       |   | 111      |  
|Gain on extinguishment of convertible debt, net of issue cost write-off, net of reversal of previously recorded gain on
extinguishment of convertible debt, net of issue cost write-off |  |                            |         |   |                                       |   | 21       |  
|Tax adjustments                                                                                                                                                                         |  |                            | 966     |   |                                       |   | 973      |  
|                                                                                                                                                                                        |  |                            |         |   |                                       |   |          |  
|Balance at June 27, 2009, as adjusted                                                                                                                                                   |  | $                          | 125,904 |   |                                       | $ | (107,479 | )
|                                                                                                                                                                                        |  |                            |         |   |                                       |   |          |  



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LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



Upon the adoption of the new convertible debt accounting guidance and effective as of
the issuance date of the convertible notes, LeCroy recorded, as adjustments to additional paid-in capital, deferred taxes for the differences between the carrying value and tax basis that resulted from allocating approximately $17.9 million of the
principal amount of convertible notes and approximately $0.7 million of the associated issuance costs to equity. In subsequent periods, the Company recorded adjustments to the deferred taxes to reflect the tax effect of the amortization of the debt
discount, debt issuance costs and gains on the extinguishments of convertible notes, net of issue cost write-offs.

Other

During fiscal 2008, the Company acquired a software license under a capital lease agreement for approximately $0.7 million. The lease
bears interest at 7.75% with a three-year term. As of April 3, 2010, the Companys outstanding balance under this agreement was approximately $0.1 million, included in Accrued expenses and other current liabilities on the Consolidated
Balance Sheet.

The Companys Swiss subsidiary has an overdraft facility totaling 1.0 million Swiss francs for which
approximately 0.4 million Swiss francs are being held against supplier obligations, leaving an available balance of 0.6 million Swiss francs under this facility at April 3, 2010. The outstanding balance under this facility remains
unchanged from June 27, 2009.

13. Commitments and Contingencies

The Companys contractual obligations and commitments include obligations associated with employee severance agreements, supplier
agreements, operating leases, capital leases, revolving credit and convertible note obligations, as set forth in the Contractual Obligations and Other Commitments table in the Managements Discussion and Analysis of Financial Condition and
Results of Operations (MD&A). The Company expensed approximately $0.6 million and $1.8 million related to operating leases for the quarter and three quarters ended April 3, 2010, respectively, and approximately $0.6 million and
$2.0 million for the quarter and three quarters ended March 28, 2009, respectively.

From time to time, the Company is
involved in lawsuits, claims, investigations and proceedings, including, but not limited to, patent, commercial and environmental matters which arise in the ordinary course of business. There are no matters currently pending that the Company expects
to have a material adverse affect on its business, results of operations, financial condition or cash flows.

14. Net Income (Loss) Per
Common Share (EPS)

The following is a presentation of the numerators and the denominators of the basic and diluted net
loss per common share computations for the quarter and three quarters ended April 3, 2010 and March 28, 2009:



|                                         |  |                          |        |                      |   |                        |  |   |                         |   |  |   |          |  
|---------------------------------------- |  | ------------------------ | ------ | -------------------- | - | ---------------------- |  | - | ----------------------- | - |  | - | -------- | -
|                                         |  | Quarter ended (13 weeks) |        | Three quarters ended |  
|                                         |  | April 3,2010             |        | March 28,2009        |   | April 3,2010(40 weeks) |  |   | March 28,2009(39 weeks) |  
|Numerator:                               |  |                          |        |                      |   |                        |  |   |                         |   |  |   |          |  
|Net income (loss), as adjusted (Note 12) |  | $                        | 330    |                      | $ | 1,565                  |  | $ | (433                    | ) |  | $ | (104,612 | )
|                                         |  |                          |        |                      |   |                        |  |   |                         |   |  |   |          |  
|Denominator:                             |  |                          |        |                      |   |                        |  |   |                         |   |  |   |          |  
|Weighted average shares outstanding:     |  |                          |        |                      |   |                        |  |   |                         |   |  |   |          |  
|Basic                                    |  |                          | 12,476 |                      |   | 12,037                 |  |   | 12,373                  |   |  |   | 11,960   |  
|Employee stock options and other         |  |                          | 202    |                      |   | 61                     |  |   |                        |   |  |   |         |  
|                                         |  |                          |        |                      |   |                        |  |   |                         |   |  |   |          |  
|Diluted                                  |  |                          | 12,678 |                      |   | 12,098                 |  |   | 12,373                  |   |  |   | 11,960   |  
|                                         |  |                          |        |                      |   |                        |  |   |                         |   |  |   |          |  

The computations of diluted EPS for the quarters ended April 3, 2010 and March 28, 2009 do not
include approximately 2.0 million and 2.2 million, respectively, of stock options and non-vested stock, as the effect of their inclusion would have been anti-dilutive to EPS. The computations of diluted EPS for the three quarters ended
April 3, 2010 and March 28, 2009 do not include approximately 2.1 million and 1.3 million, respectively, of stock options and non-vested stock, as the effect of their inclusion would have been anti-dilutive to EPS. Additionally,
the convertible notes had no impact on the diluted EPS calculations because the average share price during the periods was below $14.55 per share (the initial conversion price), and accordingly, the Notes, if converted, would have required only cash
at settlement.



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LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



15. Treasury Stock

On May 25, 2006, the Companys Board of Directors approved the adoption of a share repurchase plan authorizing the Company to
purchase up to 2.0 million shares, not to exceed $25.0 million, of its common stock for treasury. During fiscal 2009 and 2008, the Company purchased 403,215 shares for a total consideration of approximately $3.1 million. During the quarter
ended April 3, 2010, the Company retired these shares of its treasury stock.

16. Income Taxes

The Company calculates income tax expense based upon an annual effective tax rate forecast, including estimates and assumptions that could
change during the year. The differences between the effective tax rate and the U.S. federal statutory rate of 35% principally result from the Companys geographical distribution of taxable income and differences between the book and tax
treatment of certain items.

The effective income tax rate for the quarter and three quarters ended April 3, 2010 was
423.5% and 43.6%, respectively, compared to an effective income tax rate of 21.1% and 0.5% for the quarter and three quarters ended March 28, 2009, respectively. The effective tax rate for the three quarters ended April 3, 2010 includes
the write-off of deferred tax assets related to equity-based compensation of approximately $0.2 million and a reduction of tax expense of approximately $0.5 million from the recognition of unrecognized tax benefits due to the expiration of the
statute of limitations. The effective income tax rate for the three quarters ended March 28, 2009 includes: the effect of non-deductible goodwill impairment charges of approximately $103.8 million; the write-off of a deferred tax asset related
to equity-based compensation of approximately $0.4 million; partially offset by a reduction of tax expense of approximately $0.2 million related to a retroactive reinstatement of the federal research and development tax credit as a result of the
Emergency Economic Stabilization Act of 2008, passed into law on October 3, 2008; and a reduction of tax expense of approximately $0.3 million related to the recognition of unrecognized tax benefits due to the expiration of the statute of
limitations.

At April 3, 2010, the Companys net domestic deferred tax assets amounted to approximately $12.3
million. Management has considered the realizability of the deferred tax assets and has concluded that a domestic valuation allowance of approximately $1.4 million should be recorded, mainly related to certain state investment tax credit
carryforwards that are not anticipated to be realized. Although management determined that a valuation allowance was not required with respect to most of the net domestic deferred tax assets, recovery is primarily dependent on achieving the forecast
of future operating income, as well as prudent tax planning strategies. Based upon the projections, the domestic net operating loss carryforwards and federal tax credit carryforwards would be fully utilized before expiration.

The Company operates in multiple taxing jurisdictions, both within the United States and outside of the United States, and faces audits
from various tax authorities regarding the deductibility of certain expenses, intercompany transactions, as well as other matters. At April 3, 2010, the total amount of liability for unrecognized tax benefits related to federal, state and
foreign taxes and accrued interest was approximately $10.4 million, approximately $1.6 million are reflected as a non-current liability and approximately $8.8 million are reflected as a reduction of gross deferred tax assets, all of which would
impact the effective tax rate, if recognized.

The Company believes it is reasonably possible that approximately $0.1 million
of net unrecognized tax benefits will be recognized during the next twelve months and impact the Companys effective tax rate. However, actual results could differ from those currently anticipated.

The Company recognizes interest and, if applicable, penalties which could be assessed related to unrecognized tax benefits in income tax
expense. As of April 3, 2010, the total amount of accrued interest and penalties, before federal and, if applicable, state effect, was approximately $0.1 million.

The Company files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. For federal income
tax purposes, fiscal 2007 through 2009 tax years remain open for examination by the tax authorities under the normal three year statute of limitations. For state tax purposes, (principally California and New York) fiscal 2006 through 2009 tax years
remain open for examination by the tax authorities under a four year statute of limitations.



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LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



17. Geographic Revenue and Assets

The Company operates in a single-reportable 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. Revenue from the sale of the Companys products, which are similar in nature, are reflected as Test and measurement product revenue in the Consolidated
Statements of Operations.

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



|                   |  |                          |        |                      |   |                        |  |                         |        |  |   |        
|------------------ |  | ------------------------ | ------ | -------------------- | - | ---------------------- |  | ----------------------- | ------ |  | - | -------
|                   |  | Quarter Ended (13 weeks) |        | Three Quarters Ended
|                   |  | April 3,2010             |        | March 28,2009        |   | April 3,2010(40 weeks) |  | March 28,2009(39 weeks)
|North America      |  | $                        | 16,148 |                      | $ | 7,365                  |  | $                       | 42,764 |  | $ | 30,335 
|Europe/Middle East |  |                          | 11,057 |                      |   | 11,933                 |  |                         | 30,969 |  |   | 44,201 
|Asia/Pacific       |  |                          | 6,378  |                      |   | 7,625                  |  |                         | 18,849 |  |   | 32,218 
|                   |  |                          |        |                      |   |                        |  |                         |        |  |   |        
|Total revenues     |  | $                        | 33,583 |                      | $ | 26,923                 |  | $                       | 92,582 |  | $ | 106,754
|                   |  |                          |        |                      |   |                        |  |                         |        |  |   |        

Total assets by geographic area are as follows:



|                   |  |              |         |              |   |        
|------------------ |  | ------------ | ------- | ------------ | - | -------
|                   |  | April 3,2010 |         | June 27,2009
|North America      |  | $            | 86,989  |              | $ | 91,597 
|Europe/Middle East |  |              | 10,925  |              |   | 11,169 
|Asia/Pacific       |  |              | 6,296   |              |   | 4,912  
|                   |  |              |         |              |   |        
|Total assets       |  | $            | 104,210 |              | $ | 107,678
|                   |  |              |         |              |   |        

Total Property, plant and equipment, net by geographic
area are as follows:



|                        |  |              |        |              |   |       
|----------------------- |  | ------------ | ------ | ------------ | - | ------
|                        |  | April 3,2010 |        | June 27,2009
|North America           |  | $            | 19,325 |              | $ | 20,795
|Europe/Middle East      |  |              | 475    |              |   | 644   
|Asia/Pacific            |  |              | 450    |              |   | 378   
|                        |  |              |        |              |   |       
|Total long-lived assets |  | $            | 20,250 |              | $ | 21,817
|                        |  |              |        |              |   |       



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LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



18. New Accounting Pronouncements

Recent pronouncements adopted

In September 2006, FASB issued new accounting guidance on fair value measurements, effective beginning in fiscal 2009. This guidance
establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. The FASB deferred the effective date until the beginning of the Companys 2010 fiscal year, as it relates to fair value
measurement requirements for non-financial assets and liabilities that are not remeasured at fair value on a recurring basis. This includes fair value calculated in impairment assessments of long-lived assets. The Company adopted the new guidance as
it relates to non-financial assets and liabilities and it did not have any impact on the Companys consolidated financial position and results of operations at the date of adoption, although it may impact the way that fair value for
non-financial assets and liabilities is determined in future periods.

In December 2007, the FASB issued new guidance on
business combinations. It established the principles and requirements for how an acquirer in a business combination recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree at the acquisition date fair value. Further, it required that acquisition-related costs be expensed as incurred, restructuring costs be expensed in periods subsequent to the acquisition date and changes in accounting for
deferred income tax asset valuation allowances and acquired income tax uncertainties after the measurement period be included in income tax expense. Additionally, disclosure requirements were established to enable users of the financial statements
to evaluate the nature and financial effects of the business combination. The new accounting guidance applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period
beginning on or after December 15, 2008, with the exception of adjustments made to valuation allowances on deferred taxes and acquired tax contingencies. The Company will apply the provisions under the new guidance to future adjustments made to
valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the beginning of the Companys 2010 fiscal year. At April 3, 2010, approximately $2.5 million of unrecognized tax
benefits are related to a prior acquisition and would impact the effective tax rate, if recognized.

In May 2008, the FASB
issued a staff position on new accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement). The staff position requires cash settled convertible debt to be separated into debt and
equity components at issuance and a value to be assigned to each. The value assigned to the debt component will be the estimated fair value, as of the issuance date, of a similar bond without the conversion feature. The difference between the cash
proceeds and this estimated fair value will be recorded as a debt discount, with an offset to equity, and will be amortized to interest expense, using the effective interest method, over the life of the convertible notes. The guidance was effective
for financial statements issued for fiscal years beginning after December 15, 2008 and for interim periods within those years and required retrospective application. The Company adopted the staff position in fiscal 2010 and has retrospectively
applied it to prior periods (See Note 12  Debt and Capital Leases for additional information).

In April
2009, the FASB issued a staff position requiring fair value disclosures in both interim as well as annual financial statements in order to provide more timely information about the effects of current market conditions on financial instruments. The
guidance was effective for interim reporting periods ending after June 15, 2009. The Company adopted the enhanced disclosures required in the first quarter of fiscal 2010 and adoption did not have any impact on the Companys consolidated
financial position or results of operations.

In June 2009, the FASB Accounting Standards Codification
(Codification) was issued. The Codification is the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. The Codification does not change U.S. GAAP; instead, it introduces a new structure
that is organized in an easily accessible, user-friendly online research system. The Codification, which changes the referencing of financial standards, becomes effective for interim and annual periods ending on or after September 15, 2009. The
implementation of the Codification did not have any impact on the Companys consolidated financial position or results of operations.



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LeCROY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)



Recent pronouncement not yet adopted

In October 2009, the FASB issued amendments to the accounting and disclosure for revenue recognition. These amendments, effective for
fiscal years beginning on or after June 15, 2010, modify the criteria for recognizing revenue in multiple element arrangements and the scope of what constitutes a non-software deliverable. Early adoption is permitted. The Company is currently
assessing the impact on its consolidated financial position and results of operations.

19. Subsequent Events

Management has evaluated events and transactions subsequent to April 3, 2010 and has determined that no additional disclosures are
required.



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|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

This Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in
conjunction with the audited Consolidated Financial Statements, Notes, MD&A and Risk Factors included in our Annual Report filed on Form 10-K for the fiscal year ended June 27, 2009. Our discussion and analysis is an integral part of
understanding our financial results. Also refer to Basis of Presentation and Use of Estimates in the Notes to the Consolidated Financial Statements.

Our Critical Accounting Policies and Estimates

The preparation of our Consolidated Financial Statements in conformity with U.S. Generally Accepted Accounting Principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the Consolidated Financial Statements and accompanying
notes. These estimates and assumptions are based on managements judgment and available information and, consequently, actual results could differ from these estimates.

The accounting policies that we believe are the most critical to understanding and evaluating our reported financial results include:
revenue recognition; reserves on accounts receivable; allowance for excess and obsolete inventory; uncertain tax positions; valuation of deferred tax assets; the effective income tax rate and geographical distribution of taxable income; valuation of
long-lived assets; share-based compensation expense; estimation of warranty liabilities and the separation of convertible notes between debt and equity.

We recorded a goodwill impairment charge of approximately $105.8 million in the three quarters ended March 28, 2009.

Fiscal Year

Our fiscal years end on the Saturday closest to June 30, resulting in an extra week of results every five or six years. Fiscal 2010
is a fifty-three week year and, as a result, the three quarters ended April 3, 2010 represented a 40-week period compared to a 39-week period for the three quarters ended March 28, 2009.

Business Realignment Initiatives

In the first quarter of fiscal 2010, as a result of a further effort to streamline expenses internationally, we recorded severance of
approximately $0.1 million, which was expensed to Selling, general and administrative (SG&A) . This resulted from headcount reductions of four employees or approximately 1.0% of the workforce as compared to June 27, 2009.

In the second quarter of fiscal 2010, as a result of a continued effort to streamline expenses internationally, we recorded
severance of approximately $0.1 million, which was expensed to SG&A. This resulted from headcount reductions of three employees or approximately 0.8% of the workforce as compared to June 27, 2009.

In the third quarter of fiscal 2010, as a result of administrative changes, we recorded severance of approximately $0.2 million, which was
expensed to SG&A for a headcount reduction.

Our Business Risks

Our results of operations and financial position are affected by a variety of factors. 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 Computer/Semiconductor/Consumer Electronics, Data Storage, Automotive/Industrial, and Military/Aerospace industries.

Recent Accounting Pronouncements

See Note 18 New Accounting Pronouncements for additional information on recent pronouncements adopted and not yet adopted.
Currently we have not adopted the new accounting guidance on revenue recognition effective for fiscal years beginning on or after June 15, 2010, which permits early adoption.

In May 2008, the FASB issued a staff position on new accounting for convertible debt instruments that may be settled in cash upon
conversion (including partial cash settlement). The staff position requires cash settled convertible debt to be separated into debt and equity components at issuance and a value to be assigned to each. The value assigned to the debt component will
be the estimated fair value, as of the issuance date, of a similar bond without the conversion feature. The difference between the cash proceeds and this estimated fair value will be recorded as a debt discount, with an offset to equity, and will be
amortized to interest expense, using the effective interest method, over the life of the convertible notes.



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The guidance was effective for financial statements issued for fiscal years beginning after
December 15, 2008 and for interim periods within those years and required retrospective application. We adopted the staff position in fiscal 2010 and have retrospectively applied it to prior periods. See Note 12Debt and Capital
Leases for additional information.

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 quarter and three quarters ended April 3, 2010 and March 28, 2009.



|                                                                        |              |                          |   |                            |                      |   |                        |       |    |                                      |        |   
|----------------------------------------------------------------------- | ------------ | ------------------------ | - | -------------------------- | -------------------- | - | ---------------------- | ----- | -- | ------------------------------------ | ------ | --
|(Unaudited)                                                             |              | Quarter ended (13 weeks) |   |                            | Three quarters ended |  
|                                                                        | April 3,2010 |                          |   | March 28,2009(as adjusted) |                      |   | April 3,2010(40 weeks) |       |    | March 28,2009(39 weeks)(as adjusted) |       
|Revenues:                                                               |              |                          |   |                            |                      |   |                        |       |    |                                      |        |   
|Test and measurement products                                           |              | 92.8                     | % |                            | 91.8                 | % |                        | 92.2  | %  |                                      | 93.8   | % 
|Service and other                                                       |              | 7.2                      |   |                            | 8.2                  |   |                        | 7.8   |    |                                      | 6.2    |   
|                                                                        |              |                          |   |                            |                      |   |                        |       |    |                                      |        |   
|Total revenues                                                          |              | 100.0                    |   |                            | 100.0                |   |                        | 100.0 |    |                                      | 100.0  |   
|Cost of revenues                                                        |              | 40.2                     |   |                            | 46.9                 |   |                        | 41.8  |    |                                      | 46.0   |   
|                                                                        |              |                          |   |                            |                      |   |                        |       |    |                                      |        |   
|Gross profit                                                            |              | 59.8                     |   |                            | 53.1                 |   |                        | 58.2  |    |                                      | 54.0   |   
|Operating expenses:                                                     |              |                          |   |                            |                      |   |                        |       |    |                                      |        |   
|Selling, general and administrative                                     |              | 35.4                     |   |                            | 42.2                 |   |                        | 33.4  |    |                                      | 34.4   |   
|Research and development                                                |              | 21.5                     |   |                            | 30.4                 |   |                        | 21.8  |    |                                      | 23.2   |   
|Impairment of goodwill                                                  |              |                         |   |                            |                     |   |                        |      |    |                                      | 99.1   |   
|                                                                        |              |                          |   |                            |                      |   |                        |       |    |                                      |        |   
|Total operating expenses                                                |              | 56.9                     |   |                            | 72.6                 |   |                        | 55.2  |    |                                      | 156.7  |   
|Operating income (loss)                                                 |              | 2.9                      |   |                            | (19.5                | ) |                        | 3.0   |    |                                      | (102.7 | ) 
|Other income (expense):                                                 |              |                          |   |                            |                      |   |                        |       |    |                                      |        |   
|Gain on extinguishment of convertible debt, net of issue cost write-off |              | 0.4                      |   |                            | 31.9                 |   |                        | 0.8   |    |                                      | 8.3    |   
|Interest income                                                         |              |                         |   |                            | 0.1                  |   |                        |      |    |                                      | 0.1    |   
|Interest expense                                                        |              | (2.3                     | ) |                            | (3.3                 | ) |                        | (2.6  | )  |                                      | (2.5   | ) 
|Amortization of debt discount                                           |              | (1.6                     | ) |                            | (2.8                 | ) |                        | (1.9  | )  |                                      | (2.1   | ) 
|Other, net                                                              |              | 0.3                      |   |                            | 1.0                  |   |                        | (0.2  | )  |                                      | 0.4    |   
|                                                                        |              |                          |   |                            |                      |   |                        |       |    |                                      |        |   
|Other (expense) income, net                                             |              | (3.2                     | ) |                            | 26.9                 |   |                        | (3.9  | )  |                                      | 4.2    |   
|(Loss) income before income taxes                                       |              | (0.3                     | ) |                            | 7.4                  |   |                        | (0.9  | )  |                                      | (98.5  | ) 
|(Benefit) provision for income taxes                                    |              | (1.3                     | ) |                            | 1.6                  |   |                        | (0.4  | )  |                                      | (0.5   | ) 
|                                                                        |              |                          |   |                            |                      |   |                        |       |    |                                      |        |   
|Net income (loss)                                                       |              | 1.0                      | % |                            | 5.8                  | % |                        | (0.5  | )% |                                      | (98.0  | )%
|                                                                        |              |                          |   |                            |                      |   |                        |       |    |                                      |        |   

Comparison of the Quarter Ended April 3, 2010 and March 28, 2009

Total revenues were approximately $33.6 million for the quarter ended April 3, 2010, compared to $26.9 million for the comparable
prior year period, representing an increase of approximately 24.7%, or $6.7 million, primarily as a result of an increase in sales of Test and measurement products. We benefited from increased demand early in the quarter as our customers received
approval for capital spending projects that were postponed during the economic downturn. This demand and increased volume was driven by our high-end oscilloscopes and protocol products and continued through the quarter as confidence in the economic
recovery improved. Foreign currency fluctuations favorably impacted revenue by approximately $1.0 million.

Service and other
revenues consist primarily of service revenue and maintenance fees. Service and other revenues were approximately $2.4 million for the quarter ended April 3, 2010, representing an increase of approximately 10.7% or $0.2 million, compared to
approximately $2.2 million for the comparable prior year period. The increase was primarily the result of revenue earned from a research and development arrangement entered into in the first quarter of fiscal 2010.



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Revenues by geographic location expressed in dollars (in thousands) and as a percentage of
total were:



|                   |  |                           |        |            |       |   |                            |   |            |  |       |  
|------------------ |  | ------------------------- | ------ | ---------- | ----- | - | -------------------------- | - | ---------- |  | ----- | -
|                   |  | Quarter EndedApril 3,2010 |        | percentage |       |   | Quarter EndedMarch 28,2009 |   | percentage | 
|North America      |  | $                         | 16,148 |            | 48.1  | % |                            | $ | 7,365      |  | 27.4  | %
|Europe/Middle East |  |                           | 11,057 |            | 32.9  |   |                            |   | 11,933     |  | 44.3  |  
|Asia/Pacific       |  |                           | 6,378  |            | 19.0  |   |                            |   | 7,625      |  | 28.3  |  
|                   |  |                           |        |            |       |   |                            |   |            |  |       |  
|Total revenues     |  | $                         | 33,583 |            | 100.0 | % |                            | $ | 26,923     |  | 100.0 | %
|                   |  |                           |        |            |       |   |                            |   |            |  |       |  

For the quarter ended April 3, 2010 revenues were higher in terms of dollars and percentages in North
America, due to increased sales of our high-end oscilloscopes and protocol products. Despite positive foreign exchange impact, revenues were lower in terms of dollars and percentages in Europe/Middle East and Asia/Pacific due to the timing of
product shipments.

Gross profit for the quarter ended April 3, 2010 was approximately $20.1 million, or 59.8% gross
margin, compared to approximately $14.3 million, or 53.1% gross margin, for the comparable prior year period. The gross margin for the quarter ended April 3, 2010 was positively impacted by increased sales of high margin protocol products, a
shift in mix towards high-end oscilloscope products, revenue earned from a research and development arrangement entered into in the first quarter of fiscal 2010 and the absence of an approximate $0.6 million business realignment charge recorded to
cost of revenues in the prior year comparable period. Share-based compensation expense for both the quarter ended April 3, 2010 and March 28, 2009 was less than $0.1 million.

Selling, general and administrative (SG&A) expense was approximately $11.9 million for the quarter ended April 3,
2010 as compared to approximately $11.4 million for the quarter ended March 28, 2009, representing an increase of approximately 4.7% or $0.5 million. The increase was driven by a rise in variable commission expenses due to a higher sales base,
along with professional consulting fees. Business realignment charges for the quarter ended April 3, 2010 were approximately $0.2 million as compared to approximately $1.1 million for the quarter ended March 28, 2009, offset by an increase
to share-based compensation expense in the current quarter. In the third quarter of fiscal 2010, share-based compensation expense was approximately $1.3 million as compared to $0.4 million in the third quarter of fiscal 2009, driven by an increase
in the fair value of the SARs. As a percentage of total revenues, SG&A expense decreased from 42.2% for the quarter ended March 28, 2009 to 35.4% for the quarter ended April 3, 2009, primarily driven by a higher sales base as well as
factors previously discussed.

Research and development (R&D) expense was approximately $7.2 million for the
quarter ended April 3, 2010, compared to approximately $8.2 million for the comparable prior year period, a decrease of approximately 11.6% or $1.0 million. The decrease resulted primarily from the absence of a business realignment charge of
approximately $0.9 million in the quarter ended March 28, 2009. Share-based compensation was approximately $0.3 million for the quarter ended April 3, 2010 and March 28, 2009.

Other (expense) income, net, which consists primarily of: gains on the extinguishment of our convertible debt, net of issue cost
write-off, interest income and expense, foreign exchange gains and losses and amortization of debt discount on convertible notes was an expense of approximately $1.1 million for the quarter ended April 3, 2010 compared to income of
approximately $7.2 million for the third quarter ended March 28, 2009. Net interest expense was approximately $0.8 million for the quarter ended April 3, 2010 as compared to approximately $0.9 million for the comparable prior period. In
addition, there was a net gain of approximately $0.1 million in the third quarter of fiscal 2010 as compared to approximately $0.3 million in the third quarter of fiscal 2009, resulting from the changes in our foreign exchange forward contracts and
on transactions denominated in other than our functional currencies.

Additionally, there was an approximate $0.2 million gain
on the extinguishment of convertible debt, net of issue cost write-off during the current quarter, as we repurchased $5.3 million of our outstanding convertible notes. This compares to a gain on the extinguishment of convertible debt, net of issue
cost write-off of approximately $8.6 million in the prior comparable quarter ended March 28, 2009, as we repurchased $14.5 million of our outstanding convertible notes. Due to the adoption of new accounting guidance related to our convertible
notes, we recorded approximately $0.5 million of non-cash amortization expense in the third quarter of fiscal 2010 compared to approximately $0.7 million of non-cash amortization expense in the third quarter of fiscal 2009. The decrease is due to
the impact of convertible note repurchases more than offsetting the accretion of the debt discount. See Note 12 Debt and Capital Leases for further details related to the retrospective adoption.



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Comparison of the Three quarters Ended April 3, 2010 and March 28, 2009

Total revenues were approximately $92.6 million for the three quarters ended April 3, 2010, compared to $106.8 million
for the comparable prior year period, representing a decrease of approximately $14.2 million, or 13.3%, primarily as a result of a measurable decline in sales of Test and measurement products, driven by the worldwide economic downturn. This decrease
was slightly offset by an additional week of sales in our fiscal 2010 year, as the three quarters ended April 3, 2010 included 40-weeks versus 39-weeks for the three quarters ended March 28, 2009, current quarter improvement in sales
volumes and positive foreign currency impact of approximately $1.2 million. Our year to date sales were impacted by our customers reducing staffing levels and therefore their need for capital equipment, as well as postponing and reducing spending, a
trend that began to reverse in the current fiscal quarter.

Service and other revenues consist primarily of service revenue
and maintenance fees. Service and other revenues were approximately $7.2 million for the three quarters ended April 3, 2010, representing an increase of approximately 8.9% or a $0.6 million, compared to $6.7 million for the comparable
prior year period. The increase was primarily the result of revenue earned from a research and development arrangement and other services, along with positive foreign currency impact, slightly offset by a decline in customer upgrade purchases
attributable to the economic downturn.

Revenues by geographic location expressed in dollars (in thousands) and as a
percentage of total were:



|                   |  |                                            |        |            |       |   |                                             |   |            |  |       |  
|------------------ |  | ------------------------------------------ | ------ | ---------- | ----- | - | ------------------------------------------- | - | ---------- |  | ----- | -
|                   |  | Three QuartersEndedApril 3,2010 (40 weeks) |        | percentage |       |   | Three QuartersEndedMarch 28,2009 (39 weeks) |   | percentage | 
|North America      |  | $                                          | 42,764 |            | 46.1  | % |                                             | $ | 30,335     |  | 28.4  | %
|Europe/Middle East |  |                                            | 30,969 |            | 33.5  |   |                                             |   | 44,201     |  | 41.4  |  
|Asia/Pacific       |  |                                            | 18,849 |            | 20.4  |   |                                             |   | 32,218     |  | 30.2  |  
|                   |  |                                            |        |            |       |   |                                             |   |            |  |       |  
|Total revenues     |  | $                                          | 92,582 |            | 100.0 | % |                                             | $ | 106,754    |  | 100.0 | %
|                   |  |                                            |        |            |       |   |                                             |   |            |  |       |  

For the three quarters ended April 3, 2010, revenues were higher in terms of dollars and percentages in
North America due to strong sales of our high bandwidth oscilloscopes. Revenues were lower in terms of dollars and percentages in Europe/Middle East and Asia/Pacific, due to the worldwide economic downturn and timing of shipments, despite positive
foreign currency impact. Losses in Europe/Middle East and Asia/Pacific more than offset gains in North America.

Gross profit
for the three quarters ended April 3, 2010 was approximately $53.9 million, or 58.2% gross margin, compared to $57.6 million, or 54.0% gross margin, for the comparable prior year period. The gross margin for the three quarters ended
April 3, 2010 was positively impacted by revenue earned from a research and development arrangement entered into in the first quarter of fiscal 2010, slightly offset by approximately $0.2 million of share-based compensation expense. The
gross margin for the three quarters ended March 28, 2009 was negatively impacted by an approximate $2.7 million charge for the write-down of inventory, approximately $0.7 million of severance costs and approximately $0.1 million of share-based
compensation expense. Absent these charges, the gross margin percentage was slightly higher than the prior year comparable period.

Selling, general and administrative (SG&A) expense was approximately $31.0 million for the three quarters ended
April 3, 2010 compared to approximately $36.8 million for the three quarters ended March 28, 2009, representing a decrease of approximately $5.8 million or 15.8%. The decrease was mainly attributable to our extensive cost-reduction
program that began during the second quarter of fiscal 2009, along with a decrease in business realignment charges of approximately $1.5 million. These reductions were partially offset by an increase in stock-based compensation expense of
approximately $1.6 million and an additional week of compensation expense, as the current fiscal year period represented a 40-week period versus a 39-week period in the prior comparable period.

Research and development (R&D) expense was approximately $20.2 million for the three quarters ended April 3, 2010,
compared to $24.8 million for the comparable prior year period, a decrease of approximately 18.6% or $4.6 million. The decrease primarily resulted from our extensive cost-reduction program that began during the second quarter of fiscal 2009 along
with no business realignment charge in the current period, as compared to an approximate $1.5 million charge in fiscal 2009, partially offset by an increase in share-based compensation expense of approximately $0.3 million and an additional week of
compensation expense, as the three quarters ended in fiscal 2010 represent a 40-week period versus a 39-week period in fiscal 2009.

Other (expense) income, net, which consists primarily of: gains on the extinguishment of our convertible debt, net of issue cost
write-off, interest income and expense, foreign exchange gains and losses and amortization of debt discount on convertible notes was an expense of approximately $3.5 million in for the three quarters ended April 3, 2010 compared to income of
approximately



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$4.6 million for the three quarters ended March 28, 2009. Net interest expense was approximately $2.4 million for the three quarters ended April 3, 2010 as compared to approximately
$2.6 million for the comparable prior period. In addition, there was a net loss of approximately $0.2 million for the three quarters ended in fiscal 2010 as compared to a net gain of approximately $0.5 million for the three quarters ended in fiscal
2009, resulting from the changes in our foreign exchange forward contracts and on transactions denominated in other than our functional currencies.

The current fiscal quarters of 2010 also included a gain on the extinguishment of convertible debt, net of issue cost write-off of
approximately $0.8 million, as we repurchased $8.7 million of our outstanding convertible notes in fiscal 2010 as compared to a net gain of approximately $8.9 million when we repurchased $17.2 million of our notes during the three quarters ended
March 28, 2009. Due to the adoption of new accounting guidance related to our convertible notes, we recorded approximately $1.8 million of non-cash amortization expense on a year to date basis in fiscal 2010 as compared to approximately $2.3
million of non-cash amortization expense in the three quarters ended in fiscal 2009. The decrease is due to the impact of convertible note repurchases more than offsetting the accretion of the debt discount. See Note 12 Debt and Capital
Leases for further details related to the retrospective adoption.

Income Taxes

We calculate income tax expense based upon an annual effective tax rate forecast, including estimates and assumptions that could change
during the year. The differences between our effective tax rate and the U.S. federal statutory rate of 35% principally result from our geographical distribution of taxable income and differences between the book and tax treatment of certain items.

Our effective income tax rate for the quarter and three quarters ended April 3, 2010 was 423.5% and 43.6%, respectively,
compared to an effective income tax rate of 21.1%% and 0.5% for the quarter and three quarters ended March 28, 2009, respectively. Our effective tax rate for the three quarters ended April 3, 2010 includes the write-off of deferred tax
assets related to equity-based compensation of approximately $0.2 million and a reduction of tax expense of approximately $0.5 million from the recognition of unrecognized tax benefits due to the expiration of the statute of limitations. Our
effective income tax rate for the three quarters ended March 28, 2009 includes: the effect of non-deductible goodwill impairment charges of approximately $103.8 million; the write-off of a deferred tax asset related to equity-based compensation
of approximately $0.4 million; partially offset by a reduction of tax expense of approximately $0.2 million related to a retroactive reinstatement of the federal research and development tax credit as a result of the Emergency Economic Stabilization
Act of 2008, passed into law on October 3, 2008; and a reduction of tax expense of approximately $0.3 million related to the recognition of unrecognized tax benefits due to the expiration of the statute of limitations.

At April 3, 2010, our net domestic deferred tax assets amounted to approximately $12.3 million. We have considered the realizability
of the deferred tax assets and concluded that a domestic valuation allowance of approximately $1.4 million should be recorded, mainly related to certain state investment tax credit carryforwards that are not anticipated to be realized. Although we
determined that a valuation allowance was not required with respect to most of the net domestic deferred tax assets, recovery is primarily dependent on achieving the forecast of future operating income, as well as prudent tax planning strategies.
Based upon the projections, the domestic net operating loss carryforwards and federal tax credit carryforwards would be fully utilized before expiration.

Liquidity and Capital Resources

Cash and cash equivalents at April 3, 2010 were approximately $8.7 million compared to approximately $6.4 million at June 27,
2009.

Net cash provided by operating activities was approximately $9.9 million for the three quarters ended April 3, 2010
compared to net cash used in operating activities of approximately $6.4 million in the same period last year. The fiscal 2010 net cash provided by operating activities was attributable to net loss of approximately $0.4 million and non-cash gain on
the extinguishment of convertible debt, net of issue cost write-off of approximately $0.8 million, more than offset by working capital contributions of approximately $1.2 million, non-cash depreciation and amortization of approximately $4.0 million,
share-based compensation expense of approximately $3.7 million and debt related amortization of approximately $2.1 million. The net cash used in operations in fiscal 2009 was due to net loss of approximately $104.6 million, non-cash gain on the
extinguishment of convertible debt, net of issue cost write-off of approximately $8.9 million, working capital requirements of approximately $6.8 million and deferred income taxes of approximately $1.2 million, partially offset by a non-cash
goodwill impairment charge of approximately $105.8 million, non-cash depreciation and amortization of approximately $4.9 million, debt related amortization of approximately $2.7 million and share-based compensation of approximately $1.8 million.

Net cash used in investing activities was attributable to the purchase of property, plant and equipment of approximately $1.5
million in the three quarters ended April 3, 2010 compared to approximately $3.0 million in the same period in fiscal 2009. This decrease was due to less discretionary capital spending under our cost-reduction program.



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Net cash used in financing activities was approximately $6.1 million in the three quarters
ended April 3, 2010 compared to net cash provided by financing activities of approximately $6.7 million in the same period in fiscal 2009. Net cash used in financing activities was primarily due to the repurchase of convertible notes of
approximately $8.6 million (cash payments for principal), partially offset by net borrowing of approximately $2.5 million under our line of credit. Net cash provided by financing activities in fiscal 2009 was primarily the result of net borrowings
under the credit line of $15.5 million, partially offset by the repurchase of convertible notes of approximately $8.4 million (cash payments for principal) and the purchase of treasury shares for approximately $0.7 million.

We believe that our cash and cash equivalents on hand, cash flow expected to be generated by our operations and availability under our
revolving credit line will be sufficient to fund our operations, working capital, share repurchases and capital expenditure requirements for the foreseeable future and provide funds for potential acquisition opportunities. We intend to repay the
convertible notes in fiscal 2012 and the outstanding borrowings under the credit facility maturing in fiscal 2012 through a combination of cash generated from operations and working capital, and we believe repayment will also likely require possible
future financing sources such as: (i) new secured bank debt; (ii) the sale or monetization of certain assets; (iii) new unsecured debt; and (vi) issuance of equity and/or equity-like securities.

Contractual Obligations and Other Commitments

Our contractual obligations and commitments include obligations associated with our employee severance agreements, supplier agreements,
operating and capital leases, revolving credit and convertible note obligations, as set forth in the table below (in thousands):



|                                        |  |                                            |        |                 |   |           |  |           |        |                  |   |     |  |   |  
|--------------------------------------- |  | ------------------------------------------ | ------ | --------------- | - | --------- |  | --------- | ------ | ---------------- | - | --- |  | - | -
|                                        |  | Payments due by Period as of April 3, 2010
|                                        |  | Total                                      |        | Less than1 Year |   | 1-3 Years |  | 3-5 Years |        | More than5 Years
|Severance                               |  | $                                          | 481    |                 |   | 371       |  |           | 110    |                  |   |    |  |   | 
|Supplier agreements                     |  |                                            | 1,521  |                 |   | 1,521     |  |           |       |                  |   |    |  |   | 
|Operating lease obligations             |  |                                            | 5,159  |                 |   | 2,046     |  |           | 2,363  |                  |   | 750 |  |   | 
|Vendor supplied capital lease agreement |  |                                            | 131    |                 |   | 131       |  |           |       |                  |   |    |  |   | 
|Convertible notes principal amount (1)  |  |                                            | 39,650 |                 |   |          |  |           | 39,650 |                  |   |    |  |   | 
|Revolving credit obligation (2)         |  |                                            | 20,000 |                 |   |          |  |           | 20,000 |                  |   |    |  |   | 
|                                        |  |                                            |        |                 |   |           |  |           |        |                  |   |     |  |   |  
|Total (3)                               |  | $                                          | 66,942 |                 | $ | 4,069     |  | $         | 62,123 |                  | $ | 750 |  | $ | 
|                                        |  |                                            |        |                 |   |           |  |           |        |                  |   |     |  |   |  



|(1) | The Convertible notes mature on October 15, 2026. Holders of the Convertible notes have the right to require us to repurchase all or a portion of the Convertible
notes on October 15, 2011, which is reflected above.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The revolving credit facility expires on July 15, 2011, unless, in the absence of any default, extended by us to April 15, 2012, contingent on the waiver or
extension of the first redemption date of our Convertible notes.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The Contractual Obligations and Other Commitments table does not include any reserves for income taxes because we are unable to reasonably predict the ultimate amount
or timing of settlement of our reserves.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Forward-Looking Information

We discuss expectations regarding our future performance in our annual and quarterly reports, press releases, and other written and oral
statements. These forward-looking statements are based on currently available information, business plans and projections about future events and trends. They are inherently uncertain, and investors must recognize that events could turn
out to be significantly different from our expectations. When used in this Form 10-Q, the words anticipate, believe, estimate, will, plan, intend, expect and similar
expressions identify forward-looking statements. Except as required by federal securities law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. When evaluating
our business, the Risk Factors included in Item 1A. of our Annual Report filed on Form 10-K for the fiscal year ended June 27, 2009 should be considered in conjunction with all other information included in our filings.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

There have been no material changes in market risk since the filing of the Companys Annual Report on Form 10-K for the fiscal year
ended June 27, 2009.



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|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e)
of the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that
information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (2) accumulated and
communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in Internal Controls Over Financial Reporting

There have been no changes in the Companys internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) during the quarter ended April 3, 2010 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



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LeCROY CORPORATION

PART II. OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

From
time to time, the Company is involved in lawsuits, claims, investigations and proceedings, including, but not limited to, patent, commercial and environmental matters which arise in the ordinary course of business. There are no matters currently
pending that the Company expects to have a material adverse affect on its business, results of operations, financial condition or cash flows.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

There has
been no material changes with respect to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended June 27, 2009.

The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently
known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition or operating results.



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|ITEM 6. | EXHIBITS
|------- | --------

The following
exhibits are filed herewith.



|               |  |                                                                                                                    |  |               
|-------------- |  | ------------------------------------------------------------------------------------------------------------------ |  | --------------
|Exhibit
Number |  | Description                                                                                                        |  | Filed Herewith
|               |  |                                                                                                                   
|31.1           |  | Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. |  | x             
|               |  |                                                                                                                   
|31.2           |  | Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. |  | x             
|               |  |                                                                                                                   
|32.1           |  | Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350.                                   |  | x             
|               |  |                                                                                                                   
|32.2           |  | Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350.                                   |  | x             



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SIGNATURE

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



|                  |  |  |  |                                                                    
|----------------- |  |  |  | -------------------------------------------------------------------
|Date: May 3, 2010 |  |  |  | LeCROY CORPORATION                                                 
|                  |  | 
|                  |  |  |  | /S/    SEAN B.
OCONNOR                                            
|                  |  |  |  | Sean B. OConnor                                                   
|                  |  |  |  | Vice President and Chief Financial Officer, Secretary and Treasurer



34