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

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

                                    FORM 10-Q

              |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended December 31, 2004

                                       OR

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

                         Commission File Number 0-26634

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

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

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

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

Indicate by check mark ("X") whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.

                               YES |X| NO | |

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

                               YES |X| NO | |

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

              CLASS                           OUTSTANDING AT JANUARY 31, 2005
 ----------------------------------           ---------------------------------
 Common stock, par value $.01 share                   12,318,702

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


<PAGE>



                               LECROY CORPORATION
                                    FORM 10-Q

                                      INDEX

                                                                        PAGE NO.
PART I      FINANCIAL INFORMATION

 Item 1.    Financial Statements:
            Condensed Consolidated Balance Sheets as of December 31, 2004
             (Unaudited) and June 30, 2004................................     3
            Condensed Consolidated Statements of Operations (Unaudited) for
             the Three and Six Months ended December 31, 2004 and 2003....     4
            Condensed Consolidated Statements of Cash Flows (Unaudited)
             for the Six Months ended December 31, 2004 and 2003..........     5
            Notes to Condensed Consolidated Financial
             Statements (Unaudited) ......................................     6
 Item 2.    Management's Discussion and Analysis of Financial Condition
             and Results of Operations....................................    23
 Item 3.    Quantitative and Qualitative Disclosures About Market Risk....    44
 Item 4.    Controls and Procedures.......................................    46

PART II     OTHER INFORMATION

 Item 1.    Legal Proceedings.............................................    47
 Item 4.    Submission of Matters to a Vote of Security Holders...........    48
 Item 6.    Exhibits.......................................................   49

Signature     .............................................................   52


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

                                       2

<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                          LECROY CORPORATION
                                                 CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                                          DECEMBER 31,    JUNE 30,
IN THOUSANDS, EXCEPT PAR VALUE AND SHARE DATA                                                 2004          2004
-------------------------------------------------------------------------------------     ------------  -----------
                                                                                            (UNAUDITED)
ASSETS

<S>                                                                                      <C>          <C>
Current assets:
    Cash and cash equivalents........................................................      $    16,933  $    28,566
    Marketable securities............................................................               --        9,534
    Accounts receivable, net.........................................................           27,575       24,675
    Inventories, net.................................................................           26,485       21,978
    Other current assets.............................................................           10,339       11,921
                                                                                           -----------  -----------
      Total current assets...........................................................           81,332       96,674

Property and equipment, net..........................................................           19,636       19,778
Goodwill.............................................................................           81,594        1,874
Other non-current assets.............................................................           14,066       11,467
                                                                                           -----------  -----------
TOTAL ASSETS.........................................................................      $   196,628  $   129,793
                                                                                           ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Current portion of long-term debt and capital leases.............................      $     8,105  $       107
    Accounts payable.................................................................           15,692       12,097
    Accrued expenses and other current liabilities...................................           20,118       14,554
                                                                                           -----------  -----------
      Total current liabilities......................................................           43,915       26,758

Long-term debt.......................................................................           43,306           --
Deferred revenue and other non-current liabilities...................................            1,354        1,427
                                                                                           -----------  -----------
      Total liabilities..............................................................           88,575       28,185

Stockholders' equity:
  Common stock, $.01 par value (authorized 45,000,000 shares; 12,210,993 and
    11,973,830 shares issued and outstanding as of December 31, 2004 and June
    30, 2004, respectively)..........................................................              122          120
  Preferred stock, $.01 par value (authorized 5,000,000 shares; none issued and
    outstanding as of December 31, 2004 and June 30, 2004)...........................               --           --
  Additional paid-in capital.........................................................          107,116       98,421
  Warrants to purchase common stock..................................................            2,165        2,165
  Accumulated other comprehensive income.............................................            2,040          434
  Deferred stock compensation........................................................           (9,800)      (6,509)
  Retained earnings..................................................................            6,410        6,977
                                                                                           -----------  -----------
Total stockholders' equity...........................................................          108,053      101,608
                                                                                           -----------  -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY...........................................      $   196,628  $   129,793
                                                                                           ===========  ===========


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

</TABLE>


                                       3
<PAGE>

<TABLE>
<CAPTION>
                                                          LECROY CORPORATION
                                            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                              (UNAUDITED)

                                                                    THREE MONTHS ENDED             SIX MONTHS ENDED
                                                                       DECEMBER 31,                  DECEMBER 31,
IN THOUSANDS, EXCEPT PER SHARE DATA                                 2004           2003            2004          2003
--------------------------------------------------------------  ------------   ------------   -------------  ------------
                                                                  (13 weeks)     (13 weeks)     (27 weeks)   (26 weeks)
<S>                                                             <C>            <C>             <C>           <C>
Revenues:
    Test and measurement products............................       $39,243        $27,019         $71,559       $51,624
    Service and other........................................         3,545          2,752           6,734         5,566
                                                                ------------   ------------   -------------  ------------
         Total revenues......................................        42,788         29,771          78,293        57,190

Cost of revenues.............................................        22,182         12,691          36,955        24,491
                                                                ------------   ------------   -------------  ------------
         Gross profit........................................        20,606         17,080          41,338        32,699

Operating expenses:
    Selling, general and administrative......................        15,044         10,335          27,354        20,254
    Research and development.................................         8,800          3,781          13,536         7,465
                                                                ------------   ------------   -------------  ------------
         Total operating expenses............................        23,844         14,116          40,890        27,719

Operating (loss) income .....................................        (3,238)         2,964             448         4,980

    Other (expense) income, net..............................           (29)            80             (61)         (242)
                                                                ------------   ------------   -------------  ------------
(Loss) income before income taxes............................        (3,267)         3,044             387         4,738
    (Benefit from) provision for income taxes................          (398)         1,126             954         1,753
                                                                ------------   ------------   -------------  ------------
Net (loss) income............................................        (2,869)         1,918            (567)        2,985

Redemption of convertible preferred stock....................             -              -               -         7,665
                                                                ------------   ------------   -------------  ------------
Net (loss) income applicable to common stockholders..........       $(2,869)       $ 1,918          $ (567)      $(4,680)
                                                                ============   ============   =============  ============

Net (loss) income per common share
 applicable to common stockholders:
              Basic..........................................       $ (0.25)        $ 0.18         $ (0.05)      $ (0.45)
              Diluted........................................       $ (0.25)        $ 0.18         $ (0.05)      $ (0.45)

Weighted average number of common shares:
              Basic..........................................        11,655         10,498          11,633        10,456
              Diluted........................................        11,655         10,690          11,633        10,456


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

</TABLE>



                                       4
<PAGE>
<TABLE>
<CAPTION>

                                                   LeCROY CORPORATION
                                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                      (UNAUDITED)
                                                                                                  SIX MONTHS ENDED
                                                                                                    DECEMBER 31,
IN THOUSANDS                                                                                     2004         2003
------------------------------------------------------------------------------------------   -----------  ----------

<S>                                                                                          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income.........................................................................   $      (567) $    2,985
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
  Write-off of acquired in-process research and development...............................         2,190          --
  Depreciation and amortization...........................................................         3,683       3,133
  Stock-based compensation................................................................         1,112          14
  Amortization of debt issuance costs.....................................................           163          40
  Deferred income taxes...................................................................           162       1,280
  Recognition of SAB 101 deferred license revenue.........................................          (648)       (648)
  Loss on disposal of property and equipment, net.........................................            67          63
  Tax benefit from exercise of stock options..............................................           142          --
  Write-off of inventory..................................................................         2,723         350
  Write-off of intangible assets..........................................................         1,500          --
Change in operating assets and liabilities, net of assets acquired and liabilities
 assumed in an acquisition:
  Accounts receivable.....................................................................           531       2,901
  Inventories.............................................................................        (2,980)      2,152
  Other current and non-current assets....................................................           340      (1,859)
  Accounts payable, accrued expenses and other liabilities................................         3,045          99
                                                                                             -----------  ----------
Net cash provided by operating activities.................................................        11,463      10,510
                                                                                             -----------  ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment......................................................        (1,424)     (1,727)
  Proceeds from sale of marketable securities.............................................         9,534          --
  Business acquisition costs, net of acquired cash........................................       (80,345)         --
  Purchase of intangible assets...........................................................            --        (150)
                                                                                             -----------  ----------
Net cash used in investing activities.....................................................       (72,235)     (1,877)
                                                                                             -----------  ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayment of borrowings and capital leases..............................................           (52)     (5,047)
  Borrowings under line of credit.........................................................        50,000      10,000
  Redemption of convertible preferred stock...............................................            --     (23,000)
  Debt issuance costs.....................................................................        (1,378)         --
  Payments related to common stock offering...............................................            (7)         --
  Proceeds from employee stock purchase and option plans..................................           993       1,509
  Payment of seller-financed intangible assets............................................          (314)       (250)
                                                                                             -----------  ----------
Net cash provided by (used in) financing activities.......................................        49,242     (16,788)
                                                                                             -----------  ----------
Effect of exchange rate changes on cash...................................................          (103)        395
                                                                                             -----------  ----------
  Net (decrease) in cash and cash equivalents.............................................       (11,633)     (7,760)
  Cash and cash equivalents at beginning of the period....................................        28,566      30,851
                                                                                             -----------  ----------
  Cash and cash equivalents at end of the period..........................................   $    16,933  $   23,091
                                                                                             ===========  ==========
Supplemental Cash Flow Disclosure
   Cash paid during the period for:
    Interest..............................................................................   $       261  $       64
    Income taxes..........................................................................           771         110

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



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

</TABLE>




                                       5
<PAGE>

                               LeCROY CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



1. BASIS OF PRESENTATION

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

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

     These unaudited condensed consolidated financial statements reflect all
adjustments, consisting of normal recurring adjustments, that are, in the
opinion of management, necessary for a fair presentation of the financial
position and the results of operations for the interim periods presented.
Interim period operating results may not be indicative of the operating results
for a full year. The Company's fiscal period ends on the Saturday closest to
December 31, which resulted in the period ending on January 1, 2005. For clarity
of presentation, the condensed consolidated financial statement period-end
references are stated as December 31.

2. ACQUISITION

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


     Total consideration paid to acquire CATC was approximately $130.0 million.
The Merger was recorded under the purchase method of accounting which requires
that the total consideration be allocated to the assets acquired and liabilities
assumed based on their fair values. On the effective date of the Merger, each
share of CATC common stock issued and outstanding immediately prior thereto was
canceled and converted into the right to receive $6.00 in cash. In addition,
LeCroy paid cash to the holders of CATC's outstanding, vested in-the-money stock
options and employee stock purchase plan (the "ESPP") purchase rights. Further,



                                       6
<PAGE>

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

LeCroy assumed CATC's outstanding unvested stock options, as well as certain
vested but unexercised stock options, by granting to CATC employees a total of
648,284 options to purchase LeCroy common stock (the "LeCroy Options"). The
LeCroy Options were recorded at their fair values using the Black-Scholes option
pricing model based on a stock price of $16.83 per share, which was the closing
price of LeCroy common stock on October 29, 2004, less the intrinsic value of
unvested options, which will be charged as compensation expense to operations as
earned by employees over their remaining vesting periods. LeCroy paid cash of
$80.3 million, net of cash acquired, using $30.3 million of cash on hand and
borrowings of $50.0 million under the Company's $75.0 million senior, secured,
five-year credit agreement entered into on October 29, 2004, with the lenders
listed therein and The Bank of New York, as administrative agent for such
lenders (the "Credit Agreement"). (See Note 15). The Merger consideration is
summarized below (in thousands):


        Cash for shares                                   $ 120,281
        Cash for options and ESPP purchase rights             3,966
        Fair value of stock options assumed                   5,111
        Unearned stock compensation on unvested
          options assumed                                    (1,945)
        Transaction costs                                     2,564
                                                          ---------
        Total purchase price                              $ 129,977
                                                          =========

     The fair value of tangible and intangible assets acquired and liabilities
assumed was established based upon the unaudited October 28, 2004 consolidated
balance sheet of CATC, as well as certain assumptions made regarding fair
values. The fair value of finished goods and work in process inventory is valued
based on estimated selling prices less direct costs to sell and a profit margin
on the selling effort. The fair value of the in-process research and development
("IPR&D"), purchased technology, trade name and purchase orders was determined
by an independent appraisal firm. The fair value of the IPR&D was based on the
total estimated costs to develop the related technologies less the costs
incurred to date for the projects, and the intangible asset values were based on
estimates of future cash flows associated with those assets. The preliminary
purchase price allocation is not yet finalized however, the Company expects to
finalize the allocation within the third quarter of fiscal 2005. The purchased
technology, trade name and purchase orders related to this acquisition are being
amortized over their estimated economic useful lives ranging from two to
twenty-nine months. The excess of the preliminary purchase price over the fair
value of the net assets acquired has been allocated to goodwill. The principle
factors that contributed to a purchase price that resulted in the recognition of
goodwill was the fair value of the going-concern element of the CATC business,
which includes the assembled workforce and their technology position within
emerging communication standards, as well as the expected synergies that will be
achieved by combining both companies. The goodwill is not deductible for tax
purposes. The preliminary allocation of purchase price as of October 29, 2004 is
summarized below (in thousands):


        Cash and cash equivalents                         $  46,466
        Accounts receivable                                   2,296
        Inventory                                             3,848
        Other current assets                                    133
        Property and equipment                                  663
        Other non-current assets                                 28
        In-process research and development                   2,190
        Purchased technology                                  3,080
        Purchased trade name                                     70
        Purchased purchase orders                                90
        Goodwill                                             79,720
        Current liabilities assumed                          (5,897)
        Long-term liabilities assumed                          (652)
        Deferred tax liability                               (2,058)
                                                          ---------
        Total purchase price                              $ 129,977
                                                          =========


                                       7
<PAGE>
                               LeCROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

     The following table presents the details of the intangible amortizable
assets acquired in the Merger and the unamortized value as of December 31, 2004:

<TABLE>
<CAPTION>
                                                                   Weighted                 Accumulated
   (In thousands)                                               Average Lives     Cost     Amortization      Net
                                                                -------------    ------    ------------      ---
<S>                                                              <C>             <C>           <C>         <C>
   Amortizable intangible assets:
       Purchased technology................................      2.0 years       $3,080        $ 297       $2,783
       Purchased tradename.................................      1.0 year            70           12           58
       Purchased purchase orders...........................      0.2 years           90           90           --
                                                                                 ------        -----       ------
     Total intangibles purchased...........................                      $3,240        $ 399       $2,841
                                                                                 ======        =====       ======
</TABLE>

     Amortization expense for intangible assets acquired in the Merger was $0.4
million for the three and six month periods ended December 31, 2004.
Amortization expense for the intangible assets acquired in the Merger has been
recorded in the Condensed Consolidated Statements of Operations as follows:

<TABLE>
<CAPTION>
                                                    Three Months Ended        Six Months Ended
                                                       December 31,             December 31,
                                                     ----------------         ----------------
(In thousands)                                       2004        2003         2004        2003
                                                     ----        ----         ----        ----
<S>                                                  <C>          <C>         <C>          <C>
Cost of revenues............................         $387         $ -         $387         $ -
General and administrative expense..........           12                       12
                                                  -----------------------------------------------
   Total....................................         $399         $ -         $399         $ -
                                                  ===============================================

</TABLE>

     The amortization expense of intangible assets acquired in the Merger for
the current fiscal year to date and as estimated for the remainder of fiscal
2005 and in future years is as follows:

                                             Amount
                          Fiscal Year    (In thousands)
                        ---------------- ----------------
                             2005                 $1,315
                             2006                  1,339
                             2007                    586
                                         ----------------
                                                  $3,240
                                         ================

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




                                       8
<PAGE>

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

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

<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED          SIX MONTHS ENDED
                                                                              DECEMBER 31,              DECEMBER 31,
                                                                         -------------------       ----------------------
(In thousands, except per share data)                                      2004        2003         2004            2003
                                                                         -------     -------       -------        -------
<S>                                                                      <C>         <C>           <C>            <C>
Revenues ...........................................................     $43,235     $33,908       $83,317        $65,322

Net (loss) income before non-recurring charges directly
attributable to the Merger, applicable to common stockholders ......     ($1,884)      ($138)      ($3,725)      ($10,944)

Net (loss) income per share before non-recurring charges
directly attributable to the Merger- basic .........................      ($0.16)     ($0.01)       ($0.32)        ($1.05)

Net (loss) income per share before non-recurring charges
directly attributable to the Merger - diluted ......................      ($0.16)     ($0.01)       ($0.32)        ($1.05)

</TABLE>

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

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

3. STOCK PLANS AND AWARDS

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

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


                                       9
<PAGE>
                               LeCROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 THREE MONTHS ENDED       SIX MONTHS ENDED
                                                                                   DECEMBER 31,             DECEMBER 31,
                                                                                 2004        2003         2004        2003
                                                                              -------       ------      -------     -------
                                                                                   IN THOUSANDS, EXCEPT PER SHARE DATA
<S>                                                                           <C>           <C>         <C>         <C>
Net (loss) income, as reported...........................................     ($2,869)      $1,918        ($567)     $2,985
Add: stock-based compensation expense included in reported
  net (loss) income, net of income taxes ................................         416            4          698           9
Deduct: stock-based compensation expense determined under
  fair value-based method for all awards, net of income taxes............        (964)      (1,166)      (1,632)     (1,858)
                                                                              -------       ------      -------     -------
Pro forma net (loss) income..............................................      (3,417)         756       (1,501)      1,136

Charges related to convertible preferred stock...........................          --           --           --       7,665
                                                                              -------       ------      -------     -------
Pro forma net (loss) income applicable to common stockholders............     ($3,417)        $756      ($1,501)    ($6,529)
                                                                              =======       ======      =======     =======
Net (loss) income per common share applicable to common stockholders:
  Basic, as reported ....................................................      ($0.25)       $0.18       ($0.05)     ($0.45)
  Diluted, as reported...................................................      ($0.25)       $0.18       ($0.05)     ($0.45)
  Basic, pro forma ......................................................      ($0.29)       $0.07       ($0.13)     ($0.62)
  Diluted, pro forma ....................................................      ($0.29)       $0.07       ($0.13)     ($0.62)
</TABLE>


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

     In connection with the Merger, LeCroy assumed CATC's 2000 Stock
Option/Stock Issuance Plan, Special 2000 Stock Option Plan, 2000 Stock Incentive
Plan and 1994 Stock Option Plan (collectively, the "CATC Stock Plans"). On
October 27, 2004, the Board of Directors of CATC approved technical amendments
to each of the CATC Stock Plans in anticipation of their assumption by LeCroy
pursuant to the Merger including, without limitation, amendments reflecting that
any stock option and other awards granted thereunder will be exercisable for
LeCroy common stock. Pursuant to FIN No. 44 "Accounting for Certain Transactions
Involving Stock Compensation," the unvested stock options granted by the Company
in exchange for the stock options held by the employees of CATC were considered
part of the purchase price for CATC, and the fair value of the new awards were
included in the purchase price. A portion of the intrinsic value of the unvested
awards has been allocated to unearned compensation and will be recognized as
compensation expense over the remaining future vesting period. For the three and
six months ended December 31, 2004, $83,000, net of tax, has been charged as
compensation expense in the Condensed Consolidated Statements of Operations
related to the assumed options.

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

                                       10
<PAGE>
                               LeCROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

4. REVENUE RECOGNITION

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

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

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

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

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

     Revenues from perpetual software license agreements are recognized upon
delivery of the software if evidence of an arrangement exists, pricing is fixed
and determinable, and collectibility is probable. If an acceptance period is
required, revenues are recognized upon the earlier of customer acceptance or the
expiration of the acceptance period. The Company allocates revenue on software
arrangements involving multiple elements to each element based on the relative
fair values of the elements. The determination of fair value of each element in
multiple element-arrangements is based on VSOE. The Company analyzes all of the
elements and determines if there is sufficient VSOE to allocate revenue to
maintenance included in multiple element-arrangements. Accordingly, assuming all


                                       11
<PAGE>
                               LeCROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

other revenue recognition criteria are met, revenue is recognized upon delivery
using the residual method in accordance with SOP 98-9, where the VSOE of the
undelivered elements is deferred and the remaining portion of the arrangement
fee is recognized as license revenue. The revenue allocated to software
maintenance is recognized ratably over the term of the support agreement. The
revenue allocated to licenses is recognized upon delivery of the licenses.
Revenues from software license agreements are included in Service and other in
the Condensed Consolidated Statement of Operations.

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

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

     SAB 101 "Revenue Recognition in Financial Statements." Beginning in fiscal
2001 with the adoption of the SEC's Staff Accounting Bulletin No. 101 ("SAB
101"), "Revenue Recognition in Financial Statements," revenue from license fees
under agreements that have exclusivity clauses and, from the licensee's
perspective, have ongoing requirements or expectations that are more than
perfunctory, are recognized over the term 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.

     Under SAB 101 (superseded by SAB 104), certain previously recognized
license fee revenue was deferred and recognized in future periods over the terms
of the agreements. The adoption of SAB 101 was recorded as of the beginning of
fiscal 2001 and resulted in a non-cash charge for the cumulative effect of an
accounting change of $4.4 million, net of a tax benefit of $2.7 million. The
deferred revenue is being amortized into revenue over 5.5 years, the remaining
terms of the license agreements. The Company recognized pre-tax deferred license
fee revenue of $0.3 million and $0.6 million during the three and six months
ended December 31, 2004 and 2003, respectively. Such license fees were included
in service and other revenue in the Condensed Consolidated Statements of
Operations. As of December 31, 2004, the remaining balance of pre-tax deferred
license fee revenue was $1.3 million which is reflected in accrued expenses and
other current liabilities in the accompanying Condensed Consolidated Balance
Sheet.

5. RESTRUCTURING

     During the second quarter of fiscal 2005, as a result of the Merger, the
Company adopted a plan to restructure its organization and streamline its
product strategy. In connection with the adoption of this plan, the Company
recorded a charge for severance and other related expenses in the second quarter
of fiscal 2005 of $0.6 million, all recorded in selling, general and
administrative expense. The implementation of this plan resulted in headcount


                                       12
<PAGE>
                               LeCROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

reductions of six employees or approximately 2% of the workforce as compared to
June 30, 2004. As of December 31, 2004, $0.2 million has been paid and $0.4
million remains in accrued expenses and other current liabilities in the
Condensed Consolidated Balance Sheet. Severance and other related amounts under
this plan will be paid by the end of the second quarter of fiscal 2007.

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

     During the first quarter of fiscal 2003, the Company adopted a plan to
scale down fixed infrastructure due to the difficult economic environment and to
implement new management operating systems designed to improve processes in
sales, order management, customer relationship management and financial
performance management. In connection with the adoption of this plan, the
Company recorded a charge for severance and other related expenses in the first
quarter of fiscal 2003 of $2.6 million ($2.1 million of which was recorded in
selling, general and administrative expense and $0.5 million of which was
recorded in research and development expense). The plan implemented during
fiscal 2003 resulted in improved operating efficiencies and headcount reductions
of 38 employees or approximately 9% of the workforce as compared to June 30,
2002. As of December 31, 2004, $2.5 million of the total $2.6 million has been
paid and $0.1 million remains in accrued expenses and other current liabilities
in the Condensed Consolidated Balance Sheet. Severance and other related amounts
under this plan will be paid by the end of the second quarter of fiscal 2006.

6. DERIVATIVES

     The Company enters into foreign exchange forward contracts to minimize the
risks associated with foreign currency fluctuations on assets or liabilities
denominated in other than the functional currency of the Company or its
subsidiaries. These foreign exchange forward contracts are not accounted for as
hedges in accordance with SFAS No. 133, "Accounting for Derivative Investments
and Hedging Activities"; therefore, any changes in fair value of these contracts
are recorded in other income (expense), net in the Condensed Consolidated
Statements of Operations. These foreign exchange forward contracts are recorded
on the Condensed Consolidated Balance Sheets at fair value. The changes in fair
value of these contracts are inversely correlated to changes in the value of
certain of the Company's foreign currency-denominated assets and liabilities.

     The net gains resulting from changes in the fair value of these derivatives
and on transactions denominated in other than their functional currencies were
$0.6 million and $0.1 million for the three-month periods ended December 31,
2004 and 2003, respectively, and $0.5 million and $0.1 million for the six-month
periods ended December 31, 2004 and 2003, respectively. These amounts are
included in other expense, net in the Condensed Consolidated Statements of
Operations and include gross gains of $0.6 million and $0.1 million in the
three-month periods ended December 31, 2004 and 2003, respectively, and $0.2
million and $0.6 million for the six-month periods ended December 31, 2004 and
2003, respectively. At December 31, 2004 and June 30, 2004, the notional amounts
of the Company's open foreign exchange forward contracts, all with maturities of
less than six months, were approximately $8.0 million and $8.2 million,
respectively.

                                       13
<PAGE>
                               LeCROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

     As required by the terms of the Company's Credit Agreement, on January 26,
2005 the Company entered into a Master Agreement with Manufacturers & Traders
Trust Co. ("M&T Bank"), intended to hedge against certain fluctuations in
interest rates during the term of the Credit Agreement. See Note 20 - Subsequent
Events below for a further description.

7. COMPREHENSIVE (LOSS) INCOME

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

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED        SIX MONTHS ENDED
                                                       DECEMBER 31,             DECEMBER 31,
                                                  ----------------------    -------------------
                                                      2004        2003        2004       2003
                                                      ----        ----        ----       ----
                                                                    In thousands
<S>                                                <C>          <C>          <C>        <C>
Net (loss) income .............................    ($2,869)     $1,918       ($567)     $2,985
  Unrealized loss on marketable securities.....         --         --           (3)         --
  Plus: reclassification adjustment for
  realized losses inc1uded in net (loss).......         16         --           16          --
  Foreign currency translation gains...........      1,690       1,738       1,586       2,207
                                                   -------      ------      ------      ------
Comprehensive (loss) income ...................    ($1,163)     $3,656      $1,032      $5,192
                                                   =======      ======      ======      ======
</TABLE>

     The Company's investments in marketable debt securities are classified as
available-for-sale and are reported at fair value based on quoted market prices.
Unrealized gains and losses, net of taxes, are reported as a component of
stockholders' equity. Realized gains and losses on investments are included in
other (expense) income, net on the Condensed Consolidated Statements of
Operations when realized. Management has the ability, if necessary, to liquidate
any of these investments in order to meet its liquidity needs within the normal
operating cycle. Accordingly, all investments in debt securities are classified
as current assets. In the second quarter of fiscal 2005 all marketable debt
securities were liquidated.

8. ACCOUNTS RECEIVABLE, NET

     The Company has agreements with two of its customers, who are also vendors,
which provide the Company with the legal right to offset outstanding accounts
receivable balances against outstanding accounts payable balances. At December
31, 2004 and June 30, 2004, the Company netted approximately $1.4 million and
$0.6 million, respectively, of accounts receivable against accounts payable on
the Condensed Consolidated Balance Sheets related to these agreements.

9. INVENTORIES, NET

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

                                               DECEMBER 31,     JUNE 30,
                                                   2004          2004
                                               ------------    ---------
                                                      In thousands
   Raw materials..........................      $  10,001      $   6,617
   Work in process........................          3,075          4,544
   Finished goods.........................         13,409         10,817
                                                ---------      ---------
                                                $  26,485      $  21,978
                                                =========      =========



                                       14
<PAGE>
                               LeCROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

     The value of demonstration units included in finished goods was $10.0
million and $8.0 million at December 31, 2004 and June 30, 2004, respectively.
The Company's demonstration units are held for sale and are sold regularly in
the ordinary course of business through its normal sales distribution channels
and existing customer base.

     In the second quarter of fiscal 2005, as a result of the Merger the Company
reviewed the long-term product support policies in place at LeCroy and at CATC
prior to the Merger with an aim toward developing one policy to best serve
customers. In connection with the resultant change in policy, as well as changes
in the Company's product support strategy, the Company took a $2.7 million
non-cash charge to cost of revenue in the Condensed Consolidated Statement of
Operations for the write-off of excess parts.

10. OTHER CURRENT ASSETS

    Other current assets consist of the following:

<TABLE>
<CAPTION>
                                                                                     DECEMBER 31,    JUNE 30,
                                                                                        2004           2004
                                                                                     -----------    ----------
                                                                                           In thousands
<S>                                                                                  <C>            <C>
   Deferred tax assets, net.....................................................     $     5,499    $    7,400
   Other receivables............................................................             406           511
   Prepaid probes and accessories...............................................             473           818
   Value-added tax..............................................................             929           595
   Other........................................................................           3,032         2,597
                                                                                     -----------    ----------
                                                                                     $    10,339    $   11,921
                                                                                     ===========    ==========
</TABLE>
11. PROPERTY AND EQUIPMENT, NET

    Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                                                     DECEMBER 31,    JUNE 30,
                                                                                        2004           2004
                                                                                     -----------    ----------
                                                                                           In thousands
<S>                                                                                  <C>           <C>
   Land, building and improvements..............................................     $    14,760   $    14,640
   Furniture, machinery and equipment...........................................          29,181        25,073
   Computer software and hardware...............................................          15,824        17,637
                                                                                     -----------    ----------
                                                                                          59,765        57,350
   Less: Accumulated depreciation and amortization..............................         (40,129)      (37,572)
                                                                                     -----------    ----------
                                                                                     $    19,636   $    19,778
                                                                                     ===========    ==========
</TABLE>

     Depreciation and amortization expense was $1.3 million and $1.2 million for
the three-month periods ended December 31, 2004 and 2003. Depreciation and
amortization for the six-month periods ended December 31, 2004 and 2003 was $2.5
million and $2.5 million, respectively.

12. OTHER NON-CURRENT ASSETS

    Other assets consist of the following:

<TABLE>
<CAPTION>
                                                                                     DECEMBER 31,    JUNE 30,
                                                                                        2004           2004
                                                                                     -----------    ----------
                                                                                           In thousands
<S>                                                                                  <C>            <C>
   Intangibles, net...............................................................   $     7,852    $    5,802
   Deferred tax assets, net.......................................................         4,451         4,771
   Other..........................................................................         1,763           894
                                                                                     -----------    ----------
                                                                                     $    14,066    $   11,467
                                                                                     ===========    ==========
</TABLE>




                                       15
<PAGE>
                               LeCROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

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

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

<TABLE>
<CAPTION>
                                                                        Weighted      December 31,   June 30,
                                                                      Average Lives       2004         2004
                                                                     --------------   ------------   --------
                                                                        (As of              In thousands
                                                                      December 31,
                                                                         2004)
<S>                                                                    <C>             <C>          <C>
   Amortizable intangible assets:
       Technology, manufacturing and distribution rights..........     3.6 years       $  11,809    $    8,897
       Patents and other intangible assets........................     3.5 years             902           661
       Effect of currency translation on intangible assets........                           211           148
       Accumulated amortization...................................                        (5,070)       (3,904)
                                                                                       ---------    ----------
     Net carrying amount..........................................                     $   7,852    $    5,802
                                                                                       =========    ==========
   Non-amortizable intangible assets:
         Goodwill.................................................                     $  81,594    $    1,874
                                                                                       =========    ==========
</TABLE>

     Amortization expense for those intangible assets with finite lives was $1.2
million and $0.7 million for the six months ended December 31, 2004 and 2003,
respectively. The cost of technology, manufacturing and distribution rights
acquired is amortized primarily on the basis of the higher of units shipped over
the contract periods through June 2008 or on a straight-line basis over the
estimated economic life of the asset. Management estimates intangible assets
amortization expense on a straight-line basis in fiscal 2005 through 2008 will
approximate $3.3 million, $2.8 million, $2.1 million, and $0.8 million,
respectively.

     During the six months ended December 31, 2004, the Company purchased a
license for approximately $1.0 million for the use of electronic design
automation software, as well as, a license for approximately $0.4 million for
the ability to use certain computer aided design software tools. Both assets
have an amortization period of three years.

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

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

13. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

    Accrued expenses and other current liabilities consist of the following:

<TABLE>
<CAPTION>
                                                               December 31,     June 30,
                                                                   2004           2004
                                                               ------------    ----------
                                                                     In thousands
<S>                                                             <C>            <C>
   Compensation and benefits...............................     $   6,251      $    5,022
   Income taxes............................................         3,950           2,938
   Deferred license fee revenue, current portion...........         1,296           1,296

   Warranty................................................         1,372           1,247
   Deferred revenue, current portion.......................         2,926           1,606
   Retained liabilities from discontinued operations.......           160             160
   Other...................................................         4,163           2,285
                                                                ---------      ----------
                                                                $  20,118      $   14,554
                                                                =========      ==========
</TABLE>



                                       16
<PAGE>

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

14. WARRANTIES AND GUARANTEES

     The Company provides a warranty on its products, typically extending three
years after delivery and accounted for in accordance with SFAS No. 5,
"Accounting for Contingencies." Estimated future warranty obligations related to
products are provided by charges to operations in the period that the related
revenue is recognized. These estimates are derived from historical data of
product reliability. The expected failure rate is arrived at in terms of units,
which are then converted into labor hours to which an average fully burdened
cost per hour is applied to derive the amount of accrued warranty required. On a
quarterly basis, the Company studies trends of warranty claims and performance
of specific products and adjusts its warranty obligation through charges or
credits to operations.

     The following table is a reconciliation of the changes in the Company's
aggregate product warranty liability during the three and six months ended
December 31, 2004 and 2003:


<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED       SIX MONTHS ENDED
                                                                     DECEMBER 31,             DECEMBER 31,
                                                                     -------------            ------------
                                                                   2004         2003        2004        2003
                                                                   ----         ----        ----        ----
                                                                                   IN THOUSANDS
<S>                                                               <C>          <C>         <C>         <C>
Balance at beginning of period.............................       $1,241       $1,241      $1,247      $1,235
  Accruals for warranties entered into during the period...          451          366         868         639
  Warranty costs incurred during the period................         (425)        (363)       (848)       (630)
  Warranty liability assumed in the Merger.................          105           --         105          --
                                                                  ------       ------      ------      ------
Balance at end of period...................................       $1,372       $1,244      $1,372      $1,244
                                                                  ======       ======      ======      ======
</TABLE>


     In connection with an agreement to license the Company's MAUI Instrument
Operating System technology entered into by the Company during the third quarter
of fiscal 2003, the Company agreed to indemnify the licensee against losses
arising from any third party claim against the licensee to the extent such claim
arose directly out of the infringement of a U.S. or Japanese patent by any
LeCroy software components delivered under the license agreement. As of December
31, 2004, there have been no claims under such indemnification provisions.

     As is customary in the Test and Measurement industry, and as provided for
by local law in the U.S. and other jurisdictions, the Company's standard terms
of sale provide remedies to customers, such as defense, settlement, or payment
of a judgment for intellectual property claims related to the use of the
Company's products. Such indemnification provisions are accounted for in
accordance with SFAS No. 5, "Accounting for Contingencies." To date, there have
been no claims under such indemnification provisions.

15. DEBT

     On October 29, 2004, LeCroy entered into a $75.0 million senior, secured,
five-year credit agreement with the lenders listed therein and The Bank of New
York, as administrative agent for such lenders (the "Credit Agreement"), which
replaced LeCroy's existing credit facility with The Bank of New York that was
entered into on October 11, 2000 and subsequently amended. BNY Capital Markets,
Inc. acted as sole lead arranger and sole book runner in connection with
syndicating the credit facility. The terms of the Credit Agreement provide
LeCroy with a $50.0 million term loan (the "Term Loan") and a $25.0 million
revolving credit facility (the "Revolver"), which includes a $1.0 million


                                       17
<PAGE>
                               LeCROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

swingline loan subfacility and a $1.0 million letter of credit subfacility. The
performance by LeCroy of its obligations under the Credit Agreement is secured
by all of the assets of LeCroy and its domestic subsidiaries, and is guaranteed
by LeCroy's domestic subsidiaries. The proceeds under the Term Loan have been
used fully to finance the acquisition of CATC and pay transaction expenses
related to the Merger. Proceeds from the Revolver may be used for general
corporate purposes, including the financing of working capital requirements,
capital expenditures and acquisitions.

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

     As part of the Credit Agreement, the Company is required to comply with
certain financial covenants, measured quarterly, including a minimum interest
coverage ratio, minimum total net worth, maximum leverage ratio, minimum fixed
charge coverage ratio and limitations on capital expenditures. As of December
31, 2004, the Company was in compliance with its financial covenants under the
Credit Agreement.

     Outstanding borrowings of $50.0 million under the Term Loan are required to
be repaid quarterly through October 2009, beginning March 31, 2005, based on an
annualized amortization rate starting at 15% in calendar year 2005 and
increasing 250 basis points per year during the term of the Credit Agreement.

     Additionally, the Company incurred approximately $1.4 million of
transactions fees associated with the Credit Agreement, which have been deferred
and will be amortized over the life of the Credit Agreement using the effective
interest method for the Term Loan and the straight-line method for the Revolver.
Transaction fees of approximately $87,000 from the previously amended credit
facility were charged to interest expense in the second fiscal quarter of 2005.
At December 31, 2004, unamortized fees of $0.4 million were included in Accrued
expenses and other current liabilities, and $0.9 million were included in
Deferred revenue and other non-current liabilities in the Condensed Consolidated
Balance Sheet.

16. REDEEMABLE CONVERTIBLE PREFERRED STOCK

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

     The Company and the holders of its preferred stock agreed that the final
repurchase of preferred stock would be negotiated as though the transaction had
occurred at the beginning of the first quarter of fiscal 2004. As a result, the
Company accounted for the transaction as though no dividends had accrued in
fiscal 2004 and that the charge for the value originally attributed to the
warrants at the point of issue that remained unaccreted at the time of
redemption was accelerated and combined with the redemption premium to reflect
the total charge related to the redemption of convertible preferred stock in the
Condensed Consolidated Statement of Operations.



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

17. COMMITMENTS AND CONTINGENCIES

     On April 28, 2003, Tektronix, Inc. ("Tektronix") filed a complaint against
the Company in the United States District Court for the District of Oregon
claiming that the Company infringed on eight of Tektronix' U.S. patents. In the
Company's responsive pleading, the Company denied that it has infringed, or is
infringing, any of these patents, and contends that the patents are invalid.
Four of these patents concern software user interface features for
oscilloscopes, two concern circuitry and two concern probes. On August 5, 2003,
the Company filed a counterclaim in the United States District Court for the
District of Oregon claiming that Tektronix is infringing three of the Company's
patents. On November 30, 2004, the Company filed a Motion for Summary Judgment
of Noninfringement for one of the eight Tektronix patents. In response,
Tektronix filed a Cross-motion for Summary Judgment of Infringement for the same
Tektronix patent. The parties await a ruling by the Court on these motions. The
Company believes it has meritorious defenses and intends to defend this action
vigorously. Discovery in this case is ongoing and the outcome cannot be
predicted.

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

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

18. EARNINGS PER COMMON SHARE

     The following is a presentation of the numerators and the denominators of
the basic and diluted net (loss) income per share computations for the three and
six months ended December 31, 2004 and 2003:


                                       19
<PAGE>
                               LeCROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                     THREE MONTHS ENDED             SIX MONTHS ENDED
                                                                         DECEMBER 31,                 DECEMBER 31,
                                                                         ------------                 ------------
                                                                      2004          2003           2004          2003
                                                                      ----          ----           ----          ----
                                                                                        In thousands
<S>                                                               <C>            <C>            <C>           <C>
Numerator:
  Net (loss) income.........................................        ($2,869)       $1,918         ($567)        $2,985
  Redemption of convertible preferred stock.................             --            --            --          7,665
                                                                 --------------------------------------------------------
  Net (loss) income applicable to common stockholders.......        ($2,869)       $1,918         ($567)       ($4,680)
                                                                 ========================================================

Denominator:
  Weighted average shares outstanding:
        Basic...............................................         11,655        10,498        11,633         10,456
        Employee stock options and other....................             --           192            --             --
                                                                 --------------------------------------------------------
        Diluted.............................................         11,655        10,690        11,633         10,456
                                                                 ========================================================
</TABLE>

     As defined in SFAS No. 128, "Earnings per Share," the computation of
diluted net (loss) income per common share for the three months ended December
31, 2004 and 2003 does not include approximately 3.8 million and 0.4 million,
respectively, and the six months ended December 31, 2004 and 2003 does not
include approximately 3.8 million and 1.9 million, respectively, of common stock
options and restricted shares, as the effect of including such awards would have
been antidilutive to earnings per share.

     During the second quarter of fiscal 2005, the Company issued additional
stock options and restricted stock in connection with the Merger (see Note 3 --
Stock Plans and Awards).

19. INCOME TAXES

     The effective income tax rate for the second quarter of fiscal 2005 was a
(12.2%) benefit compared to a 37% tax rate in the second quarter of fiscal 2004.
The (12.2%) effective rate differs from the prior year effective tax rate
principally due to nondeductible purchased in-process R&D charges associated
with the Merger.

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

20. SUBSEQUENT EVENTS

     On January 27, 2005, the Company entered into a Master Agreement with M&T
Bank that governs certain interest rate swap transactions the Company is
required to enter into pursuant to the terms of the Credit Agreement. The Credit
Agreement obligates the Company to enter into one or more hedging agreements
covering the interest payable with respect to at least 50% of the outstanding
principal amount of the Term Loan for a period of at least three years. In
connection with the Master Agreement, the Company entered into an interest rate
swap transaction effective January 31, 2005 and continuing through January 31,
2008. In accordance with the interest rate swap transaction, the Company will
pay quarterly interest on the notional amount at a fixed annualized rate of
3.87% to M&T Bank, and will receive interest quarterly on the same notional
amount at the three-month LIBOR rate in effect at the beginning of each
quarterly reset period; except for the initial period which covers the two
months ending March 31, 2005 at a LIBOR rate of 2.64%. The initial notional
amount is $25.0 million and will reset quarterly to 50% of the outstanding
principal balance of the Term Debt.

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

21. RECENT ACCOUNTING PRONOUNCEMENTS

     In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an
amendment of ARB No. 43, Chapter 4." SFAS No. 151 amends the guidance in ARB
No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material
(spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that ". . .
under some circumstances, items such as idle facility expense, excessive
spoilage, double freight, and rehandling costs may be so abnormal as to require
treatment as current period charges. . . ." SFAS No. 151 requires that those
items be recognized as current-period charges regardless of whether they meet
the criterion of "so abnormal." In addition, SFAS No. 151 requires that
allocation of fixed production overheads to the costs of conversion be based on
the normal capacity of the production facilities. The provisions of SFAS No.
151 will apply to inventory costs beginning in fiscal year 2007. The adoption
of SFAS No. 151 is not expected to have a significant effect on the consolidated
financial statements of LeCroy.

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


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

     In December 2004, the FASB issued two FASB staff positions (FSP): FSP No.
109-1, "Application of FASB Statement No. 109, Accounting for Income Taxes, for
the Tax Deduction Provided to U.S.-Based Manufacturers by the American Jobs
Creation Act of 2004"; and FSP No. 109-2, "Accounting and Disclosure Guidance
for the Foreign Earnings Repatriation Provision within the American Jobs
Creation Act of 2004." FSP No. 109-1 clarifies that the tax deduction for
domestic manufacturers under the American Jobs Creation Act of 2004 (the "Act")


                                       21
<PAGE>
                               LeCROY CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
                                   (UNAUDITED)

should be accounted for as a special deduction in the period earned in
accordance with SFAS No. 109, "Accounting for Income Taxes." FSP FAS 109-2
provides enterprises more time (beyond the financial-reporting period during
which the Act took effect) to evaluate the Act's impact on the enterprise's plan
for reinvestment or repatriation of certain foreign earnings for purposes of
applying SFAS No. 109. The FSPs went into effect upon being issued and did not
have a significant effect on the consolidated financial statements of LeCroy.













                                       22


<PAGE>




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

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

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

OVERVIEW

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

     Presently, we develop, manufacture, sell and license oscilloscopes,
protocol verification systems and other related test and measurement equipment.
Our oscilloscopes are tools used by designers and engineers to measure and
analyze complex electronic signals in order to develop high-performance systems,
to validate electronic designs and to improve time to market. We currently offer
four families of oscilloscopes, which address different solutions to the markets
we serve: WaveMaster, our highest performance product family; WavePro, which is
targeted at the mid- to high-performance sector; WaveRunner, designed for the
mid-performance sector; and WaveSurfer, designed for value-oriented users in the
low-performance bandwidth sector of the market. Our protocol verification
systems are used to reliably and accurately monitor communications traffic and
diagnose operational problems in a variety of communications devices to ensure
that they comply with industry standards. Our protocol verification systems are
used by designers and engineers whose products are in the development stage,
production stage, and deployed in the field.

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

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


                                       23
<PAGE>


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

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

     Cost of revenue represents manufacturing and service costs, which primarily
comprise materials, labor and factory overhead. Gross margins represent revenues
less cost of revenue. Additional factors integral to gross margins earned on our
products are mix, as the list prices of our products range from $4,000 to
$94,000, and foreign currencies, as approximately two-thirds of our revenues are
derived overseas, much of which is denominated in local currencies while
manufacturing costs are U.S. dollar denominated.

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

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

     Our results of operations and financial condition are affected by a variety
of factors. As discussed below, we believe the most significant recurring
factors are the economic strength of the technology markets into which we sell
our products, our ability to timely develop competitive products, and the
actions of our competitors.

     The economics of the technology markets we serve tend to be cyclical.
Consequently, our sales are largely dependent on the health and growth of
technology companies. For example, in the late 1990's through 2001, our business
expanded along with the prosperity of the technology markets. From early 2001 to
2003, revenues decreased along with the contraction of the technology industry
overall. As a result, revenues from sales decreased 8% from the end of fiscal
year 2000 through fiscal year 2002. Beginning in fiscal year 2003 and continuing
to the present, our revenues have significantly increased concurrently with the
recovery of the technology industry and, we believe, specifically as a result of
key product introductions.

     In response to market fluctuations, we continually assess and adopt
programs aimed at positioning us for long-term success. These programs may
include streamlining operations, discontinuing older and less profitable product
lines, and reducing operating expenses from time to time. As an example, in
fiscal 2003 we implemented a restructuring plan intended to reduce costs and
more effectively address the allocation of product development resources. For a
more detailed discussion of our restructuring efforts in fiscal 2003, see the
Section entitled "Restructuring and Asset Impairment," below.

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

     In furtherance of our drive to meet our customers' changing demands, we
also look outside our organization for opportunities to expand our markets.
Accordingly, on October 29, 2004, we completed the acquisition of Computer
Access Technology Corporation ("CATC") to complement our expanding serial data
portfolio. The acquisition of CATC is described more fully in Item 1, Note 2,
entitled "Acquisition," and below.



                                       24
<PAGE>


ACQUISITION

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

     Total consideration paid to acquire CATC was approximately $130.0 million.
The Merger was recorded under the purchase method of accounting which requires
that the total consideration be allocated to the assets acquired and liabilities
assumed based on their fair values. On the effective date of the Merger, each
share of CATC common stock issued and outstanding immediately prior thereto was
canceled and converted into the right to receive $6.00 in cash. In addition,
LeCroy paid cash to the holders of CATC's outstanding, vested in-the-money stock
options and employee stock purchase plan (the "ESPP") purchase rights. Further,
LeCroy assumed CATC's outstanding unvested stock options, as well as certain
vested but unexercised stock options, by granting to CATC employees options to
purchase LeCroy common stock (the "LeCroy Options"). The LeCroy Options were
recorded at their fair values using the Black-Scholes option pricing model based
on a stock price of $16.83 per share, which was the closing price of LeCroy
common stock on October 29, 2004, less the intrinsic value of unvested options,
which will be charged as compensation expense to operations as earned by
employees over their remaining vesting periods. LeCroy paid cash of $80.3
million, net of cash acquired, using $30.3 million of cash on hand and
borrowings of $50.0 million under the Company's $75.0 million senior, secured,
five-year credit agreement entered into on October 29, 2004, with the leners
listed therein and The Bank of New York, as administrative agent for such
lenders (the "Credit Agreement"). The Merger consideration is summarized below
(in thousands):


        Cash for shares                                       $  120,281
        Cash for options and ESPP purchase rights                  3,966
        Fair value of stock options assumed                        5,111
        Unearned stock compensation on unvested options
        assumed                                                   (1,945)
        Transaction costs                                          2,564
                                                               ----------
        Total purchase price                                  $  129,977
                                                               ==========


The fair value of tangible and intangible assets acquired and liabilities
assumed was established based upon the unaudited October 28, 2004 consolidated
balance sheet of CATC, as well as certain assumptions made regarding fair
values. The fair value of finished goods and work in process inventory is valued
based on estimated selling prices less direct costs to sell and a profit margin
on the selling effort. The fair value of the in-process research and development
("IPR&D"), purchased technology, trade name and purchase orders was determined
by an independent appraisal firm. The fair value of the IPR&D was based on the
total estimated costs to develop the related technologies less the costs
incurred to date for the projects, and the intangible asset values were based on
estimates of future cash flows associated with those assets. The preliminary
purchase price allocation is not yet finalized however, the Company expects to
finalize the allocation within the third quarter of fiscal 2005. The excess
of the preliminary purchase price over the fair value of the net assets acquired
has been allocated to goodwill. The purchased technology, trade name and
purchase orders related to this acquisition are being amortized over their
estimated economic useful lives ranging from two to twenty-nine months. The
preliminary allocation of purchase price as of October 29, 2004 is summarized
below (in thousands):


                                       25
<PAGE>



         Cash                                                 $ 46,466
         Accounts receivable                                     2,296
         Inventory                                               3,848
         Other current assets                                      133
         Fixed assets                                              663
         Other assets                                               28
         In-process research and development                     2,190
         Purchased technology                                    3,080
         Purchased trade name                                       70
         Purchased purchase orders                                  90
         Goodwill                                               79,720
         Current liabilities assumed                            (5,897)
         Long-term liabilities assumed                            (652)
         Deferred tax liability                                 (2,058)
                                                             ---------
         Total purchase price                                $ 129,977
                                                             =========


     The  following  table  presents the details of the  amortizable  intangible
assets acquired in the Merger and the unamortized value as of December 31, 2004:

<TABLE>
<CAPTION>
                                                                   Weighted                 Accumulated
    (In thousands)                                               Average Lives    Cost      Amortization     Net
   Amortizable intangible assets:                                -------------    -----     ------------     ---
<S>                                                              <C>           <C>           <C>          <C>
       Purchased technology....................................  2.0 years     $  3,080      $      297   $  2,783
       Purchased tradename.....................................  1.0 year            70              12         58
       Purchased purchase orders...............................  0.2 years           90              90          -
                                                                               --------      ----------   --------
     Total intangibles purchased...............................                $  3,240      $      399   $  2,841
                                                                               ========      ==========   ========

</TABLE>

     Amortization expense for intangible assets acquired in the Merger was $0.4
million for the three and six month periods ended December 31, 2004.
Amortization expense for the intangible assets acquired in the Merger has been
recorded in the Condensed Consolidated Statement of Operations as follows:


                                         Three months ended   Six months ended
                                           December 31,         December 31,
(In thousands)                                  2004                2004
                                           ------------         ------------
Cost of revenues ......................         $387                $387
General and administrative expense ....           12                  12
                                        ----------------------------------------
   Total ..............................         $399                $399
                                        ========================================

     The amortization expense of intangible assets acquired in the Merger for
the current fiscal year to date and as estimated for the remainder of fiscal
2005 and in future years is as follows:


                                               Amount
                            Fiscal Year    (in thousands)
                           --------------- ----------------
                               2005                 $1,315
                               2006                  1,339
                               2007                    586
                                           ----------------
                                                    $3,240
                                           ================


                                       26
<PAGE>

     The $2.2 million allocated to IPR&D was written off during the second
quarter of fiscal 2005 in accordance with FASB Interpretation No. 4,
"Applicability of FASB Statement No. 2 to Business Combinations Accounted for by
the Purchase Method." This charge was included in research and development
expense in the Condensed Consolidated Statement of Operations for the three and
six months ended December 31, 2004.

RESTRUCTURING AND ASSET IMPAIRMENT

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


<TABLE>
<CAPTION>

                                                                                   Six Months ended
                                                                                     December 31,
                                                    Year Ended June 30,              (unaudited)
                                                    -------------------              -----------
                                                     2004         2003             2004         2003
                                                     ----         ----             ----         ----

<S>                                              <C>           <C>             <C>           <C>
Charges for:
  Impaired intangible assets ....................    $     -       $2,280          $ 1,500       $2,280
  Severance and related costs ...................          -          163                -           90
                                                     -------       ------          -------       ------
       Cost of sales ............................    $     -       $2,443          $ 1,500       $2,370
                                                     =======       ======          =======       ======

Charges for:
  Severance and related costs ...................    $     -        $ 670          $     -        $ 522
                                                     -------       ------          -------       ------
       Research and  development ................    $     -        $ 670          $     -        $ 522
                                                     =======       ======          =======       ======

Charges for:
  Severance and related costs ...................    $     -       $2,382          $   629       $2,042
  Plant closure .................................          -          286                -            -
  Unused restructuring reserve ..................          -          (78)               -            -
                                                     -------       ------          -------       ------
       Selling, general  and administrative .....    $     -       $2,590          $   629       $2,042
                                                     =======       ======          =======       ======
</TABLE>



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

     No similar restructuring charges were incurred in fiscal 2004.

     During the second quarter of fiscal 2005, as a result of the Merger, the
Company adopted a plan to restructure its organization and fine tune its product
strategy. In connection with the adoption of this plan, the Company recorded a
charge for severance and other related expenses in the second quarter of fiscal
2005 of $0.6 million, all recorded in selling, general and administrative
expense. The implementation of this plan resulted in headcount reductions of six
employees or approximately 2% of the workforce as compared to June 30, 2004. As
of December 31, 2004, $0.2 million of severance has been paid and $0.4 million
remains in accrued expenses and other current liabilities in the Condensed
Consolidated Balance Sheet. Severance and other related amounts under this plan
will be paid by the end of the second quarter of fiscal 2007. Additionally, in
the second quarter of fiscal 2005, as a result of a change in our organization
stemming from the Merger and a subsequent change in our low to mid-range
oscilloscope manufacturing strategy, the Company took a $1.5 million non-cash
charge to cost of revenue for the write-off of a technology asset.

CRITICAL ACCOUNTING POLICIES

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


                                       27
<PAGE>

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

CONSOLIDATED RESULTS OF OPERATIONS

     The following table indicates the percentage of total revenues represented
by each item in the Company's Condensed Consolidated Statements of Operations
for the three-months and six-months ended December 31, 2004 and 2003.


<TABLE>
<CAPTION>
                                                            Three months ended             Six months ended
                                                                December 31,                  December 31,
                                                                ------------                  ------------
(Unaudited)                                                2004           2003            2004            2003
                                                           ----           ----            ----            ----
<S>                                                     <C>            <C>             <C>             <C>
Revenues:
  Test and measurement products ........................   91.7%          90.8%           91.4%           90.3%
  Service and other ....................................    8.3            9.2             8.6             9.7
                                                          -----          -----           -----           -----
    Total revenues .....................................  100.0          100.0           100.0           100.0
Cost of revenues .......................................   51.8           42.6            47.2            42.8
                                                          -----          -----           -----           -----
    Gross profit .......................................   48.2           57.4            52.8            57.2
Operating expenses:
  Selling, general and administrative ..................   35.1           34.7            34.9            35.4
  Research and development .............................   20.6           12.7            17.3            13.1
                                                          -----          -----           -----           -----
    Total operating  expenses ..........................   55.7           47.4            52.2            48.5
Operating (loss) income ................................   (7.5)          10.0             0.6             8.7
  Other (expense) income, net ..........................   (0.1)           0.2            (0.1)           (0.4)
                                                          -----          -----           -----           -----
(Loss) income before income taxes ......................   (7.6)          10.2             0.5             8.3
  (Benefit from) provision for income taxes ............   (0.9)           3.8             1.2             3.1
                                                          -----          -----           -----           -----
Net (loss) income ......................................   (6.7)           6.4            (0.7)            5.2
Redemption of convertible preferred stock ..............      -              -               -            13.4
Net (loss) income applicable to common stockholders ....   (6.7)%          6.4%           (0.7)%          (8.2)%
                                                          =====          =====           =====           =====
</TABLE>

COMPARISON OF THE THREE-MONTH PERIODS ENDED DECEMBER 31, 2004 AND 2003

     Total revenues were $42.8 million in the second quarter of fiscal 2005,
compared to $29.8 million in the second quarter of fiscal 2004, an increase of
43.7%, or $13.0 million, mainly related to sales of Test and measurement
products. The increase in Test and measurement products was largely driven by
our increased focus on serial data solutions, resulting in record demand for our
Serial Data Analyzers ("SDAs"). Additionally, during the second fiscal quarter
of 2005, we launched the "A" version of our WaveRunner 6000 family of
oscilloscopes, including significant product enhancements which helped increase
the sales of our mid-range oscilloscopes. As a result of the Merger, the
contribution to the total growth in revenue was approximately 40% from protocol
verification systems.

     Service and other revenues primarily consist of service revenues and
license and maintenance fees. Service revenue increased 28.8% to $3.5 million in
the second quarter of fiscal 2005 from $2.8 million in the same period last
year. Service and other revenue in the second quarter of both fiscal 2005 and
2004 includes $0.3 million of revenue that was deferred with the adoption of the
SEC's Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in
Financial Statements," as of the beginning of fiscal 2001.



                                       28
<PAGE>

     Foreign currency fluctuations contributed $1.5 million to the growth in
total revenues in the second quarter of fiscal 2005 compared to the same period
last year. Revenues by geographic location expressed in dollars and as a
percentage of total revenues were:


                                                        Three Months Ended
                                                           December  31,
                                                            (unaudited)
                                                      -----------------------
   (in thousands)                                        2004          2003
                                                      ---------     ---------
   North America..................................    $  14,125     $   9,422
   Europe/Middle East.............................       14,300         9,709
   Japan..........................................        4,312         2,717
   Asia/Pacific...................................       10,051         7,923
                                                      ---------     ---------
      Total revenues..............................    $  42,788     $  29,771
                                                      =========     =========


                                               Three Months Ended
   Unaudited                                      December  31,
                                            2004              2003
                                         ---------         ---------
   North America...................          33.0%            31.7%
   Europe/Middle East..............          33.4             32.6
   Japan...........................          10.1              9.1
   Asia/Pacific....................          23.5             26.6
                                            -----            -----
      Total revenues...............         100.0%           100.0%
                                            =====            =====

     Gross profit in the second quarter of fiscal 2005 was $20.6 million, or
48.2% gross margin, compared to $17.1 million, or 57.4% gross margin in the same
period in fiscal 2004. This decrease is primarily attributable to Merger-related
non-cash charges of $2.7 million for the write-down of inventory related to the
changes in our long-term product support policy and product roadmap strategy as
well as $1.5 million for the write-down of a technology license due to a change
in our manufacturing strategy. As a result of certain purchase accounting
adjustments for the acquisition of amortizable intangible assets, as well as the
write up of acquired inventory to its fair value, CATC's impact on gross margin
was immaterial. We expect the Merger to have a more significant favorable effect
on our overall gross margins in future periods.

     Selling, general and administrative ("SG&A") expense was $15.0 million in
the second quarter of fiscal 2005 compared to $10.3 million in the second
quarter of fiscal 2004, an increase of 45.6% or $4.7 million. Approximately 23%
of the increase in the current quarter reflects the SG&A expenses incurred as a
result of the Merger. Also included in SG&A expense in the second quarter of
fiscal 2005 is $0.5 million of non-cash amortization of deferred compensation
related to our equity-based long-term incentive plan introduced at the end of
fiscal 2004; and $0.6 million of severance and other related expenses related to
the restructuring plan we undertook in connection with the Merger. The remaining
increase in SG&A was largely attributable to increases in compensation and
certain legal expenses as well as less significant increases in other general
spending categories. As a percentage of total revenues, SG&A expense increased
from 34.7% in the second quarter of fiscal 2004 to 35.1% in the second quarter
of fiscal 2005 as a result of the charges in the current quarter for the
amortization of deferred equity-based compensation and severance noted above.

     Research and development ("R&D") expense was $8.8 million in the second
quarter of fiscal 2005, compared to $3.8 million in the second quarter of fiscal
2004, an increase of 132.7% or $5.0 million. Included in R&D expense in the
second quarter of fiscal 2005 is $0.1 million of non-cash amortization of
deferred compensation related to our equity-based long term incentive plan
introduced at the end of fiscal 2004. In connection with the Merger, included in
the second quarter of fiscal 2005 is a $2.2 million charge for the write-off of
acquired IPR&D. The primary driver of the remaining increase is the higher R&D
spending related to the protocol verification system products acquired in the
Merger. As a percentage of total revenues, R&D expense increased from 12.7% in
the second quarter of fiscal 2004 to 20.6% in the second quarter of fiscal 2005,
primarily attributable to the IPR&D and the equity-based compensation.


                                       29
<PAGE>

     In the current fiscal year we intend to continue to invest a substantial
percentage of our revenues in our R&D efforts. We expect to introduce new
products in the current year that address customer needs for solutions in market
sectors such as wide band and ultra-wide band oscilloscopes. We believe that our
advanced hardware and software technologies incorporated into our core products
can be adapted to address additional sectors of the large and diverse test and
measurement market where we have not historically focused.

     Other expense, net, which consists primarily of net interest income and
expense and foreign exchange gains and losses, was an expense of ($29,000) in
the second quarter of fiscal 2005, compared to income of $80,000 in the second
quarter of fiscal 2004. In the second quarter of fiscal 2005, interest expense
of $0.6 million was substantially offset by foreign exchange gains of $0.6
million. In the corresponding quarter in fiscal 2004, we expensed $34,000 of
interest and recognized $0.1 million of foreign exchange gains. The increase in
net interest expense is due to the $50.0 million Term Loan outstanding under our
current Credit Agreement as well as the write-off of unamortized fees associated
with the previous credit facility.

     Our effective tax rate was a (12.2%) benefit in the second quarter of
fiscal 2005, compared with an effective rate of 37% in the second quarter of
fiscal 2004. The (12.2%) effective rate differs from our projected normalized
current year 37% annual effective rate, principally due to purchased IPR&D
charges associated with the Merger, which are nondeductible for tax purposes.

COMPARISON OF THE SIX-MONTH PERIODS ENDED DECEMBER 31, 2004 AND 2003

     Total revenues were $78.3 million in the six months ended December 31,
2004, compared to $57.2 million in the six months ended December 31, 2003, an
increase of 36.9%, or $21.1 million. This increase, which was substantially all
in Test and measurement products, was mainly driven by record demand for our
SDAs, the increase in demand for our WaveRunner oscilloscopes driven by the
launch of the "A" version of our WaveRunner 6000 family of oscilloscopes and the
WaveSurfer family of oscilloscopes launched in the fourth quarter of fiscal
2004. As a result of the Merger, the contribution to the total growth in revenue
was approximately 24% from the sales of our protocol verification systems.

     Foreign currency fluctuations contributed $6.1 million to the growth in
total revenues in the first half of fiscal 2005 compared to the same period last
year. Revenues by geographic location expressed in dollars and as a percentage
of total revenues were:
                                                        Six Months Ended
                                                          December  31,
                                                           (unaudited)
                                                           -----------
   (in thousands)                                       2004          2003
                                                     ---------     ---------
   North America.................................    $  24,234     $  18,930
   Europe/Middle East............................       25,130        17,105
   Japan.........................................       10,823         6,715
   Asia/Pacific..................................       18,106        14,440
                                                     ---------     ---------
      Total revenues.............................    $  78,293     $  57,190
                                                     =========     =========

                                           Six Months Ended
   Unaudited                                 December  31,
                                       2004              2003
                                     --------          --------
   North America...................    31.0%             33.1%
   Europe/Middle East..............    32.1              29.9
   Japan...........................    13.8              11.7
   Asia/Pacific....................    23.1              25.3
                                      -----             -----
      Total revenues...............   100.0%            100.0%
                                      =====             =====



                                       30
<PAGE>

     Gross margin was 52.8% in the six months ended December 31, 2004 compared
to 57.2% in the same period in fiscal 2004. This decrease is primarily
attributable to Merger-related non-cash charges of $2.7 million for the
write-down of inventory related to the changes in our long-term product support
policy and product roadmap strategy as well as $1.5 million for the write-down
of a technology license due to a change in our manufacturing strategy. As a
result of certain purchase accounting adjustments for the acquisition of
amortizable intangible assets, as well as the write up of acquired inventory to
its fair value, CATC's impact on gross margin was immaterial. We expect the
Merger to have a more significant favorable effect on our overall gross margins
in future periods.

     SG&A expense for the six months ended December 31, 2004 was $27.4 million
compared to $20.3 million in the six months ended December 31, 2003.
Approximately 15.2% of the increase in the six months ended December 31, 2004
reflects the SG&A expenses incurred as a result of the Merger. Included in SG&A
in the six-month period ended December 31, 2004 is $0.9 million of non-cash
amortization of deferred compensation related to our equity-based long-term
incentive plan introduced at the end of fiscal 2004; and $0.6 million of
severance and other related expenses related to the restructuring plan we
undertook in connection with the Merger. The remaining increase was largely
attributable to increases in compensation and certain legal expenses as well as
less significant increases in other general spending categories. As a percentage
of sales, SG&A expense decreased from 35.4% in the six months ended December 31,
2003 to 34.9% in the six months ended December 31, 2004. This decrease as a
percentage of revenues was primarily due to our continued ability to leverage
expenses over the incremental revenues.

     R&D expense was $13.5 million for the six months ended December 31, 2004,
compared to $7.5 million in the same period in fiscal 2004, an increase of 81.3%
or $6.1 million. The primary driver of the increase is the inclusion of R&D
expenses from the Merger. Also, in connection with the Merger, included in the
second fiscal quarter of 2005 is the $2.2 million charge for IPR&D. The
remaining increase is due to salary increases and the timing of certain project
specific engineering expenses related to new product introduction. As a
percentage of total revenues, R&D expense increased from 13.1% in the six months
ended December 31, 2003 to 17.3% in the six months ended December 31, 2004,
primarily attributable to the IPR&D charge, and to a lesser extent, increased
spending on new product development.

     Other income (expense), net, was ($61,000) for the six months ended
December 31, 2004 and ($0.2) million for the six months ended December 31, 2003.
Other income (expense), net, for the six months ended December 31, 2004 includes
additional expenses of $0.4 million due to the $50.0 million Term Loan issued in
connection with the Merger as well as the write-off of unamortized fees
associated with the previous credit facility; partially offset by the net
foreign exchange gains of $0.5 million resulting from the changes in our foreign
exchange forward contracts and on transactions denominated in other than their
functional currencies. Net other income (expense), for the six months ended
December 31, 2003 includes a non-recurring charge of $0.4 million for
transaction costs associated with the redemption of preferred stock recorded in
the first quarter of fiscal 2004 offset by $0.1 million for the net foreign
exchange gains resulting from the changes in our foreign exchange forward
contracts and on transactions denominated in other than their functional
currencies.

     Our effective tax rate was 247% in the six months ended December 31, 2004,
compared to 37% for the six months ended December 31, 2003. The effective tax
rate for the six months ended December 31, 2004 was based on the estimated
annual normalized projected effective tax rate of 37%, increased by the discrete
nondeductible IPR&D charges associated with the Merger.

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

LIQUIDITY AND CAPITAL RESOURCES

     On October 29, 2004, LeCroy entered into a $75.0 million senior, secured,
five-year credit agreement with the lenders listed therein and The Bank of New
York, as administrative agent for such lenders (the "Credit Agreement"),


                                       31
<PAGE>


which replaced LeCroy's existing credit facility with The Bank of New York
that was entered into on October 11, 2000 and subsequently amended. BNY Capital
Markets, Inc. acted as sole lead arranger and sole book runner in connection
with syndicating the credit facility. The terms of the Credit Agreement provide
LeCroy with a $50.0 million Term Loan and a $25.0 million revolving credit
facility (the "Revolver"), which includes a $1.0 million swingline loan
subfacility and a $1.0 million letter of credit subfacility. The borrowings by
LeCroy under the Credit Agreement are secured by all of the assets of LeCroy and
its domestic subsidiaries, and its performance thereunder is guaranteed by
LeCroy's domestic subsidiaries. Proceeds of $50.0 million under the Term Loan
have been used fully to finance the acquisition of CATC and pay transaction
expenses related to the Merger. Proceeds from the Revolver may be used for
general corporate purposes, including the financing of working capital
requirements, capital expenditures and acquisitions. As of December 31, 2004, we
have not borrowed on the Revolver.

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

     As part of the Credit Agreement, the Company is required to comply with
certain financial covenants, measured quarterly, including a minimum interest
coverage ratio, minimum total net worth, maximum leverage ratio, minimum fixed
charge coverage ratio and limitations on capital expenditures. As of December
31, 2004, the Company was in compliance with its financial covenants under the
Credit Agreement.

     Outstanding borrowings of $50.0 million under the Term Loan are required to
be repaid quarterly through October 2009, beginning March 31, 2005, based on an
annualized amortization rate starting at 15% in calendar year 2005 and
increasing 250 basis points per year during the term of the Credit Agreement.

     Cash, cash equivalents and marketable securities at December 31, 2004 were
$16.9 million compared to $38.1 million at June 30, 2004. In connection with the
Merger, we spent $80.3 million, net of cash acquired, using $30.3 million net of
our cash and borrowing $50.0 million under the Credit Agreement.

     We provided $11.5 million of net cash from operating activities in the six
months ended December 31, 2004 compared to $10.5 million in the same period last
year. Offsetting the effect of the net loss of ($0.6) million in the current
period relative to the $3.0 million of net income for the same period last year,
is the $8.0 million of pretax non-cash charges detailed in the Adjustments to
reconcile net (loss) income to net cash provided by operating activities in the
Condensed Consolidated Statement of Cash Flows including $0.4 million of
amortization of acquired intangibles shown as part of Depreciation and
amortization in that statement. Changes in operating assets and liabilities
contributed only $1.1 million to Net cash provided by operating activities in
the current period compared to $3.7 million in the same period last year. This
change was driven primarily by increased investment in accounts receivable
resulting from the general growth of the business, as well as increases in
inventory primarily due to the receipt of a substantial quantity of parts in
anticipation of a new product at the high end as well as deployment of
WaveRunner oscilloscope demonstration units in support of the launch of the
WaveRunner 6000A family of oscilloscopes.

     Net cash used in investing activities was ($72.2) million in the six months
ended December 31, 2004 compared to ($1.9) million in the same period in fiscal
2004. This increase was primarily due to $80.3 million, net of business
acquisition costs paid in the second quarter of fiscal 2005 as a result of the
Merger and the liquidation of $9.5 million of investments to partially fund such
acquisition (see Acquisition in this Discussion and Analysis of Financial
Condition and Results of Operations above).

     Net cash provided by financing activities was $49.2 million in the six
months ended December 31, 2004 compared to net cash used of ($16.8) million in
the same period in fiscal 2004. This increase in net cash provided by financing
activities was primarily due to the borrowings under the Credit Agreement used
in connection with the acquisition of CATC net of the cost of such issuance, and
the use of $23.0 million in the same period last year to redeem the preferred
stock and the repayment of borrowings and capital lease obligations of $5.0
million.


                                       32
<PAGE>

     We have a $2.0 million capital lease line of credit to fund certain capital
expenditures. As of December 31, 2004, we had $0.1 million outstanding under
this line of credit, of which all was current and included within accrued
expenses and other current liabilities on the Condensed Consolidated Balance
Sheet. This line of credit expires November 2005 and outstanding borrowings bear
interest at an annual rate of 12.2%.

     In addition to the above U.S.-based facilities, we maintain certain
short-term foreign credit facilities, principally facilities with two Japanese
banks totaling 150 million yen (approximately $1.5 million as of December 31,
2004). No amounts were outstanding under these facilities as of December 31,
2004. Our Swiss subsidiary, LeCroy S.A., also has an overdraft facility totaling
1.0 million Swiss francs (approximately $0.9 million as of December 31, 2004).
As of December 31, 2004, there were no amounts outstanding under this facility.

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

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

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

<TABLE>
<CAPTION>

                                                          Payments due by Period as of December 31, 2004
                                                     --------------------------------------------------------
                                                                Less than                         More than 5
                                                       Total     1 Year    1-3 Years   3-5 Years    Years
                                                     ---------  --------  ----------  ---------   -----------
<S>                                                 <C>        <C>         <C>        <C>         <C>
   (In thousands)
   Capital lease obligations...................      $    144   $    144    $      -   $      -    $      -
   Employee severance agreements...............           512        375         137          -           -
   Operating lease obligations.................         5,378      1,427       3,774         86          90
   Intangible asset obligations................         1,268        462         806          -           -
   Term Loan obligations ......................        50,000      7,500      18,750     23,750           -
                                                     --------   --------    --------    -------     -------
   Total.......................................      $ 57,302   $  9,908    $ 23,467    $23,836     $    90
                                                     ========   ========    ========    =======     =======

</TABLE>


RECENT ACCOUNTING PRONOUNCEMENTS

     In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an
amendment of ARB No. 43, Chapter 4."  SFAS No. 151 amends the guidance in ARB
No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material
(spoilage).  Paragraph 5 of ARB 43, Chapter 4, previously stated that ". . .
under some circumstances, items such as idle facility expense, excessive
spoilage, double freight, and rehandling costs may be so abnormal as to require
treatment as current period charges. . . ."  SFAS No. 151 requires that those
items be recognized as current-period charges regardless of whether they meet
the criterion of "so abnormal."  In addition, SFAS No. 151 requires that
allocation of fixed production overheads to the costs of conversion be based on
the normal capacity of the production facilities.  The provisions of SFAS No.
151 will apply to inventory costs beginning in fiscal year 2007.  The adoption
of SFAS No. 151 is not expected to have a significant effect on the consolidated
financial statements of LeCroy.

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


                                       33
<PAGE>

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

     In December 2004, the FASB issued two FASB staff positions (FSP): FSP No.
109-1, "Application of FASB Statement No. 109, Accounting for Income Taxes, for
the Tax Deduction Provided to U.S.-Based Manufacturers by the American Jobs
Creation Act of 2004"; and FSP No. 109-2, "Accounting and Disclosure Guidance
for the Foreign Earnings Repatriation Provision within the American Jobs
Creation Act of 2004." FSP No. 109-1 clarifies that the tax deduction for
domestic manufacturers under the American Jobs Creation Act of 2004 (the "Act")
should be accounted for as a special deduction in the period earned in
accordance with SFAS No. 109, "Accounting for Income Taxes." FSP FAS 109-2
provides enterprises more time (beyond the financial-reporting period during
which the Act took effect) to evaluate the Act's impact on the enterprise's plan
for reinvestment or repatriation of certain foreign earnings for purposes of
applying SFAS No. 109. The FSPs went into effect upon being issued and did not
have a significant effect on the consolidated financial statements of LeCroy.

FORWARD-LOOKING INFORMATION

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

RISK FACTORS

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


                                       34
<PAGE>

RISKS RELATED TO OUR BUSINESS

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

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

     o    changes in overall demand for our products;

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

     o    the timing and magnitude of research and development expenses;

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

     o    changes in our production efficiency;

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

     o    changes in the selling prices of our products; and

     o    changes in foreign currency exchange risks.

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

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

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

     o    historically low trading volume in our stock;

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

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

     o    sales by competitors, including sales to our customers;

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

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

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

     o    regulatory developments;

     o    fluctuations in results of operations;

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

     o    trends in the seasonality of our sales; and

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



                                       35
<PAGE>

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

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

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

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

     We evaluate whether our deferred tax assets can be realized and assess the
need for a valuation allowance on an ongoing basis. As of December 31, 2004, we
had recorded $10.0 million of net deferred tax assets related to the future tax
benefit of certain expenses reported for financial statement purposes that have
not yet been deducted on our tax returns. Realization of our net deferred tax
assets is dependent on our ability to generate future taxable income. As of
December 31, 2004, we had recorded a valuation allowance of $9.7 million, of
which $4.4 million was attributable to the CATC acquisition, to reserve for
those deferred tax assets we believe are not likely to be realized in future
periods. An additional valuation allowance would be recorded if it was more
likely than not that some or all of our net deferred assets will not be
realized. If we establish additional valuation allowances, we would record a tax
expense in our consolidated statement of operations, which would have an adverse
impact on our operating results. However, the recognition of any future tax
benefit resulting from the reduction of the $4.4 million valuation allowance
associated with the CATC purchase will be recorded as a reduction of goodwill.

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

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


                                       36
<PAGE>

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

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

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

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

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

     o    longer accounts receivable collection cycles;

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

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

     o    highly cyclical business environments;

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

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

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

     o    potentially adverse tax consequences.

     Such factors could cause our future international sales to decline.


                                       37
<PAGE>

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

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

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

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

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

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

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



                                       38
<PAGE>

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

     As a technology-based company, our success depends on developing and
protecting our intellectual property. We rely generally on patent, copyright,
trademark and trade secret laws in the United States and abroad. Electronic
equipment as complex as most of our products, however, is generally not
patentable in its entirety. We also license intellectual property from third
parties and rely on those parties to maintain and protect their technology. We
cannot be certain that actions we take to establish and protect proprietary
rights will be adequate, particularly in countries where intellectual property
rights are not highly developed or protected. If we are unable to adequately
protect our technology, or if we are unable to continue to obtain or maintain
licenses for protected technology from third parties, it may be difficult to
design alternatives to such technology without incurring significant costs.
Thus, the loss of intellectual property rights to technology could have a
material adverse effect on our business, results of operations or financial
condition.

     We are engaged in intellectual property litigation, including with
Tektronix. On April 28, 2003, Tektronix filed a complaint against us in the
United States District Court for the District of Oregon claiming that we
infringed on eight of its U.S. patents. In our responsive pleading, we denied
that we have infringed, or are infringing, on any of these patents, and contend
that the patents are invalid. Four of these patents concern software user
interface features for oscilloscopes, two concern circuitry and two concern
probes. On August 5, 2003, we filed an amended counterclaim in the United States
District Court for the District of Oregon claiming that Tektronix is infringing
on three of our patents. Discovery in this case is ongoing and the outcome
cannot be predicted.

     From time to time, in the ordinary course of business, we receive notices
from third parties regarding intellectual property infringement or take action
against others with regard to intellectual property rights. Even where we are
successful in defending or pursuing such claims, we may incur significant costs.
In the event of a successful claim against us, we could lose our rights to
needed technology or be required to pay license fees for the infringed rights,
either of which could have an adverse impact on our business.

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

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

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

     In the normal course of business, we engage in discussions with third
parties relating to possible acquisitions, strategic alliances and joint
ventures. On September 1, 2004, we entered into an Agreement and Plan of Merger
with CATC, pursuant to which we acquired all of the outstanding shares of common
stock of CATC on October 29, 2004. As a result of our acquisition of CATC or
other transactions which may be consummated, our financial results may differ
from the investment community's expectations in a given quarter. In addition,
acquisitions and strategic alliances may require us to integrate a different
company culture, management team and business infrastructure. We may have
difficulty developing, manufacturing and marketing the products of a
newly-acquired company in a way that enhances the performance of our combined
businesses or product lines to realize the value from expected synergies.
Depending on the size and complexity of an acquisition, our successful
integration of the entity depends on a variety of factors, including:



                                       39
<PAGE>

     o    the retention of key employees;

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

     o    the retention of key customers; and

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

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

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

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

     Our ability to execute our long-term strategy may depend to a significant
degree on our ability to obtain long-term debt and equity capital. We have no
commitments for additional borrowings at this time, other than our $75.0 million
credit facility with The Bank of New York and the other lenders party thereto,
which replaced our $25.0 million credit facility with The Bank of New York, or
for sales of equity, other than under our existing employee benefit plans. We
cannot determine the precise amount and timing of our funding needs at this
time. We may be unable to obtain future additional financing on terms acceptable
to us, or at all.

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

     o    our results of operations;

     o    general economic conditions and conditions in our industry;

     o    the perception in the capital markets of our business;

     o    our ratio of debt to equity;

     o    our financial condition;

     o    our business prospects; and

     o    changes in interest rates.

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

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

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



                                       40
<PAGE>

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

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

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

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

     In December 2004, the Financial Accounting Standards Board, or FASB, issued
SFAS No. 123 (Revised 2004) entitled "Share-Based Payment" ("SFAS 123R"), an
amendment of FASB Statements No. 123 and No. 95," requiring companies to expense
the fair value of all employee equity-based awards granted, modified or settled.
SFAS 123R will be effective for us in our 2006 fiscal year commencing July 2005
and accordingly, will require any options and stock awards issued or vesting on
or after that date and shares issued under our employee stock purchase plan to
be recognized as compensation expense. Currently, we record compensation expense
using the intrinsic value method in accordance with Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations, for option grants that have an exercise price below fair value.
Requiring us to record the fair value of all stock options, stock awards and
shares issued under our employee stock purchase plan as compensation expense in
our consolidated statement of operations, will have an adverse effect on our
results of operations, which effect may be significant.

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

     We have a $75.0 million credit facility with The Bank of New York and the
other lenders party thereto, which replaced our $25.0 million credit facility
with The Bank of New York. We are subject to financial covenants under our
credit facility, including interest coverage ratio, minimum total net worth,
leverage ratio and fixed charge coverage ratio requirements. We expect that
existing cash and cash equivalents, cash provided from operations, and
borrowings pursuant to our credit facility will be sufficient to meet ongoing
cash requirements, including debt service requirements. Failure to generate
sufficient cash or comply with the financial covenants under our credit facility
may adversely affect our business, results of operations, liquidity and
financial condition.

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

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



                                       41
<PAGE>

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

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

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

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

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

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

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

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

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

RISKS RELATED TO OUR INDUSTRY

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

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

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


                                       42
<PAGE>

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

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

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

     WE MUST SUCCESSFULLY EXECUTE OUR STRATEGY TO INTRODUCE NEW PRODUCTS.

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

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

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

     o    changing product specifications and customer requirements;

     o    unanticipated engineering complexities;

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

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

     o    difficulties in hiring and retaining necessary technical personnel.


                                       43
<PAGE>

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

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

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

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

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

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

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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


                                       44
<PAGE>

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

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

     The net gains resulting from changes in the fair value of these derivatives
and on transactions denominated in other than their functional currencies were
$0.6 million and $0.1 million for the three-month periods ended December 31,
2004 and 2003, respectively and $0.5 million and $0.1 million for the six-month
period ended December 31, 2004 and 2003, respectively. These net gains are
included in other expense, net in the Condensed Consolidated Statements of
Operations and include gross gains of $0.6 million and $0.1 million in the
three-month periods ended December 31, 2004 and 2003, respectively and $0.2
million and $0.6 million for the periods ending December 31, 2004 and 2003,
respectively. At December 31, 2004 and June 30, 2004, the notional amounts of
our open foreign exchange forward contracts, all with maturities of less than
six months, were approximately $8.0 million and $8.2 million, respectively.

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

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

     On January 27, 2005, the Company entered into a Master Agreement with M&T
Bank that governs certain interest rate swap transactions the Company is
required to enter into pursuant to the terms of the Credit Agreement. The Credit
Agreement obligates the Company to enter into one or more hedging agreements
covering the interest payable with respect to at least 50% of the outstanding
principal amount of the Term Loan for a period of at least three years. In
connection with the Master Agreement, the Company entered into an interest rate
swap transaction effective January 31, 2005 and continuing through January 31,
2008. In accordance with the interest rate swap transaction, the Company will
pay quarterly interest on the notional amount at a fixed annualized rate of
3.87% to M&T Bank, and will receive interest quarterly on the same notional
amount at the three-month LIBOR rate in effect at the beginning of each
quarterly reset period; except for the initial period which covers the two
months ending March 31, 2005 at a LIBOR rate of 2.64%. The initial notional
amount is $25.0 million and will reset quarterly to 50% of the outstanding
principal balance of the Term Debt.


                                       45
<PAGE>

ITEM 4. CONTROLS AND PROCEDURES

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

     There have not been any changes in the Company's internal control over
financial reporting during the quarter ended December 31, 2004 that have
materially affected, or are reasonably likely to materially affect, its internal
control over financial reporting.


                                       46
<PAGE>

                               LeCROY CORPORATION

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     On April 28, 2003, Tektronix Inc. ("Tektronix") filed a complaint against
the Company in the United States District Court for the District of Oregon
claiming that the Company infringed on eight of Tektronix' U.S. patents. In the
Company's responsive pleading, the Company denied that it has infringed, or is
infringing, any of these patents, and contends that the patents are invalid.
Four of these patents concern software user interface features for
oscilloscopes, two concern circuitry and two concern probes. On August 5, 2003,
the Company filed a counterclaim in the United States District Court for the
District of Oregon claiming that Tektronix is infringing three of the Company's
patents. On November 30, 2004 the Company filed a Motion for Summary Judgment of
Noninfringement for one of the 8 Tektronix patents. In response, Tektronix filed
a Cross-motion for Summary Judgment of Infringement for the same Tektronix
patent. The parties await a ruling by the Court on these motions. The Company
believes it has meritorious defenses and intends to defend this action
vigorously. Discovery in this case is ongoing and the outcome cannot be
predicted.

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

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


                                       47
<PAGE>

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

     Our 2004 annual meeting of stockholders was held on October 27, 2004. At
the meeting, our stockholders approved the following proposals presented to them
pursuant to the vote totals indicated below:

<TABLE>
<CAPTION>

                                                                                Vote (No. of Shares)
                                                                                --------------------
                             Proposal                                     For                Against/Withheld
                             --------                                     ---                ----------------
<S>                                                                  <C>                      <C>
Election of Robert E. Anderson as a Class III Director                  9,128,634                2,196,102
Election of Walter O. LeCroy, Jr. as a Class III Director              10,761,459                  563,277
Election of Thomas H. Reslewic as a Class III Director                 10,814,374                  510,362

</TABLE>

     As of October 27, 2004, Charles A. Dickinson, Norman R. Robertson, William
G. Scheerer and Allyn C. Woodward, Jr. were members of the Board of Directors
whose terms of office continued after the annual meeting of stockholders.

                                       48

<PAGE>

    ITEM 6. EXHIBITS

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

       Exhibit No.                         Exhibit

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

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

         3.2      Current By-Laws of the Registrant, filed as Exhibit 3.3 to
                  Form S-1 Registration Statement No. 33-95620, incorporated
                  herein by reference.

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

         4.1      Shares Purchase Agreement, dated August 15, 2000, between the
                  Registrant and the State of Wisconsin Investment Board,
                  incorporated herein by reference.

         4.2      Placement Agent Agreement, dated August 15, 2000, between the
                  Registrant and SG Cowen Securities Corporation, incorporated
                  herein by reference.

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

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

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

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

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

         10.4     LeCroy Corporation 1995 Non-Employee Director Stock Option
                  Plan filed as Exhibit 10.2 to Form S-1 Registration Statement
                  No. 33-95620 dated August 9, 1995, incorporated herein by
                  reference.*

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

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

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


                                       49
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


                                       50
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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





                                       51
<PAGE>

                                    SIGNATURE

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

Date: February 10, 2005        LeCROY CORPORATION

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





                                       52
<PAGE>

                                  EXHIBIT INDEX

    EXHIBIT NO.                                      DESCRIPTION

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

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

         3.2      Current By-Laws of the Registrant, filed as Exhibit 3.3 to
                  Form S-1 Registration Statement No. 33-95620, incorporated
                  herein by reference.

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

         4.1      Shares Purchase Agreement, dated August 15, 2000, between the
                  Registrant and the State of Wisconsin Investment Board,
                  incorporated herein by reference.

         4.2      Placement Agent Agreement, dated August 15, 2000, between the
                  Registrant and SG Cowen Securities Corporation, incorporated
                  herein by reference.

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

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

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

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

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

         10.4     LeCroy Corporation 1995 Non-Employee Director Stock Option
                  Plan filed as Exhibit 10.2 to Form S-1 Registration Statement
                  No. 33-95620 dated August 9, 1995, incorporated herein by
                  reference.*

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


                                       54
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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



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


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