<PAGE>

                                   UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
                                    FORM 10-K/A
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
                                      of 1934
                   For the fiscal year ended September 30, 1998.

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                                   Act of 1934
                For the transition period from _____ to _____.
                                          
                          Commission file number 333-32195
                         WAVETEK WANDEL & GOLTERMANN, INC.
                         ---------------------------------
               (Exact name of registrant as specified in its charter)

                DELAWARE                            33-0457664
                --------                            ----------
        (State or Other Jurisdiction             (I.R.S. Employer
     of Incorporation or Organization)          Identification No.)

       1030 SWABIA COURT
       RESEARCH TRIANGLE PARK, NC                             27709-3585
       --------------------------                             ----------
       (Address of Principal Executive Offices)               (Zip Code)

                                 (919) 941-5730
                                 --------------
               Registrant's Telephone Number, Including Area Code

    Securities registered pursuant to
        Section 12(b) of the Act:
          Title of each class:        Name of each exchange on which registered:
             Not applicable.                          Not applicable.
------------------------------------- ------------------------------------------

Securities pursuant to section 12(g) of the Act:

                    10 1/8 % Senior Subordinated Notes Due 2007
                    -------------------------------------------
                              (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.                Yes   X   No      .
                                                      -----   -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 299.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K [ ].

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of December 14, 1998. 
NOT APPLICABLE.

The number of shares outstanding of the issuer's classes of common stock as of
December 14, 1998.
As of December 14, 1998, issuer had only one class of common stock, of which
there were 13,202,323 shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
None.

<PAGE>

ITEM 6.   SELECTED FINANCIAL DATA

    The selected consolidated financial data should be read in conjunction with
the consolidated financial statements of the Company included in Item 8 herein
and the information contained in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in Item 7 herein.
Although WG became a subsidiary of Wavetek, the Exchange Transaction was
treated, for accounting and reporting purposes, as a purchase of Wavetek by WG.
Accordingly, the selected consolidated financial data of the Company included
herein as of any date or for any period prior to September 30, 1998, are the
historical consolidated selected financial data of WG. The consolidated balance
sheet data of the Company as of September 30, 1998, included herein reflects the
Exchange Transaction and the related purchase accounting adjustments. See
"Consolidated Financial Statements of Wavetek" included in Item 14 herein.

<TABLE>
<CAPTION>
                                                                                  YEARS ENDED SEPTEMBER 30,
                                                             ----------------------------------------------------------------------
                                                                1998            1997           1996           1995          1994
                                                             ----------      ----------     ----------     ----------    ----------
                                                                                      (DOLLARS IN THOUSANDS)
<S>                                                          <C>             <C>            <C>            <C>           <C>
STATEMENT OF INCOME DATA:
Net sales . . . . . . . . . . . . . . . . . . . . . . . . .   $327,888        $281,887       $242,984       $227,455      $208,359
Cost of goods sold. . . . . . . . . . . . . . . . . . . . .    130,863         113,812         98,466         92,336        80,156
                                                             ----------      ----------     ----------     ----------    ----------
Gross margin. . . . . . . . . . . . . . . . . . . . . . . .    197,025         168,075        144,518        135,119       128,203
Operating expenses:
  Marketing and selling . . . . . . . . . . . . . . . . . .     95,338          82,687         68,938         70,815        57,965
  Research and development. . . . . . . . . . . . . . . . .     47,730          37,322         34,528         37,044        32,434
  General and administrative. . . . . . . . . . . . . . . .     26,019          25,609         27,003         27,287        29,534
  Acquired in-process research and
       development (1). . . . . . . . . . . . . . . . . . .     32,925           1,743            362              -             -
  Provisions for restructuring operations and other
       non-recurring charges (2). . . . . . . . . . . . . .      9,369               -              -          6,855         7,202
                                                             ----------      ----------     ----------     ----------    ----------
                                                               211,381         147,361        130,831        142,001       127,135
                                                             ----------      ----------     ----------     ----------    ----------
Operating income (loss) . . . . . . . . . . . . . . . . . .    (14,356)         20,714         13,687         (6,882)        1,068
Non-operating income (expense):
  Interest income . . . . . . . . . . . . . . . . . . . . .        977           1,610          1,172          1,332           464
  Interest expense. . . . . . . . . . . . . . . . . . . . .     (7,629)         (8,509)        (9,340)       (10,591)       (8,461)
  Other, net. . . . . . . . . . . . . . . . . . . . . . . .     (4,814)            790            861           (602)       16,404
                                                             ----------      ----------     ----------     ----------    ----------
                                                               (11,466)         (6,109)        (7,307)        (9,861)        8,407
                                                             ----------      ----------     ----------     ----------    ----------
Income (loss) before provision (credit) for
  income taxes. . . . . . . . . . . . . . . . . . . . . . .    (25,822)         14,605          6,380        (16,743)        9,475
Provision (credit) for income taxes . . . . . . . . . . . .      6,541           7,362           (250)       (10,667)         (266)
Minority interest in income (loss). . . . . . . . . . . . .     (5,096)            185          2,273            536         1,628
                                                             ----------      ----------     ----------     ----------    ----------
Net income (loss) . . . . . . . . . . . . . . . . . . . . .  $ (27,267)      $   7,058      $   4,357      $  (6,612)    $   8,113
                                                             ----------      ----------     ----------     ----------    ----------
                                                             ----------      ----------     ----------     ----------    ----------
OTHER FINANCIAL DATA:
EBITDA (3). . . . . . . . . . . . . . . . . . . . . . . . .    $38,152         $32,161        $23,366         $9,288       $17,336
Depreciation and amortization expenses. . . . . . . . . . .     10,214           9,704          9,317          9,315         9,066
EBITDA as a percentage of sales . . . . . . . . . . . . . .       11.6%           11.4%           9.6%           4.1%          8.3%
Ratio of earnings to fixed charges (4). . . . . . . . . . .       (1.7)x           2.5x           1.6x          (0.2)x         1.9x
</TABLE>

<TABLE>
<CAPTION>
                                                                                     AS OF SEPTEMBER 30,
                                                                1998            1997           1996           1995          1994
                                                             ----------------------------------------------------------------------
<S>                                                          <C>             <C>            <C>            <C>           <C>
BALANCE SHEET DATA (5):
Cash and cash equivalents (6) . . . . . . . . . . . . . . .  $   6,635       $   9,400      $  14,416     $    8,857     $   8,986
Total assets. . . . . . . . . . . . . . . . . . . . . . . .    484,524         222,208        235,935        232,395       215,618
Total debt (7). . . . . . . . . . . . . . . . . . . . . . .    248,328          93,901        116,232        123,540       110,056
Stockholders' equity (deficit). . . . . . . . . . . . . . .     25,414          18,607          9,408          2,225        (5,975)
</TABLE>

                         (SEE NOTES ON FOLLOWING PAGE)

                                          1

<PAGE>


-----------
(1)  In connection with the Exchange Transaction and its acquisitions of Wandel
     & Goltermann Technologies, Inc. ("WGTI"), Switching Test Solutions AG,
     Tinwald Networking Technologies Inc., and Network Intelligence, Inc., the
     Company recorded acquired in-process research and development of $32.9
     million in fiscal 1998, $1.7 million in fiscal 1997 and $0.4 million in
     fiscal 1996. These amounts are included in operating expenses.

(2)  In connection with the Exchange Transaction, the acquisition of WGTI and
     related restructuring activities, the Company recorded provisions for
     restructuring operations and other non-recurring charges of $9.4 million in
     fiscal 1998. In fiscal 1995 and 1994, the Company initiated activities to
     restructure certain German and U.S. manufacturing, research and development
     and marketing activities in order to reduce the level of expenses in
     relation to net sales. As a result, the Company recorded provisions for
     restructuring of $6.9 million in fiscal 1995 and $7.2 million in fiscal
     1994, primarily for employee severance and inventory write-offs. These
     restructuring activities were completed during fiscal 1996.

(3)  EBITDA is operating income plus depreciation and amortization expense,
     acquired in-process research and development and provisions for
     restructuring operations and other non-recurring charges. The Company's
     definition of EBITDA is consistent with the definition of Consolidated Cash
     Flow in the Indenture related to the Company's 10-1/8% Senior Subordinated
     Notes due June 15, 2007 (the "Indenture"). While EBITDA should not be
     construed as a substitute for income from operations, net income or cash
     flows from operating activities in analyzing the Company's operating
     performance, financial position or cash flows, the Company has included
     EBITDA because it may be viewed as an indicator of compliance with certain
     covenants in the Indenture and is commonly used by certain investors and
     analysts to analyze and compare companies on the basis of operating
     performance, leverage and liquidity and to determine a Company's ability to
     service debt. EBITDA as presented by the Company herein may not be
     comparable to similarly titled measures reported by other companies. In
     addition, the amount reported by the Company as EBITDA may not be fully
     available for management's discretionary use due to the Company's needs to
     conserve funds for debt service, capital expenditures and other
     commitments.

(3)  For purposes of computing this ratio, earnings consist of income (loss)
     before provision (credit) for income taxes plus fixed charges. Fixed
     charges consist of interest expense and one-third of the rent expense from
     operating leases, which management believes is a reasonable approximation
     of the interest factor of the rent.

(4)  The consolidated balance sheet data of the Company as of September 30, 1998
     reflects the Exchange Transaction and the related purchase accounting
     adjustments.

(6)  Cash and cash equivalents includes short-term investments, which are
     comprised primarily of investment grade commercial paper, U.S. Treasury
     securities and guaranteed obligations of the U.S. government or its
     agencies with original maturities of less than 90 days. Cash and cash
     equivalents has been reduced by $28.9 million, received on September 30,
     1998, for the purpose of repaying in full on October 2, 1998, the debt
     outstanding under the Wavetek New Credit Agreement.

(7)  Total debt includes notes payable to banks, long-term obligations including
     current maturities and long-term obligations to related parties including
     current maturities. Total debt at September 30, 1998 has been reduced by
     $28.9 million which was received on September 30, 1998, for the purpose of
     repaying in full on October 2, 1998, the debt outstanding under the Wavetek
     New Credit Agreement.


                                          2

<PAGE>

ITEM 8.   FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
          INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF WAVETEK WANDEL & GOLTERMANN, INC.
                                                                                                                    Page
                                                                                                                    ----
<S>                                                                                                                 <C>
Report of Arthur Andersen LLP, Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . .        4
Consolidated Balance Sheets as of September 30, 1998 and 1997 . . . . . . . . . . . . . . . . . . . . . . . . .        5
Consolidated Statements of Operations for each of the three years in the period ended        
   September 30, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        6
Consolidated Statements of Stockholders' Equity for each of the three years in the period ended 
   September 30, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        7
Consolidated Statements of Cash Flows for each of the three years in the period ended
   September 30, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        8
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        9
</TABLE>


                                          3

<PAGE>

The Board of Directors and Stockholders
Wavetek Wandel & Goltermann, Inc.

    We have audited the accompanying consolidated balance sheets of Wavetek
Wandel & Goltermann, Inc. (as described in Note 1) as of September 30, 1998 and
1997, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended September
30, 1998 (as revised as discussed in Note 3). These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
    
    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
    
    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Wavetek
Wandel & Goltermann, Inc. as of September 30, 1998 and 1997, and the results of
its operations and its cash flows for each of the three years in the period
ended September 30, 1998, in conformity with generally accepted accounting
principles.

                                                             ARTHUR ANDERSEN LLP

Raleigh, North Carolina
February 2, 1999


                                          4

<PAGE>

                          WAVETEK WANDEL & GOLTERMANN, INC.

                             CONSOLIDATED BALANCE SHEETS
               (DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                                              SEPTEMBER 30,
                                                                                          1998           1997
                                                                                       ---------      ---------
<S>                                                                                    <C>            <C>
                        ASSETS
Current assets:
     Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . .       $ 35,544       $  9,400
     Accounts receivable (less allowance for doubtful accounts
       of $4,432 in 1998 and $1,938 in 1997) . . . . . . . . . . . . . . . . . .         92,281         53,490
     Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         74,886         52,968
     Notes receivable from related parties . . . . . . . . . . . . . . . . . . .              -          5,715
     Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .         17,095         11,587
     Other current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . .         12,736         10,499
                                                                                       ---------      ---------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        232,542        143,659
Property and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . .         66,597         51,909
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        178,675          4,468
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              -         15,258
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          6,710          6,914
                                                                                       ---------      ---------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $484,524       $222,208
                                                                                       ---------      ---------
                                                                                       ---------      ---------

<CAPTION>
                                                LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
   Notes payable to banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $113,085       $ 35,833
   Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      37,612         21,985
   Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      25,907         14,832
   Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       5,956          3,768
   Other current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . .      41,259         19,804
   Current maturities of long-term obligations. . . . . . . . . . . . . . . . . . .      30,222         16,332
   Current maturities of long-term obligations to related parties . . . . . . . . .      12,335            808
                                                                                       ---------      ---------
 Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . .     266,376        113,362
 Long-term obligations, less current maturities . . . . . . . . . . . . . . . . . .     121,595         34,043
 Long-term obligations to related parties, less current maturities. . . . . . . . .           -          6,885
 Pension liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      39,991         34,749
 Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      25,582              -
 Other non-current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . .       5,566          3,041
 Commitments and contingencies
 Minority interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           -         11,521
 Stockholders' equity:
   Common stock, par value $.01; authorized, 50,000 shares in 1998 and 15,000  
      shares in 1997; issued and outstanding, 13,202 shares in 1998 and 8,317 
      shares in 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         132             83
   Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . .      72,948         33,435
   Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (57,645)       (26,785)
   Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . .       9,979         11,874
                                                                                       ---------      ---------
 Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . .      25,414         18,607
                                                                                       ---------      ---------
 Total liabilities and stockholders' equity . . . . . . . . . . . . . . . . . . . .    $484,524       $222,208
                                                                                       ---------      ---------
                                                                                       ---------      ---------
</TABLE>

                               See accompanying notes.


                                          5

<PAGE>

                          WAVETEK WANDEL & GOLTERMANN, INC.

                        CONSOLIDATED STATEMENTS OF OPERATIONS
               (DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)



<TABLE>
<CAPTION>
                                                                                         YEARS ENDED SEPTEMBER 30,
                                                                                 ----------------------------------------
                                                                                    1998            1997          1996
                                                                                 ----------     ----------     ----------
<S>                                                                              <C>            <C>            <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $ 327,888      $ 281,887      $ 242,984
Cost of goods sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . .        130,863        113,812         98,466
                                                                                 ----------     ----------     ----------
Gross margin. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        197,025        168,075        144,518
Operating expenses:
     Marketing and selling. . . . . . . . . . . . . . . . . . . . . . . . .         95,338         82,687         68,938
     Research and development . . . . . . . . . . . . . . . . . . . . . . .         47,730         37,322         34,528
     General and administrative . . . . . . . . . . . . . . . . . . . . . .         26,019         25,609         27,003
     Acquired in-process research and development . . . . . . . . . . . . .         32,925          1,743            362
     Provisions for restructuring operations and other non-recurring 
       charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          9,369              -              -
                                                                                 ----------     ----------     ----------
      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        211,381        147,361        130,831
                                                                                 ----------     ----------     ----------
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . .        (14,356)        20,714         13,687
Non-operating income (expense):
     Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . .            977          1,610          1,172
     Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . .         (7,629)        (8,509)        (9,340)
     Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (4,814)           790            861
                                                                                 ----------     ----------     ----------
      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (11,466)        (6,109)        (7,307)
                                                                                 ----------     ----------     ----------
     Income (loss) before provision (credit) for income taxes and
        minority interest in income (loss). . . . . . . . . . . . . . . . .        (25,822)        14,605          6,380
Provision (credit) for income taxes . . . . . . . . . . . . . . . . . . . .          6,541          7,362           (250)
Minority interest in income (loss). . . . . . . . . . . . . . . . . . . . .         (5,096)           185          2,273
                                                                                 ----------     ----------     ----------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $ (27,267)     $   7,058      $   4,357
                                                                                 ----------     ----------     ----------
                                                                                 ----------     ----------     ----------

Net income (loss) per share . . . . . . . . . . . . . . . . . . . . . . . .      $   (3.28)     $    0.85      $    0.52
                                                                                 ----------     ----------     ----------
                                                                                 ----------     ----------     ----------

Weighted average number of shares outstanding . . . . . . . . . . . . . . .          8,317          8,317          8,317
                                                                                 ----------     ----------     ----------
                                                                                 ----------     ----------     ----------
</TABLE>


                               See accompanying notes.


                                          6

<PAGE>

                          WAVETEK WANDEL & GOLTERMANN, INC.

                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    YEARS ENDED SEPTEMBER 30, 1996, 1997 AND 1998
                          (DOLLARS AND SHARES IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                                           FOREIGN
                                                    COMMON STOCK            ADDITIONAL                     CURRENCY        TOTAL 
                                               ------------------------      PAID-IN      ACCUMULATED     TRANSLATION  STOCKHOLDERS'
                                                 SHARES        AMOUNT        CAPITAL       DEFICIT        ADJUSTMENTS      EQUITY
                                               ----------    ----------    -----------   ------------   -------------- -------------
<S>                                            <C>          <C>            <C>           <C>            <C>            <C>
Balance, September 30, 1995. . . . . . . . .      8,317     $     83       $ 32,634       $(36,213)      $  5,721       $  2,225
   Sales of stock by subsidiaries. . . . . .          -            -            296              -              -            296
   Net income. . . . . . . . . . . . . . . .          -            -              -          4,357              -          4,357
   Foreign currency translation 
     adjustments . . . . . . . . . . . . . .          -            -              -              -          2,530          2,530
                                               ---------    ---------      ---------      ---------      ---------      ---------
   Balance, September 30, 1996 . . . . . . .      8,317           83         32,930        (31,856)         8,251          9,408
   Sales of stock by subsidiaries. . . . . .          -            -            505              -              -            505
   Dividends . . . . . . . . . . . . . . . .          -            -              -         (1,987)             -         (1,987)
   Net income. . . . . . . . . . . . . . . .          -            -              -          7,058              -          7,058
   Foreign currency translation 
     adjustments . . . . . . . . . . . . . .          -            -              -              -          3,623          3,623
                                               ---------    ---------      ---------      ---------      ---------      ---------
Balance, September 30, 1997. . . . . . . . .      8,317           83         33,435        (26,785)        11,874         18,607
   Sales of stock by subsidiaries. . . . . .          -            -            662              -              -            662
   Shares issued in connection 
     with the Exchange Transaction 
     with Wavetek Corporation. . . . . . . .      4,885           49         38,851              -              -         38,900
   Dividends . . . . . . . . . . . . . . . .          -            -              -         (3,593)             -         (3,593)
   Net loss. . . . . . . . . . . . . . . . .          -            -              -        (27,267)             -        (27,267)
   Foreign currency translation 
     adjustments . . . . . . . . . . . . . .          -            -              -              -         (1,895)        (1,895)
                                               ---------    ---------      ---------      ---------      ---------      ---------
Balance, September 30, 1998. . . . . . . . .     13,202         $132       $ 72,948       $(57,645)      $  9,979       $ 25,414
                                               ---------    ---------      ---------      ---------      ---------      ---------
                                               ---------    ---------      ---------      ---------      ---------      ---------
</TABLE>


                               See accompanying notes.


                                       7

<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (DOLLARS IN THOUSANDS)



<TABLE>
<CAPTION>
                                                                                 Years ended September 30,
                                                                           ------------------------------------
                                                                              1998        1997         1996
                                                                           ----------  ----------   ----------
<S>                                                                        <C>         <C>          <C>
OPERATING ACTIVITIES
Net income (loss)........................................................  $ (27,267)    $ 7,058      $ 4,357
Adjustments to reconcile net income to net cash provided by operating
 activities:
 Minority interest in net income (loss)..................................     (5,096)        185        2,273
 Depreciation and amortization expense...................................     10,214       9,704        9,317
 Acquired in-process research and development............................     32,925       1,743          362
 Deferred income taxes...................................................      1,978       4,600       (4,836)
 Changes in operating assets and  liabilities,  net of effect of purchased
  businesses:
  Accounts receivable....................................................     (4,415)     (6,520)      (8,449)
  Inventories............................................................      2,282      (8,239)       2,506
  Other current assets...................................................      1,876      (3,643)         (35)
  Accounts payable and accrued expenses..................................      5,111      10,051        6,993
  Income taxes payable, net..............................................      1,572       2,383           73
  Pension liabilities....................................................      3,180         698        1,328
  Other, net.............................................................       (438)       (507)        (265)
                                                                           ----------  ----------   ----------
Net cash provided by operating activities................................     21,922      17,513       13,624

INVESTING ACTIVITIES
Purchases of businesses, net of cash acquired............................    (45,207)     (6,658)      (1,858)
Cash acquired in connection with Exchange Transaction....................     31,329        -             -
Proceeds from sale of investments in affiliates..........................      1,757       1,890          716
Purchase of property and equipment and intangibles.......................    (10,416)     (9,356)     (10,578)
Proceeds from sale of property and equipment.............................        -         3,999        2,849
Purchase of short-term investments, available for sale...................    (41,100)    (76,160)     (23,560)
Sale of short-term investments, available for sale.......................     41,100      76,160       23,560
Payments received for notes receivable from related parties..............      6,042         740          949
Increases in notes receivable from related parties.......................     (1,081)     (1,607)        (364)
                                                                           ----------  ----------   ----------
Net cash used in investing activities....................................    (17,576)    (10,992)      (8,286)

FINANCING ACTIVITIES
Proceeds from revolving lines of credit and long-term obligations........     56,241       1,961       39,619
Principal payments on revolving lines of credit and long-term
 obligations.............................................................    (35,647)    (12,084)     (39,665)
Cash dividends paid to stockholders......................................     (2,043)     (1,188)         -
Proceeds from long-term obligations to related parties...................      3,364          63          634
Principal payments on long-term obligations to related parties...........       (258)       -             -
                                                                           ----------  ----------   ----------
Net cash provided by (used in) financing activities......................     21,657     (11,248)         588

Effect of exchange rate changes on cash and cash equivalents.............        141        (289)        (367)
                                                                           ----------  ----------   ----------
Increase (decrease) in cash and cash equivalents.........................     26,144      (5,016)       5,559

Cash and cash equivalents at beginning of year...........................      9,400      14,416        8,857
                                                                           ----------  ----------   ----------
Cash and cash equivalents at end of year.................................  $  35,544     $ 9,400      $14,416
                                                                           ----------  ----------   ----------
                                                                           ----------  ----------   ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest...................................................  $   7,103     $ 8,314      $ 8,649
                                                                           ----------  ----------   ----------
                                                                           ----------  ----------   ----------
Cash paid for income taxes...............................................  $   2,038     $ 3,346      $ 3,053
                                                                           ----------  ----------   ----------
                                                                           ----------  ----------   ----------
</TABLE>

                             See accompanying notes.


                                       8

<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
                   NOTES TO CNSOLIDATED FINANCIAL STATEMENTS


1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

       ORGANIZATION

       On September 30, 1998, Wavetek Corporation, a Delaware corporation
("Wavetek"), and Wandel & Goltermann Management Holding GmbH, a German limited
liability company ("WG"), consummated an exchange transaction whereby the
stockholders of WG became stockholders of Wavetek, and WG became a subsidiary of
Wavetek (the "Exchange Transaction"). In connection with the Exchange
Transaction, Wavetek was renamed Wavetek Wandel & Goltermann, Inc. (the
"Company"). The Exchange Transaction was accounted for as a purchase of Wavetek
by WG. Accordingly, the financial statements of the Company included herein as
of any date or for any period prior to September 30, 1998, are the historical
financial statements of WG.

       The Company is a leading global designer, manufacturer and marketer of a
broad range of communications test instruments used to develop, manufacture,
install and maintain communications networks and equipment. The Company conducts
its communications test business, which addresses most sectors of the
communications test market, in four principal business areas: (1) Telecom
Networks (traditional voice/data transmissions and new multi-service networks),
(2) Enterprise Networks (local and wide-area network infrastructures), (3)
Multimedia (cable television and digital video broadcast) and (4) Wireless
(mobile telephony and data). The Company also designs, manufactures and sells
precision measurement instruments and general-purpose handheld test tools. In
addition, the Company provides repair, upgrade and calibration services, as well
as value-added professional services such as consulting, training and rental
services on a worldwide basis. The accompanying consolidated financial
statements include the operations of the Company and its wholly-owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.

       FOREIGN CURRENCY

       The accounts of foreign subsidiaries consolidated herein have been
translated from their respective functional currencies into U.S. dollars based
on the current exchange rates at the end of the period for the balance sheet and
an average rate for the period on the statement of operations. Cumulative
translation adjustments are included as a separate component of stockholders'
equity. Exchange gains and losses from foreign currency transactions are
included in "Other, net" in the accompanying consolidated statements of
operations.

       USE OF ESTIMATES

       The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. These estimates include assessing the collectibility of
accounts receivable, the use and recoverability of inventory, costs of future
product returns under warranty and provisions for contingencies expected to be
incurred. Actual results could differ from those estimates.

       CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS, AVAILABLE FOR SALE

       The carrying amounts reported in the consolidated balance sheet for cash
and cash equivalents approximate their fair values. As part of the Company's
cash management program, the Company invests in highly liquid investments,
primarily investment grade commercial paper, U.S. Treasury Securities,
guaranteed obligations of the U.S. government or its agencies, mutual funds
which invest in U.S. Treasury Securities, preferred stock and municipal bonds.
The interest and


                                       9
<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

dividend rates on these securities are reset on a frequent basis. Under
Statement of Accounting Standards No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN
DEBT AND EQUITY SECURITIES, these securities are classified as
"available-for-sale securities." For purposes of financial statement
presentation, the Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. The Company evaluates
the financial strength of the institutions in which significant investments are
made and believes that related credit risk is limited to an acceptable level.

       INVENTORIES

       Inventories are valued at cost determined on the first-in, first-out
basis, not in excess of market. Costs include direct material, labor and
manufacturing overhead.

       PROPERTY AND EQUIPMENT

       Property and equipment are recorded at cost. Depreciation for financial
statement purposes is computed using the straight-line method based upon the
estimated useful lives of the various classes of assets which range from 3 to 50
years for buildings and improvements and from 3 to 10 years for fixtures and
equipment.

       INTANGIBLE ASSETS

       Intangible assets include acquired core technologies and assembled work
force, the excess of purchase price over net tangible assets of businesses
acquired (goodwill) and deferred debt issuance costs. Intangible assets are
recorded at cost and amortized over their estimated lives ranging from 5 to 15
years.

       DEBT INSTRUMENTS

       The carrying amounts of the Company's debt instruments approximate their
fair values.

       REVENUE AND CREDIT RISK

       The Company recognizes product revenues at the time of shipment to the
customer. Service revenues are recognized as services are performed. The Company
accrues related product return reserves and warranty expenditures at the time of
sale. The Company grants credit to its customers based on an evaluation of the
customers' financial condition and generally collateral is not required. Credit
losses have traditionally been minimal and within management's expectations.

       NET INCOME PER SHARE

       Effective October 1, 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 128, EARNINGS PER SHARE ("SFAS 128"). SFAS 128
replaced the calculation of primary and fully diluted net income (loss) per
share with basic and diluted net income (loss) per share. Unlike primary net
income (loss) per share previously reported by the Company, basic net income
(loss) per share is based only on average common shares outstanding and excludes
the dilutive effects of common stock equivalents. Diluted net income (loss) per
share is very similar to the previous concept of fully diluted net income (loss)
per share and includes the dilutive effect of common stock equivalents. The
Company has no common stock equivalents during the periods presented.
Accordingly, basic and diluted net income (loss) per share are


                                       10

<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

the same. All net income (loss) per share amounts for all periods have been
presented, and where necessary, restated to conform to the requirements of SFAS
128.

       STOCK-BASED COMPENSATION

       Effective October 1, 1996, the Company adopted SFAS No. 123, ACCOUNTING
FOR STOCK-BASED COMPENSATION ("SFAS 123"). SFAS 123 allows companies to either
account for stock-based compensation under the new provisions of SFAS 123 or
under the provisions of Accounting Principles Board Opinion No. 25, ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES ("APB 25"), but requires pro forma disclosure in
the footnotes to the financial statements as if the measurement provisions of
SFAS 123 had been adopted. The Company has continued accounting for its
stock-based compensation in accordance with the provisions of APB 25.

       DERIVATIVE FINANCIAL INSTRUMENTS

       The Company uses derivative financial instruments, primarily forward
exchange contracts and collars, in the ordinary course of business to mitigate
its exposure to changes in foreign currency exchange rates relating to cash,
accounts receivable, accounts payable, significant transactions and anticipated
future sales denominated in foreign currencies. The terms of these contracts are
generally less than one year. The Company also uses interest rate cap agreements
to mitigate its exposure to changes in interest rates on variable interest rate
debt instruments. The terms of such agreements are generally in excess of one
year. The Company's risk management policies prohibit financial instruments to
be used for trading purposes. Gains and losses on financial instruments that
qualify as hedges of existing assets or liabilities or firm commitments are
recognized in income as adjustments of carrying amounts when the hedged
transaction occurs. Financial instruments which are not designated as hedges of
specific assets, liabilities, firm commitments or anticipated transactions are
marked to market and any resulting unrealized gains or losses are recorded in
"Other, net" in the accompanying consolidated statements of operations. At
September 30, 1998 and 1997, the Company had foreign exchange contracts
outstanding in an aggregate notional amount of $25.8 million and $24.7 million,
respectively. While it is not the Company's intention to terminate any of these
contracts, the estimated fair value of these contracts indicated that
termination of the forward currency exchange contracts at September 30, 1998
would have resulted in a loss of $0.6 million and termination at September 30,
1997 would have resulted in a gain of $0.4 million. Due to the volatility of
currency exchange rates, these estimated results may or may not be realized. At
September 30, 1998 and 1997, the Company had interest rate cap agreements
outstanding with notional values of $8.9 million and $8.5 million, respectively,
which had carrying values that approximated fair value.

       RECENTLY ISSUED ACCOUNTING STANDARDS

     In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
REPORTING COMPREHENSIVE INCOME ("SFAS 130") and SFAS No. 131, SEGMENT
INFORMATION ("SFAS 131"). In February 1998, the FASB issued SFAS No. 132,
EMPLOYERS' DISCLOSURES ABOUT PENSIONS AND OTHER POSTRETIREMENT BENEFITS, AN
AMENDMENT OF FASB STATEMENTS NO. 87, 88, AND 106 ("SFAS 132"). All three of
these standards are effective for fiscal years beginning after December 15,
1997.


                                       11

<PAGE>


                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

       SFAS 130 requires that all components of comprehensive income, including
net income, be reported in the financial statements in the period in which they
are recognized. Comprehensive income is defined as the change in equity during a
period from transactions and other events and circumstances from non-owner
sources. Net income and other comprehensive income, including foreign currency
translation adjustment, minimum pension accrual, and unrealized gains and losses
on investments, shall be reported, net of their related tax effect, to arrive at
comprehensive income. The Company intends to adopt SFAS 130 in fiscal 1999 and
operating results of prior periods will be reclassified. The Company's only
component of other comprehensive income is the foreign currency translation
adjustment which is currently reported as part of stockholders' equity.

       Historically, the Company has operated in one business segment; however,
SFAS 131 redefines segments and in the future, the Company will be required to
disclose certain financial information about operating segments, products,
services and geographic areas in which they operate. The Company has not
determined how operating segments will be defined for disclosure purposes or
which segments will meet the quantitative requirements for disclosure. The
adoption of SFAS 131 will have no impact on the Company's future results of
operations or financial position. The Company intends to adopt SFAS 131 in
fiscal 1999.

       SFAS 132 revises employers' disclosures about pension and other
postretirement benefit plans. It does not change the measurement or recognition
of those plans. It standardizes the disclosure requirements for pensions and
other postretirement benefits to the extent practicable, requires additional
information on changes in the benefit obligations and fair values of plan assets
that will facilitate financial analysis and eliminates certain disclosures. The
adoption of SFAS 132 will have no impact on the Company's future results of
operations. The Company intends to adopt SFAS 132 in fiscal 1999.

       In June 1998, the FASB issued SFAS 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. This statement requires companies to record
derivatives on the balance sheet as assets and liabilities, measured at fair
value. Gains or losses resulting from changes in the values of those derivatives
would be accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. This statement is not expected to have a
material impact on the Company's consolidated financial statements. This
statement is effective for fiscal years beginning after June 15, 1999, with
earlier adoption encouraged. The Company will adopt this accounting standard in
fiscal 2000.

2. FINANCIAL STATEMENT DETAILS

         Inventories consist of the following:

<TABLE>
<CAPTION>
                                                               SEPTEMBER 30,
                                                          ----------------------
                                                             1998        1997
                                                         ----------- -----------
                                                          (DOLLARS IN THOUSANDS)
<S>                                                      <C>         <C>
    Materials..........................................  $   19,217  $   13,805
    Work-in-progress...................................      21,469      15,155
    Finished goods.....................................      34,200      24,008
                                                         ----------- -----------
                                                         $   74,886  $   52,968
                                                         ----------- -----------
                                                         ----------- -----------
</TABLE>

<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


2. FINANCIAL STATEMENT DETAILS (CONTINUED)

         Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                               SEPTEMBER 30,
                                                          ----------------------
                                                             1998        1997
                                                         ----------- -----------
                                                          (DOLLARS IN THOUSANDS)
<S>                                                      <C>         <C>
    Land...............................................  $    6,073  $    5,572
    Building and improvements..........................      52,699      48,859
    Fixtures and equipment.............................     107,626      86,711
                                                         ----------- -----------
                                                            166,398     141,142
    Less: accumulated depreciation.....................     (99,801)    (89,233)
                                                         ----------- -----------
                                                         $   66,597  $   51,909
                                                         ----------- -----------
                                                         ----------- -----------
</TABLE>

         Intangible assets consist of the following:

<TABLE>
<CAPTION>
                                                               SEPTEMBER 30,
                                                          ----------------------
                                                             1998        1997
                                                         ----------- -----------
                                                          (DOLLARS IN THOUSANDS)
<S>                                                      <C>         <C>
    Goodwill...........................................   $  66,845  $      815
    Acquired core technologies.........................      90,032         363
    Acquired assembled work force......................       9,069         226
    Other..............................................      23,425      12,242
                                                         ----------- -----------
                                                            189,371      13,646
    Less: accumulated amortization.....................     (10,696)     (9,178)
                                                         ----------- -----------
                                                         $  178,675  $    4,468
                                                         ----------- -----------
                                                         ----------- -----------
</TABLE>

3. EXCHANGE TRANSACTION

       On September 30, 1998, Wavetek and WG consummated the Exchange
Transaction whereby the stockholders of WG received 8,317,463 shares of Common
Stock of Wavetek valued by an independent appraisal at $38.7 million plus cash
of 2.0 million Deutsche marks ($1.2 million) and WG became a subsidiary of
Wavetek. In connection with the Exchange Transaction, Wavetek was renamed
Wavetek Wandel & Goltermann, Inc. and changed its year-end to September 30 from
the Saturday closest to September 30. The Exchange Transaction was accounted for
as a purchase of Wavetek by WG. Accordingly, the financial statements of the
Company included herein as of any date or for any period prior to September 30,
1998, are the historical financial statements of WG. In addition, the historical
stockholders' equity of the Company has been retroactively restated to reflect
the equivalent number of shares issued in connection with the Exchange
Transaction. The accounts and results of operations of Wavetek have been
included in the financial statements from September 30, 1998 and reflect
purchase price allocations and adjustments. The accompanying consolidated
balance sheet as of September 30, 1998 and consolidated statement of
stockholders' equity for the year ended September 30, 1998 have been adjusted to
reflect a revised assumption used in the purchase price allocation related to
the Exchange Transaction. Accordingly, intangible assets and additional paid-in
capital as reported in such accompanying consolidated balance sheet and
consolidated statement of stockholders' equity have each been reduced by $2.6
million.

                                      13
<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


3. EXCHANGE TRANSACTION (CONTINUED)

       The purchase price of Wavetek including expenses of the transaction, was
deemed to be $41.5 million and was allocated to the assets acquired and
liabilities assumed based on their estimated fair values as determined by an
independent valuation. The fair value of assets acquired was $271.1 million,
including $56.7 million of goodwill, and liabilities assumed was $229.6 million.
The Company allocated $11.8 million of the purchase price to in-process research
and development projects that had not reached technological feasibility, which
the Company expensed at the date of the Exchange Transaction. Goodwill will be
amortized over 15 years.

       In connection with the Exchange Transaction and related restructuring
activities, the Company recorded approximately $4.5 million of restructuring and
other non-recurring charges in fiscal 1998. This expense included elimination of
one duplicate product line, costs of consolidation of certain sales and service
operations, accounting and tax consulting charges and severance payments.

4. ACQUISITIONS

       PURCHASE OF THE MINORITY INTEREST IN WANDEL & GOLTERMANN TECHNOLOGIES,
INC.

       During fiscal 1997, the Company's ownership interests in its then
publicly-traded U.S. subsidiary, Wandel & Goltermann Technologies, Inc.
("WGTI"), was increased by the repurchases of common shares of WGTI on the open
market. The Company's ownership interest was increased from 57% as of September
30, 1996, to 62% as of September 30, 1997. The total purchase cost of shares
acquired was $4.5 million and was accounted for as a purchase. The Company
allocated $1.4 million of the purchase price to in-process research and
development projects that had not reached technological feasibility, which the
Company expensed at the date of acquisition. In addition, $1.2 million of the
purchase price was allocated to goodwill and other intangibles and is being
amortized over five years.

       On September 18, 1998, the Company purchased the remaining outstanding
minority interest in WGTI for $15.90 per share, or $32.3 million. The Company
allocated $14.3 million of the purchase price to in-process research and
development projects that had not reached technological feasibility, which the
Company expensed at the date of acquisition. In addition, $11.5 million of the
purchase price was allocated to goodwill and other intangibles and is being
amortized over five years. In connection with the acquisition of WGTI, the
Company incurred non-recurring charges of $4.8 million in fiscal 1998. These
costs included $3.4 million of stock option compensation, $0.9 million of
severance expenses and $0.5 million of legal and consulting expenses incurred by
WGTI.

       In connection with the Company's initial proposal in January 1998 to
acquire the outstanding shares of WGTI's common stock for $13.00 in cash, five
actions were filed in the Superior Court of Durham County, North Carolina, that
alleged breaches of fiduciary duty by the Company and the directors of WGTI. The
Company believes the claims made in these actions to be without merit, and the
Company intends to defend itself vigorously.

       PURCHASE OF SWITCHING TEST SOLUTIONS AG

       In fiscal 1997, the Company purchased 40% of the outstanding capital
stock of Switching Test Solutions AG, ("STS") for $2.0 million. The Company
allocated $0.3 million of the purchase price to in-process research and
development projects that had not reached technological feasibility, which the
Company expensed at the date of


                                      14

<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


4. ACQUISITIONS (CONTINUED)

acquisition. In addition, $0.6 million of the purchase price was allocated to
goodwill and other intangibles and is being amortized over five years. This
investment was accounted for using the equity method of accounting in fiscal
1997.

       At the beginning of fiscal 1998, the Company purchased the remaining 60%
interest in STS for a purchase price of $6.5 million. The Company allocated $1.4
million of the purchase price to in-process research and development projects
that had not reached technological feasibility, which the Company expensed at
the date of acquisition. In addition, $3.3 million of the purchase price was
allocated to goodwill and other intangibles and is being amortized over five
years. The accounts and results of STS have been included in the Company's
consolidated financial statements from the date of the acquisition of the
remaining 60% interest.

       In February 1998, the Company sold 400 shares, or 10%, of the common
stock of STS to the new CEO of the Company for a purchase price of $0.8 million,
which was paid in April 1998. In connection with this transaction, the CEO and
two principal owners and directors of the Company entered into put and call
options related to the shares sold to the CEO. In September 1998, the two
shareholders exercised the call options and purchased the shares of common stock
of STS held by the CEO. Subsequently, the Company purchased these shares from
the two principal owners for $0.8 million in cash. The Company allocated $0.1
million of the purchase price to in-process research and development projects
that had not reached technological feasibility, which the Company expensed at
the date of acquisition. In addition, $0.3 million of the purchase price has
been allocated to goodwill and other intangibles and is being amortized over
five years.

       OTHER ACQUISITIONS

       In January 1998, the Company acquired privately-held Tinwald Networking
Technologies Inc. (Tinwald), an Ontario Canada-based developer of software
analysis tools. Under the terms of the transaction, the Company acquired all of
the outstanding common stock of Tinwald for an initial payment of approximately
$5.0 million, plus the possibility of contingent payments for up to three years
after the acquisition. The Company accounted for the transaction as a purchase.
The purchase price was allocated to the assets acquired and liabilities assumed
based on their estimated fair values as determined by an independent valuation.
The fair value of tangible assets acquired was approximately $1.6 million and
liabilities assumed was approximately $0.3 million. In addition, approximately
$3.9 million of the purchase price was allocated to in-process research and
development projects that had not reached technological feasibility, which the
Company expensed at the date of the acquisition. The remainder of the purchase
price, including expenses related to the purchase, of $0.3 million has been
allocated to goodwill and is being amortized over five years.

       In March 1998, the Company acquired the assets of privately held Network
Intelligence, Inc. ("NI"), a California-based developer of network performance
management software. Under the terms of the transaction, the Company acquired
all of the assets of NI for an initial payment of $1.3 million. The Company
accounted for the transaction as a purchase. The total purchase price of
approximately $1.5 million, including expenses related to the purchase, was
allocated to in-process research and development projects that had not reached
technological feasibility, which the Company expensed at the date of the
acquisition.


                                      15 
<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


4. ACQUISITIONS (CONTINUED)

       The following unaudited pro forma information presents a summary of
consolidated results of operations as if the Exchange Transaction and the
acquisitions of WGTI, STS, Tinwald and NI had all occurred as of the beginning
of each period presented:

<TABLE>
<CAPTION>
                                                                       FOR THE YEAR ENDED
                                                                          SEPTEMBER 30,
                                                                    ------------------------
                                                                        1998         1997
                                                                    ------------ -----------
             <S>                                                    <C>          <C>
                                                                     (DOLLARS IN THOUSANDS)
              Revenues...........................................   $  469,773   $  437,485
              Loss before extraordinary items....................   $  (51,542)  $  (45,781)
              Net loss...........................................   $  (56,053)  $  (50,292)
              Net loss per share.................................   $    (4.25)  $    (3.81)
</TABLE>

       The unaudited pro forma results have been prepared for comparative
purposes only and include certain adjustments, such as additional amortization
expense as a result of goodwill and other intangible assets. They do not purport
to be indicative of the results of operations which would have resulted had the
combinations been consummated on the first day of each period presented. In
addition, the pro forma results are not intended to be a projection of future
results of operations of the consolidated entities.


                                      16

<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


5. CREDIT AGREEMENTS AND LONG-TERM OBLIGATIONS

       Long-term obligations are as follows:
<TABLE>
<CAPTION>
                                                                                                SEPTEMBER 30,
                                                                                           ----------------------
                                                                                              1998       1997
                                                                                           ----------  ----------
                                                                                           (DOLLARS IN THOUSANDS)
      <S>                                                                                  <C>         <C>
      Senior Subordinated Notes; total principal balance due June 15, 2007; interest
         payable semiannually on June 15 and December 15 at 10 1/8%; guaranteed by 
         the Company's U.S. subsidiaries................................................   $  85,000    $   -

       Term loan payable to banks, paid in full in October 1998.........................      24,000        -

      Term loans payable to banks under Bank Pooling Agreement; payable in quarterly
         installments through 2011; interest payable at rates set on dates of
         borrowing ranging from 5.60% to 7.75%; secured by certain inventories, trade
         receivables, fixed assets and other assets of the Company and the share
         capital of certain subsidiaries................................................      20,906      25,388

      Term loans payable to banks; payable in semi-annual installments through 2007;
         interest ranging from 3.50% to 6.0%; secured by mortgages on certain
         facilities.....................................................................      12,617      16,783

      Credit facilities with banks; interest rates ranging from 5.0% to 10.5%...........       4,735       7,115

       Unsecured non-interest bearing promissory note recorded at present value on
         issuance date at implied interest rate of 8.1875%; issued in connection with
         license of technology; payable in six annual installments of $0.8 million
         commencing January 1999........................................................       3,685        -

      Other obligations.................................................................         874       1,089
                                                                                           ----------  ----------
                                                                                             151,817      50,375
      Less current maturities...........................................................     (30,222)    (16,332)
                                                                                           ----------  ----------
      Long-term obligations, less current maturities....................................   $ 121,595   $  34,043
                                                                                           ----------  ----------
                                                                                           ----------  ----------
</TABLE>

       As of September 30, 1998, the future annual principal payments on
long-term obligations outstanding at September 30, 1998, were as follows (in
thousands):

<TABLE>
           <S>                                    <C>
           1999...........................      $  30,222
           2000...........................          6,376
           2001...........................          5,032
           2002...........................          6,138
           2003...........................          4,267
           Thereafter.....................         99,782
                                                ----------
                                                $ 151,817
                                                ----------
                                                ----------
</TABLE>


                                      17

<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


5. CREDIT AGREEMENTS AND LONG-TERM OBLIGATIONS (CONTINUED)

       In November 1997, WG and one of its German subsidiaries entered into a
collateral pooling agreement with six banks (the "Bank Pooling Agreement"). The
Bank Pooling Agreement has an indefinite term, however, may be terminated by
either party with a notice period of three months before the end of any calendar
quarter, but not before December 31, 1999. The Bank Pooling Agreement provides
for term loans and revolving credit facilities up to a maximum of approximately
$116 million at terms and interest rates negotiated at the date of each
borrowing. Prior to November 1997, the Company had a similar bank pooling
agreement in place. Under the bank pooling agreements, the Company has
short-term borrowings outstanding of $59.6 million and $14.2 million at
September 30, 1998 and 1997, respectively, which were classified as "Notes
payable to banks" in the accompanying consolidated balance sheets. The
short-term borrowings bear interest at rates ranging from 2.6% to 6.75% at
September 30, 1998. The Bank Pooling Agreement stipulates that if the Company
does not complete an initial public offering of its Common Stock by the year
2000, the Company is required to achieve a Total Capital Ratio, as defined, that
is acceptable to the banks. The Bank Pooling Agreement is secured by certain
inventories, trade receivables, fixed assets and other assets of WG and the
share capital of certain of its subsidiaries. At September 30, 1998,
approximately $35.8 million is available for borrowing under the Bank Pooling
Agreement.

       Prior to the Exchange Transaction, Wavetek had, and following the 
Exchange Transaction, the Company has $85 million outstanding in aggregate 
principal amount of Senior Subordinated Notes (the "Notes") issued pursuant 
to an Indenture (the "Indenture") between the Company and the Bank of New 
York, as trustee. The Notes bear interest at 10 1/8%, payable semi-annually 
on each June 15 and December 15. The total principal balance of the Notes is 
due June 15, 2007. On or after June 15, 2002, the Notes will be redeemable at 
the option of the Company, in whole or in part, at the following redemption 
prices (expressed as percentages of principal amount) plus accrued and unpaid 
interest and liquidated damages, if any: 105.063% if redeemed during the 
twelve-month period beginning on June 15, 2002; 103.375% if redeemed during 
the twelve-month period beginning on June 15, 2003; 101.688% if redeemed 
during the twelve-month period beginning on June 15, 2004, and 100% 
thereafter. Notwithstanding the foregoing, during the first three years 
following the issue date of the Notes, the Company may redeem up to 33 1/3% 
of the aggregate principal amount of the Notes with the proceeds of one or 
more Public Equity Offerings (as defined in the Indenture) at a redemption 
price of 110.125% of the principal amount thereof, in each case plus accrued 
and unpaid interest and liquidated damages, if any. The Notes are guaranteed 
on a senior subordinated basis by the Company's current and future 
subsidiaries in the United States. The Indenture requires the Company to 
comply with various affirmative and negative covenants. The Company was in 
compliance with all such covenants at September 30, 1998.

       Also in connection with the Exchange Transaction, the Company's financial
statements include the New Credit Agreement (the "New Credit Agreement") with a
group of five lending banks (the "Lenders") including DLJ Capital Funding, Inc.
as Syndication Agent and Fleet National Bank as Administrative Agent. The
Company had $24.0 million outstanding under the term facility and $4.8 million
outstanding under the revolving credit facility at September 30, 1998. All
borrowings under the New Credit Agreement were repaid in full on October 2,
1998. Accordingly, all such amounts were classified as current liabilities in
the accompanying consolidated balance sheet as of September 30, 1998. Borrowings
outstanding under the New Credit Agreement at September 30, 1998 were refinanced
with the proceeds of unsecured short-term loans from two German banks,
aggregating $29.7 million, received September 30, 1998. These short-term loans
bear interest at rates ranging from 5.0625% to 6.7%, are due January 4, 1999 and
were classified as "Notes payable to banks" in the accompanying consolidated
balance sheet as of September 30, 1998. The cash proceeds were invested upon
receipt on September 30, 1998 in cash equivalents pending the repayment of the
New Credit Agreement.


                                      18

<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


5. CREDIT AGREEMENTS AND LONG-TERM OBLIGATIONS (CONTINUED)

Management is currently negotiating the terms of a new long-term credit
facility, which it intends to draw upon to repay the short-term loans upon their
maturity in January 1999.

       Certain of the Company's foreign subsidiaries have agreements with banks
providing for short-term revolving advances and overdraft facilities in an
aggregate total amount of approximately $24.4 million. At September 30, 1998 and
1997, aggregate amounts of $19.0 million and $21.7 million, respectively, had
been borrowed under these facilities. Revolving borrowings under these
agreements bear interest at variable rates ranging from 3.578% to 9% as of
September 30, 1998. Certain of these bank agreements also provide for long-term
borrowings and are generally secured by the assets of the local subsidiary and
the guarantee of the Company. Most of these agreements do not have stated
expiration dates, but are cancelable by the banks at any time. In addition,
these bank agreements provide for issuance of letters of credit and bank
guarantees in an aggregate total amount of approximately $10.5 million. At
September 30, 1998, the Company was contingently liable for outstanding letters
of credit and bank guarantees aggregating $3.2 million.

       Borrowings under all of the Company's revolving bank agreements have been
classified as "Notes payable to banks" in the accompanying consolidated balance
sheets due to the short-term nature of the revolving advances taken under these
agreements.

       At September 30, 1998 and 1997, the Company had unsecured notes payable
to stockholders of $12.3 million and $7.7 million, respectively. These
obligations bear interest at 7.75%, payable quarterly, and are due at the
earlier of an initial public offering of the Company's Common Stock or September
30, 2000. In addition, each stockholder has the right to call outstanding
obligations in part or in total at the end of each fiscal year with nine months
notice. The Company recorded interest expense related to these obligations of
$0.8 million in fiscal 1998 and $0.9 million in each of fiscal 1997 and 1996.

6. RETIREMENT BENEFITS

       DEFINED CONTRIBUTION PLANS

       In certain countries, the Company's employees participate in Company
sponsored defined contribution plans. Contributions by the Company to these
plans were $0.8 million in fiscal 1998 and $0.7 million in each of fiscal 1997
and 1996.

       DEFINED BENEFIT PLANS

       For those Company employees participating in defined benefit plans,
benefits are generally based upon years of service and compensation or stated
amounts for each year of service.


                                      19

<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


6. RETIREMENT BENEFITS (CONTINUED)

       The components of net pension expense for the Company's defined benefit
plans are (in thousands):

<TABLE>
<CAPTION>
                                                                    FOR THE YEAR ENDED SEPTEMBER 30,
                                                             -------------------------------------------
                                                                 1998            1997            1996
                                                             -----------     -----------     -----------
      <S>                                                    <C>             <C>             <C>
      Service cost........................................   $   3,304       $   1,338       $   1,754
      Interest cost.......................................       2,797           2,774           2,899
      Return on plan assets...............................        (915)           (704)         (1,154)
                                                             -----------     -----------     -----------
      Pension expense.....................................   $   5,186       $   3,408       $   3,499
                                                             -----------     -----------     -----------
                                                             -----------     -----------     -----------
</TABLE>

       The funded status of the Company's major pension plans and the amounts
recognized in the Company's consolidated balance sheet are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                SEPTEMBER 30, 1998         SEPTEMBER 30, 1997
                                                             -------------------------- --------------------------
                                                             PLAN ASSETS  ACCUMULATED    PLAN ASSETS  ACCUMULATED
                                                                EXCEED      BENEFITS       EXCEED      BENEFITS
                                                             ACCUMULATED     EXCEED     ACCUMULATED     EXCEED
                                                               BENEFITS   PLAN ASSETS     BENEFITS    PLAN ASSETS
                                                             -----------  ------------- -----------   ------------
      <S>                                                    <C>          <C>           <C>           <C>
      Actuarial present value of benefit obligations:
          Vested benefit obligation........................  $   9,870    $    41,652   $    8,032    $    33,703
          Non-vested benefit obligation....................        -            1,220            -          1,014
                                                             -----------  ------------- -----------   ------------
      Accumulated benefit obligation.......................      9,870         42,872        8,032         34,717
      Effect of projected future compensation levels.......        208             64          161             32
                                                             -----------  ------------- -----------   ------------
      Projected benefit obligation.........................     10,078         42,936        8,193         34,749
      Plan assets at fair value............................    (10,861)           -        (10,123)           -
      Unrecognized prior service costs and
          net gain (loss)..................................     (1,243)        (2,945)         -              -
                                                             -----------  ------------- -----------   ------------
      Accrued pension liabilities (prepaid pension costs)..  $  (2,026)   $    39,991   $   (1,930)   $    34,749
                                                             -----------  ------------- -----------   ------------
                                                             -----------  ------------- -----------   ------------
</TABLE>

       The key economic assumptions used in the actuarial calculations are as
follows:

<TABLE>
<CAPTION>
                                                                    1998            1997            1996
                                                                 -----------    -----------     -----------
        <S>                                                      <C>            <C>             <C>
        Discount rate........................................       6.25%        6.5%-7.0%          6.5%
        Rate of increase in compensation levels..............    3.5 - 4.25%     4.5%-5.0%          4.5%
        Expected long-term rate of return on assets..........       7.5%            8.5%            8.5%
</TABLE>

       Assets of the various plans consist primarily of managed funds that have
underlying investments in stocks and bonds. The Company's policy for funded
plans is to make contributions equal to or greater than the requirements
prescribed by law in each country.


                                      20

<PAGE>


                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


7. LEASE COMMITMENTS

       The Company rents certain facilities under operating leases. The leases
generally provide that the Company pay the taxes, insurance and maintenance
expenses related to the leased property. Certain leases include renewal options
and/or options to purchase the leased property. The Company also rents equipment
and other facilities on a month-to-month basis. Total rent expense was $5.8
million for fiscal 1998, $4.4 million for fiscal 1997 and $3.8 million for
fiscal 1996.

       In 1991, Wavetek entered into a sale/leaseback arrangement for its San
Diego manufacturing facility with an affiliate of a major stockholder. The lease
runs through June 2006 with the minimum annual rental of $0.6 million, subject
to annual consumer price index adjustments. The original gain on the transaction
was deferred and is being amortized over the original ten-year lease term.

       The Company's U.S. corporate headquarters and the office and
manufacturing facilities of two of the Company's U.S. subsidiaries are leased
from a partnership affiliated with certain major stockholders of the Company.
Under these leases, which expire on September 30, 2005 and 2010, annual rent of
$1.2 million is payable in monthly installments and is adjusted annually for
changes in the consumer price index.

       At September 30, 1998, the annual future minimum lease payments under
noncancelable operating leases and the future minimum annual lease receipts
under noncancelable subleases are as follows:

<TABLE>
<CAPTION>
                                                                       LEASE         LEASE
                                                                      PAYMENTS      RECEIPTS
                                                                    ------------- -------------
              <S>                                                   <C>           <C>
                                                                      (DOLLARS IN THOUSANDS)
              1999...............................................     $  9,225        $  542
              2000...............................................        7,005           263
              2001...............................................        5,895           213
              2002...............................................        3,679           222
              2003...............................................        3,019            37
              Later years........................................       16,645           -
                                                                    ------------- -------------
              Total minimum lease payments.......................     $ 45,468        $1,277
                                                                    ------------- -------------
                                                                    ------------- -------------
</TABLE>

8. STOCKHOLDERS' EQUITY

       In September 1998, the Company increased its authorized capital stock to
55,000,000 shares, of which 50,000,000 shares were designated as Common Stock
and 5,000,000 shares were designated as Preferred Stock. Previously, the Company
had authorized capital stock of 15,000,000, all of which was designated as
Common Stock. All authorized shares have a par value of $.01 per share. No
Preferred Stock has been issued by the Company.

       In fiscal 1998, the Company declared dividends of $3.6 million of which
$2.0 million was paid in cash, $0.7 million was paid as a decrease to notes
receivable from related parties and $0.9 million was paid as an increase to
long-term obligations to related parties. In fiscal 1997, the Company declared
dividends of $2.0 million of which $1.2 million was paid in cash, $0.4 million
was paid as a decrease to notes receivable from related parties and $0.4 million
was paid as an increase to long-term obligations to related parties.


                                      21

<PAGE>


                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


8. STOCKHOLDERS' EQUITY (CONTINUED)

       Prior to the Exchange Transaction, Wavetek had, and following the
Exchange Transaction, the Company has 513,298 options outstanding under the
Company's Amended and Restated Stock Option Plan ("the Stock Option Plan") at
prices ranging from $1.25 to $17.91 per share and which expire through 2008.
Under the Stock Option Plan, options to purchase an aggregate of up to 1,320,232
shares of Common Stock may be issued at an exercise price equal to the fair
value of the shares at the date of grant. Options generally vest and become
exercisable over a period not to exceed five years.

       A summary of stock option transactions is as follows:

<TABLE>
<CAPTION>
                                                                                   WEIGHTED
                                                                                   AVERAGE
                                                                    SHARES      EXERCISE PRICE
                                                                 -------------- ---------------
              <S>                                                <C>            <C>
              Outstanding at September 30, 1997................        -               -
                  Options of Wavetek...........................     513,298         $10.48
                  Granted......................................        -               -
                  Canceled.....................................        -               -
                  Exercised....................................        -               -
                                                                 --------------
              Outstanding at September 30, 1998................     513,298         $10.48
                                                                 --------------
                                                                 --------------
</TABLE>

       As of September 30, 1998, options to purchase 194,696 shares, were
exercisable and 766,934 shares are available for future grant under the Stock
Option Plan.

       Exercise prices and weighted average remaining contractual lives for the
options outstanding under the Stock Option Plan as of September 30, 1998 are as
follows:

<TABLE>
<CAPTION>
                          OPTIONS OUTSTANDING                               OPTIONS EXERCISABLE
---------------------------------------------------------------------- ------------------------------
                                           WEIGHTED
                                           AVERAGE
                          NUMBER OF       REMAINING        WEIGHTED      NUMBER OF       WEIGHTED
                           OPTIONS       CONTRACTUAL       AVERAGE        OPTIONS        AVERAGE
   EXERCISE PRICES       OUTSTANDING     LIFE (YEARS)   EXERCISE PRICE  EXERCISABLE   EXERCISE PRICE
---------------------------------------- ------------- --------------- ------------- ---------------
<S>                    <C>               <C>           <C>             <C>           <C>
    $1.25 - $2.57          123,250            4.9          $  1.72          95,750        $  1.48
    $5.21 - $12.50         158,000            6.9          $  6.41          57,250        $  6.96
        $17.91             232,048            8.9          $ 17.91          41,696        $ 17.91
                       -----------------                                ------------
                           513,298                                         194,696
                       -----------------                                ------------
                       -----------------                                ------------
</TABLE>

       SFAS 123 requires pro forma information to be disclosed regarding the
amount of net income determined as if the Company had accounted for its employee
stock options under the fair value method prescribed by SFAS 123. For the
purpose of determining such pro forma net income, the fair value of these
options was estimated as of the date of grant using the minimum value method
provided for in SFAS 123 with the following assumptions for 1998: risk-free
interest rate of 6%, no annual dividends and an expected option life of five
years. The effect of applying the minimum value method of SFAS 123 to options
granted in 1998 did not result in pro forma net income amounts that are
materially different from amounts reported. Accordingly, no such pro forma
information is presented herein.

                                      22
<PAGE>


                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


9. INCOME TAXES

       The provision (credit) for income taxes is comprised as follows:

<TABLE>
<CAPTION>
                                                                                YEARS ENDED SEPTEMBER 30,
                                                                            ----------------------------------
                                                                               1998        1997        1996
                                                                            ----------  ---------- ----------
                                                                                 (DOLLARS IN THOUSANDS)
               <S>                                                          <C>         <C>        <C>
              Federal:
                  Current..................................................   $  (866)     $ (123)   $ 1,100
                  Deferred.................................................    (2,151)         57        780
                                                                            ----------  ---------- ----------
                                                                               (3,017)        (66)     1,880
                                                                            ----------  ---------- ----------
              State:
                  Current..................................................       -            73        241
                  Deferred.................................................       -            (7)        87
                                                                            ----------  ---------- ----------
                                                                                  -            66        328
                                                                            ----------  ---------- ----------
              Foreign:
                  Current..................................................     5,429       2,812      3,245
                  Deferred.................................................     4,129       4,550     (5,703)
                                                                            ----------  ---------- ----------
                                                                                9,558       7,362     (2,458)
                                                                            ----------  ---------- ----------
                Total provision (credit) for income taxes..................   $ 6,541      $7,362    $  (250)
                                                                            ----------  ---------- ----------
                                                                            ----------  ---------- ----------
</TABLE>

       The  reconciliation  of income taxes computed at the U.S. federal 
statutory tax rate to income tax provision (credit) is as follows:

<TABLE>
<CAPTION>
                                                                                YEARS ENDED SEPTEMBER 30,
                                                                            ----------------------------------
                                                                               1998        1997        1996
                                                                            ---------- ----------- -----------
               <S>                                                          <C>        <C>         <C>
              Federal income tax at statutory rate.........................   (35)%         35%        35%
              State income taxes, net of federal tax benefit...............     -            1          5
              Foreign tax rate differential................................     6           10        (30)
              Benefit from foreign sales corporation.......................     -           (1)        (5)
              Acquired in-process research and development and amortization
                 of goodwill...............................................    46          -           -
              Other, net...................................................    (2)          (1)        (5)
              Write-down of investments in subsidiaries for which
                 benefits were not previously recognized...................     -          -          (42)
                                                                            ---------- ----------- -----------
                                                                               15           44        (42)
              Changes in valuation allowance...............................    10            6         38
                                                                            ---------- ----------- -----------
              Effective income tax rate....................................    25%          50%        (4)%
                                                                            ---------- ----------- -----------
                                                                            ---------- ----------- -----------
</TABLE>


       Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax assets and liabilities as of September
30, 1998 and 1997 are set forth in the following table.


                                      23

<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


9. INCOME TAXES (CONTINUED)

       The significant components of deferred tax assets and liabilities at
September 30, result from:

<TABLE>
<CAPTION>
                                                                                1998          1997
                                                                            ------------- -------------
                                                                               (DOLLARS IN THOUSANDS)
              <S>                                                           <C>           <C>
              Deferred tax assets:
                Inventories................................................   $ 6,845        $  5,734
                Accrued and unpaid expenses................................     6,508           1,905
                Property, plant and equipment..............................     1,138           1,599
                Intangible assets..........................................     3,089           2,543
                Pension plans..............................................     3,253           2,308
                Tax credit carryforwards...................................     3,179           1,541
                Net operating loss carryforwards...........................    24,707          23,377
                Other......................................................       946             890
                                                                            ------------- -------------
              Total deferred tax assets....................................    49,665          39,897
              Deferred tax liabilities:
                Intangible assets..........................................   (39,736)            -
                Property, plant and equipment..............................    (1,480)           (855)
                Pension plans..............................................    (1,551)           (591)
                Other......................................................      (233)           (717)
                                                                            ------------- -------------
              Deferred tax liabilities.....................................   (43,000)         (2,163)
                                                                            ------------- -------------
              Valuation allowance..........................................   (15,152)        (10,889)
                                                                            ------------- -------------
              Net deferred tax assets (liabilities)........................   $(8,487)       $ 26,845
                                                                            ------------- -------------
                                                                            ------------- -------------
</TABLE>


       As of September 30, 1998, the Company's German subsidiaries had net
operating loss carryforwards of approximately $24 million which can be used
indefinitely. The Company's U.S. subsidiaries had net operating loss
carryforwards of approximately $7.7 million and tax credit carryforwards of
approximately $3.2 million which can be used through 2015, subject to certain
restrictions on amounts which may be used in each year. The Company's French
subsidiaries had net operating loss carryforwards of approximately $7.2 million
which expire on various dates during the next four years.

       The Company establishes valuation allowances in accordance with the
provisions of SFAS No. 109, ACCOUNTING FOR INCOME TAXES. Management believes
sufficient uncertainty exists regarding the realizability of deferred tax assets
that a valuation allowance is required. The Company continually reviews the
adequacy of the valuation allowance and is recognizing these benefits only as
reassessment indicates that it is more likely than not that the benefits will be
realized.


                                      24

<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


10. GEOGRAPHIC INFORMATION

       The Company operates in a single industry segment: the design,
manufacture and distribution of electronic test equipment and measurement tools.
In the table below, net sales, income (loss) before provision (credit) for
income taxes and total assets are reported based on the location of the
Company's facilities. Intercompany transfers are made at arm's length between
the various geographic areas.

<TABLE>
<CAPTION>
                                                                              YEARS ENDED SEPTEMBER 30,
                                                                     -----------------------------------------
                                                                     ------------- ------------- -------------
                                                                         1998          1997          1996
                                                                     ------------- ------------- -------------
                                                                              (DOLLARS IN THOUSANDS)
<S>                                                                  <C>           <C>           <C>
Net sales:
   Europe.........................................................     $ 176,437    $ 148,037      $128,810
   Canada, Mexico, Central and South America......................        69,725       62,922        42,837
   Asia-Pacific...................................................        44,258       40,417        34,870
   United States..................................................        37,468       30,511        36,467
                                                                     ------------- ------------- -------------
Consolidated net sales............................................     $ 327,888    $ 281,887      $242,984
                                                                     ------------- ------------- -------------
                                                                     ------------- ------------- -------------
Income before provision (credit) for income taxes and minority interest in
   income (loss):
   Europe.........................................................     $  14,871    $  28,056      $  8,275
   Canada, Mexico, Central and South America......................           131        1,668           482
   Asia-Pacific...................................................           864         (203)          525
   United States..................................................       (38,495)      (1,329)        5,870
   Eliminations...................................................        (3,193)     (13,587)       (8,772)
                                                                     ------------- ------------- -------------
Consolidated income before provision (credit) for income
   taxes and minority interest in income (loss)...................     $ (25,822)   $  14,605      $  6,380
                                                                     ------------- ------------- -------------
                                                                     ------------- ------------- -------------

Total Assets:
   Europe.........................................................     $ 512,582    $ 364,722      $396,174
   Canada, Mexico, Central and South America......................        26,174       12,786        15,213
   Asia-Pacific...................................................        14,341       14,095        10,418
   United States and Canada.......................................       265,722       42,432        37,411
   Eliminations...................................................      (334,295)    (211,827)     (223,281)
                                                                     ------------- ------------- -------------
Consolidated total assets.........................................     $ 484,524    $ 222,208      $235,935
                                                                     ------------- ------------- -------------
                                                                     ------------- ------------- -------------
</TABLE>


                                      25
<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


11. LITIGATION AND OTHER CLAIMS

       The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. It is management's opinion that the likely
outcome of any such proceedings and claims would not have a material adverse
effect on the Company's future results of operations or financial position.

       A matter is pending in the United States District Court for the Southern
District of Indiana, involving a claim by Trilithic, Inc. ("Trilithic") that
certain products of the Company infringe Trilithic's patent on a radio frequency
leakage detection system for a cable network system. Trilithic seeks injunctive
and unspecified monetary relief, including enhanced damages for alleged willful
infringement. The product line potentially affected by this claim, and by a
second patent that has been issued to Trilithic subsequent to the filing of the
lawsuit, had fiscal 1998 sales of approximately $6.3 million. Trilithic's
complaint, which was served on the Company in March 1997, was the first notice
to the Company of Trilithic's patent. This litigation is ongoing and in the
event the outcome of the litigation is not favorable, the Company could be
required to: (1) redesign existing or future products so that they do not use
the rights covered by Trilithic's patent; (2) negotiate licenses from Trilithic
to avoid such redesign; (3) withdraw existing products or not introduce future
products that are covered by those patent rights and (4) pay Trilithic damages
for any infringement since March 1997. It is management's opinion that the
outcome of this matter, net of amounts currently accrued, will not have a
material adverse effect on the Company's results of operations or financial
position.

       In December 1998, the Company received a letter from counsel for certain
beneficial owners of the Company's 10 1/8% Senior Subordinated Notes due 2007
(the "Notes") alleging that, as a result of the Exchange Transaction, a "Change
of Control" under the indenture governing such notes (the "Indenture") has
occurred and, because the Company has failed to make an offer to purchase the
Notes, that an Event of Default under the Indenture has occurred. The Company
believes that the Exchange Transaction did not result in a Change of Control
under the Indenture and that the Company was not required to make an offer to
purchase the Notes.

12. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL DATA

       The Company's payment obligations under the Notes are guaranteed by all
of the Company's current and future domestic subsidiaries (collectively, the
"Subsidiary Guarantors"). WGTI and Wandel & Goltermann ATE Systems, Inc., which
became legal Subsidiary Guarantors upon completion of the Exchange Transaction,
are shown as Subsidiary Guarantors for all periods presented. Wavetek U.S. Inc.
and its subsidiary, Digital Transport Systems, Inc., are also included in the
balance sheet as of September 30, 1998 as a result of the Exchange Transaction.
Such guarantees are full and unconditional and joint and several. Separate
financial statements of the Subsidiary Guarantors are not presented because the
Company's management has deemed that they would not be material to investors.
The following supplemental condensed consolidating financial data sets forth, on
an unconsolidated basis, balance sheets, statements of operations and statements
of cash flows data for (i) the Company (Wavetek Wandel & Goltermann, Inc.
formerly Wavetek Corporation, the legal obligor under the Notes), (ii) the
current Subsidiary Guarantors and (iii) the Company's foreign subsidiaries (the
"Foreign Subsidiaries"). The supplemental financial data reflects the
investments of the Company in the Subsidiary Guarantors and the Foreign
Subsidiaries using the equity method of accounting.


                                      26
<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


12. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL DATA (CONTINUED)

                                           CONSOLIDATING BALANCE SHEETS
                                             AS OF SEPTEMBER 30, 1998
                                              (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                      WAVETEK
                                                     WANDEL &
                                                    GOLTERMANN,   SUBSIDIARY      FOREIGN
                                                       INC.       GUARANTORS    SUBSIDIARIES   ELIMINATIONS    CONSOLIDATED
                                                   ------------  ------------  -------------- -------------- ---------------
<S>                                                <C>           <C>           <C>            <C>            <C>
                                     ASSETS
Current assets:
   Cash and cash equivalents...................... $       19      $  31,143    $     4,382   $       -         $ 35,544
   Accounts receivable (less allowance for
     doubtful accounts of $4,432).................      8,710         26,166         81,907       (24,502)        92,281
   Inventories....................................         -          18,033         59,942        (3,089)        74,886
   Deferred income taxes..........................      3,592          4,408          9,095           -           17,095
   Other current assets...........................      1,244          1,884          9,608           -           12,736
                                                   ------------  ------------  -------------- -------------- ---------------
Total current assets..............................     13,565         81,634        164,934       (27,591)       232,542
Property and equipment, net.......................      1,611          8,015         56,971           -           66,597
Intangible assets, net............................      6,755        111,588         60,332           -          178,675
Investment in subsidiaries........................    143,570            -           29,932      (173,502)           -
Other assets......................................        213          2,763          3,794           (60)         6,710
                                                   ------------  ------------  -------------- -------------- ---------------
Total assets...................................... $  165,714      $ 204,000    $   315,963   $  (201,153)      $484,524
                                                   ------------  ------------  -------------- -------------- ---------------
                                                   ------------  ------------  -------------- -------------- ---------------

<CAPTION>
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Notes payable to banks......................... $   34,463      $     373    $    78,249   $       -         $113,085
   Trade accounts payable.........................      2,805         20,322         35,845       (21,360)        37,612
   Accrued compensation...........................        714          5,478         19,715           -           25,907
   Income taxes payable...........................    (10,839)         9,978          6,817                        5,956
   Other current liabilities......................      3,683          8,967         30,397        (1,788)        41,259
   Current maturities of long-term obligations....     24,000            741          5,481           -           30,222
   Current maturities of long-term obligations to
     related parties..............................         -             -           12,335           -           12,335
                                                   ------------  ------------  -------------- -------------- ---------------
Total current liabilities.........................     54,826         45,859        188,839       (23,148)       266,376
Long-term obligations, less current maturities....     85,000          4,299         33,711        (1,415)       121,595
Pension liabilities...............................         -              -          39,991           -           39,991
Deferred taxes....................................        229         21,908          3,445           -           25,582
Other non-current liabilities.....................        245          2,142          3,179           -            5,566
Commitments and contingencies.....................
Stockholders' equity:
   Common stock...................................        132             -             -             -              132
   Additional paid-in capital.....................     72,948        163,580         75,585      (239,165)        72,948
   Accumulated deficit............................    (57,645)       (33,762)       (38,766)       72,528        (57,645)
   Foreign currency translation adjustments.......      9,979            (26)         9,979        (9,953)         9,979
                                                   ------------  ------------  -------------- -------------- ---------------
Total stockholders' equity........................     25,414        129,792         46,798      (176,590)        25,414
                                                   ------------  ------------  -------------- -------------- ---------------
                                                   ------------  ------------  -------------- -------------- ---------------
Total liabilities and stockholders' equity........ $  165,714      $ 204,000    $   315,963   $  (201,153)      $484,524
                                                   ------------  ------------  -------------- -------------- ---------------
                                                   ------------  ------------  -------------- -------------- ---------------
</TABLE>


                                      27
<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


12. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL DATA (CONTINUED)

                                           CONSOLIDATING BALANCE SHEETS
                                             AS OF SEPTEMBER 30, 1997
                                              (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                      WAVETEK
                                                     WANDEL &
                                                    GOLTERMANN,  SUBSIDIARY   FOREIGN
                                                       INC.      GUARANTORS   SUBSIDIARIES  ELIMINATIONS   CONSOLIDATED
                                                   ------------ ------------ -------------- -------------  ------------
<S>                                                <C>          <C>          <C>            <C>            <C>
                                                        ASSETS
Current assets:
   Cash and cash equivalents......................    $    -       $13,401      $  4,499     $ (8,500)     $   9,400
   Accounts receivable (less allowance for
     doubtful accounts of $1,938).................         -        11,075        48,681       (6,266)        53,490
   Inventories....................................         -         8,848        48,305       (4,185)        52,968
   Notes receivable from related parties..........         -           -           7,070       (1,355)         5,715
   Deferred income taxes..........................         -         1,448        10,139          -           11,587
   Other current assets...........................         -         2,301         8,198          -           10,499
                                                   ------------ ------------ -------------- ------------- -------------
Total current assets..............................         -        37,073       126,892      (20,306)       143,659
Property and equipment, net.......................         -         3,320        48,589          -           51,909
Intangible assets, net............................         -         2,039         2,429          -            4,468
Investment in subsidiaries........................         -           -          20,576      (20,576)           -
Deferred income taxes.............................         -           -          15,258          -           15,258
Other assets......................................         -           -           6,914                       6,914
                                                   ------------ ------------ -------------- ------------- -------------
Total assets......................................    $    -       $42,432    $  220,658    $ (40,882)     $ 222,208
                                                   ------------ ------------ -------------- ------------- -------------
                                                   ------------ ------------ -------------- ------------- -------------

<CAPTION>
                                         LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Notes payable to banks.........................    $    -       $   -        $ 35,833    $     -        $  35,833
   Trade accounts payable.........................         -         4,451        32,300      (14,766)        21,985
   Accrued compensation...........................         -         1,487        13,345          -           14,832
   Income taxes payable...........................         -           -           3,768          -            3,768
   Other current liabilities......................         -         3,042        16,762          -           19,804
   Current maturities of long-term obligations....         -           -          16,332          -           16,332
   Current maturities of long-term obligations to
     related parties..............................         -           -             808          -              808
                                                   ------------ ------------ -------------- ------------- -------------
Total current liabilities.........................         -         8,980       119,148      (14,766)       113,362
Long-term obligations, less current maturities....         -         1,355        34,043       (1,355)        34,043
Long-term obligations to related parties, less
   current maturities.............................         -           -           6,885          -            6,885
Pension liabilities...............................         -           -          34,749          -           34,749
Other liabilities.................................         -           -           3,041          -            3,041
Commitments and contingencies.....................
Minority interest.................................         -           -             -         11,521         11,521
Stockholders' equity:
   Common stock...................................         -           -              83          -               83
   Additional paid-in capital.....................         -        30,479        33,435      (30,479)        33,435
   Retained earnings (accumulated deficit)........         -         1,618       (22,600)      (5,803)       (26,785)
   Foreign currency translation adjustments.......         -           -          11,874          -           11,874
                                                   ------------ ------------ -------------- ------------- -------------
Total stockholders' equity........................         -        32,097        22,792      (36,282)        18,607
                                                   ------------ ------------ -------------- ------------- -------------
                                                   ------------ ------------ -------------- ------------- -------------
Total liabilities and stockholders' equity........    $    -       $42,432    $  220,658    $ (40,882)     $ 222,208
                                                   ------------ ------------ -------------- ------------- -------------
                                                   ------------ ------------ -------------- ------------- -------------
</TABLE>


                                      28 
<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


12. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL DATA (CONTINUED)

                                      CONSOLIDATING STATEMENTS OF OPERATIONS
                                       FOR THE YEAR ENDED SEPTEMBER 30, 1998
                                              (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                      WAVETEK
                                                     WANDEL &
                                                    GOLTERMANN,   SUBSIDIARY      FOREIGN
                                                       INC.       GUARANTORS    SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                                   ------------  ------------  -------------- -------------- --------------
<S>                                                <C>           <C>           <C>            <C>             <C>
Net sales..........................................$      -          $59,261      $ 305,916      $ (37,289)    $ 327,888
Cost of goods sold.................................       -           32,278        137,680        (39,095)      130,863
                                                   ------------  ------------  -------------- -------------- --------------
Gross margin.......................................       -           26,983        168,236          1,806       197,025
Operating expenses:                                       -                                           -
   Marketing and selling...........................       -           17,181         78,157           -           95,338
   Research and development........................       -           13,891         33,839           -           47,730
   General and administrative......................       -            5,281         20,738           -           26,019
   Acquired in-process research and development....       -           24,342          8,583           -           32,925
   Provisions for restructuring and other
     non-recurring charges.........................       -            4,820          4,549           -            9,369
                                                   ------------  ------------  -------------- -------------- --------------
                                                          -           65,515        145,866           -          211,381
                                                   ------------  ------------  -------------- -------------- --------------
Operating income (loss)............................       -          (38,532)        22,370          1,806       (14,356)
Non-operating income (expense):                           -
   Interest income.................................       -              351            807           (181)          977
   Interest expense................................       -             (181)        (7,629)           181        (7,629)
   Other, net......................................       -             (133)        (4,681)          -           (4,814)
                                                   ------------  ------------  -------------- -------------- --------------
                                                          -               37        (11,503)          -          (11,466)
                                                   ------------  ------------  -------------- -------------- --------------
Income (loss) before provision (credit) for income
   taxes and minority interest in income (loss)....       -          (38,495)        10,867          1,806       (25,822)
Provision (credit) for income taxes................       -           (3,017)         9,558           -            6,541
Minority interest in income (loss).................       -                             124         (5,220)       (5,096)
                                                   ------------  ------------  -------------- -------------- --------------
Net income (loss)..................................$      -         $(35,478)     $   1,185     $    7,026     $ (27,267)
                                                   ------------  ------------  -------------- -------------- --------------
                                                   ------------  ------------  -------------- -------------- --------------
</TABLE>

                                      29

<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


12. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL DATA (CONTINUED)

                                      CONSOLIDATING STATEMENTS OF OPERATIONS
                                       FOR THE YEAR ENDED SEPTEMBER 30, 1997
                                              (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                      WAVETEK
                                                     WANDEL &
                                                    GOLTERMANN,   SUBSIDIARY      FOREIGN
                                                       INC.       GUARANTORS    SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                                   ------------  ------------  -------------- -------------- --------------
<S>                                                <C>           <C>           <C>            <C>             <C>
Net sales......................................    $   -           $61,302     $   258,945      $ (38,360)      $ 281,887
Cost of goods sold.............................        -            27,311         125,944        (39,443)        113,812
                                                   ------------  ------------  -------------- -------------- --------------
Gross margin...................................        -            33,991         133,001          1,083         168,075

Operating expenses:
   Marketing and selling.......................        -            15,870          66,817            -            82,687
   Research and development....................        -            12,510          24,812            -            37,322
   General and administrative..................        -             5,324          20,285            -            25,609
   Acquired in-process research
     and development...........................        -             1,401             342            -             1,743
                                                   ------------  ------------  -------------- -------------- --------------
                                                       -            35,105         112,256            -           147,361
                                                   ------------  ------------  -------------- -------------- --------------
Operating income (loss)........................        -            (1,114)         20,745          1,083          20,714
Non-operating income (expense):
   Interest income.............................        -               639           1,094           (123)          1,610
   Interest expense............................        -              (123)         (8,509)           123          (8,509)
   Other, net..................................        -              (217)          1,007            -               790
                                                   ------------  ------------  -------------- -------------- --------------
                                                       -               299          (6,408)           -            (6,109)
                                                   ------------  ------------  -------------- -------------- --------------
   Income (loss) before provision for income
   taxes and minority interest in income.......        -              (815)         14,337          1,083          14,605
Provision for income taxes.....................        -               -             7,362            -             7,362
Minority interest in income....................        -               -              -               185             185
                                                   ------------  ------------  -------------- -------------- --------------
Net income (loss)..............................    $   -         $   (815)       $   6,975      $     898       $   7,058
                                                   ------------  ------------  -------------- -------------- --------------
                                                   ------------  ------------  -------------- -------------- --------------
</TABLE>


                                      30

<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


12. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL DATA (CONTINUED)

                                      CONSOLIDATING STATEMENTS OF OPERATIONS
                                       FOR THE YEAR ENDED SEPTEMBER 30, 1996
                                              (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                      WAVETEK
                                                     WANDEL &
                                                    GOLTERMANN,   SUBSIDIARY      FOREIGN
                                                       INC.       GUARANTORS    SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                                   ------------  ------------  -------------- -------------- --------------
<S>                                                <C>           <C>           <C>            <C>             <C>

Net sales...................................        $  -           $ 62,433      $ 215,011        $ (34,460)    $ 242,984
Cost of goods sold..........................           -             25,531        106,724          (33,789)       98,466
                                                   ------------  ------------  -------------- -------------- --------------
Gross margin................................           -             36,902        108,287             (671)      144,518

Operating expenses:
   Marketing and selling....................           -             14,701         54,237              -          68,938
   Research and development.................           -             10,994         23,534              -          34,528
   General and administrative...............           -              5,419         21,584              -          27,003
   Acquired in-process research
     and development........................           -                362            -                -             362
                                                   ------------  ------------  -------------- -------------- --------------
                                                       -             31,476         99,355              -         130,831
                                                   ------------  ------------  -------------- -------------- --------------
Operating income............................           -              5,426          8,932             (671)       13,687
Non-operating income (expense):                      
   Interest income..........................           -                350            979             (157)        1,172
   Interest expense.........................           -               (157)        (9,340)             157        (9,340)
   Other, net...............................           -               (104)           965              -             861
                                                   ------------  ------------  -------------- -------------- --------------
                                                       -                 89         (7,396)             -          (7,307)
                                                   ------------  ------------  -------------- -------------- --------------
Income before provision (credit) for income
   taxes and minority interest in income....           -              5,515          1,536             (671)        6,380
Provision (credit) for income taxes.........           -              2,208         (2,458)             -            (250)
Minority interest in income.................           -               -               -              2,273         2,273
                                                   ------------  ------------  -------------- -------------- --------------
Net income..................................        $  -           $  3,307        $ 3,994        $  (2,944)    $   4,357
                                                   ------------  ------------  -------------- -------------- --------------
                                                   ------------  ------------  -------------- -------------- --------------
</TABLE>


                                      31

<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


12. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL DATA (CONTINUED)

                               CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                                     FOR THE YEAR ENDED SEPTEMBER 30, 1998
                                            (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                      WAVETEK
                                                     WANDEL &
                                                    GOLTERMANN,   SUBSIDIARY      FOREIGN
                                                       INC.       GUARANTORS    SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                                   ------------  ------------  -------------- -------------- --------------
<S>                                                <C>           <C>           <C>            <C>             <C>
Net cash provided by (used in) operating
   activities....................................      $ -        $(7,100)      $ 20,522        $8,500        $21,922
INVESTING ACTIVITIES
Purchases of businesses, net of cash acquired....        -        (39,182)        (6,025)           -         (45,207)
Cash acquired in connection with the Exchange
   Transaction...................................       19         30,438            872            -          31,329
Purchase of short-term investments, available
   for sale......................................        -        (41,100)           -              -         (41,100)
Sale of short-term investments, available for
   sale..........................................        -         41,100            -              -          41,100
Purchase of property, equipment and intangibles..        -         (1,779)        (8,637)           -         (10,416)
Other investing activities.......................        -            302          6,416            -           6,718
                                                   ------------  ------------  -------------- -------------- --------------
Net cash provided by (used in) investing
   activities....................................       19        (10,221)        (7,374)           -         (17,576)
FINANCING ACTIVITIES
Proceeds from revolving lines of credit and
   long-term obligations.........................        -          1,455         54,786            -          56,241
Principal payments on revolving lines of credit
   and long-term obligations.....................        -         (1,087)       (34,560)           -         (35,647)
Capital contributions from the Company to
   subsidiaries..................................        -         34,695        (34,695)           -               -
Cash dividends paid to stockholders                      -             -          (2,043)           -          (2,043)
Other financing activities.......................        -             -           3,106            -           3,106
                                                   ------------  ------------  -------------- -------------- --------------
Net cash provided by (used in) financing
   activities....................................        -         35,063        (13,406)           -          21,657
Effect of exchange rate changes on cash and
   cash equivalents..............................        -             -             141            -             141
                                                   ------------  ------------  -------------- -------------- --------------
Increase (decrease) in cash and cash equivalents.       19         17,742           (117)        8,500         26,144
Cash and cash equivalents at beginning of year...        -         13,401          4,499        (8,500)         9,400
                                                  ------------- ------------- ------------- -------------- ---------------
Cash and cash equivalents at end of year.........      $19        $31,143       $  4,382        $  -          $35,544
                                                  ------------- ------------- ------------- -------------- ---------------
                                                  ------------- ------------- ------------- -------------- ---------------
</TABLE>


                                      32

<PAGE>

                       WAVETEK WANDEL & GOLTERMANN, INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


12. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL DATA (CONTINUED)

                               CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                                     FOR THE YEAR ENDED SEPTEMBER 30, 1997
                                            (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                      WAVETEK
                                                     WANDEL &
                                                    GOLTERMANN,   SUBSIDIARY      FOREIGN
                                                       INC.       GUARANTORS    SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                                   ------------  ------------  -------------- -------------- --------------
<S>                                                <C>           <C>           <C>            <C>             <C>
Net cash provided by operating activities........    $   -         $3,411       $ 22,602       $(8,500)        $17,513
INVESTING ACTIVITIES
Purchase of businesses, net of cash acquired.....                                 (6,658)                       (6,658)
Purchase of short-term investments, available
   for sale......................................        -        (76,160)           -              -          (76,160)
Proceeds from sale of short-term investments,
   available for sale............................        -         76,160            -              -           76,160
Purchase of property, equipment and intangibles..        -         (1,728)        (7,628)           -           (9,356)
Other investing activities.......................        -          1,413          3,609            -            5,022
                                                   ------------  ------------  -------------- -------------- --------------
Net cash used in investing activities............        -           (315)       (10,677)           -          (10,992)
FINANCING ACTIVITIES
Proceeds from revolving lines of credit and
   long-term obligations.........................        -             -           1,961            -            1,961
Principal payments on revolving lines of credit
   and long-term obligations.....................        -             -         (12,084)           -          (12,084)
Dividends........................................                      -          (1,188)           -           (1,188)
Other financing activities.......................        -             -              63            -               63
                                                   ------------  ------------  -------------- -------------- --------------
Net cash used in financing activities............        -             -         (11,248)           -          (11,248)
Effect of exchange rate changes on cash and cash
   equivalents...................................        -             -            (289)           -             (289)
                                                   ------------  ------------  -------------- -------------- --------------
Increase (decrease) in cash and cash equivalents.        -          3,096            388        (8,500)         (5,016)
Cash and cash equivalents at beginning of year...        -         10,305          4,111            -           14,416
                                                   ------------  ------------  -------------- -------------- --------------
Cash and cash equivalents at end of year.........    $   -        $13,401        $ 4,499       $(8,500)        $ 9,400
                                                   ------------  ------------  -------------- -------------- --------------
                                                   ------------  ------------  -------------- -------------- --------------
</TABLE>


                                      33
<PAGE>



12. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL DATA (CONTINUED)

                               CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
                                     FOR THE YEAR ENDED SEPTEMBER 30, 1996
                                            (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                      WAVETEK
                                                     WANDEL &
                                                    GOLTERMANN,   SUBSIDIARY      FOREIGN
                                                       INC.       GUARANTORS    SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                                   ------------  ------------  -------------- -------------- --------------
<S>                                                <C>           <C>           <C>            <C>             <C>

Net cash provided by operating activities........    $   -        $  6,995       $ 6,629         $  -          $13,624
INVESTING ACTIVITIES                                     -
Purchase of businesses, net of cash acquired.....                   (1,287)         (571)           -           (1,858)
Purchase of marketable securities................        -         (23,560)          -              -          (23,560)
Proceeds from sale of marketable securities......        -          23,560           -              -           23,560
Purchase of property, equipment and intangibles..        -          (2,180)       (8,398)           -          (10,578)
Other investing activities.......................        -             603         2,747          800            4,150
                                                   ------------  ------------  -------------- -------------- --------------
Net cash used in investing activities............        -          (2,864)       (6,222)         800           (8,286)
FINANCING ACTIVITIES                                     -
Proceeds from revolving lines of credit and
   long-term obligations.........................        -             -          39,619            -           39,619
Principal payments on revolving lines of credit
   and long-term obligations.....................        -             -         (39,665)           -          (39,665)
Proceeds from long-term obligations to related
   parties.......................................        -             -             634            -              634
Capital contributions from the Company to
   subsidiaries..................................        -             800           -           (800)             -
                                                   ------------  ------------  -------------- -------------- --------------
Net cash provided by financing  activities.......        -             800           588         (800)             588
Effect of exchange rate changes on cash and
   cash equivalents..............................        -             -            (367)           -             (367)
                                                   ------------  ------------  -------------- -------------- --------------
Increase in cash and cash equivalents............        -           4,931           628            -            5,559
Cash and cash equivalents at beginning of year...        -           5,374         3,483            -            8,857
                                                   ------------  ------------  -------------- -------------- --------------
Cash and cash equivalents at end of year.........    $   -        $ 10,305       $ 4,111         $  -          $14,416
                                                   ------------  ------------  -------------- -------------- --------------
                                                   ------------  ------------  -------------- -------------- --------------
</TABLE>


                                      34

<PAGE>

       SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) 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.

                                    WAVETEK WANDEL & GOLTERMANN, INC.

                                                    /S/ VICKIE L. CAPPS
                                    -------------------------------------------
                                    Vickie L. Capps
                                    Senior Vice President-Finance, Treasurer,
                                    Secretary and Acting Chief Financial Officer
                                    Dated: February 16, 1999

       Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

               Signature                                 Date
               ---------                                 ----

           /S/ PETER WAGNER                        February 16, 1999
----------------------------------------
Peter Wagner
President, Chief Executive Officer and
Director

        /S/ TERENCE J. GOODING                     February 16, 1999
----------------------------------------
Terence J. Gooding
Co-Chairman of the Board

          /S/ ALBRECHT WANDEL                      February 16, 1999
----------------------------------------
Albrecht Wandel
Co-Chairman of the Board

          /S/ VICKIE L. CAPPS                      February 16, 1999
----------------------------------------
Vickie L. Capps
Senior Vice President-Finance
Treasurer, Secretary and Acting  Chief
Financial Officer

           /S/ MALCOLM BATES                       February 16, 1999
----------------------------------------
Malcolm Bates
Director

          /S/ SUSAN SCHNABEL                       February 16, 1999
----------------------------------------
Susan Schnabel
Director