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




                                    FORM 10-Q



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

For the quarter ended December 31, 1997
Commission File Number 1-8037




                              AEROFLEX INCORPORATED


             (Exact name of Registrant as specified in its Charter)

                DELAWARE                          11-1974412
      (State or other jurisdiction             (I.R.S. Employer
     of incorporation or organization)         Identification No.)

           35 South Service Road
              Plainview, N.Y.                       11803
(Address of principal executive offices)          (Zip Code)

                                 (516) 694-6700
              (Registrant's telephone number, including area code)





 *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,  and (2) has been  subject to such filing
requirements for the past 90 days.

                      Yes [X]                  No  [  ]

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

February 2, 1998  14,369,751 shares (excluding 110,956 shares held in treasury)
----------------  -------------------------------------------------------------
    (Date)                           (Number of Shares)

NOTE:  THIS IS PAGE 1 OF A DOCUMENT CONSISTING OF    16      PAGES.

<PAGE>


                              AEROFLEX INCORPORATED

                                AND SUBSIDIARIES


                                      INDEX
                                      -----
<TABLE>
                                                           PAGE
                                                           ----
<S>                                                         <C>
PART I:  FINANCIAL INFORMATION
------   ---------------------

CONSOLIDATED BALANCE SHEETS
 December 31, 1997 and June 30, 1997                        3-4

CONSOLIDATED STATEMENTS OF OPERATIONS
 Six Months Ended December 31, 1997 and 1996                5

CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended December 31, 1997 and 1996              6

CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months Ended December 31, 1997 and 1996                7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                  8-10

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS

 Six and Three Months Ended December 31, 1997 and 1996      11-14

PART II:  OTHER INFORMATION
-------   -----------------

ITEM 4 Submission of Matters to a Vote of Security Holders  15

ITEM 6 Exhibits and Reports on Form 8-K                     15

SIGNATURES                                                  16

</TABLE>


                                       

<PAGE>


                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                           December 31,        June 30,
                                               1997              1997
                                           -------------       ---------
                                                    (In thousands)
<S>                                           <C>               <C>
ASSETS
------
Current assets:
 Cash and cash equivalents                    $    675          $    600
 Current portion of invested cash                  118                69
 Accounts receivable, less allowance for
   doubtful accounts of $530,000 and $417,000   18,095            21,843
 Inventories                                    28,719            20,319
 Deferred income taxes                           2,113             2,043
 Prepaid expenses and other current assets       1,394               743
                                              --------          --------
   Total current assets                         51,114            45,617
                                      
Invested cash                                      312               453
Property, plant and equipment, at cost, net     19,988            14,487
Intangible assets acquired in connection with
  the purchase of businesses, net                7,962             8,046
Cost in excess of fair value of net assets
  of businesses acquired, net                    9,978             9,903
Other assets                                     2,710             2,541
                                              --------          -------- 
Total assets                                  $ 92,064          $ 81,047
                                              ========          ========
<FN>
              See notes to consolidated financial statements
</FN>
</TABLE>

                                      
<PAGE>

                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (continued)


<TABLE>
<CAPTION>
                                                December 31,        June 30,
                                                    1997             1997
                                                ------------        --------
                                         (In thousands, except share information)

<S>                                              <C>               <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current Liabilities:
  Current portion of long-term debt              $  4,928           $  4,247
  Accounts payable                                  6,831              5,093
  Accrued expenses and other current liabilities   10,021              8,564
  Income taxes payable                              2,746              1,841
                                                 --------           -------- 
    Total current liabilities                      24,526             19,745

Long-term debt                                     16,800             14,688
Deferred income taxes                                 119                334
Other long-term liabilities                         2,773              1,259
Senior subordinated convertible debentures             -               9,981
                                                 --------           --------

Total liabilities                                  44,218             46,007
                                                 --------           --------

Stockholders' equity:
 Preferred Stock, par value $.10 per share; 
  authorized 1,000,000 shares:
   Series A Junior Participating Preferred
   Stock, par value $.10 per share,
   authorized 150,000 shares                           -                 -
 Common Stock, par value $.10 per share;
  authorized 25,000,000 shares; issued
  14,481,000 and 12,658,000 shares                  1,448              1,266
 Additional paid-in capital                        67,639             58,110
 Accumulated deficit                              (20,746)           (23,584)
                                                 --------           --------
                                                   48,341             35,792
Less:  Treasury stock, at cost (111,000 and
  169,000 shares)                                     495                752
                                                 --------           -------- 
Total stockholders' equity                         47,846             35,040
                                                 --------           --------
Total liabilities and stockholders' equity       $ 92,064           $ 81,047
                                                 ========           ======== 

<FN>
                See notes to consolidated financial statements
</FN>
</TABLE>

                                       
<PAGE>

                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                  Six Months Ended
                                                    December 31,
                                                  ----------------
                                             1997               1996
                                             ----               ----
                                       (In thousands, except per share data)

<S>                                        <C>               <C>     
Net sales                                  $ 53,210          $ 41,975
Cost of sales                                35,079            28,440
                                           --------          --------
  Gross profit                               18,131            13,535
                                           --------          --------   

Selling, general and administrative costs    10,365             8,154
Research and development costs                2,029             1,422
                                           --------          --------
                                             12,394             9,576
                                           --------          --------      
  Operating income                            5,737             3,959
                                           --------          -------- 
Other expense (income)
  Interest expense                            1,250             1,551
  Other expense (income)                         74               (61)
                                           --------          -------- 
  Total other expense (income)                1,324             1,490
                                           --------          -------- 
Income before income taxes                    4,413             2,469

Provision for income taxes                    1,575               925
                                           --------          --------
Net income                                 $  2,838          $  1,544
                                           ========          ========  

Net income per common share:
    -  Basic                                  $ .21            $ .12
                                              =====            =====     
    -  Diluted                                $ .19            $ .12
                                              =====            =====  
Weighted average number of common
 shares and common share equivalents
 outstanding:
    -  Basic                                  13,547          12,387
                                              ======          ======    
    -  Diluted                                15,557          14,744
                                              ======          ======
<FN>
              See notes to consolidated financial statements
</FN>
</TABLE>

                                       

<PAGE>


                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                 Three Months Ended
                                                     December 31,
                                                 ------------------- 
                                             1997               1996
                                             ----               ---- 
                                       (In thousands, except per share data)

<S>                                        <C>               <C>     
Net sales                                  $ 29,325          $ 22,914
Cost of sales                                19,406            15,657
                                           --------          --------    
  Gross profit                                9,919             7,257
                                           --------          --------

Selling, general and administrative costs     5,759             4,357
Research and development costs                1,031               739
                                           --------          --------  
                                              6,790             5,096
                                           --------          --------
  Operating income                            3,129             2,161
                                           --------          --------

Other expense (income)
  Interest expense                              527               741
  Other expense (income)                         (9)              (15)
                                           --------          --------  
  Total other expense (income)                  518               726
                                           --------          --------                 
Income before income taxes                    2,611             1,435

Provision for income taxes                      925               542
                                           --------          --------  
Net income                                 $  1,686          $    893
                                           ========          ========  
Net income per common share:
    -  Basic                                 $ .12             $ .07
                                             =====             =====  
    -  Diluted                               $ .11             $ .07
                                             =====             =====  
Weighted average number of common
 shares and common share equivalents
 outstanding:
    -  Basic                                 14,347           12,442
                                             ======           ====== 
    -  Diluted                               15,750           14,654
                                             ======           ======   
<FN>
                 See notes to consolidated financial statements
</FN>
</TABLE>

                                       

<PAGE>
                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                     Six Months Ended
                                                        December 31,
                                                     -----------------

                                                   1997            1996
                                                   ----            ----   
                                                      (In thousands)
<S>                                               <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                       $ 2,838         $ 1,544
 Adjustments to reconcile net income to net cash
  provided by (used in) operating activities:
   Depreciation and amortization                    2,511           2,220
   Amortization of deferred gain                     (338)            -
   Other, net                                        (161)           (132)
 Change in operating  assets and  liabilities,  
   net of effects from  purchase of business:
   Decrease (increase) in accounts receivable       3,624           4,614
   Decrease (increase) in inventories              (7,265)         (2,279)
   Decrease (increase) in prepaid expenses, income
    tax refund receivable and other assets         (1,420)            774
   Increase (decrease) in accounts payable, accrued
    expenses and other long-term liabilities        1,880          (1,301)
   Increase (decrease) in income taxes payable      1,091             223
                                                  -------         -------

NET CASH PROVIDED BY (USED IN)
 OPERATING ACTIVITIES                               2,760           5,663
                                                  -------         -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of equipment, inventory and
    technology rights from Lucent Technologies     (4,435)           -
  Capital expenditures                             (1,348)         (1,374)
  Other, net                                          (95)             22
                                                  -------         -------
NET CASH PROVIDED BY (USED IN)
 INVESTING ACTIVITIES                              (5,878)         (1,352)
                                                  -------         -------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings under debt agreements                  6,232            -
  Debt repayments                                  (3,439)         (4,173)
  Proceeds from the exercise of stock options
    and warrants                                      400             226
                                                  -------         -------
NET CASH PROVIDED BY (USED IN)
 FINANCING ACTIVITIES                               3,193          (3,947)
                                                  -------         -------
NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                                 75             364
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD      600             661
                                                  -------         -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD        $   675         $ 1,025
                                                  =======         =======
<FN>
                 See notes to consolidated financial statements
</FN>
</TABLE>
<PAGE>
                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     1. Basis of Presentation
        ---------------------
     The  consolidated  balance sheet of Aeroflex  Incorporated and Subsidiaries
     ("the  Company")  as of  December  31,  1997 and the  related  consolidated
     statements  of operations  for the six and three months ended  December 31,
     1997 and 1996 and the  statements  of cash flows for the six  months  ended
     December  31,  1997 and 1996  have been  prepared  by the  Company  and are
     unaudited.  In the opinion of management,  all  adjustments  (which include
     normal  recurring  adjustments)  necessary to present  fairly the financial
     position, results of operations and cash flows at December 31, 1997 and for
     all periods  presented  have been made.  Certain  information  and footnote
     disclosures   normally  included  in  financial   statements   prepared  in
     accordance with generally accepted accounting principles have been omitted.
     It is suggested  that these  consolidated  financial  statements be read in
     conjunction with the financial statements and notes thereto included in the
     Company's June 30, 1997 annual report to  shareholders.  There have been no
     changes of significant  accounting  policies since June 30, 1997, except as
     described in Note 2. Certain reclassifications have been made to previously
     reported financial statements to conform to current classifications.

     Results  of  operations  for  the  six  and  three  month  periods  are not
     necessarily  indicative  of results  of  operations  for the  corresponding
     years.

 2.  Earnings Per Share
     ------------------
     For the periods ended December 31, 1997, the Company has adopted  Statement
     of Financial  Accounting Standards ("SFAS") No. 128 "Earnings Per Share" In
     accordance  with SFAS No. 128,  earnings per common share  ("Basic EPS") is
     computed  by  dividing  net  income  by  weighted   average  common  shares
     outstanding.  Earnings per common share,  assuming dilution ("Diluted EPS")
     is computed by dividing  net income plus a pro forma  addback of  debenture
     interest by weighted  average  common  shares  outstanding  plus  potential
     dilution  from the  conversion  of  debentures  and the  exercise  of stock
     options and  warrants.  Earnings per share  amounts for prior  periods have
     been restated to conform to SFAS No. 128.

     A  reconciliation  of the numerators and  denominators of the Basic EPS and
     Diluted EPS calculations is as follows:
<TABLE>
<CAPTION>
                                                            Six Months
                                                         Ended December 31,
                                                         ------------------
                                              (In thousands, except per share data)  
                                                         1997          1996
                                                         ----          ----   
<S>                                                   <C>            <C>
     Computation of Adjusted Net Income:
     Net income for basic earnings per common share   $  2,838       $  1,544
     Add:  Debenture interest and amortization
       expense, net of income taxes                        103            246
                                                      --------       -------- 
     Adjusted net income for diluted
       earnings per common share                      $  2,941       $  1,790
                                                      ========       ========  
     Computation of Adjusted Weighted Average
       Shares Outstanding:
     Weighted average shares outstanding                13,547         12,387
     Add:  Effect of dilutive options and warrants
         outstanding                                     1,227            583
     Add:  Shares assumed to be issued upon
       conversion of debentures                            783          1,774
                                                      --------       --------  
     Weighted average shares and common share
       equivalents used for computation of
       diluted earnings per common share                15,557         14,744
                                                      ========       ======== 
     Net Income Per Common Share:
       Basic                                             $ .21          $ .12
                                                         =====          =====
       Diluted                                           $ .19          $ .12
                                                         =====          =====      
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                             Three Months
                                                           Ended December 31,
                                                           ----------------- 
                                                 (In thousands, except per share data)  
                                                         1997            1996
                                                         ----            ----  
<S>                                                   <C>            <C>
     Computation of Adjusted Net Income:
     Net income for basic earnings per common share   $  1,686       $    893
     Add:  Debenture interest and amortization
       expense, net of income taxes                       -               123
                                                      --------       --------
     Adjusted net income for diluted
       earnings per common share                      $  1,686       $  1,016
                                                      ========       ========  
     Computation of Adjusted Weighted Average
       Shares Outstanding:
     Weighted average shares outstanding                14,347         12,442
     Add:  Effect of dilutive options and warrants
       outstanding                                       1,388            438
     Add:  Shares assumed to be issued upon
       conversion of debentures                             15          1,774
                                                      --------       --------
     Weighted average shares and common share
       equivalents used for computation of
       diluted earnings per common share                15,750         14,654
                                                      ========       ========
     Net Income Per Common Share:
       Basic                                             $ .12          $ .07
                                                         =====          =====
       Diluted                                           $ .11          $ .07
                                                         =====          =====
</TABLE>
     Options to purchase 63,000 shares at a weighted  average  exercise price of
     $10.38 per share were  outstanding  as of  December  31,  1997 but were not
     included in the  computation of Diluted EPS because the exercise  prices of
     these  options  were  greater  than the average  market price of the common
     shares.

 3.  Acquisition of Business
     -----------------------
     Effective   July  1,  1997,  the  Company's   subsidiary,   MIC  Technology
     Corporation, acquired certain equipment, inventory, licenses for technology
     and patents of two of Lucent Technologies' microelectronics component units
     -  multi-chip  modules  and film  integrated  circuits - for  approximately
     $4,400,000 in cash.  These units  manufacture  microelectronic  modules and
     interconnect  products.  The Company has also  signed a  multi-year  supply
     agreement  to  provide  Lucent  with film  integrated  circuits  for use in
     telecommunications  applications.  The purchase price has been allocated to
     the assets acquired,  based on their fair values,  and certain  obligations
     assumed relating to the agreements.

 4.  Bank Loan Agreements
     --------------------
     As of March 15,  1996 the  Company  replaced  a previous  agreement  with a
     revised  revolving  credit and term loan  agreement with two banks which is
     secured  by  substantially  all  of  the  Company's  assets  not  otherwise
     encumbered.   The  agreement  provides  for  a  revolving  credit  line  of
     $22,000,000  and a term loan of  $16,000,000.  The  revolving  credit  line
     expires in March 1999.  The term loan is payable in quarterly  installments
     of $900,000 with final payment on September 30, 2000.  The interest rate on
     borrowings  under this agreement is at various rates depending upon certain
     financial  ratios,  with the current rate  substantially  equivalent to the
     prime rate (8-1/2% at December 31, 1997) plus 1/4% on the revolving  credit
     borrowings  and prime plus 1/2% on the term loan  borrowings.  The terms of
     the agreement require  compliance with certain covenants  including minimum
     consolidated  tangible  net  worth and  pre-tax  earnings,  maintenance  of
     certain   financial  ratios,   limitations  on  capital   expenditures  and
     indebtedness and prohibition of the payment of cash dividends.
                                    

<PAGE>


 5.  Inventories
     -----------
     Inventories consist of the following:
<TABLE>
<CAPTION>

                                     December 31,               June 30,
                                        1997                      1997
                                     ------------              ---------
                                                 (In thousands)
<S>                                   <C>                      <C>     
                    Raw Materials     $ 13,265                 $ 11,191
                    Work in Process     10,490                    6,642
                    Finished Goods       4,964                    2,486
                                      --------                 --------  
                                      $ 28,719                 $ 20,319
                                      ========                 ========  
</TABLE>

 6.  Income Taxes
     ------------
     At June 30,  1997 the  Company  had net  operating  loss  carryforwards  of
     approximately  $4,000,000  for Federal  income tax  purposes  which  expire
     through 2006.

     The Company is undergoing  routine audits by various taxing  authorities of
     several  of its state and  local  income  tax  returns  covering  different
     periods from 1994 to 1996. Management believes that the probable outcome of
     these  various  audits  should  not  materially   affect  the  consolidated
     financial statements of the Company.

 7.  Contingencies
     -------------     
     A subsidiary of the Company whose operations were  discontinued in 1991, is
     one of several  defendants  named in a personal injury action  initiated in
     August, 1994, by a group of plaintiffs.  The plaintiffs are seeking damages
     which cumulatively exceed $500 million. The complaint alleges,  among other
     things,  that the plaintiffs  suffered injuries from exposure to substances
     contained in products sold by the subsidiary to one of its customers.  This
     action  is  in  the  early  stages  of  discovery.   Based  upon  available
     information and considering its various defenses, together with its product
     liability  insurance,  in the opinion of  management  of the  Company,  the
     outcome of the action  against its  subsidiary  will not have a  materially
     adverse effect on the Company's consolidated financial statements.

8.   Conversion  of  7-1/2%  Debentures
     ----------------------------------
     On September 8, 1997,  the Company  called for the redemption of all of its
     outstanding 7-1/2% Senior Subordinated  Convertible Debentures ($9,981,000)
     at  104-1/2%  of the  principal  amount.  As of  October  1997,  all of the
     principal amount  outstanding was converted into Common Stock at $5-5/8 per
     share.  In  connection  with the  conversions,  $599,000 of  deferred  bond
     issuance costs were charged to additional paid-in capital.



















                                   
<PAGE>

                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Overview

   Aeroflex,   founded  in  1937,  utilizes  advanced  technologies  to  provide
state-of-the-art microelectronic module, interconnect and testing solutions used
in communication  applications for commercial and defense markets.  Its products
are used in satellite,  personal wireless, cable television ("CATV") and defense
communications  markets. It also designs and manufactures motion control systems
and shock and vibration  isolation  systems used for commercial,  industrial and
defense applications.  The Company's operations are grouped into three segments:
Microelectronics;   Test,  Measurement  and  Other  Electronics;   and  Isolator
Products.  The Company's  consolidated financial statements include the accounts
of Aeroflex and its subsidiaries, all of which are wholly-owned.

   Effective July 1, 1997, the Company  acquired certain  equipment,  inventory,
licenses   for   technology   and   patents  of  two  of  Lucent   Technologies'
microelectronics   component  units,  multi-chip  modules  and  film  integrated
circuits.  These units  manufacture  microelectronic  modules  and  interconnect
products.  The Company has also signed a multi-year  supply agreement to provide
Lucent with film integrated circuits for use in the telecommunications industry.

   Approximately  50% and 65% of the  Company's  sales for fiscal years 1997 and
1996, respectively, were to agencies of the United States Government or to prime
defense  contractors  or  subcontractors  of the United States  Government.  The
Company's  overall  dependence  on the defense  market has been  declining  as a
result  of  the  acquisition  of  MIC  Technology  Corporation,  which  is  more
commercially  oriented,  and a focusing of resources towards developing standard
products for the commercial market.

   Management  believes that potential  reductions in defense  spending will not
materially  affect its  operations.  In certain  product areas,  the Company has
suffered  reductions in sales volume due to cutbacks in the military budget.  In
other product areas, the Company has experienced increased sales volume due to a
realignment of government spending towards upgrading existing systems instead of
purchasing  completely  new  systems.  The overall  effect of the  cutbacks  and
realignment has not been material to the Company.

Six Months  Ended  December 31, 1997  Compared to Six Months Ended  December 31,
1996

   Net Sales.  Net sales  increased  26.8% to $53.2  million  for the six months
ended December 31, 1997 from $42.0 million for the six months ended December 31,
1996. Net sales in the Microelectronics segment increased 64.0% to $33.1 million
for the six months ended December 31, 1997 from $20.2 million for the six months
ended  December  31,  1996 due to  increased  sales  volume  in both  thin  film
interconnects  and  microelectronic  modules.  Sales of thin film  interconnects
increased  primarily due to the commencement of a strategic supply contract with
Lucent Technologies  effective July 1, 1997. Net sales in the Test,  Measurement
and Other  Electronics  segment  decreased  18.6% to $11.3  million  for the six
months  ended  December  31, 1997 from $13.9  million  for the six months  ended
December  31, 1996  primarily  as a result of reduced  sales volume of frequency
synthesizers  which was partially offset by increased sales of stabilization and
tracking devices and of high speed instrumentation test systems. The decrease in
frequency  synthesizer  sales was due to the  early  completion  of the  current
Consolidated  Automated  Support  System  ("CASS")  contract.  Net  sales in the
Isolator  Products  segment  increased  11.5% to $8.8 million for the six months
ended  December 31, 1997 from $7.9 million for the six months ended December 31,
1996 due to increased  sales volume in each of the  commercial,  industrial  and
military isolator product lines.



                                   

<PAGE>


   Gross Profit.  Cost of sales  includes  materials,  direct labor and overhead
expenses such as engineering labor, fringe benefits,  allocable occupancy costs,
depreciation and manufacturing  supplies.  Gross profit increased 34.0% to $18.1
million for the six months ended  December  31, 1997 from $13.5  million for the
six months ended December 31, 1996.  Gross margin increased to 34.1% for the six
months ended  December 31, 1997 from 32.2% for the six months ended December 31,
1996.  The  increase  was  primarily  a  result  of  increased  margins  in  the
Microelectronics segment reflecting the greater efficiencies of higher volume.

   Selling,   General   and   Administrative   Costs.   Selling,   general   and
administrative  costs include office and management  salaries,  fringe benefits,
commissions and advertising costs.  Selling,  general and  administrative  costs
increased  27.1% to $10.4 million  (19.5% of net sales) for the six months ended
December  31,  1997 from $8.2  million  (19.4% of net  sales) for the six months
ended  December  31,  1996.  The increase  was  primarily  due to labor  related
expenses  including  additional  hires,  recruitment  and  relocation  costs  in
connection with the Company's growth.

   Research and Development  Costs.  Research and  development  costs consist of
material,  engineering labor and allocated overhead.  Company sponsored research
and  development  costs  increased 42.7% to $2.0 million (3.8% of net sales) for
the six months ended December 31, 1997 from $1.4 million (3.4% of net sales) for
the six months ended December 31, 1996. The increase was primarily  attributable
to the development of a new low-cost,  high speed,  high  performance  frequency
synthesizer intended for commercial communication test systems.

   Other Expense (Income).  Other expense decreased by 11.1% to $1.3 million for
the six months  ended  December  31,  1997 from $1.5  million for the six months
ended December 31, 1996.  Interest  expense  decreased 19.4% to $1.3 million for
the six months  ended  December  31,  1997 from $1.6  million for the six months
ended  December 31,  1996.  The  decrease  was  primarily  due to a reduction of
outstanding  debt paid from  operating  cash  flow and the  conversion  of $10.0
million of debentures.  Other expense included $102,000 of debenture  redemption
costs for the six months ended December 31, 1997.

   Provision for Income Taxes.  Income taxes  recorded by the Company  increased
70.3% to $1.6 million (an effective income tax rate of 35.7%) for the six months
ended  December 31, 1997 from $925,000 (an  effective  income tax rate of 37.5%)
for the six months ended  December 31, 1996.  The income tax  provisions for the
two periods  differed  from the amount  computed by  applying  the U.S.  Federal
income tax rate to income before  income taxes  primarily due to state and local
income taxes.

Three Months Ended December 31, 1997 Compared to Three Months Ended December 31,
1996

   Net Sales.  Net sales  increased  28.0% to $29.3 million for the three months
ended  December 31, 1997 from $22.9 million for the three months ended  December
31, 1996. Net sales in the  Microelectronics  segment  increased  68.4% to $18.6
million for the three months ended  December 31, 1997 from $11.0 million for the
three months ended December 31, 1996 due to increased  sales volume in both thin
film interconnects and microelectronic modules. Sales of thin film interconnects
increased  primarily due to the commencement of a strategic supply contract with
Lucent Technologies  effective July 1, 1997. Net sales in the Test,  Measurement
and Other  Electronics  segment  decreased  17.7% to $6.4  million for the three
months  ended  December  31, 1997 from $7.8  million for the three  months ended
December  31, 1996  primarily  as a result of reduced  sales volume of frequency
synthesizers  which  was  partially  offset  by  increased  sales of high  speed
instrumentation  test  systems.  Net  sales  in the  Isolator  Products  segment
increased 6.0% to $4.3 million for the three months ended December 31, 1997 from
$4.1 million for the three months ended December 31, 1996 due to increased sales
volume in the commercial and industrial product lines.







                                   

<PAGE>


   Gross  Profit.  Gross  profit  increased  36.7% to $9.9 million for the three
months  ended  December  31, 1997 from $7.3  million for the three  months ended
December  31, 1996.  Gross margin  increased to 33.8% for the three months ended
December 31, 1997 from 31.7% for the three months ended  December 31, 1996.  The
increase  was  primarily a result of increased  margins in the  Microelectronics
segment reflecting the greater efficiencies of higher volume.

   Selling,   General   and   Administrative   Costs.   Selling,   general   and
administrative  costs  increased  32.2% to $5.8 million (19.6% of net sales) for
the three months ended  December 31, 1997 from $4.4 million (19.0% of net sales)
for the three months ended  December 31, 1996. The increase was primarily due to
labor related expenses  including  additional hires,  recruitment and relocation
costs in connection with the Company's growth.

   Research and Development  Costs.  Company sponsored  research and development
costs  increased  39.5% to $1.0 million (3.5% of net sales) for the three months
ended  December 31, 1997 from $739,000  (3.2% of net sales) for the three months
ended  December  31,  1996.  The  increase  was  primarily  attributable  to the
development  of  a  new  low-cost,   high  speed,  high  performance   frequency
synthesizer intended for commercial communication test systems.

   Other Expense (Income).  Other expense decreased by 28.7% to $518,000 for the
three  months ended  December 31, 1997 from  $726,000 for the three months ended
December 31, 1996.  Interest  expense  decreased 28.9% to $527,000 for the three
months ended December 31, 1997 from $741,000 for the three months ended December
31, 1996.  The decrease was primarily due to the  conversion of $10.0 million of
debentures.

   Provision for Income Taxes.  Income taxes  recorded by the Company  increased
70.7% to $925,000 (an  effective  income tax rate of 35.4%) for the three months
ended  December 31, 1997 from $542,000 (an  effective  income tax rate of 37.8%)
for the three months ended  December 31, 1996. The income tax provisions for the
two quarters  differed  from the amount  computed by applying  the U.S.  Federal
income tax rate to income before  income taxes  primarily due to state and local
income taxes.

Liquidity and Capital Resources

   As of December 31, 1997, the Company had $26.6 million in working capital. As
of March 15,  1996,  the Company  replaced a previous  agreement  with a revised
revolving  credit  and term loan  agreement  with two banks  which is secured by
substantially  all  of  the  Company's  assets  not  otherwise  encumbered.  The
agreement  provides for a revolving credit line of $22.0 million and a term loan
of $16.0 million. The revolving credit line expires in March 1999. The term loan
is payable in quarterly installments of $900,000 with final payment on September
30, 2000.  The interest  rate on borrowings  under this  agreement is at various
rates  depending  upon  certain   financial   ratios,   with  the  current  rate
substantially  equivalent  to the prime rate  (8-1/2% at December 31, 1997) plus
1/4% on the  revolving  credit  borrowings  and prime plus 1/2% on the term loan
borrowings. The terms of the agreement require compliance with certain covenants
including  minimum  consolidated   tangible  net  worth  and  pre-tax  earnings,
maintenance of certain financial ratios, limitations on capital expenditures and
indebtedness  and prohibition of the payment of cash dividends.  At December 31,
1997, the outstanding  borrowings  under the revolving credit line and term loan
were $9.1 million and $5.3 million, respectively.

     During June 1994, the Company  completed a sale of $10.0 million  principal
amount of 7-1/2% Senior Subordinated Convertible Debentures  ("Debentures").  On
September 8, 1997,  the Company  called for  redemption  all of its  outstanding
Debentures at 104-1/2% of the principal amount.  The Debentures were convertible
into the Company's  Common Stock at a price of $5-5/8 per share through  October
6,  1997.  As of October  1997,  all of the  principal  amount  outstanding  was
converted into Common Stock.  In connection  with the  conversions,  $599,000 of
deferred bond issuance costs were charged to additional paid-in capital.



                                   

<PAGE>


   The  Company's  order backlog at December 31, 1997 and 1996 was $66.1 million
and $45.8 million, respectively.

   At June 30,  1997,  the  Company  had net  operating  loss  carryforwards  of
approximately $4.0 million for Federal income tax purposes.

   The Company's net cash provided by operating  activities was $2.8 million for
the six months ended  December 31, 1997.  Net cash used in investing  activities
was  $5.9  million  for the six  months  ended  December  31,  1997,  consisting
primarily  of $4.4  million of cash used to purchase  equipment,  inventory  and
technology  rights  from Lucent  Technologies.  Net cash  provided by  financing
activities  was $3.2 million for the six months ended December 31, 1997. For the
six months ended December 31, 1997, the Company  borrowed $6.2 million under two
equipment loans.

   Management  of the  Company  believes  that  internally  generated  funds and
available   lines  of  credit  will  be  sufficient  for  its  working   capital
requirements,  capital  expenditure  needs and the  servicing of its debt for at
least the next twelve  months.  At December 31, 1997,  the  Company's  available
unused line of credit was approximately $10.9 million.














































                                   

<PAGE>


                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES
                           PART II - OTHER INFORMATION


Item 1. Legal Proceedings

        None

Item 2. Changes in Securities

        None

Item 3. Defaults upon Senior Securities

        None

Item 4.  Submission of Matters to a Vote of Security Holders

       A. The Registrant held its Annual Meeting of Stockholders on November 13,
       1997.

       B. Three  directors were elected at the Annual Meeting to serve until the
       Annual Meeting of  Stockholders  in 2000. The name of these Directors and
       votes cast in favor of their election and shares withheld are as follows:
<TABLE>
<CAPTION>

           Name                         Votes For                 Votes Withheld
           ----                         ---------                 --------------
<S>                                     <C>                          <C>   
           Harvey R. Blau               11,760,855                   56,562
           Ernest E. Courchene, Jr.     11,766,361                   51,056
           John S. Patton               11,764,568                   52,849
</TABLE>

       In addition to the election of  directors,  the  stockholders  approved a
       deferred  compensation  agreement between the Company and its Chairman of
       the  Board  permitting  him to elect to defer  payment  of his  incentive
       compensation.

Item 5.    Other Information

           None

Item 6.    Exhibits and Reports on Form 8-K

      (a)  Exhibits

           Exhibit 27 - Financial Data Schedule

      (b)  Reports on Form 8-K

           None
















                                   
<PAGE>

                                   SIGNATURES


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



                                        AEROFLEX INCORPORATED
                                             (REGISTRANT)




February 4, 1998                  By:        s/Michael Gorin
                                     ---------------------------------   
                                               Michael Gorin
                                   President, Chief Financial Officer
                                     and Principal Accounting Officer