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    March 31, 2003
                      ---------------------------------------------
 Commission File Number 000-02324

                              --------------------

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

               Yes         X                      No
                   --------------------              --------------------

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

 May 15, 2003       60,113,092  shares (excluding 4,388 shares held in treasury)
--------------------------------------------------------------------------------
  (Date)                            (Number of Shares)

           NOTE: THIS IS PAGE 1 OF A DOCUMENT CONSISTING OF 33 PAGES.
                                                           ----

<PAGE>


                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES


                                      INDEX
                                      -----


                                                                           PAGE
                                                                           ----

     PART I:  FINANCIAL INFORMATION
     ------   ---------------------


Item 1 - CONSOLIDATED BALANCE SHEETS                                       3-4
          March 31, 2003 and June 30, 2002

         CONSOLIDATED STATEMENTS OF OPERATIONS                             5-6
          Nine and Three Months Ended March 31, 2003 and 2002

         CONSOLIDATED STATEMENTS OF CASH FLOWS                              7
          Nine Months Ended March 31, 2003 and 2002

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                        8-18

Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS                             19-26
          Nine and Three Months Ended March 31, 2003 and 2002

Item 3 - QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT
          MARKET RISK                                                      26

Item 4 - CONTROLS AND PROCEDURES                                           27

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

Item 1 - LEGAL PROCEEDINGS                                                 28

Item 6 - EXHIBITS AND REPORTS ON FORM 8-K                                  28

SIGNATURES                                                                 29

CERTIFICATIONS                                                            30-33


<PAGE>


                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS



                                                     March 31,        June 30,
                                                       2003             2002
                                                   -------------    ------------
                                                    (Unaudited)       (Note 3)
                                                           (In thousands)

ASSETS

Current assets:
    Cash and cash equivalents                       $ 42,705         $ 38,559
    Accounts receivable, less allowance for
      doubtful accounts of $500,000 and $636,000      64,053           63,384
    Income taxes receivable                              870            4,432
    Inventories                                       74,456           72,040
  Deferred income taxes                               12,956           12,259
  Assets of discontinued operations                     -               1,367
  Prepaid expenses and other current assets            6,796            3,360
                                                    ---------        ---------
       Total current assets                          201,836          195,401

Property, plant and equipment, net                    68,817           73,473
Intangible assets with definite lives, net            15,778           17,815
Goodwill                                              22,476           20,179
Deferred income taxes                                    867            2,477
Other assets                                          11,636            9,120
                                                   ---------        ---------
      Total assets                                  $321,410         $318,465
                                                   =========        =========



                 See notes to consolidated financial statements.


<PAGE>




                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (continued)



                                                     March 31,         June 30,
                                                       2003              2002
                                                    ----------        ----------
                                                    (Unaudited)        (Note 3)
                                                          (In thousands)


LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current liabilities:
  Current portion of long-term debt                  $  1,844          $  2,171
  Accounts payable                                     16,490            18,356
  Advance payments by customers                         2,816             1,775
  Liabilities of discontinued operations                1,074               366
  Accrued expenses and other current liabilities       24,130            26,637
                                                     ---------          --------
    Total current liabilities                          46,354            49,305

Long-term debt                                         11,603            12,638
Other long-term liabilities                             8,348             7,040
                                                     ---------         ---------

    Total liabilities                                  66,305            68,983
                                                     ---------         ---------

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 110,000; none issued                       -                  -
  Common Stock, par value $.10 per share;
    authorized 110,000,000 shares; issued
    60,117,000 and 60,006,000 shares                   6,012              6,001
  Additional paid-in capital                         222,921            222,351
  Accumulated other comprehensive income               3,578              1,881
  Retained earnings                                   22,608             19,263
                                                    ---------          ---------
                                                     255,119            249,496

  Less: Treasury stock, at cost (4,000 shares)            14                 14
                                                    ---------          ---------

    Total stockholders' equity                       255,105            249,482
                                                    ---------          ---------

    Total liabilities and stockholders' equity      $321,410           $318,465
                                                    =========          =========






                 See notes to consolidated financial statements.



<PAGE>



                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                      (In thousands, except per share data)

                                                        Nine Months Ended
                                                              March 31,

                                                    2003                 2002
                                                  -------              ---------
                                                                       (Note 3)
                                                             (Unaudited)

Net sales                                        $213,139              $135,875
Cost of sales                                     131,343                87,453
                                                 ---------             ---------
  Gross profit                                     81,796                48,422
                                                 ---------             ---------

Selling, general and administrative costs          50,003                33,229
Research and development costs                     22,751                14,965
                                                 ---------             ---------
                                                   72,754                48,194
                                                 ---------             ---------
  Operating income                                  9,042                   228
                                                 ---------             ---------

Other expense (income)
  Interest expense                                  1,023                 1,138
  Other expense (income)                             (284)               (1,666)
                                                 ---------             ---------
    Total other expense (income)                      739                  (528)
                                                 ---------             ---------
Income before income taxes                          8,303                   756
Provision for income taxes                          2,820                   282
                                                 ---------             ---------

Income from continuing operations                   5,483                   474
                                                 ---------             ---------
Discontinued operations (Note 3)
  Loss from discontinued operations,
    net of tax benefit of $208 and $757               404                 1,485
  Loss on abandonment of operations,
    net of tax benefit of $892                      1,734                  -
                                                 ---------             ---------
  Loss from discontinued operations,
    net of tax                                      2,138                 1,485
                                                 ---------             ---------
Net income (loss)                                $  3,345              $ (1,011)
                                                 =========             =========

Income (loss) per common share:
  Basic
    Continuing operations                            $ .09                $ .01
    Discontinued operations                           (.03)                (.03)
                                                     -----                 -----
    Net income (loss)                                $ .06                $(.02)
                                                     =====                 =====

  Diluted
    Continuing operations                            $ .09                $ .01
    Discontinued operations                           (.03)                (.03)
                                                     -----                 -----
    Net income (loss)                                $ .06                $(.02)
                                                     =====                 =====

Weighted average number of
  common shares outstanding:
    Basic                                          60,180                59,926
                                                =========              =========
    Diluted                                        60,739                61,992
                                                =========              =========


                 See notes to consolidated financial statements.



<PAGE>



                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                      (In thousands, except per share data)

                                                           Three Months Ended
                                                                March 31,
                                                           ------------------
                                                   2003                   2002
                                                ---------              ---------
                                                                        (Note 3)
                                                          (Unaudited)

Net sales                                       $ 74,942               $ 50,571
Cost of sales                                     45,208                 32,314
                                                ---------              ---------
  Gross profit                                    29,734                 18,257
                                                ---------              ---------

Selling, general and administrative costs         17,540                 13,951
Research and development costs                     7,757                  5,901
                                                ---------              ---------
                                                  25,297                 19,852
                                                ---------              ---------
  Operating income (loss)                          4,437                 (1,595)
                                                ---------              ---------

Other expense (income)
  Interest expense                                   310                    479
  Other expense (income)                            (293)                  (578)
                                                ---------              ---------
    Total other expense (income)                      17                    (99)
                                                ---------              ---------
Income (loss) before income taxes                  4,420                 (1,496)
Provision (benefit) for income taxes               1,495                   (483)
                                                ---------              ---------

Income (loss) from continuing operations           2,925                 (1,013)
                                                ---------              ---------
Discontinued operations (Note 3)
  Loss from discontinued operations,
    net of tax benefit of $5 and $316                  8                    616
  Loss on abandonment of operations                 -                     -
                                                ---------              ---------
  Loss from discontinued operations,
    net of tax                                         8                    616
                                                ---------              ---------
Net income (loss)                               $  2,917               $ (1,629)
                                                =========              =========

Income (loss) per common share:
  Basic
    Continuing operations                         $ .05                   $(.02)
    Discontinued operations                         -                      (.01)
                                                  -----                    -----
    Net income (loss)                             $ .05                   $(.03)
                                                  =====                    =====

  Diluted
    Continuing operations                         $ .05                   $(.02)
    Discontinued operations                         -                      (.01)
                                                  -----                    -----
    Net income (loss)                             $ .05                   $(.03)
                                                  =====                    =====

Weighted average number of
  common shares outstanding:
    Basic                                         60,229                  60,088
                                               =========               =========
    Diluted                                       60,831                  60,088
                                               =========               =========



                 See notes to consolidated financial statements.



<PAGE>



                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                                   Nine Months Ended
                                                                                                       March 31,
                                                                                          2003                         2002
                                                                                       ----------                   ----------
                                                                                                                     (Note 3)
                                                                                                      (Unaudited)

<S>                                                                                      <C>                         <C>
Cash Flows From Operating Activities:
 Net income (loss)                                                                       $  3,345                    $ (1,011)
 Adjustments to reconcile net income (loss) to net
  cash provided by (used in) operating activities:
   Loss from discontinued operations                                                        3,238                       2,242
   Depreciation and amortization                                                           11,410                       8,289
   Restructuring charge                                                                       -                         5,050
   Deferred income taxes                                                                    1,191                        (466)
   Other, net                                                                                (132)                        274
 Change in operating assets and liabilities:
   Decrease (increase) in accounts receivable                                                (460)                     (1,529)
   Decrease (increase) in inventories                                                      (2,011)                       (830)
   Decrease (increase) in prepaid expenses
    and other assets                                                                       (1,489)                       (262)
   Increase (decrease) in accounts payable, accrued
    expenses and other liabilities                                                         (4,546)                     (8,108)
                                                                                         ---------                   ---------

Net Cash Provided By (Used In) Operating Activities                                        10,546                       3,649
                                                                                         ---------                   ---------

Cash Flows From Investing Activities:
  Payment for purchase of business                                                         (1,039)                       (283)
  Capital expenditures                                                                     (4,100)                     (3,169)
  Cash flow provided by (used in) discontinued
    operations                                                                             (1,163)                     (1,611)
  Purchase of marketable securities                                                          -                         (5,938)
  Proceeds from sale of marketable securities                                                -                         11,994
  Other, net                                                                                   40                        -
                                                                                         ---------                   ---------

Net Cash Provided By (Used In) Investing Activities                                        (6,262)                        993
                                                                                         ---------                   ---------

Cash Flows From Financing Activities:
  Borrowings under debt agreements                                                           -                             89
  Debt repayments                                                                          (1,362)                     (1,516)
  Proceeds from the exercise of stock options                                                 485                       1,640
  Amounts paid for withholding taxes on stock option
    exercises                                                                                 (84)                     (1,485)
  Withholding taxes collected for stock option
    exercises                                                                                  84                       1,485
                                                                                         ---------                   ---------
Net Cash Provided By (Used In) Financing Activities                                          (877)                        213
                                                                                         ---------                   ---------
Effect of exchange rate changes on cash
  and cash equivalents                                                                        739                        -
                                                                                         ---------                   ---------
Net Increase (Decrease) In Cash
  And Cash Equivalents                                                                      4,146                       4,855
Cash And Cash Equivalents At Beginning Of Period                                           38,559                      69,896
                                                                                         ---------                   ---------
Cash And Cash Equivalents At End Of Period                                               $ 42,705                    $ 74,751
                                                                                         =========                   =========

</TABLE>

                 See notes to consolidated financial statements.



<PAGE>



                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

 1.      Basis of Presentation
         ---------------------

         The   consolidated   balance   sheet  of  Aeroflex   Incorporated   and
         Subsidiaries  ("the  Company")  as  of  March  31,  2003,  the  related
         consolidated  statements  of  operations  for the nine and three months
         ended March 31, 2003 and 2002, and the consolidated  statements of cash
         flows  for the nine  months  ended  March  31,  2003 and 2002 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 March 31,  2003 and for all
         periods  presented  have been made.  Certain  information  and footnote
         disclosures  normally  included  in  financial  statements  prepared in
         accordance with accounting  principles generally accepted in the United
         States of  America  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, 2002 annual report to  shareholders.  There have been no changes of
         significant   accounting  policies  since  June  30,  2002,  except  as
         disclosed  in Note  2.  Certain  reclassifications  have  been  made to
         previously   reported  financial   statements  to  conform  to  current
         classifications.

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

 2.      Recent Accounting Pronouncements
         --------------------------------

         In October 2001,  the Financial  Accounting  Standards  Board  ("FASB")
         issued Statement of Financial  Accounting  Standards  ("SFAS") No. 144,
         "Accounting  for the Impairment of Long-Lived  Assets," which addresses
         financial  accounting  and reporting for the  impairment or disposal of
         long-lived  assets.  The Company adopted SFAS No. 144 effective July 1,
         2002.  The  adoption  did  not  have  any  impact  on the  consolidated
         financial statements.

         In July 2002,  the FASB  issued  SFAS No.  146,  "Accounting  for Costs
         Associated with Exit or Disposal  Activities,"  which will be effective
         for exit and disposal  activities  initiated  after  December 31, 2002.
         SFAS No. 146 provides that an exit cost liability  should not always be
         recorded at the date of an  entity's  commitment  to an exit plan,  but
         instead should be recorded when the obligation is incurred and measured
         at fair value.  An entity's  commitment to a plan, by itself,  does not
         create an obligation that meets the definition of a liability.

         In November 2002, the FASB issued  Interpretation No. 45,  "Guarantor's
         Accounting  and  Disclosure  Requirements  for  Guarantees,   Including
         Indirect  Guarantees  of  Indebtedness  of Others"  ("FIN 45").  FIN 45
         requires certain  guarantees to be recorded at fair value regardless of
         the probability of the loss. FIN 45 has been adopted  prospectively  by
         the Company as of January 1, 2003. The adoption did not have any impact
         on the consolidated financial statements.


<PAGE>


         In  December  2002,  the FASB  issued  SFAS No.  148,  "Accounting  for
         Stock-Based  Compensation  - Transition and  Disclosure."  SFAS No. 148
         provides  alternative  methods of transition for a voluntary  change to
         the  fair  value  method  of  accounting   for   stock-based   employee
         compensation  as originally  provided by SFAS No. 123  "Accounting  for
         Stock-Based  Compensation."  Additionally,  SFAS  No.  148  amends  the
         disclosure  requirements  of SFAS No. 123 in both  annual  and  interim
         financial statements. The Company has adopted the disclosure portion of
         this  statement  for the  fiscal  quarter  ended  March 31,  2003.  The
         adoption  did  not  have  any  impact  on  the  Company's  consolidated
         financial position or results of operations.

         In November  2002, the Emerging  Issues Task Force  ("EITF")  finalized
         EITF Issue 00- 21, "Revenue  Arrangements with Multiple  Deliverables",
         which provides guidance on the timing and method of revenue recognition
         for sales  arrangements  that  include  the  delivery  of more than one
         product or service.  EITF Issue 00-21 is  effective  prospectively  for
         arrangements  entered into in fiscal periods  beginning  after June 15,
         2003. The Company is currently  analyzing the impact of its adoption on
         its consolidated financial statements.

 3.      Discontinued Operation
         ----------------------

         In December  2002,  the Board of  Directors  of the Company  approved a
         formal plan to discontinue  the Company's  fiber optic lithium  niobate
         modulator  operation.  The plan called for an  immediate  cessation  of
         operations  and disposal of existing  assets.  The  abandonment  of the
         operation  resulted in a charge of $2.6 million ($1.7  million,  net of
         tax) in the quarter ended December 31, 2002. The charge included a cash
         requirement of $1.4 million, primarily for equipment leases and payroll
         costs,  and a  non-cash  charge  of  $1.2  million  primarily  for  the
         write-off of owned equipment.

         In accordance with SFAS No. 144, the abandonment has been reported as a
         discontinued operation and, accordingly, losses from operations and the
         loss on  abandonment  have been  reported  separately  from  continuing
         operations.

         To conform with this presentation, all periods have been restated. As a
         result,  the assets and liabilities of the discontinued  operation have
         been   reclassified   on  the   balance   sheet  from  the   historical
         classifications   and   presented   under  the   captions   "assets  of
         discontinued operations" and "liabilities of discontinued  operations,"
         respectively.

 4.      Acquisition of Business and Intangible Assets
         ---------------------------------------------

         Acquisition of IFR Systems

         On May 20, 2002, the Company acquired 75.1% of the outstanding stock of
         IFR Systems, Inc. ("IFR"). Effective June 19, 2002, IFR was merged into
         a wholly- owned  subsidiary  of the Company,  with IFR as the surviving
         wholly-owned  subsidiary.  The  Company  paid  $61.9  million  from its
         available cash and marketable securities, including $48.8 million which
         was advanced to IFR to satisfy IFR's bank indebtedness. IFR designs and
         manufactures  advanced test solutions for communications,  avionics and
         general  test  and  measurement  applications.   As  a  result  of  the
         acquisition,  the  Company has  broadened  its Test  Solutions  Segment
         product portfolio and its international sales network.



<PAGE>


         The Company evaluated the acquired tangible and identifiable intangible
         assets to serve as a basis for  allocation of the purchase  price.  The
         Company  allocated the purchase price,  including  acquisition costs of
         approximately  $1.9 million,  based on the estimated  fair value of the
         assets acquired and liabilities assumed, as follows:
                                                                 (In thousands)
                                                                  ------------
         Current assets (excluding cash of $8.0 million)....         $ 44,209
         Property, plant and equipment......................           20,242
         Developed technology...............................            8,230
         Goodwill...........................................            5,058
         In-process research and development................            1,100
         Other..............................................               62
                                                                    ---------
           Total assets acquired............................           78,901
                                                                    ---------
         Current liabilities................................          (22,208)
         Long-term debt.....................................           (2,814)
                                                                    ---------
           Total liabilities assumed........................          (25,022)
                                                                    ---------
           Net assets acquired..............................         $ 53,879
                                                                    =========

         The developed  technology is being amortized on a  straight-line  basis
         over 6 years.  The goodwill is not deductible for tax purposes.  At the
         acquisition date, the acquired  in-process research and development was
         not  considered to have reached  technological  feasibility  and had no
         alternative  future uses.  Therefore,  in  accordance  with  accounting
         principles  generally  accepted in the United  States of  America,  the
         value  of such was  expensed  in the  quarter  ended  June 30,  2002 in
         operating  costs. At the acquisition  date, IFR was conducting  design,
         development,  engineering  and testing  activities  associated with the
         completion of new technologies for its radio test set product line.

         Summarized  below are the  unaudited pro forma results of operations of
         the Company as if IFR had been  acquired at the beginning of the fiscal
         period  presented.  The $1.1 million write-off has not been included in
         the March 31, 2002 pro forma  results of operations in order to provide
         comparability to the respective historical period.

                                                         Pro Forma
                                                     Nine Months Ended
                                                          March 31,
                                                            2002
                                                     -----------------
                                           (In thousands, except per share data)

         Net sales.........................              $221,771
         Income (loss) from continuing
           operations......................                (6,777)
         Income (loss) from continuing
             operations per share:
             Basic.........................              $   (.11)
             Diluted.......................              $   (.11)


         The pro forma financial  information presented above is not necessarily
         indicative of either the results of operations that would have occurred
         had  the  acquisition  taken  place  at the  beginning  of  the  period
         presented or of future operating results of the combined companies.



<PAGE>


         Intangibles   with  Definite   Lives  The   components  of  amortizable
         intangible assets are as follows:

                                                  As of March 31, 2003
                                                  --------------------
                                    Gross Carrying    Accumulated      Net Book
                                        Amount        Amortization       Value
                                    --------------    ------------     --------
                                                     (In thousands)


      Existing technology......       $ 23,769          $  8,583       $ 15,186
      Tradenames...............          1,000               408            592
                                      ---------         ---------      ---------
          Total................       $ 24,769          $  8,991       $ 15,778
                                      =========         =========      =========



         The aggregate  amortization expense for the amortized intangible assets
         was $2.3 million for the nine months ended March 31, 2003.

         The  estimated  aggregate  amortization  expense for each of the twelve
         month periods ending March 31, is as follows:

                                               (In thousands)
                   2004....................       $ 3,003
                   2005....................         3,000
                   2006....................         3,000
                   2007....................         3,000
                   2008....................         2,886


         Goodwill
         The carrying amount of goodwill is as follows:

                               Balance                              Balance
                                as of                                as of
                               July 1,          Adjustment          March 31,
                                2002            (Note a)              2003
                             ----------        ------------       ------------
                                              (In thousands)

Microelectronic
  solutions
  segment...............     $ 5,367            $   -               $ 5,367
Test solutions
  segment...............      14,023               2,297             16,320
Isolator products
  segment...............         789                -                   789
                             --------           ---------           --------
    Total...............     $20,179            $  2,297            $22,476
                             ========           =========           ========


Note a -      The additional goodwill recorded during the period is a result of
              adjustments to the fair value of assets and  liabilities  assumed
              in the acquisition of IFR and contingent  payments  pursuant to a
              purchase agreement.



<PAGE>



5.       Restructuring Charges
         ---------------------

         In fiscal 2002, the Company  initiated  strategic  plans to consolidate
         three of its  manufacturing  operations  to take  advantage  of  excess
         manufacturing   capacity  in  certain  of  its  facilities  and  reduce
         operating  costs.  The Company  recorded  charges to  eliminate  excess
         equipment capacity,  primarily in its microelectronics segment, and for
         personnel  related  costs.   These   consolidations  are  substantially
         complete. In connection with these restructurings, the Company recorded
         charges of $5.0  million and $4.1  million  during the  quarters  ended
         March 31, 2002 and June 30,  2002,  respectively,  or $3.4  million and
         $2.9 million, net of tax, respectively.

         The following table sets forth the charges and payments  related to the
         restructuring reserve for the nine months ended March 31, 2003:


                              Balance                                 Balance
                              July 1,       Nine Months Ended         March 31,
                               2002           March 31, 2003           2003
                          -------------   -----------------------   ------------
                                         Adjustments to
                          Restructuring  Restructuring     Cash    Restructuring
                             Reserve        Reserve      Payments     Reserve
                           -----------  --------------  ---------- -------------
                                               (In thousands)

Workforce reduction.....   $   1,406       $     58      $ (1,271)    $    193

Lease payments..........         864            (35)         (670)         159

Plant shutdown..........         106             99           (84)         121
                           ----------      ---------     ---------    ---------

  Total operating costs.   $   2,376       $    122      $ (2,025)    $    473
                           ==========      =========     =========    =========



         The  amounts  above  exclude  $11.0  million of  restructuring  charges
         recorded during the quarter ended June 30, 2002 for the Company's fiber
         optic lithium niobate  modulator  operation which, as of December 2002,
         has been reclassified as a discontinued operation.  The charges related
         to such discontinuance were primarily due to the impairment of goodwill
         and other intangibles.

 6.      Earnings Per Share
         ------------------

         In  accordance  with SFAS No. 128  "Earnings Per Share," net income per
         common  share  ("Basic  EPS") is computed by dividing net income by the
         weighted  average  common  shares  outstanding.  Net  income per common
         share,  assuming  dilution  ("Diluted EPS") is computed by dividing net
         income by the weighted average common shares outstanding plus potential
         dilution from the exercise of stock options.  A  reconciliation  of the
         numerators  and   denominators   of  the  Basic  EPS  and  Diluted  EPS
         calculations is as follows:




<PAGE>


                                                        Nine Months
                                                      Ended March 31,
                                                 ------------------------
                                                 2003                2002
                                                 ----                ----
                                          (In thousands, except per share data)

Income from continuing operations             $ 5,483              $   474
                                              ========             ========

Computation of adjusted weighted
  average shares outstanding:
Weighted average shares outstanding            60,180               59,926
Add: Effect of dilutive options
  outstanding                                     559                2,066
                                              --------             --------
Weighted average shares and common
  share equivalents used for computation
  of diluted earnings per common share         60,739               61,992
                                              ========             ========

Income from continuing operations
          per share  - Basic                   $ .09                $ .01
                                               ======               ======
                 - Diluted                     $ .09                $ .01
                                               ======               ======



                                                       Three Months
                                                      Ended March 31,
                                                  ------------------------
                                                  2003                2002
                                                  ----                ----
                                          (In thousands, except per share data)

Income (loss) from continuing operations        $ 2,925             $(1,013)
                                                ========            ========

Computation of adjusted weighted
   average shares outstanding:
Weighted average shares outstanding              60,229              60,088
Add: Effect of dilutive options
  outstanding                                       602                -
                                                --------            --------
Weighted average shares and common
  share equivalents used for computation
  of diluted earnings per common share           60,831              60,088
                                                ========            ========

Income (loss) from continuing operations
          per share  - Basic                     $ .05               $(.02)
                                                 ======              ======
                 - Diluted                       $ .05               $(.02)
                                                 ======              ======


Options to purchase 11.3 million shares at exercise prices ranging between $6.85
and $34.41 per share were outstanding as of March 31, 2003 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

7.       Accounting for Stock-Based Compensation
         ---------------------------------------

         The Company  records  compensation  expense for  employee  and director
         stock options only if the current market price of the underlying  stock
         exceeds the  exercise  price on the date of the grant.  The Company has
         chosen not to  implement  the fair value  based  accounting  method for
         employee and director  stock  options,  but has elected to disclose the
         pro forma  income and income per share as if such  method had been used
         to account for stock-based  compensation costs as described in SFAS No.
         123.


<PAGE>


         The per share  weighted  average  fair value of stock  options  granted
         during  the nine  months  ended  March 31,  2003 and 2002 was $5.36 and
         $7.12,  respectively,  on the date of grant.  These  fair  values  were
         determined  using  the  Black  Scholes  option-pricing  model  with the
         following weighted average assumptions:  2003 - expected dividend yield
         of 0%, risk free  interest rate of 3.9%,  expected  volatility of 112%,
         and an  expected  option  life of 5.4 years;  2002 - expected  dividend
         yield of 0%, risk free  interest rate of 4.9%,  expected  volatility of
         122%, and an expected option life of 5.3 years.

         The per share  weighted  average  fair value of stock  options  granted
         during the  quarter  ended March 31, 2003 and 2002 was $5.40 and $9.11,
         respectively,  on the date of grant.  These fair values were determined
         using  the  Black  Scholes  option-pricing  model  with  the  following
         weighted  average  assumptions:  2003 - expected  dividend yield of 0%,
         risk free interest rate of 3.7%,  expected  volatility of 112%,  and an
         expected life of 7.4 years;  2002 - expected dividend yield of 0%, risk
         free  interest  rate of  5.0%,  expected  volatility  of  122%,  and an
         expected life of 7.5 years. The Company's income (loss) from continuing
         operations and income (loss) from continuing operations per share using
         the pro forma compensation cost would have been:
<TABLE>
<CAPTION>

                                                        Nine Months Ended         Three Months Ended
                                                             March 31,                  March 31,
                                                       ------------------       ---------------------
                                                         2003       2002           2003        2002
                                                        ------     ------         ------      ------
                                                                       (In thousands)
        <S>                                             <C>         <C>            <C>         <C>

      Income (loss) from
        continuing operations                         $  5,483    $    474       $  2,925    $ (1,013)

      Deduct: Total stock-based
        employee compensation
        expense determined under
        fair value based method
        for all grants, net of tax                     (23,588)    (32,484)        (5,850)    (11,010)
                                                      ---------   ---------      ---------   ---------

      Pro forma income (loss) from
        continuing operations                         $(18,105)   $(32,010)      $ (2,925)   $(12,023)
                                                      =========   =========      =========   =========

      Earnings per share:
         Basic - as reported                            $ 0.09      $ 0.01         $ 0.05      $(0.02)
                                                       =======     =======        =======     =======
         Basic - pro forma                              $(0.30)     $(0.53)        $(0.05)     $(0.20)
                                                       =======     =======        =======     =======

         Diluted - as reported                          $ 0.09      $ 0.01         $ 0.05         *
                                                       =======     =======        =======     =======
         Diluted - pro forma                               *           *              *           *
                                                       =======     =======        =======     =======
</TABLE>


* As a result of the loss, all options are anti-dilutive.


<PAGE>


 8.      Comprehensive Income
         --------------------
         The components of comprehensive income are as follows:

<TABLE>
<CAPTION>

                                                          Nine Months                Three Months
                                                          Ended March 31,           Ended March 31,
                                                     ----------------------     ---------------------
                                                       2003           2002       2003          2002
                                                      ------         ------     ------        ------
                                                                       (In thousands)

        <S>                                          <C>            <C>         <C>         <C>
        Net income (loss)                            $ 3,345        $(1,011)    $ 2,917     $(1,629)

        Unrealized gain (loss) on
          interest rate swap
          agreements, net of tax                         (97)           (37)          7          36

        Unrealized investment
          gain (loss), net of tax                        -               (8)         -           (3)

        Foreign currency
          translation adjustment                       1,794             61         109         (28)
                                                      --------       --------    --------    --------
         Total comprehensive
          income (loss)                               $ 5,042        $  (995)    $ 3,033     $(1,624)
                                                      ========       ========    ========    ========
</TABLE>


 9.      Bank Loan Agreements
         --------------------
         On February  14,  2003,  the Company  executed an amended and  restated
         revolving credit and security agreement with two banks which replaced a
         previous  loan  agreement.  The amended  and  restated  loan  agreement
         increased  the line of credit to $50  million  through  February  2007,
         continues  the mortgage on the  Company's  Plainview  property for $3.3
         million  and is  secured  by the  pledge of the stock of certain of the
         Company's   subsidiaries.   The  interest  rate  on  revolving   credit
         borrowings  under this  agreement is at various  rates  depending  upon
         certain   financial  ratios,   with  the  current  rate   substantially
         equivalent  to prime  (4.25% at March 31,  2003).  The  Company  paid a
         facility  fee of $125,000  and is required to pay a  commitment  fee of
         .25% per annum of the average  unused  portion of the credit line.  The
         mortgage is payable in monthly  installments of  approximately  $26,000
         through March 2008 and a balloon payment of $1.6 million in April 2008.
         The Company has entered  into  interest  rate swap  agreements  for the
         outstanding  amount under the mortgage  agreement at approximately 7.6%
         in order to  reduce  the  interest  rate  risk  associated  with  these
         borrowings.  The fair market value of the interest rate swap agreements
         was $376,000 as of March 31, 2003 in favor of the banks.

         The  terms  of the  loan  agreement  require  compliance  with  certain
         covenants including minimum consolidated  tangible net worth and pretax
         earnings,  maintenance  of certain  financial  ratios,  limitations  on
         indebtedness  and  prohibition  of the  payment of cash  dividends.  In
         connection   with  the  purchase  of  certain   materials  for  use  in
         manufacturing,  the Company has a letter of credit of $2.0 million.  At
         March 31,  2003,  the  Company's  available  unused  line of credit was
         approximately  $46.2  million  after  consideration  of this and  other
         letters of credit.



<PAGE>


10.      Inventories
         -----------
         Inventories consist of the following:

                                            March 31,              June 30,
                                              2003                   2002
                                         -------------          -------------
                                                   (In thousands)
          Raw materials                    $ 33,994                $ 34,702
          Work in process                    26,413                  21,939
          Finished goods                     14,049                  15,399
                                           ---------               ---------
                                           $ 74,456                $ 72,040
                                           =========               =========


11.      Product Warranty
         ----------------
         The Company warrants its products against defects in design,  materials
         and workmanship,  generally for one year from their date of shipment. A
         provision for estimated  future costs  relating to these  warranties is
         recorded  when  revenue is  recorded  and is  included in cost of goods
         sold.

         Changes in the Company's  product  warranty  liability  during the nine
         months ended March 31, 2003 were as follows:


                                                    Nine Months Ended
                                                        March 31,

                                                   2003          2002
                                               ----------    ----------
                                                     (In thousands)

         Balance at beginning of period         $ 1,500       $   270
         Provision for warranty obligations       1,369           547
         Charges incurred                        (1,552)         (527)
                                                --------      --------

         Balance at end of period               $ 1,317       $   290
                                                ========      ========

12.      Income Taxes
         ------------
         The Company is undergoing  routine audits by various taxing authorities
         of several of its Federal and state income tax returns covering periods
         from 1997 to 2001.  Management  believes  that the probable  outcome of
         these various  audits  should not  materially  affect the  consolidated
         financial statements of the Company.

         The Company  recorded credits of $84,000 and $1.3 million to additional
         paid-in  capital  during the nine months ended March 31, 2003 and 2002,
         respectively,   in   connection   with  the  tax  benefit   related  to
         compensation deductions on the exercise of stock options.

13.      Contingencies
         -------------
         The  Company  was served  recently  with an action  commenced  by Ricoh
         Company,  Ltd.  ("Ricoh").  The action,  which is pending in the United
         States  District  Court for the District of Delaware,  alleges that the
         Company and several other unrelated defendants are infringing a certain
         patent  owned  by  Ricoh  which  purportedly  describes  a  method  for
         designing an application  specific integrated circuit.  The supplier of
         software used by the Company in the design of the application  specific
         integrated  circuits  has agreed to assume the  defense of this  action
         pursuant to the  supplier's  contractual  obligation  to indemnify  the
         Company against such claims. Accordingly,  the Company does not believe
         that the outcome of the lawsuit will have a materially  adverse  effect
         upon its consolidated financial statements.

         The  Company  is  involved  in various  other  routine  legal  matters.
         Management  believes  the  outcome  of  these  matters  will not have a
         materially  adverse  effect  on the  Company's  consolidated  financial
         statements.


<PAGE>


14.      Business Segments
         -----------------

         The Company's  business  segments and major  products  included in each
         segment, are as follows:

         Microelectronic Solutions:                    Test Solutions:
         a)Microelectronic Modules                     a)Instrument Products
         b)Thin Film Interconnects                     b)Motion Control Systems
         c)Integrated Circuits

         Isolator Products

                                                    For The Nine Months Ended
                                                             March 31,
     Business Segment Data:                          2003               2002
                                                 -----------        -----------
                                                          (In thousands)
     Net sales:
       Microelectronic solutions                 $  76,668          $  75,235
       Test solutions                              124,616             48,983
       Isolator products                            11,855             11,657
                                                 -----------        -----------
         Net sales                               $ 213,139          $ 135,875
                                                 ===========        ===========

     Operating income:
       Microelectronic solutions                 $  10,463          $   8,083
       Test solutions                                2,928               (106)
       Isolator products                               424                620
       General corporate expenses                   (4,773)            (3,319)
                                                 -----------        -----------
                                                     9,042              5,278

        Restructuring charge (1)                      -                (5,050)
       Interest expense                             (1,023)            (1,138)
       Other income (expense), net                     284              1,666
                                                  -----------        -----------
         Income before income taxes               $  8,303          $     756
                                                  ===========       ===========


                                                    For The Three Months Ended
                                                             March 31,
                                                     2003               2002
                                                  -----------        -----------
                                                           (In thousands)
     Net sales:
       Microelectronic solutions                  $  26,810          $  27,259
       Test solutions                                43,934             19,580
       Isolator products                              4,198              3,732
                                                  -----------        -----------
         Net sales                                $  74,942          $  50,571
                                                  ===========        ===========

     Operating income (loss):
       Microelectronic solutions                  $   4,209          $   3,144
       Test solutions                                 1,909              1,335
       Isolator products                                204                 78
       General corporate expenses                    (1,885)            (1,102)
                                                  -----------        -----------
                                                      4,437              3,455

           Restructuring charge (1)                    -                (5,050)
       Interest expense                                (310)              (479)
       Other income (expense), net                      293                578
                                                  -----------        -----------
         Income (loss) before income taxes        $   4,420          $  (1,496)
                                                  ===========        ===========


(1)     The Microelectronic Solutions segment operating income has been adjusted
        to exclude the restructuring charge of $5.1 million from the periods
        ended March 31, 2002 for the closing of the Company's Richardson, Texas
        facility.

<PAGE>


Revenues, based on the customers' locations, attributed to the United States and
other regions are as follows:


                                        For the Nine Months Ended
                                                 March 31,
                                        2003                2002
                                      --------            --------
                                            (In thousands)

United States of America              $137,759            $117,115
Europe and Middle East                  57,153              12,247
Asia and Australia                      14,341               5,249
Rest of World                            3,886               1,264
                                      ---------           ---------
                                      $213,139            $135,875
                                      =========           =========


<PAGE>


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

Overview

          We use our advanced design, engineering and manufacturing abilities to
produce  microelectronic  and testing  solutions.  Our  products are used in the
aerospace,  defense and  broadband  communications  markets.  We also design and
manufacture  motion control  systems and shock and vibration  isolation  systems
which  are  used  for  commercial,  industrial  and  defense  applications.  Our
operations are grouped into three segments:

        o      microelectronic solutions
        o      test solutions
        o      isolator products

          Our consolidated financial statements include the accounts of Aeroflex
Incorporated  and  all  of  our  subsidiaries.   All  of  our  subsidiaries  are
wholly-owned.

          Our   microelectronic    solutions   segment   has   been   designing,
manufacturing and selling state-of-the-art  microelectronics for the electronics
industry since 1974. In January 1994, we acquired  substantially  all of the net
operating assets of the microelectronics  division of Marconi Circuit Technology
Corporation, which manufactures a wide variety of microelectronic assemblies. In
March 1996, we acquired MIC  Technology  Corporation  which  designs,  develops,
manufactures  and markets  microelectronic  products in the form of passive thin
film circuits and interconnects. Effective July 1, 1997, MIC Technology acquired
certain  equipment,  inventory,  licenses for  technology  and patents of two of
Lucent Technologies' telecommunications component units - multi-chip modules and
film integrated circuits.  These units manufacture  microelectronic  modules and
interconnect  products.  In February  1999,  we acquired all of the  outstanding
stock of UTMC  Microelectronic  Systems,  Inc.,  consisting of UTMC's integrated
circuit  business.  UTMC  designs and  supplies  radiation  tolerant  integrated
circuits for defense and aerospace communications.

          Our test solutions segment consists of two divisions:  (1) instruments
and (2) motion control products, including the following product lines:

     o    Comstron,  which we acquired in November 1989. Comstron is a leader in
          radio  frequency and microwave  technology  used in the manufacture of
          fast switching frequency signal generators and components. Comstron is
          currently an operating division of Aeroflex Laboratories Incorporated,
          one of our wholly-owned subsidiaries.

     o    Lintek,  which we acquired in January 1995. Lintek is a leader in high
          speed instrumentation  antenna measurement systems,  radar systems and
          satellite test systems.

     o    Europtest, which we acquired in September 1998. Europtest develops and
          sells  specialized  software-driven  test  equipment used primarily in
          cellular, satellite and other communications applications.

     o    Altair, which we acquired in October 2000. Altair designs and develops
          advanced   object-oriented  control  systems  software  based  upon  a
          proprietary software engine.

     o    RDL,  which we acquired in October  2000.  RDL  designs,  develops and
          manufactures  advanced commercial  communications test and measurement
          products and defense subsystems.



<PAGE>


     o    IFR,  which we  acquired in May 2002.  IFR  designs  and  manufactures
          advanced test solutions for communications,  avionics and general test
          and measurement applications.

     o    Our  motion  control  products   division  has  been  engaged  in  the
          development and manufacture of  electro-optical  scanning devices used
          in infra-red  night vision  systems  since 1975.  Additionally,  it is
          engaged in the design,  development  and  production of  stabilization
          tracking  devices and systems and magnetic  motors used in  satellites
          and other high reliability applications.

          Our  isolator   products  segment  has  been  designing,   developing,
manufacturing  and selling severe service shock and vibration  isolation systems
since 1961. These devices are primarily used in defense applications. In October
1983, we acquired  Vibration  Mountings & Controls,  Inc., which  manufactures a
line of  off-the-shelf  rubber and spring shock,  vibration and structure  borne
noise  control  devices  used in  commercial  and  industrial  applications.  In
December 1986, we acquired the operating assets of Korfund Dynamics Corporation,
a  manufacturer  of an  industrial  line of heavy duty  spring and rubber  shock
mounts.

          In December  2002,  our Board of  Directors  approved a formal plan to
discontinue our fiber optic lithium niobate modulator operation. The plan called
for an immediate  cessation of operations and disposal of existing  assets.  The
abandonment of the operation resulted in a charge of $2.6 million ($1.7 million,
net of tax) in the quarter ended December 31, 2002.  The charge  included a cash
requirement of $1.4 million,  primarily for equipment  leases and payroll costs,
and a non-cash  charge of $1.2  million,  primarily  for the  write-off of owned
equipment. In accordance with SFAS No. 144, the abandonment has been reported as
a discontinued  operation and, accordingly,  losses from operations and the loss
on abandonment have been reported separately from continuing operations.

          Approximately  35% of our sales for the nine  months  ended  March 31,
2003, 43% of our sales for fiscal 2002 and 29% of our sales for fiscal 2001 were
to agencies of the United States  government or to prime defense  contractors or
subcontractors of the United States government. The decrease from fiscal 2002 is
primarily due to the  acquisition  in May 2002 of IFR,  which has  predominantly
commercial customers.

          As  used  in  this  report,   "we,"  "us"  and  "our"  mean   Aeroflex
Incorporated and its subsidiaries (unless the content indicates otherwise).

Nine Months Ended March 31, 2003 Compared to Nine Months Ended March 31, 2002

          Net Sales.  Net sales  increased  56.9% to $213.1 million for the nine
months ended March 31, 2003 from $135.9  million for the nine months ended March
31, 2002. Net sales in the  microelectronic  solutions segment increased 1.9% to
$76.7  million for the nine months  ended March 31, 2003 from $75.2  million for
the nine months ended March 31, 2002 due primarily to increased  sales volume of
integrated circuits,  primarily in the aerospace and defense markets, offset, in
part,  by  decreased  sales  volume  in  microelectronic  modules  and thin film
interconnects  due to the  continuing  slowdown of the fiber optic  market.  Net
sales in the test solutions  segment  increased 154.4% to $124.6 million for the
nine months  ended March 31, 2003 from $49.0  million for the nine months  ended
March 31, 2002 due to the  acquisition  of IFR in May 2002  partially  offset by
decreased  sales  volume of  communications  test and  measurement  products and
satellite test equipment.  Net sales in the isolator  products segment increased
1.7% to $11.9  million  for the nine  months  ended  March 31,  2003 from  $11.7
million for the nine months ended March 31, 2002.

          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
66.3% to $81.8 million  (38.4% of net sales) for the nine months ended March 31,
2003 from $49.2 million (36.2% of net sales)



<PAGE>


for the nine months ended March 31, 2002 (excluding a $750,000 restructuring
charge. See Note 5 of the Consolidated Financial Statements). The increases were
primarily a result of the effect of the acquisition of IFR, which has higher
gross margins than our historical average.

     Selling,   General  and   Administrative   Costs.   Selling,   general  and
administrative costs include office and management salaries, fringe benefits and
commissions.  Selling, general and administrative costs increased 72.8% to $50.0
million (23.5% of net sales) for the nine months ended March 31, 2003 from $28.9
million (21.3% of net sales) for the nine months ended March 31, 2002 (excluding
a $4.3 million  restructuring  charge. See Note 5 to the Consolidated  Financial
Statements).  The increase in such expenses was due primarily to the addition of
the expenses of IFR.

     Other  Expense  (Income).  Interest  expense was $1.0  million for the nine
months ended March 31, 2003 and $1.1 million for the nine months ended March 31,
2002. Other income of $284,000 for the nine months ended March 31, 2003 consists
primarily  of  interest  income  of  $801,000  and other  miscellaneous  income,
partially  offset by  foreign  currency  transaction  losses of  $570,000  and a
$180,000 decrease in the fair value of our interest rate swap agreements.  Other
income of $1.7  million  for the nine  months  ended  March 31,  2002  consisted
primarily of interest income.  Interest income decreased  primarily due to lower
levels of cash and  marketable  securities,  which were used to acquire IFR, and
lower market interest rates.

     Provision for Income  Taxes.  The income tax provision was $2.8 million (an
effective income tax rate of 34.0%) for the nine months ended March 31, 2003 and
$282,000 (an effective income tax rate of 37.3%) for the nine months ended March
31, 2002. The income tax provision 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 foreign,  state and local income taxes and research and
development credits.

     Income From Continuing Operations. Income from continuing operatons for the
nine months  ended March 31,  2003 was $5.5  million or $.09 per diluted  share,
versus $474,000,  or $.01 per diluted share, for the nine months ended March 31,
2002.  The 2002 amounts  include a  restructuring  charge for the closing of our
Richardson,  Texas facility of $5.0 million ($3.4 million,  net of tax), or $.06
per diluted share.

Three Months Ended March 31, 2003 Compared to Three Months Ended March 31, 2002

     Net Sales.  Net sales increased 48.2% to $74.9 million for the three months
ended March 31, 2003 from $50.6  million  for the three  months  ended March 31,
2002. Net sales in the microelectronic solutions segment decreased 1.6% to $26.8
million for the three  months  ended  March 31, 2003 from $27.3  million for the
three  months ended March 31, 2002 due  primarily  to decreased  sales volume in
microelectronic  modules  and  thin  film  interconnects  due to the  continuing
slowdown of the fiber optic market,  offset,  in part, by increased sales volume
of integrated  circuits,  primarily in the aerospace  and defense  markets.  Net
sales in the test solutions  segment  increased  124.4% to $43.9 million for the
three months ended March 31, 2003 from $19.6  million for the three months ended
March 31, 2002 due to the  acquisition  of IFR in May 2002  partially  offset by
decreased  sales  volume of  communications  test and  measurement  products and
frequency  synthesizers.  Net sales in the isolator  products segment  increased
12.5% to $4.2  million  for the three  months  ended  March  31,  2003 from $3.7
million for the three  months ended March 31, 2002 due to higher sales volume of
military isolators.


<PAGE>


     Gross Profit.  Gross profit  increased 56.4% to $29.7 million (39.7% of net
sales) for the three  months ended March 31, 2003 from $19.0  million  (37.6% of
net sales) for the three  months  ended  March 31,  2002  (excluding  a $750,000
restructuring charge. See Note 5 to the Consolidated Financial Statements).  The
increases were primarily a result of the effect of the acquisition of IFR, which
has higher gross margins than our historical average.

     Income From Continuing Operations. Income from continuing operatons for the
three months  ended March 31, 2003 was $2.9  million or $.05 per diluted  share,
versus a loss from continuing operations of $(1.0) million, or $(.02) per share,
for the  three  months  ended  March  31,  2002.  The  2002  amounts  include  a
restructuring  charge for the closing of our Richardson,  Texas facility of $5.0
million ($3.4 million, net of tax), or $.06 per share.

Liquidity and Capital Resources

     As of March 31, 2003, we had $155.5 million in working capital. Our current
ratio was 4.4 to 1 at March 31,  2003.  On  February  14,  2003,  we executed an
amended and  restated  revolving  credit and security  agreement  with two banks
which  replaced a  previous  loan  agreement.  The  amended  and  restated  loan
agreement  increased the line of credit to $50 million  through  February  2007,
continues the mortgage on our Plainview property for $3.3 million and is secured
by the pledge of the stock of certain of our subsidiaries.  The interest rate on
revolving  credit  borrowings under this agreement is at various rates depending
upon certain financial ratios, with the current rate substantially equivalent to
prime (4.25% at March 31, 2003). The mortgage is payable in monthly installments
of  approximately  $26,000  through  March  2008 and a balloon  payment  of $1.6
million in April 2008. We have entered into interest  rate swap  agreements  for
the outstanding  amount under the mortgage  agreement at  approximately  7.6% in
order to reduce the interest rate risk associated with these borrowings.



<PAGE>


     The terms of the loan agreement  require  compliance with certain covenants
including  minimum   consolidated   tangible  net  worth  and  pretax  earnings,
maintenance  of  certain  financial  ratios,  limitations  on  indebtedness  and
prohibition of the payment of cash dividends. In connection with the purchase of
certain materials for use in  manufacturing,  we have a letter of credit of $2.0
million.

     We are currently in full compliance with all of the covenants  contained in
our loan agreement.

     For the nine months ended March 31, 2003, our  operations  provided cash of
$10.5 million primarily due to the profitability of operations  partially offset
by  reductions  in accounts  payable and accrued  expenses.  For the nine months
ended  March 31,  2003,  our  investing  activities  used  cash of $6.3  million
primarily  for capital  expenditures.  For the nine months ended March 31, 2003,
our financing  activities  used cash of $877,000  primarily for debt  repayments
offset, in part, by the proceeds from the exercise of stock options.

     On May 20,  2002,  we  acquired  75.1%  of the  outstanding  stock  of IFR.
Effective June 19, 2002, IFR was merged into a wholly owned  subsidiary with IFR
as the surviving wholly owned  subsidiary.  The purchase price was approximately
$61.9  million  of which  $48.8  million  was used to fully  satisfy  IFR's bank
indebtedness.  The balance was used to purchase IFR's outstanding shares and for
various  acquisition  related costs.  The purchase price was paid from available
cash  and  marketable   securities.   The  acquired  company's  net  sales  were
approximately $117.8 million for the year ended March 31, 2002.

     During fiscal year 2002, we announced certain  strategic  consolidations of
our manufacturing operations. The total restructuring charges are expected to be
$9.3  million  with a cash  cost  of  $4.3  million.  These  restructurings  are
substantially  complete and are  expected to reduce  annual  operating  costs by
approximately  $6.3 million and result in annual cash  savings of  approximately
$5.3 million.  The  restructuring  charges  included the  elimination  of excess
equipment capacity (primarily in the  microelectronics  segment),  severance and
other employee related expenses.

     We believe that existing cash and cash equivalents  coupled with internally
generated  funds  will be  sufficient  for  our  working  capital  requirements,
restructuring  charges,  capital expenditure needs and the servicing of our debt
for the foreseeable  future. Our cash and cash equivalents are available to fund
acquisitions  and other  potential large cash needs that may arise. At March 31,
2003, our available unused line of credit was $46.2 million after  consideration
of letters of credit.

     The following table  summarizes,  as of March 31, 2003, our obligations and
commitments to make future payments under debt and operating leases:

                                     Payments due by period
                     ------------------------------------------------------

                                        Less Than                    After
                       Total      1 Year    1-3 Years   4-5 Years   5 Years
                     ---------  ----------  ---------   ---------   -------
                                            (In thousands)

Long-term debt...... $13,447     $ 1,844    $ 3,154     $ 1,550    $ 6,899
Operating leases....  32,788       6,021      8,606       4,943     13,218
                     --------    --------   --------    --------   --------
Total............... $46,235     $ 7,865    $11,760     $ 6,493    $20,117
                     ========    ========   ========    ========   ========


     The  operating  lease  commitments  shown in the above  table have not been
reduced by future minimum sub-lease rentals of $16.3 million.


<PAGE>


     In the normal  course of  business,  we  routinely  enter into  binding and
non-binding  purchase obligations  primarily covering  anticipated  purchases of
inventory and equipment. None of these obligations are individually significant.
We do not expect that these  commitments  as of March 31,  2003 will  materially
adversely affect our liquidity.

Accounting Policies Involving Significant Estimates

     The  preparation  of  financial   statements  and  related  disclosures  in
conformity with accounting principles generally accepted in the United States of
America  requires us to make estimates and assumptions  that affect the reported
amounts of assets and  liabilities,  the  disclosure  of  contingent  assets and
liabilities  at the date of the  financial  statements  and the  recognition  of
revenue  and  expenses  during the period  reported.  The  following  accounting
policies   require  us  to  make   estimates  and   assumptions   based  on  the
circumstances,  information  available and our  experience  and judgment.  These
estimates and assumptions are reviewed periodically and the effects of revisions
are reflected in the period that they are determined to be necessary.  If actual
results differ significantly from our estimates,  our financial statements could
be materially impacted.

Revenue and Cost Recognition Under Long-Term Contracts
------------------------------------------------------

     Our  revenue  is  generally  recognized  based  upon  shipments.   Revenues
associated   with  certain   long-term   contracts  are  recognized   under  the
units-of-delivery  method that  includes  shipments  and progress  billings,  in
accordance  with  Statement of Position  81-1  "Accounting  for  Performance  of
Construction-Type and Certain Production-Type Contracts." We record costs on our
long-term contracts using percentage-of-completion  accounting. Under percentage
of completion accounting,  costs are recognized on revenues in the same relation
that  total  estimated  manufacturing  costs bear to the total  contract  value.
Estimated costs at completion are based on engineering and production estimates.
Estimates  are  reviewed  on a  regular  basis  throughout  the  life  of  these
contracts.  Provisions for estimated losses or revisions in estimated profits on
contracts-in-process  are  recorded  in the  period  in  which  such  losses  or
revisions are first determined. Revisions to profits recognized to date could be
required  in future  periods  and may have a material  effect on our  results of
operations and financial condition.

Inventories
-----------

     Inventories  are  stated  at the  lower of cost  (first-in,  first-out)  or
market.  Inventory  levels are  maintained  in  relation to the  expected  sales
volume.  We  periodically  evaluate the net  realizable  value of our inventory.
Numerous  analyses  are  applied  including  lower of cost or  market  analysis,
forecasted sales requirements and forecasted warranty requirements. After taking
these and other factors into consideration,  such as technological  changes, age
and physical  condition,  appropriate  adjustments are recorded to the inventory
balance.  If actual  conditions  differ from our  expectations,  then  inventory
balances may be over or under valued,  which could have a material effect on our
results of operations and financial condition.

Recoverability of Long-Lived and Intangible Assets
--------------------------------------------------

     Property,   plant  and  equipment  are  stated  at  cost  less  accumulated
depreciation  computed on a straight-line  basis over the estimated useful lives
of the related assets. Leasehold improvements are amortized over the life of the
lease or the  estimated  life of the asset,  whichever  is  shorter.  Changes in
circumstances  such  as  technological  advances  or  changes  to the  Company's
business  model  can  result  in the  actual  useful  lives  differing  from the
Company's estimates. To the extent the estimated useful lives are incorrect, the
value of these  assets  may be over or under  stated  which in turn could have a
material effect on our results of operations and financial condition.


<PAGE>


     Long-lived  assets,  other  than  goodwill,  are  reviewed  for  impairment
periodically and whenever events or changes in  circumstances  indicate that the
carrying value of any such asset may be impaired. We evaluate the recoverability
of such assets by estimating  future cash flows. If the sum of the  undiscounted
cash flows  expected  to result  from the use of the  assets and their  eventual
disposition is less than the carrying amount of the assets, we will recognize an
impairment loss to the extent of the excess of the carrying amount of the assets
over the discounted cash flow.

     SFAS 142 requires that we perform an annual  assessment of whether there is
an indication that goodwill is impaired unless events or circumstances warrant a
more  frequent  assessment.  The  impairment  assessment  involves,  among other
things,  an estimate of the fair value of each of the Company's  reporting units
(as defined in SFAS 142). Such estimates  involve  forward looking  assessments,
are inherently subjective, and are subject to change in future periods.

     If  the  impairment  review  of  goodwill,   intangible  assets  and  other
long-lived  assets differ  significantly  from actual  results,  it could have a
material effect on our results of operations and financial condition.

Restructuring
-------------

     When circumstances  warrant a restructuring  charge, we estimate and record
all appropriate  expenses.  These expenses include  severance,  fringe benefits,
asset impairment, buyout of leases and inventory write-downs. To the extent that
our estimates differ from actual expenses  incurred,  there could be significant
additional expenses or reversals of previously recorded charges in the future.

Income Taxes
------------

     The carrying  value of our net deferred tax assets  assumes that we will be
able to generate  sufficient future taxable income in certain tax jurisdictions.
If  this  assumption  changes  in  the  future,  we may be  required  to  record
additional  valuation  allowances  against our deferred tax assets  resulting in
additional  income tax expense in our consolidated  statement of operations.  We
evaluate the realizability of the deferred tax assets and assess the adequacy of
the valuation allowance quarterly.

Recent Accounting Pronouncements

     In  October  2001,  the FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment of Long-Lived  Assets,"  which  addresses  financial  accounting  and
reporting for the impairment or disposal of long-lived  assets.  We adopted SFAS
No. 144  effective  July 1, 2002.  The  adoption  did not have any impact on our
consolidated financial statements.

     In July  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
Associated with Exit or Disposal  Activities,"  which will be effective for exit
and disposal activities initiated after December 31, 2002. SFAS No. 146 provides
that an exit cost  liability  should  not always be  recorded  at the date of an
entity's  commitment  to an exit plan,  but instead  should be recorded when the
obligation is incurred and measured at fair value.  An entity's  commitment to a
plan, by itself,  does not create an obligation  that meets the  definition of a
liability.

     In November  2002,  the FASB  issued  Interpretation  No. 45,  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness  of  Others"  (FIN  45).  FIN 45  requires  certain
guarantees  to be recorded at fair value  regardless of the  probability  of the
loss. We have adopted FIN 45  prospectively  as of January 1, 2003. The adoption
did not have any impact on the consolidated financial statements.

<PAGE>

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition  and  Disclosure."  SFAS No. 148 provides  alternative
methods  of  transition  for a  voluntary  change  to the fair  value  method of
accounting for stock- based employee compensation as originally provided by SFAS
No. 123 "Accounting for Stock-Based  Compensation."  Additionally,  SFAS No. 148
amends the  disclosure  requirements  of SFAS No. 123 in both annual and interim
financial  statements.  We have adopted the disclosure portion of this statement
for the fiscal  quarter  ended March 31,  2003.  The  adoption  did not have any
impact on our consolidated financial position or results of operations.

     In November  2002,  the Emerging  Issues Task Force (EITF)  finalized  EITF
Issue 00-21, "Revenue Arrangements with Multiple  Deliverables",  which provides
guidance on the timing and method of revenue  recognition for sales arrangements
that include the delivery of more than one product or service.  EITF Issue 00-21
is effective  prospectively  for  arrangements  entered  into in fiscal  periods
beginning  after June 15, 2003.  We are  currently  analyzing  the impact of its
adoption on our consolidated financial statements.

Forward-Looking Statements

All statements  other than statements of historical fact included in this Report
on Form 10-Q,  including  without  limitation,  statements  under  "Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operations"
regarding our financial position,  business outlook, business strategy and plans
and  objectives of our  management for future  operations,  are  forward-looking
statements.  When used in this Report on Form 10-Q,  words such as "anticipate,"
"believe,"  "estimate,"  "expect,"  "intend"  and similar  expressions,  as they
relate  to us or  our  management,  identify  forward-looking  statements.  Such
forward-looking  statements are based on the current  beliefs of our management,
as well  as  assumptions  made by and  information  currently  available  to our
management.  Actual results could differ  materially from those  contemplated by
the forward-looking  statements,  as a result of certain factors,  including but
not limited to, competitive  factors and pricing  pressures,  the integration of
the business of IFR, changes in legal and regulatory requirements, technological
change   or   difficulties,   product   development   risks,   commercialization
difficulties  and  general  economic  conditions.  Such  statements  reflect our
current  views with  respect  to the  future and are  subject to these and other
risks,  uncertainties  and  assumptions  relating  to our  financial  condition,
results of operations, growth strategy and liquidity. We undertake no obligation
to update such forward-looking  statements which are made as of the date of this
Report.

ITEM 3 - QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
------   --------------------------------------------------------

     We are exposed to market risk  related to changes in interest  rates and to
foreign currency  exchange rates. Most of our debt is at fixed rates of interest
or at a variable rate with an interest  rate swap  agreement  which  effectively
converts  the  variable  rate debt into fixed rate  debt.  Therefore,  if market
interest  rates increase by 10 percent from levels at March 31, 2003, the effect
on our net income would be a reduction of  approximately  $17,000 per year. Most
of our invested cash and cash equivalents are at variable rates of interest.  If
market  interest rates decrease by 10 percent from levels at March 31, 2003, the
effect on our net income would be a decrease of approximately  $36,000 per year.
We operate  businesses  that are  located  outside of the United  States,  which
exposes us to the fluctuation of foreign currency  exchange rates (primarily the
British Pound and the Euro).  If foreign  currency  exchange rates change by 10%
from  levels at March 31,  2003,  the effect on our other  comprehensive  income
would be approximately $4.1 million.


<PAGE>


ITEM 4 - CONTROLS AND PROCEDURES
------   -----------------------

     On May 5, 2003,  there were  meetings  held  under the  supervision  of our
management,  including  our  Chairman of the Board,  who is our Chief  Executive
Officer,  and our President,  who is our Chief Financial  Officer,  during which
there was an  evaluation of the  effectiveness  of our  disclosure  controls and
procedures.  Our  Chairman  and  President  have  advised  us that based on such
evaluation, they believe such controls and procedures are effective.

     Our  Chairman  of the Board  and our  President  are  involved  in  ongoing
evaluations of internal controls.  In May 2003, in anticipation of the filing of
this Form  10-Q,  they  reviewed  the most  recent  evaluation  of our  internal
controls  prepared  by  our  internal  audit  department.  There  have  been  no
significant  changes in our  internal  controls or in other  factors  that would
significantly affect our internal controls subsequent to such evaluation.



<PAGE>



                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES
                           PART II - OTHER INFORMATION


Item 1.   Legal Proceedings

          The  Company was served  recently  with an action  commenced  by Ricoh
          Company,  Ltd. ("Ricoh").  The action,  which is pending in the United
          States  District Court for the District of Delaware,  alleges that the
          Company  and several  other  unrelated  defendants  are  infringing  a
          certain patent owned by Ricoh which purportedly describes a method for
          designing an application  specific integrated circuit. The supplier of
          software used by the Company in the design of the application specific
          integrated  circuits  has agreed to assume the  defense of this action
          pursuant to the  supplier's  contractual  obligation  to indemnify the
          Company against such claims. Accordingly, the Company does not believe
          that the outcome of the lawsuit will have a materially  adverse effect
          upon its consolidated financial statements.

Item 2.   Changes in Securities

          None

Item 3.   Defaults upon Senior Securities

          None

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

          None

Item 5.   Other Information

          None

Item 6.   Exhibits and Reports on Form 8-K

           (a)   Exhibits

                 99.1     Certification of Chief Executive Officer pursuant to
                          Section 906 of Sarbanes-Oxley Act of 2002.

                 99.2     Certification of Chief Financial Officer pursuant to
                          Section 906 of Sarbanes-Oxley Act of 2002.

           (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)



May 15, 2003                       By:       /s/Michael Gorin
                                       --------------------------------
                                              Michael Gorin
                                   President, Chief Financial Officer
                                     and Principal Accounting Officer



<PAGE>


                                  CERTIFICATION

     I, Harvey R. Blau, Chairman of the Board of Aeroflex Incorporated,  certify
that:

     1. I  have  reviewed  this  quarterly  report  on  Form  10-Q  of  Aeroflex
Incorporated;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

     4. The  registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a) designed  such  disclosure  controls and  procedures to ensure that
material  information  relating to the  registrant,  including its  consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this quarterly report is being prepared;

          b) evaluated the effectiveness of the registrant's disclosure controls
and  procedures  as of a date  within 90 days prior to the  filing  date of this
quarterly report (the "Evaluation Date"); and

          c)  presented  in this  quarterly  report  our  conclusions  about the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

     5. The registrant's other certifying  officers and I have disclosed,  based
on our most  recent  evaluation,  to the  registrant's  auditors  and the  audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent function):

          a) all significant deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

          b) any fraud,  whether or not material,  that  involves  management or
other  employees  who  have a  significant  role  in the  registrant's  internal
controls; and


<PAGE>


     6. The registrant's other certifying  officers and I have indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 15, 2003

                                                   /s/Harvey R. Blau
                                               ----------------------------
                                               Harvey R. Blau
                                               Chairman of the Board
                                               (Principal Executive Officer)




<PAGE>



                                  CERTIFICATION

     I, Michael Gorin, President of Aeroflex Incorporated, certify that:

     1. I  have  reviewed  this  quarterly  report  on  Form  10-Q  of  Aeroflex
Incorporated;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

     4. The  registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange  Act Rules  13a-14  and  15d-14)  for the  registrant  and we have:

          a)designed  such  disclosure  controls and  procedures  to ensure that
material  information  relating to the  registrant,  including its  consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this quarterly report is being prepared;

          b) evaluated the effectiveness of the registrant's disclosure controls
and  procedures  as of a date  within 90 days prior to the  filing  date of this
quarterly report (the "Evaluation Date"); and

          c)  presented  in this  quarterly  report  our  conclusions  about the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

     5. The registrant's other certifying  officers and I have disclosed,  based
on our most  recent  evaluation,  to the  registrant's  auditors  and the  audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent function):

          a) all significant deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

          b) any fraud,  whether or not material,  that  involves  management or
other  employees  who  have a  significant  role  in the  registrant's  internal
controls; and

<PAGE>


     6. The registrant's other certifying  officers and I have indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant  deficiencies and material weaknesses.


Date:  May 15, 2003

                                              /s/Michael Gorin
                                          ---------------------------
                                          Michael Gorin
                                          President
                                          (Principal Financial Officer)