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




                                    FORM 10-Q



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

For the quarter ended                       December 31, 1996
Commission File Number 1-8037


                              AEROFLEX INCORPORATED

             (Exact name of Registrant as specified in its Charter)

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

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

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

 *Indicate  by check  mark  whether  the  Registrant  (1) has filed all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the  preceding  12 months,  and (2) has been  subject to such filing
requirements for the past 90 days.

               Yes [X]          No  [  ]

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

    February 13, 1997    12,590,625 (excluding 66,956 shares held in treasury)
           (Date)                       (Number of Shares)

NOTE:     THIS IS PAGE 1 OF A DOCUMENT CONSISTING OF 15 PAGES.

<PAGE>


                              AEROFLEX INCORPORATED

                                AND SUBSIDIARIES


                                      INDEX


                                                                                
                                                             PAGE
                                                             ----               
PART I:  FINANCIAL INFORMATION

CONSOLIDATED BALANCE SHEETS
 December 31, 1996 and June 30, 1996                           3-4

CONSOLIDATED STATEMENTS OF OPERATIONS
 Six Months Ended December 31, 1996 and 1995                    5

CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended December 31, 1996 and 1995                  6

CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months Ended December 31, 1996 and 1995                    7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     8-10

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS
    Six and Three Months Ended December 31, 1996 and 1995     11-13

PART II:  OTHER INFORMATION

ITEM 1 Legal Proceedings                                        14

ITEM 6 Exhibits and Reports on Form 8-K                         14

SIGNATURES                                                      15


                                       -2-

<PAGE>


                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                           December 31,        June 30,
                                              1996              1996
                                           --------------      --------   
<S>                                          <C>            <C> 

ASSETS

Current assets:
 Cash and cash equivalents                   $  1,025,000   $    661,000
 Invested cash                                     69,000           -
 Accounts receivable less allowance for
   doubtful accounts of $361,000 and 
   $354,000                                    18,710,000     23,336,000
 Income tax refund receivable                        -           926,000
 Inventories                                   19,195,000     16,916,000
 Deferred income taxes                          1,921,000      1,871,000
 Prepaid expenses and other current assets      1,008,000        554,000
                                             -------------  ------------
   Total Current Assets                        41,928,000     44,264,000

Invested cash                                     512,000        603,000
Property, plant and equipment, at cost, net    14,517,000     14,854,000
Intangible assets acquired in connection with
  the purchase of businesses, net               8,353,000      8,707,000
Costs in excess of fair value of net assets
  of businesses acquired, net                  10,052,000     10,054,000
Other assets                                    2,384,000      2,687,000
                                             ------------   ------------
                                             $ 77,746,000   $ 81,169,000
                                             ============   ============

                 See notes to consolidated financial statements
</TABLE>

                                    -3-
<PAGE>

                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (continued)

<TABLE>
<CAPTION>
                                             December 31,      June 30,
                                                 1996            1996
                                             -------------     ---------
<S>                                          <C>               <C> 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Current portion of long-term debt          $  4,312,000    $  4,259,000
  Accounts payable                              4,727,000       5,243,000
  Accrued expenses and other current 
    liabilities                                 7,623,000       8,256,000
  Income taxes payable                          1,693,000       1,770,000
                                             ------------    ------------
    Total Current Liabilities                  18,355,000      19,528,000
                                             ------------    ------------

Long-term debt                                 16,111,000      20,337,000
                                             ------------    ------------
Deferred income taxes                              78,000         172,000
                                             ------------    ------------
Other long-term liabilities                       679,000         679,000
                                             ------------    ------------
7-1/2% Senior Subordinated Convertible
  Debentures                                    9,981,000       9,981,000
                                             ------------    ------------
Stockholders' equity:
 Preferred stock, par value $.10 per share; 
   Authorized 1,000,000 shares:
   Series A Junior Participating Preferred
   Stock, par value $.10 per share,
   authorized 150,000 shares                        -               -
 Common stock, par value $.10 per share;
  authorized 25,000,000 shares; issued
  12,550,000 and 12,380,000 shares              1,255,000       1,238,000
 Additional paid-in capital                    58,174,000      57,820,000
 Accumulated deficit                          (26,460,000)    (28,004,000)
                                             ------------    ------------                     
                                               32,969,000      31,054,000

Less:  Treasury stock, at cost (89,000 and
  129,000 shares)                                 427,000         582,000
                                             ------------    ------------
                                               32,542,000      30,472,000
                                             ------------    ------------
                                             $ 77,746,000    $ 81,169,000
                                             ============    ============
              See notes to consolidated financial statements
</TABLE>

                                    -4-


<PAGE>

                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                Six Months Ended
                                                  December 31,
                                                ----------------
                                             1996                1995
                                             ----                ----
<S>                                       <C>               <C> 

Net Sales                                 $ 41,975,000       $ 28,344,000
Cost of Sales                               28,440,000         19,715,000
                                          ------------       ------------
  Gross Profit                              13,535,000          8,629,000
Selling, General and Administrative Costs    9,576,000          6,341,000
                                          ------------       ------------
  Operating Income                           3,959,000          2,288,000
                                          ------------       ------------
Other Expense (Income)
  Interest expense                           1,551,000            616,000
  Interest and other income                    (61,000)          (333,000)
                                          ------------       ------------
  Total Other Expense (Income)               1,490,000            283,000
                                          ------------       ------------
Income Before Income Taxes                   2,469,000          2,005,000
Provision for Income Taxes                     925,000            400,000
                                          ------------       ------------
Net Income                                $  1,544,000       $  1,605,000
                                          ============       ============
Net Income per Common Share:
  Primary                                     $ .12            $ .13
                                              =====            =====

  Fully Diluted                               $ .12            $ .13
                                              =====            =====

Weighted Average Number of Common
 Shares Outstanding:

  Primary                                   13,276,000         12,671,000
                                          ============       ============
  Fully Diluted                             15,120,000         14,459,000
                                          ============       ============

                 See notes to consolidated financial statements
</TABLE>

                                    -5-

<PAGE>


                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                Three Months Ended
                                                   December 31,
                                               -------------------
                                             1996                1995
                                             ----                ----
<S>                                       <C>                <C> 
                                             
Net Sales                                 $ 22,914,000       $ 15,195,000
Cost of Sales                               15,657,000         10,635,000
                                          ------------       ------------
  Gross Profit                               7,257,000          4,560,000
Selling, General and Administrative Costs    5,096,000          3,163,000
                                          ------------       ------------
  Operating Income                           2,161,000          1,397,000
                                          ------------       ------------

Other Expense (Income)
  Interest expense                             741,000            313,000
  Interest and other income                    (15,000)          (163,000)
                                          ------------       ------------
  Total Other Expense (Income)                 726,000            150,000
                                          ------------       ------------
Income Before Income Taxes                   1,435,000          1,247,000
Provision for Income Taxes                     542,000            249,000
                                          ------------       ------------
Net Income                                $    893,000       $    998,000
                                          ------------       ------------
Net Income per Common Share:
  Primary                                     $ .07            $ .08
                                              =====            =====
  Fully Diluted                               $ .07            $ .08
                                              =====            =====

Weighted Average Number of Common
 Shares Outstanding:

  Primary                                   13,148,000         12,626,000
                                          ============       ============
  Fully Diluted                             15,061,000         14,402,000
                                          ============       ============

              See notes to consolidated financial statements
</TABLE>

                                    -6-

<PAGE>


                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                    Six Months Ended
                                                      December 31,

                                                   1996           1995
                                                   ----           ----  
<S>                                           <C>             <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                   $  1,544,000    $  1,605,000
 Adjustments to reconcile net income to net 
   cash provided by (used in) operating 
   activities:
   Depreciation and amortization                 2,220,000       1,441,000
   Deferred income taxes                          (144,000)       (163,000)
   Other                                            12,000          89,000
 Change in operating assets and liabilities:
   Decrease (increase) in accounts receivable    4,614,000       1,713,000
   Decrease (increase) in inventories           (2,279,000)     (3,548,000)
   Decrease (increase) in prepaid expenses and
    other assets                                   774,000        (697,000)
   Increase (decrease) in accounts payable, 
    accrued expenses and other long-term 
    liabilities                                 (1,301,000)     (1,610,000)
   Increase (decrease) in income taxes payable     223,000         364,000
                                               -----------     -----------

NET CASH PROVIDED BY (USED IN)
 OPERATING ACTIVITIES                            5,663,000        (806,000)
                                               -----------     -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Net cash provided by
   discontinued operations                            -             94,000
  Proceeds from sale of property, plant
    and equipment                                     -            313,000
  Decrease in invested cash                         22,000         653,000
  Capital expenditures                          (1,374,000)       (643,000)
                                               -----------     -----------

NET CASH PROVIDED BY (USED IN)
 INVESTING ACTIVITIES                           (1,352,000)        417,000
                                               -----------     -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net debt repayments                           (4,173,000)     (1,725,000)
  Proceeds from the exercise of stock options      226,000         360,000
                                               -----------     -----------
NET CASH PROVIDED BY (USED IN)
 FINANCING ACTIVITIES                           (3,947,000)     (1,365,000)
                                               -----------     -----------
NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                             364,000      (1,754,000)
CASH AND CASH EQUIVALENTS AT BEGINNING 
  OF PERIOD                                        661,000      11,330,000
                                               -----------     -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD     $ 1,025,000     $ 9,576,000
                                               ===========     ===========

                 See notes to consolidated financial statements
</TABLE>

                                    -7-

<PAGE>


                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 1. Basis of Presentation
    The  consolidated  balance sheet of Aeroflex  Incorporated  and Subsidiaries
    ("the  Company")  as of  December  31,  1996  and the  related  consolidated
    statements  of  operations  for the six and three months ended  December 31,
    1996 and 1995 and the  statements  of cash  flows for the six  months  ended
    December  31,  1996 and 1995  have  been  prepared  by the  Company  and are
    unaudited.  In the opinion of  management,  all  adjustments  (which include
    normal  recurring  adjustments)  necessary to present  fairly the  financial
    position,  results of operations and cash flows at December 31, 1996 and for
    all periods  presented  have been made.  Certain  information  and  footnote
    disclosures normally included in financial statements prepared in accordance
    with  generally  accepted  accounting  principles  have been omitted.  It is
    suggested  that  these   consolidated   financial   statements  be  read  in
    conjunction with the financial  statements and notes thereto included in the
    Company's  June 30, 1996 annual report to  shareholders.  There have been no
    changes of significant accounting policies since June 30, 1996.

    Certain  reclassifications  have been made to previously  reported financial
    statements to conform to current classifications.

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

 2. Acquisition of Business

    MIC
    Effective March 19, 1996, the Company acquired all of the outstanding  stock
    of MIC Technology Corporation ("MIC") for approximately $36,000,000 of cash,
    300,000  shares of common stock and warrants to purchase  400,000  shares of
    common stock (at exercise prices ranging from $7.05 to $7.50 per share). The
    purchase  price was paid with  available  cash of $9,000,000  and borrowings
    under the  Company's  bank  loan  agreement  of  $27,000,000.  The  purchase
    agreement  also provides for a contingent  payment of $4,000,000  based upon
    certain  operating  results.  MIC  manufactures  high  frequency  thin  film
    circuits  and   interconnects  for   miniaturized,   high  frequency,   high
    performance  electronic  products  for growing  commercial  markets  such as
    wireless  communications,  satellite based communications  hardware and high
    technology  military  electronics.  The  acquired  company's  net sales were
    approximately $25,000,000 for its fiscal year ended October 31, 1995.

    The  acquisition  was  accounted  for as a purchase  and,  accordingly,  the
    acquired  assets and  liabilities  assumed were recorded at their  estimated
    fair values at the date of  acquisition.  The  operating  results of MIC are
    included in the  consolidated  statement of operations  from the acquisition
    date.

    The Company  commissioned  an independent  asset valuation study of acquired
    tangible  and  identifiable  intangible  assets  to  serve  as a  basis  for
    allocation of the purchase price. Based on this study, the Company allocated
    the purchase price as follows:
<TABLE>
<S>                                               <C>

      Net tangible assets                          $ 6,237,000
      Identifiable intangible assets                 8,406,000
      In-process research and development           23,200,000
                                                   -----------   
                                                   $37,843,000
                                                   ===========
</TABLE>

                                     -8-

<PAGE>


    The  identifiable  intangible  assets  which  include  existing  technology,
    customer  relationships  and  assembled  work force will be  amortized  on a
    straight-line  basis over thirteen years based on the study described above.
    The acquired  in-process research and development was not considered to have
    reached technological feasibility and, in accordance with generally accepted
    accounting  principles,  the value of such was expensed in the third quarter
    of fiscal 1996.

    Summarized  below are the  unaudited  pro forma results of operations of the
    Company as if MIC had been acquired at the  beginning of the fiscal  periods
    presented.  The $23,200,000 write-off has been included in the June 30, 1996
    pro forma  income but not included in the December 31, 1995 pro forma income
    in order to provide comparability to the respective historical periods.

<TABLE>
<CAPTION>

                                                 Pro Forma         Pro Forma
                             Pro Forma           Six Months        Three Months
                             Year Ended            Ended              Ended
                            June 30, 1996    December 31, 1995   December 31, 1995
                            -------------    -----------------   -----------------
                                     (in thousands, except per share data)
<S>                            <C>               <C>                <C> 

     Net Sales                $ 90,097           $ 40,318            $ 20,473
     Net Income (Loss)         (19,392)               656                  79

     Earnings (Loss) Per Share
       Primary                $  (1.62)          $    .05            $    .01
       Fully Diluted               *                  .05                 .01
<FN>

     * Due to the loss,  all options,  warrants and  convertible  debentures are
       anti-dilutive.
</FN>
</TABLE>


    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 periods presented or of
    future operating results of the combined companies.

 3. Bank Loan Agreements
    As of March 15,  1996 the  Company  replaced  a  previous  agreement  with a
    revised  revolving  credit and term loan  agreement  with two banks which is
    secured  by  substantially   all  of  the  Company's  assets  not  otherwise
    encumbered.   The  agreement   provides  for  a  revolving  credit  line  of
    $22,000,000  and a term  loan of  $16,000,000.  The  revolving  credit  line
    expires in March 1999. The term loan is payable in quarterly installments of
    $900,000  with final  payment on September  30, 2000.  The interest  rate on
    borrowings  under this agreement is at various rates  depending upon certain
    financial  ratios,  with the current rate  substantially  equivalent  to the
    prime rate (8.25% at December 31, 1996) on the revolving  credit  borrowings
    and prime plus 1/4% on the term loan borrowings.  The terms of the agreement
    require  compliance with certain covenants  including  minimum  consolidated
    tangible net worth and pre-tax  earnings,  maintenance of certain  financial
    ratios, limitations on capital expenditures and indebtedness and prohibition
    of the payment of cash dividends.


                                       -9-
<PAGE>

 4. Inventories
    Inventories consist of the following:

<TABLE>
<CAPTION>
                                      December 31,         June 30,
                                         1996                1996
                                      -------------       ----------    
<S>                                   <C>               <C>
                    Raw Materials     $ 10,864,000       $  9,352,000
                    Work in Process      5,761,000          5,301,000
                    Finished Goods       2,570,000          2,263,000
                                      ------------       ------------    
                                      $ 19,195,000       $ 16,916,000
                                      ============       ============    
</TABLE>
 5.  Income Taxes
     At June 30,  1996 the  Company  had net  operating  loss  carryforwards  of
     approximately  $8,000,000  for Federal  income tax  purposes  which  expire
     through 2006.  The income tax provisions for the six and three months ended
     December  31,  1995  include  benefits   relating  to  the  recognition  of
     unrealized and realized net operating loss carryforwards.

     The Company is undergoing  routine audits by various taxing  authorities of
     several  of its state and  local  income  tax  returns  covering  different
     periods from 1993 to 1995. Management believes that the probable outcome of
     these  various  audits  should  not  materially   affect  the  consolidated
     financial statements of the Company.

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

                                      -10-

<PAGE>


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

Results of Operations

Six Months  Ended  December 31, 1996  Compared to Six Months Ended  December 31,
1995

Net sales  increased to  $41,975,000  for the six months ended December 31,
1996 from  $28,344,000  for the six months ended  December  31, 1995.  Operating
profits increased 73% from last year. Net income decreased to $1,544,000 for the
six months ended December 31, 1996 from $1,605,000 for the comparable  period in
the prior year.

Net sales in the electronics segment increased to $34,042,000 for the six months
ended December 31, 1996 from  $21,396,000  for the six months ended December 31,
1995 primarily as a result of the  acquisition of MIC Technology  Corporation in
March 1996.  Operating  profits  increased by $1,404,000 as a result of both the
increased sales volume and higher profit margins in the existing product lines.

Net sales in the isolator  products segment  increased to $7,933,000 for the six
months ended December 31, 1996 from $6,948,000 for the six months ended December
31,  1995.  The  increase  reflects  increased  sales  volume  in  each  of  the
commercial,  industrial  and  military  isolator  divisions.  Operating  profits
increased by $224,000 primarily due to the higher sales volume and higher profit
margins,  offset,  in part,  by increased  selling,  general and  administrative
expenses.

Cost of sales as a percentage of sales decreased to 67.8% from 69.6% between the
two periods  primarily as a result of increased margins in  microelectronics  in
the  six  months  ended  December  31,  1996  and  inefficiencies  in the  final
production runs of military  isolators in the Company's Puerto Rican facility in
the period ended December 31, 1995. Selling, general and administrative costs as
a percentage of sales increased to 22.8% from 22.4%.

Interest  expense  increased to $1,551,000 from $616,000 due to increased levels
of borrowings  related to the MIC acquisition in March 1996.  Interest and other
income  decreased to $61,000 from $333,000 as a result of lower interest  income
on reduced cash amounts due to the acquisition of MIC.

The income tax provisions for the two periods  differed from the amount computed
by applying  the U.S.  Federal  income tax rate to income  before  income  taxes
primarily as a result of the tax benefits of loss carryforwards (both unrealized
and  realized)  for the six months ended  December 31, 1995 and primarily due to
state income taxes for the six months  ended  December 31, 1996.  The income tax
rates were 37% and 20% for 1996 and 1995, respectively.

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

Three Months Ended December 31, 1996 Compared to Three Months Ended December 31,
1995 

Net sales  increased to $22,914,000 for the three months ended December 31,
1996 from  $15,195,000  for the three months ended December 31, 1995.  Operating
profits  increased 55% from last year. Net income  decreased to $893,000 for the
three months ended December 31, 1996 from $998,000 for the comparable  period in
the prior year.


                                      -11-

<PAGE>


Net sales in the  electronics  segment  increased to  $18,811,000  for the three
months  ended  December  31, 1996 from  $11,552,000  for the three  months ended
December 31, 1995  primarily as a result of the  acquisition  of MIC  Technology
Corporation in March 1996.  Operating  profits increased by $847,000 as a result
of both the  increased  sales volume and higher  profit  margins in the existing
product lines  partially  offset by the addition of MIC's  selling,  general and
administrative costs.

Net sales in the isolator products segment increased to $4,103,000 for the three
months  ended  December  31, 1996 from  $3,643,000  for the three  months  ended
December 31, 1995. The increase is attributable to higher sales volume primarily
in the commercial isolator division. Operating profits decreased by $72,000 as a
result of increased selling, general and administrative costs.

Cost of sales as a percentage of sales decreased to 68.3% from 70.0% between the
two periods as a result of improved margins in the  microelectronics,  frequency
synthesizer and military isolator divisions. Selling, general and administrative
costs as a  percentage  of sales  increased  to 22.2% from 20.8%  primarily as a
result of the addition of MIC which has a higher S,G&A cost  structure  than the
balance of the Company.

Interest expense  increased to $741,000 from $313,000 due to increased levels of
borrowings  related to the MIC  acquisition  in March 1996.  Interest  and other
income  decreased to $15,000 from $163,000 as a result of lower interest  income
on reduced cash amounts due to the acquisition of MIC.

The income tax provisions for the two quarters differed from the amount computed
by applying  the U.S.  Federal  income tax rate to income  before  income  taxes
primarily as a result of the tax benefits of loss carryforwards (both unrealized
and realized) for the three months ended  December 31, 1995 and primarily due to
state income taxes for the three months ended  December 31, 1996. The income tax
rates were 38% and 20% for 1996 and 1995, respectively.

Financial Condition

The Company's  working  capital at December 31, 1996 was $23,573,000 as compared
to $24,736,000 at June 30, 1996. The current ratio was 2.3 to 1 at both dates.

Cash provided by operating  activities  of  $5,663,000  for the six months ended
December  31,  1996 was  primarily  due to the  continued  profitability  of the
Company and the collection of receivables.  Cash used by investing activities of
$1,352,000 was comprised primarily of capital expenditures.

The cash  provided by  operating  activities  net of the cash used by  investing
activities  for the six  month  period  was used to reduce  debt by  $4,173,000.
Management  believes that the revolving  credit and term loan facility,  coupled
with  cash to be  provided  by future  operations,  will be  sufficient  for its
presently  anticipated working capital  requirements,  capital expenditure needs
and the servicing of its debt.


                                   -12-

<PAGE>


Effective March 19, 1996, the Company  acquired all of the outstanding  stock of
MIC  Technology  Corporation  ("MIC")  for  approximately  $36,000,000  of cash,
300,000 shares of common stock and warrants to purchase 400,000 shares of common
stock (at exercise  prices ranging from $7.05 to $7.50 per share).  The purchase
price  was paid with  available  cash of  $9,000,000  and  borrowings  under the
Company's  bank loan  agreement  of  $27,000,000.  The purchase  agreement  also
provides for a contingent  payment of  $4,000,000  based upon certain  operating
results.  MIC manufactures  high frequency thin film circuits and  interconnects
for  miniaturized,  high frequency,  high  performance  electronic  products for
growing  commercial  markets such as wireless  communications,  satellite  based
communications  hardware and high technology military electronics.  The acquired
company's  net sales were  approximately  $25,000,000  for its fiscal year ended
October 31, 1995.

As of March 15, 1996 the Company  replaced a previous  agreement  with a revised
revolving  credit  and term loan  agreement  with two banks  which is secured by
substantially  all  of  the  Company's  assets  not  otherwise  encumbered.  The
agreement provides for a revolving credit line of $22,000,000 and a term loan of
$16,000,000.  The revolving  credit line expires in March 1999. The term loan is
payable in quarterly  installments  of $900,000  with final payment on September
30, 2000.  The interest  rate on borrowings  under this  agreement is at various
rates  depending  upon  certain   financial   ratios,   with  the  current  rate
substantially  equivalent  to the prime rate (8.25% at December 31, 1996) on the
revolving credit borrowings and prime plus 1/4% on the term loan borrowings. The
terms of the  agreement  require  compliance  with certain  covenants  including
minimum  consolidated  tangible net worth and pre-tax  earnings,  maintenance of
certain financial ratios,  limitations on capital  expenditures and indebtedness
and prohibition of the payment of cash dividends.

During June 1994, the Company  completed a sale of $10,000,000  principal amount
of 7-1/2% Senior Subordinated  Convertible  Debentures to non-U.S.  persons. The
debentures  are due June 15, 2004 subject to prior sinking fund payments of 10%,
10%, 15% and 15% of the principal  amount on September 15, 2000,  2001, 2002 and
2003,  respectively.  The debentures are convertible  into the Company's  common
stock at a price of $5-5/8 per share. As of December 31, 1996, $19,000 principal
amount of debentures was converted.

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

The  Company's  backlog of orders at December 31, 1996 and 1995 was  $45,800,000
and $39,900,000, respectively.

At  June  30,  1996  the  Company  had  net  operating  loss   carryforwards  of
approximately  $8,000,000  for  Federal  income  tax  purposes.  The  Company is
undergoing  routine audits by various taxing authorities of several of its state
and local  income tax  returns  covering  different  periods  from 1993 to 1995.
Management believes that the probable outcome of these various audits should not
materially affect the consolidated financial statements of the Company.

                                      -13-

<PAGE>


                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES
                           PART II - OTHER INFORMATION


Item 1. Legal Proceedings

      None

Item 2. Changes in Securities

      None

Item 3. Defaults upon Senior Securities

      None

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

      None

Item 5.  Other Information

      None

Item 6.  Exhibits and Reports on Form 8-K

      (a)  Exhibits

           Exhibit 11 - Computation of Earnings Per Common Share

           Exhibit 27 - Financial Data Schedule

      (b)  Reports on Form 8-K

           None

                                      -14-

<PAGE>


                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES


                                   SIGNATURES


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



                                        AEROFLEX INCORPORATED
                                             (REGISTRANT)


February 13, 1997                        By:   /s/Michael Gorin
                                         Michael Gorin
                                         President, Chief Financial Officer
                                         and Principal Accounting Officer



                                      -15-