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, 2002
                       ------------------------------

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
(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.

     May 15, 2002    59,998,842 shares (excluding 4,388 shares held in treasury)
--------------------------------------------------------------------------------
        (Date)                             (Number of Shares)

NOTE:  THIS IS PAGE 1 OF A DOCUMENT CONSISTING OF      30      PAGES.
                                                  ------------
<PAGE>


                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES


                                      INDEX
                                      -----




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

CONSOLIDATED BALANCE SHEETS
 March 31, 2002 and June 30, 2001                               3-4

CONSOLIDATED STATEMENTS OF OPERATIONS
 Nine and Three Months Ended March 31, 2002 and 2001            5-6

CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine Months Ended March 31, 2002 and 2001                       7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     8-19

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS
    Nine and Three Months Ended March 31, 2002 and 2001        20-28

PART II:  OTHER INFORMATION                                     29
-------   -----------------

SIGNATURES                                                      30



                                -2-

<PAGE>
                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                             March 31,         June 30,
                                               2002              2001
                                             ---------         --------
                                            (Unaudited)
                                                    (In thousands)

ASSETS
------
<S>                                           <C>               <C>
Current assets:
 Cash and cash equivalents                    $ 74,751          $ 69,896
 Marketable securities                           5,943            12,012
 Accounts receivable, less allowance for
   doubtful accounts of $593,000 and $459,000   50,474            49,409
 Inventories, net                               48,522            48,423
 Deferred income taxes                           7,320             7,148
 Prepaid expenses and other current assets       2,592             2,583
                                              --------          --------
   Total current assets                        189,602           189,471

Property, plant and equipment, net              55,534            62,137
Intangible assets with definite lives, net      15,196            20,286
Goodwill                                        23,212            21,006
Deferred income taxes                           11,239             8,538
Other assets                                     9,014             8,814
                                              --------          --------
   Total assets                               $303,797          $310,252
                                              ========          ========
<FN>
                 See notes to consolidated financial statements.
</FN>
</TABLE>

                                    -3-
<PAGE>

                            AEROFLEX INCORPORATED
                               AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS
                                 (continued)

<TABLE>
<CAPTION>
                                                 March 31,         June 30,
                                                   2002              2001
                                                 ---------         --------
                                                 (Unaudited)
                                                      (In thousands)

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S>                                                <C>            <C>
Current liabilities:
  Current portion of long-term debt                $  1,714       $  1,905
  Accounts payable                                   10,154         16,794
  Advance payments by customers                       1,693            425
  Accrued expenses and other current liabilities     16,292         17,973
                                                   --------       --------
    Total current liabilities                        29,853         37,097

Long-term debt                                       10,192         11,428
Other long-term liabilities                           6,671          6,606
                                                   --------       --------
    Total liabilities                                46,716         55,131
                                                   --------       --------
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
    59,988,000 and 59,674,000 shares                  5,999          5,967
  Additional paid-in capital                        222,201        219,278
  Accumulated other comprehensive income (loss)        (138)          (154)
  Retained earnings                                  29,033         30,044
                                                   --------       --------
                                                    257,095        255,135

  Less:  Treasury stock, at cost (4,000 and
  4,000 shares)                                          14             14
                                                   --------       --------
    Total stockholders' equity                      257,081        255,121
                                                   --------       --------
    Total liabilities and stockholders' equity     $303,797       $310,252
                                                   ========       ========
<FN>
                 See notes to consolidated financial statements.
</FN>
</TABLE>

                                     -4-
<PAGE>

                            AEROFLEX INCORPORATED
                               AND SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                Nine Months Ended
                                                    March 31,
                                             ----------------------
                                             2002              2001
                                             ----              ----
                                                  (Unaudited)
                                       (In thousands, except per share data)
<S>                                         <C>               <C>
Net sales                                   $136,307          $173,602
Cost of sales (including a $750,000
  restructuring charge in 2002, Note 3)       88,247           101,181
                                            --------          --------
  Gross profit                                48,060            72,421
                                            --------          --------
Selling, general and administrative costs
  (including a $4,300,000 restructuring
   charge in 2002, Note 3)                    34,706            32,143
Research and development costs                15,370            13,101
Acquired in-process research and
  development (Note 4)                             -             2,500
                                            --------          --------
                                              50,076            47,744
                                            --------          --------
  Operating income (loss)                     (2,016)           24,677
                                            --------          --------
Other income (expense):
  Interest expense                            (1,138)           (1,078)
  Other income (expense), net                  1,668             2,749
                                            --------          --------
    Total other income (expense)                 530             1,671
                                            --------          --------
Income (loss) before income taxes             (1,486)           26,348
Provision (benefit) for income taxes            (475)            9,300
                                            --------          --------
Income (loss) before cumulative effect
  of a change in accounting                   (1,011)           17,048
Cumulative effect of a change
  in accounting, net of tax (Note 2)               -               132
                                            --------          --------
Net income (loss)                           $ (1,011)         $ 17,180
                                            ========          ========
Net income (loss) per common share:
  Basic
    Income (loss) before cumulative effect     $(.02)             $.30
    Cumulative effect of a change
      in accounting                                -                 -
                                               -----             -----
    Net income (loss)                          $(.02)             $.30
                                               =====              ====
  Diluted(1)
    Income (loss) before cumulative effect     $(.02)             $.28
    Cumulative effect of a change
      in accounting                                -                 -
                                               -----             -----
    Net income (loss)                          $(.02)             $.28
                                               =====              ====
Weighted average number of
  common shares outstanding:
    Basic                                     59,926            57,584
                                            ========          ========
    Diluted(1)                                59,926            60,920
                                            ========          ========
<FN>
(1)  As a result  of the loss for the nine  months  ended  March 31,  2002,  all
     options are anti-dilutive.

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

                                     -5-
<PAGE>
                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                 Three Months Ended
                                                     March 31,
                                                 ------------------

                                              2002               2001
                                             -------          --------
                                                    (Unaudited)
                                           (In thousands, except per share data)

<S>                                          <C>               <C>
Net sales                                    $ 50,617          $ 64,026
Cost of sales (including a $750,000
  restructuring charge in 2002, Note 3)        32,570            35,897
                                             --------          --------
  Gross profit                                 18,047            28,129
                                             --------          --------
Selling, general and administrative costs
  (including a $4,300,000 restructuring
   charge in 2002, Note 3)                     14,533            11,850
Research and development costs                  6,043             5,623
Acquired in-process research and
  development (Note 4)                              -             1,000
                                             --------          --------
                                               20,576            18,473
                                             --------          --------
  Operating income (loss)                      (2,529)            9,656
                                             --------          --------
Other income (expense):
  Interest expense                               (479)             (320)
  Other income (expense), net                     579               798
                                             --------          --------
    Total other income (expense)                  100               478
                                             --------          --------
Income (loss) before income taxes              (2,429)           10,134
Provision (benefit) for income taxes             (800)            3,800
                                             --------          --------
Net income (loss)                            $ (1,629)         $  6,334
                                             ========          ========
Net income (loss) per common share:
  Basic                                         $(.03)             $.11
                                                =====              ====
  Diluted(1)                                    $(.03)             $.10
                                                =====              ====
Weighted average number of
  common shares outstanding:
    Basic                                      60,088            58,480
                                             ========          ========
    Diluted(1)                                 60,088            61,145
                                             ========          ========
<FN>
(1)  As a result of the loss for the three  months  ended  March 31,  2002,  all
     options are anti-dilutive.

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

                                    -6-
<PAGE>
                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                      Nine Months Ended
                                                           March 31,
                                                      -----------------
                                                      2002           2001
                                                      ----           ----
                                                          (Unaudited)
                                                        (In thousands)
<S>                                                 <C>            <C>
Cash Flows From Operating Activities:
 Net income (loss)                                  $ (1,011)       $ 17,180
 Adjustments to reconcile net income (loss) to net
  cash provided by (used in) operating activities:
   Acquired in-process research and development            -           2,500
   Depreciation and amortization                       9,127           8,284
   Tax benefit of stock option
     exercises (Note 9)                                    -          10,015
   Deferred income taxes                                (466)            431
   Restructuring charge                                5,050               -
   Other, net                                            364            (448)
 Change in operating assets and liabilities,
   net of effects from purchase of businesses:
   Decrease (increase) in accounts receivable         (1,632)            349
   Decrease (increase) in inventories                   (849)         (5,430)
   Decrease (increase) in prepaid expenses
    and other assets                                    (212)         (1,299)
   Increase (decrease) in accounts payable, accrued
    expenses and other liabilities                    (8,178)            239
                                                    --------        --------
Net Cash Provided By (Used In) Operating Activities    2,193          31,821
                                                    --------        --------
Cash Flows From Investing Activities:
  Payment for purchase of businesses, net of
    cash acquired                                       (283)        (14,532)
  Capital expenditures                                (3,324)        (10,332)
  Purchase of marketable securities                   (5,938)        (21,747)
  Proceeds from sale of marketable securities         11,994          22,833
  Other, net                                               -             (52)
                                                    --------        --------
Net Cash Provided By (Used In) Investing Activities    2,449         (23,830)
                                                    --------        --------
Cash Flows From Financing Activities:
  Borrowings under debt agreements                        89             613
  Debt repayments                                     (1,516)         (3,550)
  Proceeds from the exercise of stock options
    and warrants                                       1,640           3,369
  Amounts paid for withholding taxes on stock
    option exercises                                  (1,485)        (21,910)
  Withholding taxes collected for stock option
    exercises                                          1,485          17,700
                                                    --------        --------
Net Cash Provided By (Used In) Financing Activities      213          (3,778)
                                                    --------        --------
Net Increase (Decrease) In Cash
  And Cash Equivalents                                 4,855           4,213
Cash And Cash Equivalents At Beginning Of Period      69,896          54,732
                                                    --------        --------
Cash And Cash Equivalents At End Of Period          $ 74,751        $ 58,945
                                                    ========        ========
<FN>
                 See notes to consolidated financial statements.
</FN>
</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 March 31, 2002, the related  consolidated  statements
     of operations  for the nine and three months ended March 31, 2002 and 2001,
     and the  consolidated  statements  of cash flows for the nine months  ended
     March  31,  2002  and  2001  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, 2002 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, 2001 annual
     report  to  shareholders.   There  have  been  no  changes  of  significant
     accounting  policies  since June 30,  2001,  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
     --------------------------------

     Accounting for Derivative Instruments and Hedging Activities
     ------------------------------------------------------------
     Effective  July  1,  2000,  the  Company  adopted  Statement  of  Financial
     Accounting   Standards   ("SFAS")  No.  133,   "Accounting  for  Derivative
     Instruments and Hedging  Activities," as amended.  This statement  requires
     companies  to  record  derivatives  on  the  balance  sheet  as  assets  or
     liabilities at their fair value.  In certain  circumstances  changes in the
     value  of such  derivatives  may be  required  to be  recorded  as gains or
     losses.  The impact of this statement did not have a material effect on the
     Company's consolidated  financial statements.  The cumulative effect of the
     adoption of this  accounting  policy was a $132,000,  net of tax, credit in
     the quarter ended  September 30, 2000 which  represents the net of tax fair
     value of certain interest rate swap agreements at July 1, 2000.

     Accounting for Business Combinations, Goodwill and Other Intangible Assets
     --------------------------------------------------------------------------
     In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
     No. 141,  "Business  Combinations,"  and SFAS No. 142,  "Goodwill and Other
     Intangible  Assets." SFAS No. 141 specifies criteria that intangible assets
     acquired in a business  combination must meet to be recognized and reported
     apart from  goodwill.  SFAS No. 142 requires that  goodwill and  intangible
     assets with indefinite useful lives no longer be amortized,  but instead be
     tested for impairment at least  annually in accordance  with the provisions
     of SFAS No. 142. This  pronouncement  also requires that intangible  assets
     with estimable  useful lives be amortized over their  respective  estimated
     useful lives and reviewed for impairment in accordance with SFAS No. 121.

     The Company has adopted the  provisions of SFAS Nos. 141 and 142 as of July
     1, 2001.  The Company has  evaluated  its  existing  intangible  assets and
     goodwill that were acquired in prior purchase business combinations and has
     reclassified  $3.0  million  net  carrying  value of  intangible  assets to
     goodwill  in order  to  conform  to the new  criteria  in SFAS No.  141 for
     recognition apart from goodwill. In connection with this  reclassification,
     the  Company  has  reduced  goodwill  for  the  amount  of  deferred  taxes

                                       -8-
<PAGE>
     previously recorded on the reclassified intangible assets that is no longer
     required.  The Company has also  reassessed  the useful  lives and residual
     values  of all  intangible  assets  acquired,  and has  determined  that no
     adjustment to these estimates was necessary.

     The Company has tested  goodwill  for  impairment  in  accordance  with the
     provisions of SFAS No. 142 as of July 1, 2001. Based on its evaluation, the
     Company is not required to recognize any impairment losses.

     The components of amortized intangible assets are as follows:
<TABLE>
<CAPTION>
                                        As of March 31, 2002
                                   ------------------------------
                                   Gross Carrying    Accumulated
                                       Amount        Amortization
                                   --------------    ------------
                                            (In thousands)

     <S>                              <C>               <C>
     Existing technology             $ 21,413          $  6,909
     Tradenames                         1,000               308
                                     --------          --------
         Total                       $ 22,413          $  7,217
                                     ========          ========
</TABLE>

     The aggregate  amortization expense for the amortized intangible assets was
     $2.1 million for the nine months ended March 31, 2002.


     The carrying amount of goodwill is as follows:
<TABLE>
<CAPTION>
                    Balance                                           Balance
                     as of                                             as of
                     July 1,    Adjustment   Adjustment    Acquired   March 31,
                      2001       (Note a)      (Note b)     (Note c)    2002
                    --------    ----------   ----------    --------   ---------
                                            (In thousands)
<S>                 <C>          <C>          <C>          <C>       <C>
Microelectronic
  Solutions
  Segment            $  9,268    $  2,913     $(1,116)     $    -    $ 11,065
Test Solutions
  Segment              10,949         126           -         283      11,358
Isolator Products
  Segment                 789           -           -           -         789
                     --------    --------     -------      ------    --------
   Total             $ 21,006    $  3,039     $(1,116)     $  283    $ 23,212
                     ========    ========     =======      ======    ========
<FN>
Note a -  Reclassification  from  intangible  assets in accordance with SFAS No.
          141.

Note b -  Reversal  of  deferred  taxes  payable,   previously  recorded,   for
          reclassified intangible assets.

Note c - Goodwill acquired during the period as a result of contingent  payments
         made pursuant to purchase agreements.
</FN>
</TABLE>

     Goodwill   (including   intangible  assets   reclassified  to  goodwill  in
     accordance  with SFAS No. 141)  amortization  for the nine and three months
     ended March 31, 2001 was $957,000 and $365,000, respectively, and generated
     a tax benefit of $169,000 and $72,000,  respectively.  The following  table
     shows the  results of  operations  as if SFAS No. 141 was  applied to prior
     periods:

                                       -9-
<PAGE>
<TABLE>
<CAPTION>
                                             For the nine months
                                                ended March 31,
                                             -------------------
                                             2002            2001
                                             ----            ----
                                     (In thousands, except per share amounts)

     <S>                                   <C>             <C>
     Net income (loss), as reported        $(1,011)        $17,180
     Add Back: Goodwill
       amortization, net of tax                  -             788
                                           -------         -------
     Adjusted net income (loss)            $(1,011)        $17,968
                                           =======         =======

     Income (loss) per share - Basic
       Net income (loss), as reported      $  (.02)        $   .30
       Goodwill amortization, net of tax         -             .01
                                           -------         -------
       Adjusted net income (loss)          $  (.02)        $   .31
                                           =======         =======
     Income (loss) per share - Diluted
       Net income, as reported             $  (.02)        $   .28
       Goodwill amortization, net of tax         -             .01
                                           -------         -------
       Adjusted net income (loss)          $  (.02)        $   .29
                                           =======         =======
</TABLE>
<TABLE>
<CAPTION>
                                             For the three months
                                                ended March 31,
                                             --------------------
                                             2002             2001
                                             ----             ----
                                     (In thousands, except per share amounts)
     <S>                                   <C>             <C>
     Net income (loss), as reported        $(1,629)        $ 6,334
     Add Back: Goodwill
       amortization, net of tax                  -             293
                                           -------         -------
     Adjusted net income (loss)            $(1,629)        $ 6,627
                                           =======         =======

     Income (loss) per share - Basic
       Net income (loss), as reported      $  (.03)        $   .11
       Goodwill amortization, net of tax         -               -
                                           -------         -------
       Adjusted net income (loss)          $  (.03)        $   .11
                                           =======         =======
     Income (loss) per share - Diluted
       Net income (loss), as reported      $  (.03)        $   .10
       Goodwill amortization, net of tax         -             .01
                                           -------         -------
       Adjusted net income (loss)          $  (.03)        $   .11
                                           =======         =======
</TABLE>

     Accounting for the Impairment of Long-Lived Assets
     --------------------------------------------------
     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. The Company
     will  adopt SFAS No. 144  effective  July 1, 2002 and does not expect  such
     adoption  to  have  a  material  impact  on  its   consolidated   financial
     statements.

                                      -10-
<PAGE>
3.   Restructuring Charge
     --------------------

     In February 2002, the Company, pursuant to a Board of Directors resolution,
     decided to consolidate its leased Texas thin-film manufacturing  operations
     into its existing  owned  facilities in Pearl River,  New York. The Company
     has ceased  manufacturing  operations in Texas as of April 2002 and expects
     the  consolidation  to be complete by June 2002.  In  connection  with this
     restructuring,  the Company  has  recorded a  restructuring  charge of $5.1
     million in the third  quarter of fiscal  2002 or $3.4  million,  net of tax
     ($.06 per diluted share). The restructuring charge is allocated $750,000 to
     cost of sales and $4.3  million  to  selling,  general  and  administrative
     expenses.  In  addition,  there are  anticipated  charges of  approximately
     $550,000  directly  related to the  restructuring  plan which  could not be
     accrued  in the third  quarter  of fiscal  2002,  but will be  expensed  as
     incurred.

     Inventory
     ---------
     The $750,000 charge to write-off  inventory was recognized for inventory at
     the Texas facility that is not compatible with the  manufacturing  platform
     at the New York facility. This charge was classified as a component of cost
     of sales in  accordance  with EITF No. 96-9,  "Classification  of Inventory
     Markdowns and Other Costs Associated with a Restructuring."

     Workforce Reduction
     --------------------
     During the third quarter of fiscal 2002, workforce reductions resulted in a
     charge of $560,000.  This charge includes  severance pay, retention bonuses
     and fringe  benefits for the  remaining  workforce  at the Texas  facility.
     Approximately $220,000 of post-production  payroll costs, related solely to
     closing  the  facility,  have not been  accrued,  but will be  expensed  as
     incurred,  as such costs did not meet the  criteria for accrual of EITF No.
     94-3, "Liability  Recognition for Certain Employee Termination Benefits and
     Other  Costs to Exit an Activity  (Including  Certain  Costs  Incurred in a
     Restructuring)."

     Plant Shutdown
     --------------
     During the third quarter of fiscal 2002, the Company recognized a charge of
     $3.7 million for plant shutdown charges.  This charge includes $2.5 million
     for write- off of excess equipment and leasehold improvements, $1.0 million
     for buyouts of certain  equipment and facility leases and $240,000 relating
     to facility  closing and  clean-up.  Approximately  $330,000 of  additional
     costs are  expected to be incurred  and  expensed in the fourth  quarter of
     fiscal 2002 related to post-  production  operating  costs such as rent and
     utilities.

     The $2.5 million of asset  impairment  charges was recognized for property,
     plant and equipment  associated  with the  consolidation  of  manufacturing
     facilities.  This non-cash  charge was  recognized in accordance  with SFAS
     121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
     Assets to be disposed of."

                                      -11-
<PAGE>

     The  following  table sets forth the  charges and  payments  related to the
     restructuring reserve for the nine months ended March 31, 2002:
<TABLE>
<CAPTION>
                                                                Balance
                                Nine Months Ended               March 31,
                                March 31, 2002                    2002
                     -------------------------------------    -------------
                     Restructuring    Non-Cash      Cash      Restructuring
                        Charge         Items      Payments       Reserve
                     -------------    --------    --------    -------------
                                        (In thousands)
<S>                      <C>           <C>          <C>            <C>
Inventory write-off      $  750        $  (750)     $    -         $    -
                         ------        -------      ------         ------
  Cost of sales             750           (750)          -              -
                         ------        -------      ------         ------
Workforce reduction         560              -          (5)           555

Plant Shutdown            3,740         (2,506)        (19)         1,215
                         ------        -------      ------         ------
  Operating costs         4,300         (2,506)        (24)         1,770
                         ------        -------      ------         ------
    Total                $5,050        $(3,256)     $  (24)        $1,770
                         ======        =======      ======         ======
</TABLE>


     This  restructuring  charge,  along  with  the  additional  post-production
     operating costs of approximately  $550,000 that will be expensed subsequent
     to March 31, 2002, is estimated to be $5.6 million in total.


4.  Acquisition of Businesses
    -------------------------

    TriLink
    -------
     Effective March 23, 2001, the Company acquired all of the outstanding stock
     of TriLink  Communications  Corp.  ("TriLink")  for 1.1  million  shares of
     Aeroflex Common Stock. TriLink designs, develops,  manufactures and markets
     fiber optic components for the communications  industry,  including Lithium
     Niobate modulators and optical switches.

     The Company  evaluated the acquired  tangible and  identifiable  intangible
     assets  to  serve as a basis  for  allocation  of the  purchase  price.  In
     accordance  with SFAS No. 141, the Company  allocated  the purchase  price,
     including acquisition costs of approximately $300,000, as follows:
<TABLE>
<CAPTION>

                                                            (In thousands)
               <S>                                             <C>
               Net tangible assets                             $ 1,171
               Existing technology                               6,000
               Deferred income taxes on identifiable
                 intangible assets                              (2,400)
               Goodwill                                          5,926
               In-process research and development               1,000
                                                               -------
                                                               $11,697
                                                               =======
</TABLE>
     The existing  technology is being amortized on a straight-line basis over 6
     years. The acquired  in-process research and development was not considered
     to  have  reached   technological   feasibility  and,  in  accordance  with
     accounting  principles  generally accepted in the United States of America,
     the value of such was expensed in the quarter  ended March 31, 2001. At the
     acquisition date, TriLink was conducting design,  development,  engineering
     and  testing  activities  associated  with  the  completion  of  its  10 GB
     modulator.
                                     -12-

<PAGE>
     Summarized  below are the  unaudited pro forma results of operations of the
     Company as if TriLink  had been  acquired  at the  beginning  of the fiscal
     period  presented.  The $1.0 million write-off has not been included in the
     March 31, 2001 pro forma  income in order to provide  comparability  to the
     respective historical period.
<TABLE>
<CAPTION>
                                             Pro Forma
                                          Nine Months Ended
                                            March 31, 2001
                                          -----------------
                                (In thousands, except per share data)
     <S>                                      <C>
     Net Sales                                $173,962
     Income before cumulative effect
       of a change in accounting                15,666

     Income before cumulative effect
       of a change in accounting per share:
         Basic                                   $ .27
         Diluted                                 $ .25
</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 period presented or of
     future operating results of the combined companies.

     RDL
     ---
     On October 23, 2000, the Company  acquired all of the outstanding  stock of
     RDL,  Inc.  ("RDL")  for $14.0  million of  available  cash.  RDL  designs,
     develops  and  manufactures  advanced  commercial  communications  test and
     measurement  products and defense  subsystems.  The acquired  company's net
     sales were approximately $15.0 million for the year ended March 31, 2000.

     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 $100,000, as follows:
<TABLE>
<CAPTION>
                                                       (In thousands)
          <S>                                             <C>
          Net tangible assets                             $ 6,774
          Existing technology                               2,970
          Goodwill                                          2,856
          In-process research and development               1,500
                                                          -------
                                                          $14,100
                                                          =======
</TABLE>

     The existing  technology is being amortized on a straight-line basis over 7
     years. The acquired  in-process research and development was not considered
     to  have  reached   technological   feasibility  and,  in  accordance  with
     accounting  principles  generally accepted in the United States of America,
     the value of such was expensed in the quarter  ended  December 31, 2000. At
     the acquisition date, RDL was conducting design,  development,  engineering
     and testing  activities  associated  with the completion of its defense and
     commercial product lines representing next- generation technologies.

     Summarized  below are the  unaudited pro forma results of operations of the
     Company as if RDL had been  acquired at the  beginning of the fiscal period
     presented.  The $1.5 million  write-off  has not been included in the March
     31,  2001  pro  forma  income  in  order to  provide  comparability  to the
     respective historical period.

                                      -13-
<PAGE>
<TABLE>
<CAPTION>
                                               Pro Forma
                                           Nine Months Ended
                                             March 31, 2001
                                           -----------------
                                   (In thousands, except per share data)

     <S>                                         <C>
     Net sales                                   $178,484
     Income before cumulative effect
       of a change in accounting                   16,604

     Income before cumulative effect
       of a change in accounting per share:
         Basic                                     $ .29
         Diluted                                   $ .27
</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 period presented or of
     future operating results of the combined companies.

     Altair
     ------
     On October 16, 2000, the Company issued 550,000 shares(after adjustment for
     the two-for-one stock split effective in November 2000) of its Common Stock
     for all the  outstanding  common  stock  of  Altair  Aerospace  Corporation
     ("Altair").  Altair designs and develops advanced  object-oriented  control
     systems software based upon a proprietary  software  engine.  This business
     combination  has  been  accounted  for  as  a   pooling-of-interests   and,
     accordingly,  for  all  periods  prior  to the  business  combination,  the
     Company's historical  consolidated  financial statements have been restated
     to include the accounts and results of operations  of Altair.  The acquired
     company's  net sales were  approximately  $3.0  million  for the year ended
     December 31, 2000.

     For  periods   preceding  the  combination,   there  were  no  intercompany
     transactions  which  required  elimination  from the combined  consolidated
     results of operations  and there were no  adjustments  necessary to conform
     the accounting practices of the two companies.

     Amplicomm
     ---------
     Effective  September 7, 2000, Aeroflex  Amplicomm,  Inc.  ("Amplicomm") was
     formed as a wholly-owned  subsidiary of the Company. On September 20, 2000,
     Amplicomm acquired certain equipment and intellectual property from a third
     party for approximately  $300,000,  entered into employment agreements with
     this third  party's  former owners and issued 25% of the stock of Amplicomm
     to  them.  Amplicomm  designs  and  develops  fiber  optic  amplifiers  and
     modulator drivers used by manufacturers of advanced fiber optic systems. On
     a pro forma  basis,  had the  Amplicomm  acquisition  taken place as of the
     beginning of the periods presented, results of operations for those periods
     would not have been materially affected.

5.   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 and warrants.

                                      -14-
<PAGE>
     A  reconciliation  of the numerators and  denominators of the Basic EPS and
     Diluted EPS calculations is as follows:
<TABLE>
<CAPTION>

                                                 Nine Months
                                                Ended March 31,
                                              ------------------
                                              2002          2001
                                              ----          ----
                                       (In thousands, except per share data)

<S>                                         <C>           <C>
Income (loss) before cumulative effect
  of a change in accounting                 $ (1,011)     $ 17,048
Cumulative effect of a change in
  accounting, net of tax                           -           132
                                            --------      --------
Net income (loss)                           $ (1,011)     $ 17,180
                                            ========      ========
Computation of Adjusted Weighted
  Average Shares Outstanding:
Weighted average shares outstanding           59,926        57,584
Add: Effect of dilutive options and
  warrants outstanding                             -         3,336
                                            --------      --------
Weighted average shares and common
  share equivalents used for computation
  of diluted earnings per common share        59,926        60,920
                                            ========      ========
Income (loss) per share - Basic:
  Income (loss) before cumulative effect       $(.02)        $ .30
  Cumulative effect of a change in
    accounting                                     -             -
                                            --------      --------
  Net income (loss)                            $(.02)        $ .30
                                            ========      ========
Income (loss) per share - Diluted(1):
  Income (loss) before cumulative effect       $(.02)        $ .28
  Cumulative effect of a change in
    accounting                                     -             -
                                            --------      --------
  Net income (loss)                            $(.02)        $ .28
                                            ========      ========
</TABLE>
<TABLE>
<CAPTION>
                                                 Three Months
                                                Ended March 31,
                                                ---------------
                                              2002          2001
                                              ----          ----
                                       (In thousands, except per share data)
<S>                                         <C>           <C>
Net income (loss)                           $(1,629)      $ 6,334
                                            =======       =======
Computation of Adjusted Weighted
  Average Shares Outstanding:
Weighted average shares outstanding          60,088        58,480
Add: Effect of dilutive options and
  warrants outstanding                            -         2,665
                                            -------       -------
Weighted average shares and common
  share equivalents used for computation
  of diluted earnings per common share       60,088        61,145
                                            =======       =======
Net Income (loss) Per Share - Basic           $(.03)        $ .11
                                              =====         =====
                            - Diluted(1)      $(.03)        $ .10
                                              =====         =====
<FN>
(1)  As a result of the loss for the nine and three months ended March 31, 2002,
     all options are anti-dilutive.
</FN>
</TABLE>
                                      -15-
<PAGE>
     Stock Split
     -----------
     On  November  2,  2000,  the  Company's  Board of  Directors  authorized  a
     two-for-one stock split of the Common Stock,  effective  November 16, 2000.
     The share and per share amounts in these consolidated  financial statements
     give effect to the stock split.

6.   Comprehensive Income (Loss)
     ---------------------------
     The components of comprehensive income (loss) are as follows:
<TABLE>
<CAPTION>
                                     Nine Months             Three Months
                                    Ended March 31,          Ended March 31,
                                    ---------------          ---------------
                                    2002        2001        2002        2001
                                    ----        ----        ----        ----
                                                 (In thousands)
     <S>                           <C>         <C>        <C>          <C>
     Net income (loss)             $(1,011)    $17,180    $(1,629)     $ 6,334

     Unrealized gain (loss) on
       interest rate swap
       agreements, net of tax          (37)        (81)        36          (55)

     Unrealized investment
       gain (loss), net of tax          (8)       (109)        (3)         (38)

     Foreign currency
       translation adjustment           61         (84)       (28)         (42)
                                   -------     -------    -------      -------
     Total comprehensive
       income (loss)               $  (995)    $16,906    $(1,624)     $ 6,199
                                   =======     =======    =======      =======
</TABLE>


 7.  Bank Loan Agreements
     --------------------
     As of February 25, 1999, the Company  replaced a previous  agreement with a
     revised revolving credit,  term loan and mortgage  agreement with two banks
     which is secured by substantially all of the Company's assets not otherwise
     encumbered.  The  agreement  provided for a revolving  credit line of $23.0
     million,  a term loan of $20.0  million  and a  mortgage  on its  Plainview
     property for $4.5 million.  The revolving  credit loan facility  expires in
     December  2002.  The term loan was fully  paid with the  proceeds  from the
     Company's  sale of its  Common  Stock in May  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 prime
     (4.75% at March 31, 2002) on the revolving credit  borrowings.  The Company
     paid a facility fee of $100,000 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  an  interest  rate  swap   agreement  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  agreement was $122,000 as
     of March 31, 2002 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  capital
     expenditures  and  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, 2002, the Company's  available unused line of credit was  approximately
     $20.0 million after consideration of this and other letters of credit.

                                      -16-
<PAGE>
 8.  Inventories
     -----------
     Inventories, net, consist of the following:
<TABLE>
<CAPTION>
                                      March 31,         June 30,
                                        2002              2001
                                      ---------         --------
                                                    (In thousands)
                    <S>               <C>                <C>
                    Raw Materials     $ 26,132           $ 28,999
                    Work in Process     17,327             13,071
                    Finished Goods       5,063              6,353
                                      --------           --------
                                      $ 48,522           $ 48,423
                                      ========           ========
</TABLE>
 9.  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  $1.3  million  and  $21.7  million  to
     additional paid- in capital during the nine months ended March 31, 2002 and
     2001,  respectively,   in  connection  with  the  tax  benefit  related  to
     compensation deductions on the exercise of stock options.

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

11.  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

                                      -17-
<PAGE>
<TABLE>
<CAPTION>
                                                     For The Nine Months Ended
                                                               March 31,
                                                     ----------------------------
     Business Segment Data:                             2002               2001
                                                        ----               ----
                                                            (In thousands)
     <S>                                             <C>                <C>
     Net sales:
       Microelectronic Solutions                     $  75,668          $ 107,709
       Test Solutions                                   48,982             51,450
       Isolator Products                                11,657             14,443
                                                     ---------          ---------
         Net sales                                   $ 136,307          $ 173,602
                                                     =========          =========
     Operating income (loss):
       Microelectronic Solutions(1)                  $   5,840          $  28,202
       Test Solutions                                     (106)             3,655
       Isolator Products                                   620              1,583
       General corporate expenses                       (3,319)            (6,263)
                                                     ---------          ---------
                                                         3,035             27,177

   Restructuring charge (1)                             (5,050)                 -
    Acquired in-process research
      and development (2)                                    -             (2,500)
    Interest expense                                    (1,138)            (1,078)
    Other income (expense), net                          1,667              2,749
                                                     ---------          ---------
      Income (loss) before income taxes              $  (1,486)         $  26,348
                                                     =========          =========
</TABLE>
<TABLE>
<CAPTION>
                                                      For The Three Months Ended
                                                                March 31,
                                                      --------------------------
                                                       2002              2001
                                                       ----              ----
                                                             (In thousands)
     <S>                                             <C>                <C>
     Net sales:
       Microelectronic Solutions                     $  27,304          $  40,993
       Test Solutions                                   19,580             17,689
       Isolator Products                                 3,733              5,344
                                                     ---------          ---------
         Net sales                                   $  50,617          $  64,026
                                                     =========          =========
     Operating income (loss):
       Microelectronic Solutions(1)                  $   2,210          $  11,374
       Test Solutions                                    1,335                796
       Isolator Products                                    78                687
       General corporate expenses                       (1,102)            (2,201)
                                                     ---------          ---------
                                                         2,521             10,656

   Restructuring charge (1)                             (5,050)                 -
    Acquired in-process research
      and development (2)                                    -             (1,000)
    Interest expense                                      (479)              (320)
    Other income (expense), net                            579                798
                                                     ---------          ---------
      Income (loss) before income taxes              $  (2,429)         $  10,134
                                                     =========          =========
<FN>
(1)  The Microelectronic Solutions segment operating income has been adjusted to
     exclude  the  restructuring  charge of $5.1  million for the closing of the
     Company's Richardson, Texas facility.

(2)  The charge for the  in-process  research  and  development  acquired in the
     purchase of RDL of $1.5 million for the nine months ended March 31, 2001 is
     allocable  fully  to  the  Test  Solutions  segment.  The  charge  for  the
     in-process research and development  acquired in the purchase of TriLink of
     $1.0  million  for the  nine and  three  months  ended  March  31,  2001 is
     allocable fully to the Microelectronics Solutions segment.
</FN>
</TABLE>
                                      -18-
<PAGE>
12.  Subsequent Event
     ----------------

     On April 15, 2002,  the Company  announced its  agreement to purchase,  for
     cash, all of the outstanding  shares of IFR Systems ("IFR") stock for $1.35
     per share.  IFR designs and manufactures  advanced  wireless test solutions
     for communications, avionics and general test and measurement applications.
     IFR's net sales were approximately  $88.3 million for the nine months ended
     December 31, 2001. Under the terms of the agreement,  unanimously  approved
     by the board of directors of both of the companies, the Company commenced a
     tender offer for a minimum of 50.1% of the  outstanding  shares of IFR on a
     fully-diluted  basis. The tender offer expires May 20, 2002.  Following the
     successful  completion of the tender offer,  it is expected there will be a
     merger in which any  remaining  shareholders  of IFR will receive $1.35 per
     share in cash. The cash purchase price is approximately $60 million,  which
     includes  the  payment  of $48.8  million  in  satisfaction  of IFR's  bank
     indebtedness  of  approximately  $84  million,  including  interest.  IFR's
     lenders  have agreed to accept  this  payment in full  satisfaction  of the
     amounts owed to them from IFR.

                                      -19-
<PAGE>
                              AEROFLEX INCORPORATED
                                AND SUBSIDIARIES

                     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, integrated circuit, interconnect and testing solutions.
Our products are used in fiber optic,  broadband  cable,  wireless and satellite
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:

    --   microelectronic solutions
    --   test solutions
    --   isolator products

     Our  consolidated  financial  statements  include the  accounts of Aeroflex
Incorporated  and  all  of  our  subsidiaries.   All  of  our  subsidiaries  are
wholly-owned, except for Aeroflex Amplicomm, Inc., which is 75% owned by us.

     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 microelectronics  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.  In September 2000, we acquired all of the operating assets of
AmpliComm, Inc., which designs and develops fiber optic amplifiers and modulator
drivers used by manufacturers of advanced fiber optic systems. In March 2001, we
acquired TriLink Communications Corp. which designs, develops,  manufactures and
markets  fiber  optic  components  for the  communications  industry,  including
Lithium Niobate modulators and optical switches.

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

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

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

     --   Europtest,  S.A. (France),  which we acquired  effective  September 1,
          1998.  Europtest develops and sells specialized  software-driven  test
          equipment   used   primarily   in   cellular,   satellite   and  other
          communications applications.

                                      -20-
<PAGE>
     --   Altair, which we merged with in October 2000 in a pooling-of-interests
          business   combination.   Altair   designs   and   develops   advanced
          object-oriented  control  systems  software  based upon a  proprietary
          software engine.

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

     --   Our  motion  control  products   division  has  been  engaged  in  the
          development and manufacture of  electro-optical  scanning devices used
          in infra-red night vision 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.

     Approximately 40% of our sales for the nine months ended March 31,2002, 29%
of our  sales for  fiscal  2001 and 33% of our  sales  for  fiscal  2000 were to
agencies of the United  States  Government or to prime  defense  contractors  or
subcontractors of the United States Government.

Nine Months Ended March 31, 2002 Compared to Nine Months Ended March 31, 2001

     Net Sales.  Net sales decreased 21.5% to $136.3 million for the nine months
ended  March 31, 2002 from  $173.6  million for the nine months  ended March 31,
2001. Net sales in the  microelectronic  solutions  segment  decreased  29.7% to
$75.7  million for the nine months ended March 31, 2002 from $107.7  million for
the nine months ended March 31, 2001 due primarily to decreased  sales volume in
thin  film  interconnects  and  microelectronic  modules  due to the  continuing
slowdown of the fiber optics market offset,  in part, by increased  sales volume
of integrated  circuits,  primarily in the satellite  and defense  markets.  Net
sales in the test solutions segment decreased 4.8% to $49.0 million for the nine
months  ended March 31, 2002 from $51.5  million for the nine months ended March
31, 2001  primarily  due to lower  volume in  frequency  synthesizers  partially
offset by increased sales volume in satellite test  equipment.  Net sales in the
isolator  products segment  decreased 19.3% to $11.7 million for the nine months
ended March 31, 2002 from $14.4 million for the nine months ended March 31, 2001
due to lower volume of commercial and industrial isolators.

     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 decreased 32.6% to $48.8
million (35.8% of net sales) for the nine months ended March 31, 2002 (excluding
a  $750,000  restructuring  charge,  see  Note 3 to the  Consolidated  Financial
Statements)  from $72.4  million  (41.7% of net sales) for the nine months ended
March 31, 2001.  The decreases  were  primarily a result of the decreased  sales
volume in all  segments.  The gross  profit  margin also  decreased in all three
segments due to the fixed nature of certain of the labor and overhead costs.

                                      -21-
<PAGE>
     Selling,   General  and   Administrative   Costs.   Selling,   general  and
administrative costs include office and management salaries, fringe benefits and
commissions. Selling, general and administrative costs were $30.4 million (22.3%
of net sales) for the nine months ended March 31, 2002 (excluding a $4.3 million
restructuring  charge, see Note 3 to the Consolidated  Financial Statements) and
$32.1 million (18.5% of net sales) for the nine months ended March 31, 2001. The
increase in expenses due to the  acquisition  of TriLink was more than offset by
lower corporate expenses and reduced expenses at our thin film  microelectronics
division.

     Research and  Development  Costs.  Research and  development  costs include
material, engineering labor and allocated overhead. Our self-funded research and
development  costs increased 17.3% to $15.4 million (11.3% of net sales) for the
nine months ended March 31, 2002 from $13.1  million (7.5% of net sales) for the
nine months ended March 31, 2001.  The increase was  primarily  due to increased
efforts  to  develop  proprietary  integrated  circuits  utilized  in  broadband
communications.

     Acquired  In-Process  Research  and  Development.  In  connection  with the
acquisition  of RDL,  Inc., we allocated  $1.5 million of the purchase  price to
incomplete research and development projects. In connection with the acquisition
of TriLink Communications Corp., we allocated $1.0 million of the purchase price
to incomplete research and development projects. These allocations represent the
estimated  fair value based on future cash flows that have been  adjusted by the
projects'  completion  percentage.  At the  respective  acquisition  dates,  the
development of these projects had not yet reached technological  feasibility and
the  research  and  development  in progress  had no  alternative  future  uses.
Accordingly,  we expensed  these costs as of the respective  acquisition  dates,
resulting in a $2.5 million charge for the nine months ended March 31, 2001.

     Other Income (Expense). Interest expense was $1.1 million for both the nine
months ended March 31, 2002 and March 31, 2001. Other income of $1.7 million for
the nine months  ended March 31, 2002  consists  primarily  of interest  income.
Other income of $2.7 million for the nine months ended March 31, 2001  consisted
primarily  of $3.0  million of interest  income  partially  offset by a $288,000
decrease in the fair value of our interest rate swap agreements. Interest income
decreased primarily due to the lower market interest rates,  partially offset by
increased levels of cash and marketable securities.

     Provision  (Benefit) for Income Taxes.  The income tax benefit was $475,000
(an effective income tax rate of 32.0%) for the nine months ended March 31, 2002
and the income tax expense was $9.3  million  (an  effective  income tax rate of
35.3%) for the nine months ended March 31, 2001.  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 state and local
income taxes and research and development credits.

     Net Income  (Loss).  On a pro forma  basis,  net income for the nine months
ended March 31, 2002 was $2.3  million,  or $.04 per diluted  share,  versus net
income of $19.2 million,  or $.31 per diluted  share,  for the nine months ended
March 31, 2001.  Pro forma net income  excludes a  restructuring  charge for the
closing of our Richardson,  Texas facility of $5.1 million ($3.4 million, net of
tax), or $.06 per diluted share,  in the current period and in-process  research
and development write- offs of $2.5 million ($2.0 million,  net of tax), or $.03
per diluted share, in 2001. On a GAAP basis, our net loss for the current period
was $1.0 million, or $.02 per diluted share, versus net income of $17.2 million,
or $.28 per diluted share, in 2001.
                                      -22-

<PAGE>

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

     Net Sales.  Net sales decreased 20.9% to $50.6 million for the three months
ended March 31, 2002 from $64.0  million  for the three  months  ended March 31,
2001. Net sales in the  microelectronic  solutions  segment  decreased  33.4% to
$27.3  million for the three months ended March 31, 2002 from $41.0  million for
the three months ended March 31, 2001 due primarily to decreased sales volume in
thin  film  interconnects  and  microelectronic  modules  due to the  continuing
slowdown of the fiber optic market offset, in part, by increased sales volume of
integrated  circuits,  primarily in the satellite and defense markets. Net sales
in the test  solutions  segment  increased  10.7% to $19.6 million for the three
months ended March 31, 2002 from $17.7  million for the three months ended March
31, 2001 primarily due to the increased sales volume in motion control products,
partially offset by the decrease in sales of communications test and measurement
products.  Net sales in the isolator  products  segment  decreased 30.1% to $3.7
million for the three  months  ended  March 31,  2002 from $5.3  million for the
three  months  ended  March  31,  2001 due to lower  volume  of  commercial  and
industrial isolators.

     Gross Profit.  Gross profit  decreased 33.2% to $18.8 million (37.1% of net
sales)  for the  three  months  ended  March  31,  2002  (excluding  a  $750,000
restructuring charge, see Note 3 to the Consolidated  Financial Statements) from
$28.1  million  (43.9% of net sales) for the three  months ended March 31, 2001.
The  decreases  were  primarily a result of the  decreased  sales  volume in the
microelectronic  solutions  segment.  The gross profit margin also decreased due
primarily to the fixed nature of certain of the labor and overhead  costs in the
microelectronic solutions segment.

     Selling,   General  and   Administrative   Costs.   Selling,   general  and
administrative  costs  were  $10.2  million  (20.2% of net  sales) for the three
months ended March 31, 2002 (excluding a $4.3 million  restructuring charge, see
Note 3 to the Consolidated Financial Statements) and $11.9 million (18.5% of net
sales) for the three months  ended March 31, 2001.  The addition of the expenses
of TriLink was more than offset by lower corporate expenses and reduced expenses
at our thin-film microelectronics division.

     Research and Development  Costs.  Our self-funded  research and development
costs  increased  7.5% to $6.0 million (11.9% of net sales) for the three months
ended March 31, 2002 from $5.6 million  (8.8% of net sales) for the three months
ended March 31, 2001.  The increase was  primarily  due to increased  efforts to
develop proprietary integrated circuits utilized in broadband communications.

     Acquired  In-Process  Research  and  Development.  In  connection  with the
acquisition of TriLink  Communications,  Corp., we allocated $1.0 million of the
purchase price to incomplete research and development projects.  This allocation
represents  the  estimated  fair value based on future cash flows that have been
adjusted by the projects'  completion  percentage.  At the acquisition date, the
development of these projects had not yet reached technological  feasibility and
the  research  and  development  in progress  had no  alternative  future  uses.
Accordingly,  we expensed  these costs  during the three  months ended March 31,
2001.
                                      -23-

<PAGE>
     Other Income (Expense).  Interest expense was $479,000 for the three months
ended March 31, 2002 and  $320,000  for the three  months  ended March 31, 2001.
Other  income of $579,000  for the three  months  ended March 31, 2002  consists
primarily  of  $549,000 of  interest  income and a $49,000  increase in the fair
value of our  interest  rate swap  agreements.  Other income of $798,000 for the
three  months ended March 31, 2001  consisted  primarily of $875,000 of interest
income offset by a $82,000  decrease in the fair value of our interest rate swap
agreements. Interest income decreased primarily due to the lower market interest
rates, partially offset by increased levels of cash and marketable securities.

     Provision  (Benefit) for Income Taxes.  The income tax benefit was $800,000
(an  effective  income tax rate of 32.9%) for the three  months  ended March 31,
2002 and the income tax expense was $3.8 million (an  effective  income tax rate
of 37.5%) for the three months ended March 31,  2001.  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 state and
local  income taxes and research  and  development  credits,  and, for the three
months ended March 31, 2001, the non-deductible acquired in-process research and
development expense.

     Net Income  (Loss).  On a pro forma basis,  net income for the three months
ended March 31, 2002 was $1.7  million,  or $.03 per diluted  share,  versus net
income of $7.3  million,  or $.12 per diluted  share,  in the three months ended
March 31, 2001.  Pro forma net income  excludes a  restructuring  charge for the
closing of our Richardson,  Texas facility of $5.1 million ($3.4 million, net of
tax),  or $.06 per  diluted  share,  in the current  quarter  and an  in-process
research and development  write-off of $1.0 million ($1.0 million,  net of tax),
or $.02 per  diluted  share,  in  2001.  On a GAAP  basis,  our net loss for the
current quarter was $1.6 million,  or $.03 per diluted share,  versus net income
of $6.3 million, or $.10 per diluted share, in 2001.

Liquidity and Capital Resources

     As of March 31, 2002, we had $159.7 million in working capital. Our current
ratio was 6.4 to 1 at March 31, 2002.  As of February  25,  1999,  we replaced a
previous  agreement  with a revised  revolving  credit,  term loan and  mortgage
agreement with two banks which is secured by substantially all of our assets not
otherwise  encumbered.  The  agreement  provided for a revolving  credit line of
$23.0  million,  a term loan of $20.0  million and a mortgage  on our  Plainview
property  for $4.5  million.  The  revolving  credit  loan  facility  expires in
December  2002.  The term loan was fully paid in May 2000 with the proceeds from
the sale of our  Common  Stock.  The  interest  rate on  borrowings  under  this
agreement is at various rates depending upon certain financial ratios,  with the
current rate substantially  equivalent to prime (4.75% at March 31, 2002) on the
revolving credit borrowings.  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 an interest  rate swap  agreement  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 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 capital expenditures and
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.

                                      -24-
<PAGE>
     We are currently in full compliance with all of the covenants  contained in
our loan  agreement.  However,  we  believe  that we will not meet our  covenant
requiring  us to have income  before  taxes of no less than $8.0 million for the
fiscal year ending  June 30,  2002 and so have  contacted  our banks to obtain a
waiver or  amendment of such  covenant.  The banks have advised us that they are
willing to provide a waiver or  amendment  of this  covenant for the fiscal year
ending June 30, 2002;  however, no assurance can be given that the banks will in
fact deliver the waiver or amendment.  In the event that we do not obtain such a
waiver or  amendment,  the banks  may limit our  ability  to draw on the line of
credit;  however, we have  sufficient  cash on hand to pay all of our  currently
outstanding indebtedness under the loan agreement.

     For the nine months ended March 31, 2002, our  operations  provided cash of
$2.2  million  primarily  due  to the  profitability  of  operations,  excluding
non-cash charges of depreciation and amortization and the  restructuring  charge
(see  Note 3 to the  Consolidated  Financial  Statements),  partially  offset by
reductions in accounts payable and accrued  expenses.  For the nine months ended
March 31, 2002, our investing  activities  provided cash of $2.4 million - $12.0
million from the sale of marketable  securities partially offset by $5.9 million
of purchases of marketable  securities and $3.3 million of capital expenditures.
For the nine months ended March 31, 2002, our financing activities provided cash
of $213,000  primarily  from the exercise of stock options  offset,  in part, by
debt repayments.

     On April 15, 2002, we announced our agreement to purchase, for cash, all of
the  outstanding  shares of IFR Systems  ("IFR") stock for $1.35 per share.  IFR
designs and manufactures  advanced  wireless test solutions for  communications,
avionics and general  test and  measurement  applications.  IFR's net sales were
approximately  $88.3 million for the nine months ended December 31, 2001.  Under
the terms of the  agreement,  unanimously  approved by the board of directors of
both of the companies, we have commenced a tender offer of a minimum of 50.1% of
the outstanding shares of IFR on a fully-diluted basis. The tender offer expires
May 20, 2002.  Following the  successful  completion of the tender offer,  it is
expected there will be a merger in which any remaining  shareholders of IFR will
receive $1.35 per share in cash.  The cash purchase price is  approximately  $60
million,  which includes the payment of $48.8 million in  satisfaction  of IFR's
bank  indebtedness  of  approximately  $84 million,  including  interest.  IFR's
lenders have agreed to accept this payment in full  satisfaction  of the amounts
owed to them from IFR.

     We believe that existing cash, cash  equivalents and marketable  securities
coupled with  internally  generated  funds and available lines of credit will be
sufficient  for our working  capital  requirements,  the  purchase  of IFR,  the
restructuring  charge  recorded  in the third  quarter of fiscal  2002,  capital
expenditure needs and the servicing of our debt for the foreseeable  future. Our
cash,  cash  equivalents  and marketable  securities are available to fund other
acquisitions  and other  potential large cash needs that may arise. At March 31,
2002, our available unused line of credit was $20.0 million after  consideration
of letters of credit.  We expect to enter into a new credit  facility during the
first quarter of fiscal 2003.

     Aggregate  long-term debt matures in each of the twelve month periods ended
March 31 as follows:
<TABLE>
<CAPTION>
                          (In thousands)
                          --------------
             <S>            <C>
             2003           $  1,714
             2004              1,524
             2005              1,634
             2006              1,458
             2007              1,051
             Thereafter        4,525
                            --------
                            $ 11,906
                            ========
</TABLE>

                                      -25-
<PAGE>
     Future minimum  payments under operating leases in each of the twelve month
periods ended March 31, are as follows:
<TABLE>
<CAPTION>
                          (In thousands)
                          --------------
             <S>            <C>
             2003           $  4,203
             2004              3,269
             2005              2,232
             2006              1,694
             2007              1,072
             Thereafter          970
                            --------
                            $ 13,440
                            ========
</TABLE>

     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,  2002 will  materially
adversely affect our liquidity.

     Our  backlog  of orders was  $128.2  million  at March 31,  2002 and $143.7
million at March 31, 2001.


Accounting Policies Involving Significant Estimates

     The  preparation  of  financial   statements  and  related  disclosures  in
conformity with accounting  principles  generally  accepted in the United States
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.

                                     -26-
<PAGE>
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.

     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 shortfall.

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

     If the impairment  review of goodwill,  intangible  assets with  indefinite
useful  lives 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,  retention bonuses,
fringe benefits,  asset impairment,  buyout of leases and inventory write downs.
To the extent that our  estimates  differ from actual  expenses,  there could be
significant  additional  expenses or reversals of previously recorded charges in
the future.

                                      -27-
<PAGE>
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.


Market Risk

  We are exposed to market risk related to changes in interest rates and, to an
immaterial extent, 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% from levels at March 31,
2002, the effect on our net income would be a reduction of approximately $80,000
per year. Most of our invested cash and marketable securities are at variable
rates of interest. If market interest rates decrease by 10% from levels at March
31, 2002, the effect on our net income would be a reduction of approximately
$100,000 per year.

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 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 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,  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 future events 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.

                                      -28-
<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

               None

        (b)    Reports on Form 8-K

               Current report on Form 8-K dated April 13, 2002 covering Item 5 -
               Other  Events  and  Item  7  -  Financial  Statements,  Pro Forma
               Financial Information and Exhibits.


                                      -29-
<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, 2002                     By:      s/Michael Gorin
                                     ----------------------------------
                                            Michael Gorin
                                   President, Chief Financial Officer
                                     and Principal Accounting Officer



                                      -30-