UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-Q/A
                                (Amendment No. 1)

 (Mark One)

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

For the quarterly period ended December 31, 2006

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

For the transition period from _____________________ to ________________________

                          Commission file number 0-6620


                                  ANAREN, INC.
             (Exact name of registrant as specified in its Charter)

       New York                                           16-0928561
(State of incorporation)                     (I.R.S Employer Identification No.)

   6635 Kirkville Road                                      13057
 East Syracuse, New York                                  (Zip Code)
  (Address of principal
    executive offices)

Registrant's telephone number, including area code: 315-432-8909
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

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

Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the
Exchange Act). Check One: Large accelerated filer __ Accelerated filer X
Non-accelerated filer __

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes __ No X


<PAGE>


      The number of shares of Registrant's Common Stock outstanding on February
7, 2007 was 17,746,298.

Explanatory Note

The purpose of this amended Quarterly Report on Form 10-Q/A of Anaren, Inc. (the
"Company") is to restate the Company's consolidated condensed financial
statements for the three and six months ended December 31, 2006 ("the financial
statements") and to modify the related disclosures. See note 1 to the
consolidated condensed financial statements included in this amended Quarterly
Report.

The restatement arose from the Company's determination that accounting errors
had occurred at its China subsidiary. The accounting errors were caused by a
material weakness in the Company's risk assessment and oversight controls as
disclosed in the June 30, 2007 Annual Report Form 10-K. The unapproved and
undetected changes in procedures over accounting for the reconciliation of
inventory and the recording of vendor payables for materials received, but not
yet invoiced at the China facility resulted in a misstatement of pre-tax income
and inventory. Additionally, the Company has corrected certain errors in
accounting for income taxes, equity based compensation and pension expense; and,
as part of the Company's adoption of the Securities and Exchange Commissions
Staff Accounting Bulletin No. 108, the Company has corrected errors in their
warranty expense and allowance for sales returns. As a result of these errors,
the Company has determined that its pre-tax income for the three and six months
ended December 31, 2006 was overstated by $238,000.

This amended Quarterly Report does not update or discuss any other Company
developments after the date of the original filing. All information contained in
this amended Quarterly Report and the original Quarterly Report is subject to
updating and supplementing as provided in the periodic reports that the Company
has filed and will file after the original filing date with the Securities and
Exchange Commission.



                                       2
<PAGE>


                                  ANAREN, INC.

                                      INDEX


 PART I - FINANCIAL INFORMATION                                         Page No.
 ------------------------------                                         --------

   Item 1.    Financial Statements

              Consolidated Condensed Balance Sheets as of                      4
              December 31, 2006 (As restated) and June 30, 2006
              (unaudited)

              Consolidated Condensed Statements of Earnings                    5
              for the Three Months Ended December 31,
              2006 (As restated) and 2005 (unaudited)

              Consolidated Condensed Statements of Earnings                    6
              for the Six Months Ended December 31,
              2006 (As restated) and 2005 (unaudited)

              Consolidated Condensed Statements of Cash Flows                  7
              for the Six Months Ended December 31,
              2006 (As restated) and 2005 (unaudited)

              Notes to Consolidated Condensed Financial                        8
              Statements (unaudited)

   Item 2.    Management's Discussion and Analysis                            22
              of Financial Condition and Results of Operations

   Item 3.    Quantitative and Qualitative Disclosures About
              Market Risk                                                     33

   Item 4.    Controls & Procedures                                           34

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

   Item 1A.   Risk Factors                                                    35

   Item 2.    Unregistered Sales of Equity Securities and
              Use of Proceeds                                                 35

   Item 6.    Exhibits                                                        36

Officer Certifications                                                   37 - 41




                                       3
<PAGE>


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                                  ANAREN, INC.
                      Consolidated Condensed Balance Sheets
                       December 31, 2006 and June 30, 2006
                                   (Unaudited)

<TABLE>
<CAPTION>
                       Assets                              December 31, 2006   June 30, 2006
                       ------                              -----------------   -------------
                                                              (As restated)
<S>                                                           <C>              <C>
Current assets:
    Cash and cash equivalents                                 $  18,008,641    $  15,733,214
    Securities available for sale (note 5)                       29,009,921       35,635,000
    Securities held to maturity (note 5)                         24,663,212       31,124,733
    Receivables, less allowances of $231,128
      at December 31, 2006 and $84,854 at June 30, 2006          16,060,375       16,362,011
    Inventories (note 6)                                         26,884,270       21,827,271
    Other receivables                                             1,763,909        1,336,009
    Prepaid expenses                                                987,355          584,321
    Deferred income taxes                                         1,012,287          716,287
    Other current assets                                          1,230,447          851,863
                                                              -------------    -------------
                Total current assets                            119,620,417      124,170,709

Securities held to maturity (note 5)                             19,865,894        6,131,425
Property, plant and equipment, net (note 7)                      31,226,848       27,635,161
Deferred income taxes                                                32,902           32,902
Goodwill                                                         30,715,861       30,715,861
Other intangible assets, net of accumulated amortization
    of $2,839,031 at December 31, 2006
    and $2,684,595 at June 30, 2006 (note 3)                        185,935          340,371
Other assets                                                           --               --
                                                              -------------    -------------
                Total assets                                  $ 201,647,857    $ 189,026,429
                                                              =============    =============

      Liabilities and Stockholders' Equity
Current liabilities:
    Accounts payable                                          $   8,167,666    $   6,798,793
    Accrued expenses (note 8)                                     2,575,912        3,254,816
    Income taxes payable                                            191,420          703,488
    Customer advance payments                                       483,722          483,722
    Other current liabilities (note 9)                            1,216,752          769,523
                                                              -------------    -------------
                Total current liabilities                        12,635,472       12,010,342
Deferred income taxes                                             2,059,955        1,811,955
Pension and postretirement benefit obligation                     2,591,439        2,356,789
Other liabilities (note 9)                                          800,872          728,943
                                                              -------------    -------------
                Total liabilities                                18,087,738       16,908,029
                                                              -------------    -------------
Stockholders' equity:
    Common stock of $.01 par value.  Authorized
       200,000,000 shares; issued 27,106,641 shares
       at December 31, 2006 and 26,857,554 at June 30, 2006         271,066          268,575
    Additional paid-in capital                                  186,180,433      181,780,660
    Retained earnings                                            77,478,825       70,493,853
    Accumulated other comprehensive loss                           (386,914)        (441,397)
                                                              -------------    -------------
                                                                263,543,410      252,101,691
    Less cost of 9,249,643 treasury shares
      at December 31, 2006 and June 30, 2006                     79,983,291       79,983,291
                                                              -------------    -------------
                Total stockholders' equity                      183,560,119      172,118,400
                                                              -------------    -------------
Total liabilities and stockholders' equity                    $ 201,647,857    $ 189,026,429
                                                              =============    =============
</TABLE>

See accompanying notes to consolidated condensed financial statements.



                                       4
<PAGE>


                                  ANAREN, INC.
                  Consolidated Condensed Statements of Earnings
                               Three Months Ended
                           December 31, 2006 and 2005
                                   (Unaudited)

                                                  December 31,     December 31,
                                                       2006             2005
                                                  -------------    -------------
                                                  (As restated)
Net sales                                          $ 30,322,785    $ 25,019,013

Cost of sales                                        19,425,005      16,273,387
                                                   ------------    ------------
        Gross profit                                 10,897,780       8,745,626
                                                   ------------    ------------
Operating expenses:
        Marketing                                     1,928,858       1,715,660
        Research and development                      2,192,823       2,268,438
        General and administrative                    2,760,742       2,523,124
                                                   ------------    ------------
              Total operating expenses                6,882,423       6,507,222
                                                   ------------    ------------
Operating income                                      4,015,357       2,238,404

Other income, primarily interest                        917,080         536,821
Interest expense                                         (6,143)         (6,143)
                                                   ------------    ------------
              Total other income                        910,937    $    530,678
                                                   ------------    ------------
Income before income taxes                            4,926,294       2,769,082

Income tax expense                                    1,165,000         759,000
                                                   ------------    ------------
Net income                                         $  3,761,294    $  2,010,082
                                                   ============    ============
     Basic earnings per share                      $       0.21    $       0.12
                                                   ============    ============
     Diluted earnings per share:                   $       0.21    $       0.11
                                                   ============    ============
Shares used in computing net earnings per share:
        Basic                                        17,622,700      17,020,360
                                                   ============    ============
        Diluted                                      18,088,109      17,595,314
                                                   ============    ============

See accompanying notes to consolidated condensed financial statements.



                                       5
<PAGE>


                                  ANAREN, INC.
                  Consolidated Condensed Statements of Earnings
                                Six Months Ended
                           December 31, 2006 and 2005
                                   (Unaudited)

                                                   December 31,    December 31,
                                                       2006            2005
                                                   ------------    ------------
                                                  (As restated)
Net sales                                          $ 60,525,895    $ 49,633,371

Cost of sales                                        38,788,783      32,233,299
                                                   ------------    ------------
        Gross profit                                 21,737,112      17,400,072
                                                   ------------    ------------
Operating expenses:
        Marketing                                     3,741,564       3,483,739
        Research and development                      4,331,008       4,303,079
        General and administrative                    5,528,968       5,015,434
                                                   ------------    ------------
              Total operating expenses               13,601,540      12,802,252
                                                   ------------    ------------
Operating income                                      8,135,572       4,597,820

Other income, primarily interest                      1,813,686       1,124,565
Interest expense                                        (12,286)        (12,286)
                                                   ------------    ------------
              Total other income                      1,801,400    $  1,112,279
                                                   ------------    ------------
Income before income taxes                            9,936,972       5,710,099

Income tax expense                                    2,415,000       1,474,000
                                                   ------------    ------------
Net income                                         $  7,521,972    $  4,236,099
                                                   ============    ============
     Basic earnings per share                      $       0.43    $       0.25
                                                   ============    ============
     Diluted earnings per share:                   $       0.42    $       0.24
                                                   ============    ============
Shares used in computing net earnings per share:
        Basic                                        17,557,429      17,211,315
                                                   ============    ============
        Diluted                                      18,032,032      17,765,683
                                                   ============    ============

See accompanying notes to consolidated condensed financial statements.



                                       6
<PAGE>


                                  ANAREN, INC.
                 Consolidated Condensed Statements of Cash Flows
                                Six Months Ended
                           December 31, 2006 and 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                December 31, 2006  December 31, 2005
                                                                -----------------  -----------------
                                                                   (As restated)
<S>                                                                 <C>             <C>
Cash flows from operating activities:
     Net income                                                     $  7,521,972    $  4,236,099
     Adjustments to reconcile net income
       to net cash used in operating activities:
         Depreciation                                                  2,524,216       2,391,077
         Amortization of intangibles                                     154,436         166,435
         Gain on sale of land                                            (77,508)           --
         Loss on sales of equipment                                         --            15,875
         Deferred income taxes                                           254,000         156,405
         Stock based compensation                                      1,662,320       1,725,844
         Provision for doubtful accounts                                 (18,726)         (2,292)
         Changes in operating assets and liabilities:
           Receivables                                                   (67,638)        874,917
           Inventories                                                (5,056,999)     (2,686,286)
           Other receivables                                            (427,900)          2,480
           Prepaids and other current assets                            (781,618)       (268,114)
           Accounts payable                                            1,368,873        (551,607)
           Accrued expenses                                             (678,904)        141,654
           Income taxes payable                                         (512,068)       (105,658)
           Customer advance payments                                        --           483,722
           Other liabilities                                              68,158          26,296
           Pension and postretirement benefit obligation                 234,650         341,425
                                                                    ------------    ------------
             Net cash provided by operating activities                 6,167,264       6,948,272
                                                                    ------------    ------------
Cash flows from investing activities:
     Capital expenditures                                             (6,172,903)     (2,989,171)
     Proceeds from sales of land                                         134,508            --
     Proceeds from sale of equipment                                        --             1,000
     Maturities of marketable debt and auction rate securities        62,568,681      39,120,237
     Purchase of marketable debt and auction rate securities         (63,216,550)    (35,610,000)
                                                                    ------------    ------------
             Net cash provided by (used in) investing activities      (6,686,264)        522,066
                                                                    ------------    ------------
Cash flows from financing activities:
     Stock options exercised                                           2,111,188         646,209
     Tax benefit from exercise of stock options                          628,756         378,318
     Purchase of treasury stock                                             --        (9,792,475)
                                                                    ------------    ------------
             Net cash provided by (used in) financing activities       2,739,944      (8,767,948)
                                                                    ------------    ------------
     Effect of exchange rates                                             54,483          25,783
                                                                    ------------    ------------
             Net increase (decrease) in cash and cash equivalents      2,275,427      (1,271,827)
Cash and cash equivalents at beginning of period                      15,733,214       5,900,841
                                                                    ------------    ------------
Cash and cash equivalents at end of period                          $ 18,008,641    $  4,629,014
                                                                    ============    ============
Supplemental Disclosures of Cash Flow Information:
     Cash Paid During the Period For:
       Interest                                                     $     12,286    $     12,286
                                                                    ============    ============
       Income taxes, net of refunds                                 $  2,044,312    $  1,021,935
                                                                    ============    ============
</TABLE>

See accompanying notes to consolidated condensed financial statements.



                                       7
<PAGE>


NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

The consolidated condensed financial statements are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the financial
position and operating results for the interim periods. The consolidated
condensed financial statements should be read in conjunction with the
consolidated financial statements and notes thereto, together with management's
discussion and analysis of financial condition and results of operations,
contained in the Company's amended Annual Report on Form 10-K/A for the fiscal
year ended June 30, 2006. The results of operations for the six months ended
December 31, 2006 are not necessarily indicative of the results for the entire
fiscal year ending June 30, 2007, or any future interim period.

The income tax rates utilized for interim financial statement purposes for the
six months ended December 31, 2006 and 2005 are based on estimates of income and
utilization of tax credits for the entire year.

NOTE 1: Restatement of Financial Statements

The Company has determined that in the fourth quarter of fiscal year 2007,
accounting errors had occurred at its China subsidiary which were caused by
unapproved and undetected changes in procedures over accounting for the
reconciliation of inventory and the recording of vendor payables for materials
received and, but not yet invoiced at the China facility, resulting in a
misstatement of pretax income and inventory. As a result of these errors, the
Company has determined that its inventory was understated at December 31, 2006
and its net income for the three and six months ended December 31, 2006 was
overstated. Additionally, the Company has corrected certain errors in accounting
for income taxes, equity based compensation and pension expense and, as part of
the Company's adoption of the Securities and Exchange Commissions Staff
Accounting Bulletin No. 108, the Company has corrected errors in their warranty
expense and allowance for sales returns.

The Company's previously issued condensed consolidated financial statements for
the three months ended December 31, 2006 have been restated to correct the
accounting for the following items:


      o     Recording in the second quarter of fiscal 2007 an increase in other
            liabilities of $451,000, a reduction in accounts receivable of
            $388,000, an increase in deferred tax benefits of $302,000 and a net
            reduction in retained earnings of $537,000 to reflect the adoption
            of SAB 108 to establish warranty reserve and sales return allowance
            accounts.

      o     Recording in the second quarter and first six months of fiscal 2007,
            additional cost of sales of $333,000 to correct the recording of
            vendor payables for items received but not yet invoiced and
            inventory reconciliation errors. Recording a corresponding increase
            in accounts payable of $398,000 and an increase in inventory of
            $65,000

      o     Recording in the second quarter and first six months of fiscal 2007,
            an $83,000 reduction in cost of sales due to a reduction in pension
            expense in the second quarter and first six months and a reduction
            in other liabilities of $83,000 at December 31, 2006.

      o     Recording in the second quarter and first six month of fiscal 2007 a
            reduction in cost of sales of $49,000 resulting from a reduction in
            warranty expense and a corresponding reduction in other liabilities
            at December 31, 2006 of $49,000.

      o     Recording in the second quarter of fiscal 2007 a reduction in sales
            and accounts receivable of $3,000 to adjust the sales return
            allowance.

      o     Recording in the second quarter and first six months of fiscal 2007
            an increase in general and administrative expense of $34,000 and a
            corresponding increase in additional paid in



                                       8
<PAGE>


            capital of $34,000 at December 31, 2006 to correct equity based
            compensation expense for the quarter.

      o     Recording in the second quarter and first six months of fiscal 2007
            an increase in income tax expense of $49,000, an increase in taxes
            payable of $43,000 and a decrease in deferred tax benefits of $6,000
            to correct taxes payable at December 31, 2006.

The following tables summarize the effect of the restatement adjustments on the
consolidated condensed financial statements as of and for the three and six
months ended December 31, 2006:

Statement of Earnings:
                                              Three Months Ended December 31
                                        ----------------------------------------
                                           2006
                                        Previously                       2006
                                         Reported       Adjustments  As restated
                                        -----------    ------------  -----------
Sales                                   $30,325,785        (3,000)   $30,322,785
Cost of sales                            19,224,005       201,000     19,425,005
                                        -----------      --------    -----------
Gross profit                             11,101,780      (204,000)    10,897,780
                                        -----------      --------    -----------
General and administrative                2,726,742        34,000      2,760,742
                                        -----------      --------    -----------
Total operating expenses                  6,848,423        34,000      6,882,423
                                        -----------      --------    -----------
Operating income                          4,253,357      (238,000)     4,015,357
                                        -----------      --------    -----------
Income before income taxes                5,164,294      (238,000)     4,926,294
Income tax expense                        1,116,000        49,000      1,165,000
                                        -----------      --------    -----------
Net income                              $ 4,048,294      (287,000)   $ 3,761,294
                                        ===========      ========    ===========
     Basic earnings per share           $      0.23          (.02)   $      0.21
                                        ===========      ========    ===========
     Diluted earnings per share         $      0.22          (.01)   $      0.21
                                        ===========      ========    ===========

                                               Six Months Ended December 31
                                        ----------------------------------------
                                           2006
                                        Previously                       2006
                                         Reported      Adjustments   As restated
                                        -----------      --------    -----------
Sales                                   $60,528,895        (3,000)   $60,525,895
Cost of sales                            38,587,783       201,000     38,788,783
                                        -----------      --------    -----------
Gross profit                             21,941,112      (204,000)    21,737,112
                                        -----------      --------    -----------
General and administrative                5,494,968        34,000      5,528,968
                                        -----------      --------    -----------
Total operating expenses                 13,567,540        34,000     13,601,540
                                        -----------      --------    -----------
Operating income                          8,373,572      (238,000)     8,135,572
                                        -----------      --------    -----------
Income before income taxes               10,174,972      (238,000)     9,936,972
Income tax expense                        2,366,000        49,000      2,415,000
                                        -----------      --------    -----------
Net income                              $ 7,808,972      (287,000)   $ 7,521,972
                                        ===========      ========    ===========
     Basic earnings per share           $      0.44          (.01)   $      0.43
                                        ===========      ========    ===========
     Diluted earnings per share         $      0.43          (.01)   $      0.42
                                        ===========      ========    ===========



                                       9
<PAGE>


Balance Sheet:
                                                 As of December 31
                                   ---------------------------------------------
                                       2006
                                    Previously                          2006
                                     Reported       Adjustments      As restated
                                   ------------    ------------     ------------
Accounts receivable                $ 16,451,375        (391,000)    $ 16,060,375
Inventories                          26,819,270          65,000       26,884,270
Deferred income taxes                   716,287         296,000        1,012,287
                                   ------------    ------------     ------------
Total current assets                119,650,417         (30,000)     119,620,417
                                   ------------    ------------     ------------
Total assets                        201,677,857         (30,000)     201,647,857
                                   ============    ============     ============
Accounts payable                      7,769,666         398,000        8,167,666
Income taxes payable                    148,420          43,000          191,420
Other current liabilities               814,752         402,000        1,216,752
                                   ------------    ------------     ------------
Total current liabilities            11,792,472         843,000       12,635,472
Pension and postretirement
  benefit obligation                  2,674,439          83,000        2,591,439
                                   ------------    ------------     ------------
Total liabilities                    17,327,738         760,000       18,087,738
                                   ------------    ------------     ------------
Additional paid-in capital          186,146,433          34,000      186,180,433
Retained earnings                    78,302,825        (824,000)      77,478,825
                                   ------------    ------------     ------------
Total stockholders' equity          184,350,119        (790,000)     183,560,119
                                   ------------    ------------     ------------
Total liabilities and
  stockholders' equity             $201,677,857         (30,000)    $201,647,857
                                   ============    ============     ============

The adjustments to the balance sheet and income statement at and for the three
and six months ended December 31, 2006 had no impact on total cash flows from
operating, investing and financing activities.

The restatement of the consolidated financial statements also affected footnotes
2, 4, 6, 9, 10, 11, and 12.

NOTE 2: Adoption of SAB 108

In September 2006, the SEC staff issued Staff Accounting Bulletin No. 108,
"Considering the Effects of Prior Year misstatements when Quantifying
misstatements in Current Year Financial Statements" ("SAB 108"). SAB 108 was
issued to provide interpretive guidance on how the effects of the carryover or
reversal of prior year misstatements should be considered in quantifying a
current year misstatement. Under SAB 108, both the balance sheet and the income
statement approach must be considered when evaluating the materiality of
misstatements. The Company adopted SAB 108 in the fourth quarter of 2007,
effective July 1, 2006. After applying the dual approach, the accounting errors
relating to the warranty accrual and the sales returns reserve, that were
recorded on a cash basis as the events occurred and were deemed immaterial in
the prior years using the income statement approach, were deemed material to the
current year financial statements using the balance sheet approach. In
accordance with SAB 108, the cumulative effect adjustment of these accounting
changes was recorded to the beginning retained earnings as of July 1, 2006. The
impact of the two items noted above on the July 1, 2006 balances are presented
below:



                                       10
<PAGE>


   Accounts receivable                             $(388,000)
   Other liabilities                                (451,000)
         Total:                                     (839,000)
   Less deferred tax benefit                         302,000
                                                   ---------
   Adjustment to retained earnings                 $(537,000)
                                                   =========

NOTE 3: Intangible Assets

Intangible assets as of December 31, 2006 and June 30, 2006 are as follows:

                                    December 31                 June 30
                              ------------------------  ------------------------
                                 Gross                    Gross
                               Carrying    Accumulated   Carrying   Accumulated
                                Amount    Amortization    Amount    Amortization
                              ----------  ------------  ----------  ------------
Patent                        $  574,966   $  539,031   $  574,966   $  503,095
Customer Relationships         1,350,000    1,200,000    1,350,000    1,087,500
Trade Name                       320,000      320,000      320,000      320,000
Non-Competition Agreements       180,000      180,000      180,000      174,000
Favorable Lease                  600,000      600,000      600,000      600,000
                              ----------  -----------   ----------   ----------
  Total                       $3,024,966   $2,839,031   $3,024,966   $2,684,595

Intangible asset amortization expense for the six month period ended December
31, 2006 and 2005 aggregated $154,436 and $166,435, respectively, while tangible
asset amortization expense for the three months ended December 31, 2006 and 2005
aggregated $74,218 and $83,217, respectively. Estimated amortization expense
related to intangible assets for the remaining six months of fiscal 2007 and for
the next five years is as follows:

Year Ending June 30,
               2007                                            $        148,439
               2008                                            $         37,496
               2009                                            $              0
               2010                                            $              0
               2011                                            $              0

NOTE 4: Equity-Based Compensation

Effective July 1, 2005, the Company adopted the fair-value recognition
provisions of Statement of Financial Accounting Standards No. 123R (SFAS 123R)
on a prospective basis. This standard requires the Company to measure the cost
of employee services received in exchange for equity awards based on the grant
date fair value of the awards. The cost is recognized as compensation expense
over the vesting period of the awards.

Total stock-based compensation expense recognized for the three months and six
months ended December 31, 2006 was $853,883 (As restated) and $1,681,691 (As
restated), respectively. These amounts include $108,609 and $190,892 related to
the Company's restricted stock program (see restricted stock programs below) and
$725,903 (As restated) and $1,471,428 (As restated) related to the Company's
stock option program for the three and six month periods, respectively.



                                       11
<PAGE>


As a result of the adoption of SFAS 123R, both operating income and income
before taxes for the three month and six months ended December 31, 2006 were
reduced by $853,883 (As restated) and $1,681,691 (As restated), respectively.
Net income was reduced by $668,643 and $1,347,451, or $0.04, and $0.07 per
diluted share for the three and six month periods, respectively.

Stock-based compensation expense included in operating expenses is as follows
for the three month periods ended December 31:

<TABLE>
<CAPTION>
                                                                  2006
                                               -------------------------------------------
                                                  Stock                         Total
                                                  option       Restricted    stock-based
                                                  program         stock      compensation
                                               (As restated)     program     (As restated)
                                               -------------   ----------    -------------
<S>                                               <C>           <C>             <C>
Cost of goods sold ...........................    $161,027      $ 62,249        $223,276
Marketing ....................................      59,262          --            59,262
Research and development .....................     103,965          --           103,965
General and administrative ...................     401,649        46,360         448,009
                                                  --------      --------        --------
      Total cost of stock-based compensation .     725,903       108,609         834,512
Change in amounts capitalized in inventory ...      19,371          --            19,371
                                                  --------      --------        --------
Net stock-based compensation expense .........    $745,274      $108,609        $853,883
                                                  ========      ========        ========
Amount of related income tax benefit
  recognized in income .......................    $148,701      $ 36,539        $185,240
                                                  ========      ========        ========
</TABLE>

<TABLE>
<CAPTION>
                                                                 2005
                                               -------------------------------------------
                                                  Stock        Restricted        Total
                                                  option         stock        stock-based
                                                  program       program       compensation
                                               -------------   ----------    -------------
<S>                                               <C>           <C>             <C>
Cost of goods sold ............................   $197,061      $ 26,634        $223,695
Marketing .....................................     68,452          --            68,452
Research and development ......................    127,702          --           127,702
General and administrative ....................    441,074         3,000         444,074
                                                  --------      --------        --------
      Total cost of stock-based compensation ..    834,289        29,634         863,923
Change in amounts capitalized in inventory ....       --            --              --
                                                  --------      --------        --------
Net stock-based compensation expense ..........   $834,289      $ 29,634        $863,923
                                                  ========      ========        ========
Amount of related income tax benefit
  recognized in income ........................   $ 75,297      $ 11,261        $ 86,558
                                                  ========      ========        ========
</TABLE>



                                       12
<PAGE>


Stock-based compensation expense included in operating expenses is as follows
for the six month periods ended December 31:

<TABLE>
<CAPTION>
                                                                  2006
                                               -------------------------------------------
                                                  Stock                         Total
                                                  option       Restricted    stock-based
                                                  program         stock      compensation
                                               (As restated)     program     (As restated)
                                               -------------   ----------    -------------
<S>                                             <C>           <C>             <C>
Cost of goods sold ............................ $  377,889    $  112,626      $  490,515
Marketing .....................................    123,116          --           123,116
Research and development ......................    172,636          --           172,636
General and administrative ....................    797,787        78,266         876,053
                                                ----------    ----------      ----------
      Total cost of stock-based compensation...  1,471,428       190,892       1,662,320
Change in amounts capitalized in inventory ....     19,371          --            19,371
                                                ----------    ----------      ----------
Net stock-based compensation expense .......... $1,490,799    $  190,892      $1,681,691
                                                ==========    ==========      ==========
Amount of related income tax benefit
  recognized in income ........................ $  261,701    $   72,539      $  334,240
                                                ==========    ==========      ==========
</TABLE>

<TABLE>
<CAPTION>
                                                                  2005
                                               -------------------------------------------
                                                  Stock        Restricted       Total
                                                  option         stock       stock-based
                                                  program       program      compensation
                                               -------------   ----------    -------------
<S>                                               <C>           <C>             <C>
Cost of goods sold ............................ $  521,823    $   53,267      $  575,090
Marketing .....................................    136,905          --           136,905
Research and development ......................    127,702          --           127,702
General and administrative ....................    882,147         4,000         886,147
                                                ----------    ----------      ----------
      Total cost of stock-based compensation...  1,668,577        57,267       1,725,844
Change in amounts capitalized in inventory ....       --            --              --
                                                ----------    ----------      ----------
Net stock-based compensation expense .......... $1,668,577    $   57,267      $1,725,844
                                                ==========    ==========      ==========
Amount of related income tax benefit
  recognized in income ........................ $  128,080    $   21,761      $  149,841
                                                ==========    ==========      ==========

</TABLE>

As of December 31, 2006, there were 2,403,120 stock options outstanding. At
December 31, 2006, the aggregate unrecognized compensation cost of unvested
options, as determined using a Black-Scholes option valuation model, was
$7,228,651 (As restated) (net of estimated forfeitures) which is expected to be
recognized as compensation expense in fiscal years 2007 through 2012. The
aggregate intrinsic value of these options based on the original grant date was
$9,125,792 (net of forfeitures). As of December 31, 2006, 1,396,115 stock
options were exercisable, which represents an aggregate intrinsic value of
$5,932,680.

During the six month periods ended December 31, 2006 and 2005, the Company
granted 186,850 and 374,000 nonstatutory stock options with a fair value of
$2,529,872 and $3,202,270 (net of estimated forfeitures), respectively. During
the six months ended December 31, 2006 and 2005, 29,000 and 46,770 options were
forfeited and/or expired, respectively. During the six months ended December 31,
2006 and 2005, there were 200,637 and 94,859 stock options exercised, which
represents an aggregate intrinsic value of $1,361,723 and $814,839,
respectively. New option grants made after July 1, 2005, as well as option
grants issued prior to that date, have been valued using a Black-Scholes option
valuation model.



                                       13
<PAGE>


Stock Option Plans

In November 2004, the shareholders approved the amendment and restatement of the
Company's three existing stock option plans, which combined these plans under
one single consolidated equity compensation plan, the Anaren, Inc. Comprehensive
Long-Term Incentive Plan ("the Plan"). The effect of the amendment and
restatement was to combine the separate share pools available for grant under
the three existing plans into a single grant pool, expand the type of
equity-based awards the Company may grant, and extend the term of the combined
plan to October 31, 2014. Under the restated plan, the Company may issue
incentive stock options, nonstatutory stock options, stock appreciation rights,
restricted stock, performance shares, and performance units that can vest
immediately or up to five years. Under this plan, the Company reserved 1,470,443
common shares available for grant. In November 2006, the shareholders approved
an amendment of the plan increasing the number of shares of Common Stock by
600,000 with respect to which awards may be granted and also increasing the
number of shares by 600,000 with respect to which awards other than options may
be granted. The shareholders also approved limiting the maximum number of shares
of Common Stock with respect to which option rights or SARs may be granted in
any calendar year to any participant to 100,000 shares along with the approval
of other amendments relating to the administration of the Plan. On December 31,
2006, the Company had 1,489,504 shares available for grant under the restated
Plan.

Information with respect to this Plan is as follows:

                                                                       Weighted
                                                                       average
                                           Total          Option       exercise
                                          shares           price        price
                                        ---------    ---------------  ---------
Outstanding at June 30, 2005 .......... 2,782,780    $ 2.27 to 57.59   $14.73
   Issued .............................   387,500     11.97 to 21.15    14.22
   Exercised ..........................  (664,103)     2.27 to 20.17     8.04
   Expired ............................   (36,090)    14.73 to 57.59    39.05
   Forfeited ..........................   (24,180)     9.51 to 53.00    14.43
                                        ---------
Outstanding at June 30, 2006 .......... 2,445,907    $ 2.27 to 54.00   $15.91
   Issued .............................   186,850     19.56 to 20.00    19.56
   Exercised ..........................  (200,637)     2.27 to 19.21    10.97
   Expired ............................   (23,100)    15.00 to 19.21    18.81
   Forfeited ..........................    (5,900)     9.51 to 14.73    14.21
                                        ---------
Outstanding at December 31, 2006 ...... 2,403,120    $ 2.27 to 54.00   $16.77
                                        =========
Shares exercisable at
   December 31, 2006 .................. 1,396,115    $ 2.27 to 54.00   $17.27
                                        =========



                                       14
<PAGE>


The following table summarizes significant ranges of outstanding and exercisable
options at December 31, 2006:

             Options outstanding                       Options exercisable
   ---------------------------------------      --------------------------------
                               Weighted         Weighted                Weighted
     Range of                   average         average                 average
     exercise                  remaining        exercise                exercise
      prices        Shares   life in years        price      Shares       price
   -------------  ---------  -------------      --------    ---------   --------
   $1.00 - 5.00       5,000        .39            $ 2.28        5,000    $ 2.28
    5.01 - 15.00  1,872,546       6.80              6.72    1,067,391     11.19
   15.01 - 40.00    354,974       7.45             19.86      153,124     20.25
   40.01 - 65.00    170,600       4.32             53.04      170,600     53.04
                  ---------                                 ---------
                  2,403,120                                 1,396,115
                  =========                                 =========

During the six months ended December 31, 2006, the per-share weighted average
fair value of the nonstatutory stock options granted was $13.89. The fair value
of options at the date of the grant was estimated using the Black-Scholes model
with the following assumptions for the respective period ending December 31:

                                                2006                2005
                                                ----                ----
     Expected option life (using the
       Simplified Method) ...............  6.0 - 6.5 years    6.0 - 6.5 years
     Weighted average risk-free
       interest rate ....................    4.56% - 4.87%       3.92 - 4.34%
     Weighted average expected
       volatility .......................  60.00% - 75.00%    61.00% - 69.00%
     Dividend ...........................             0.0%               0.0%

For the six month period ended December 31, 2006, the Company used the
Simplified Method to estimate the expected term of the expected life of stock
option grants as defined by SEC Staff Accounting Bulletin No. 107, Share-Based
Payment, for each award granted. Expected volatility for the six month period
ended December 31, 2006, is based on historical volatility levels of the
Company's common stock. The risk-free interest rate for the six month period
ended December 31, 2006 is based on the implied yield currently available on
U.S. Treasury zero coupon issues with a remaining term equal to the expected
life.

Restricted Stock Program

On November 17, 2004, the Company issued restricted stock grants of 23,500
shares. The per-share price of each grant was $13.60. The shares of restricted
stock are subject to a 36 month forfeiture period.

On September 1, 2005, the Company issued restricted stock grants totaling 2,605
shares. The per-share price of each grant was $13.82. The shares of restricted
stock are subject to a 36 month foreiture period.

On May 17, 2006, the Company issued restricted stock grants totaling 120,082
shares. The per-share price of each grant was $21.15. These shares are subject
to a forfeiture period which expires as of the later of May 17, 2009 and the
last day of the Company's single fiscal year during which the Company has both
net sales from operations of at least $250 million and operating income of at
least 12 percent of net sales. These grant agreements expire if both financial
performance conditions above are not met by June 30, 2011. Presently, the
Company has recognized no compensation expense for this grant and the shares
have not been included in the current diluted earnings per share calculation as
the Company believes that it is probable that these goals will not be met within
the time period specified. In the future, if it becomes probable that the sales
and earnings goal will be achieved then at that time the compensation cost
associated with the grant will be recognized over the remaining vesting period.



                                       15
<PAGE>


On August 9, 2006, the Company issued restricted stock grants totaling 48,450
shares. The per share price of each grant was $19.56. The shares of restricted
stock are subject to a 36 month forfeiture period.

As of December 31, 2006 and 2005, the Company has issued restricted shares
aggregating 194,637 and 26,105, respectively, under its 2004 Comprehensive
Long-Term Incentive Plan. No shares were forfeited during the six month periods
ended December 31, 2006 and 2005. No shares vested during the six month periods
ended December 31, 2006 and 2005.

For the six month periods ended December 31, 2006 and 2005, the Company
recognized compensation expense associated with the lapse of restrictions
aggregating $190,892 and $57,267, respectively.

NOTE 5: Securities

The amortized cost and fair value of securities are as follows:

<TABLE>
<CAPTION>
                                                              December 31, 2006
                                         ------------------------------------------------------
                                                          Gross         Gross
                                           Amortized   Unrealized     Unrealized
                                             Cost         Gains         Losses      Fair Value
                                         -----------   -----------   -----------    -----------
<S>                                      <C>           <C>           <C>            <C>
Securities available for sale:
 Auction securities                      $29,009,921   $        --   $        --    $29,009,921
                                         -----------   -----------   -----------    -----------
     Total securities
     available-for-sale                  $29,009,921   $        --   $        --    $29,009,921
                                         ===========   ===========   ===========    ===========
Securities held to maturity:
 Municipal bonds                         $36,184,775   $        --      $(81,455)   $36,103,320
 Commercial paper                          3,010,363            --            --      3,010,363
 Corporate bonds                           1,486,709           178            --      1,486,887
 Federal Agency Bond                       3,847,259            --        (8,711)     3,838,548
                                         -----------   -----------   -----------    -----------
     Total securities held to maturity   $44,529,106          $178      $(90,166)   $44,439,118
                                         ===========   ===========   ===========    ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                June 30, 2006
                                         --------------------------------------------------------
                                                            Gross         Gross
                                          Amortized      Unrealized     Unrealized
                                            Cost            Gains         Losses      Fair Value
                                         -----------   --------------   ----------    -----------
<S>                                      <C>           <C>              <C>           <C>
Securities available for sale:
 Auction rate securities                 $35,635,000   $           --   $       --    $35,635,000
                                         ===========   ==============   ==========    ===========
     Total securities
       Available-for-sale                $35,635,000   $           --   $       --    $35,635,000
                                         ===========   ==============   ==========    ===========
Securities held to maturity:
 Municipal bonds                         $29,056,496   $           --    $(143,144)   $28,913,352
 Commercial paper                          2,976,555               --         --        2,976,555
 Corporate bonds                           1,824,132            1,989       (2,666)     1,823,455
 Federal agency bonds                      3,398,975               --      (41,890)     3,357,085
                                         -----------   --------------   ----------    -----------
     Total securities held to maturity   $37,256,158           $1,989    $(187,700)   $37,070,447
                                         ===========   ==============   ==========    ===========
</TABLE>

The unrealized losses on the Company's held to maturity marketable debt
securities were caused by interest rate increases. Because the Company has the
ability and intent to hold these investments until they recover their amortized
cost, the Company does not consider these investments to be
other-than-temporarily impaired at December 31, 2006.



                                       16
<PAGE>


Contractual maturities of marketable debt securities held to maturity at
December 31, 2006 and June 30, 2006 are summarized as follows:

                              December 31, 2006              June 30, 2006
                         -------------------------   -------------------------
                                          Fair                       Fair
                                          Market                     Market
                             Cost         Value          Cost        Value
                         -----------   -----------   -----------   -----------
Within one year          $24,663,212   $24,631,889   $31,124,733   $30,994,480
One year to five years    19,865,894    19,825,229     6,131,425     6,075,967
                         -----------   -----------   -----------   -----------
     Total               $44,529,106   $44,457,118   $37,256,158   $37,070,447
                         ===========   ===========   ===========   ===========

Contractual maturities of auction rate securities available for sale at December
31, 2006 and June 30, 2006 are summarized as follows:

                              December 31, 2006              June 30, 2006
                         -------------------------   -------------------------
                                          Fair                        Fair
                                          Market                      Market
                             Cost         Value          Cost         Value
                         -----------   -----------   -----------   -----------
Within one year          $29,009,921   $29,009,921   $35,635,000   $35,635,000
One year to five years            --            --            --            --
                         -----------   -----------   -----------   -----------
     Total               $29,009,921   $29,009,921   $35,635,000   $35,635,000
                         ===========   ===========   ===========   ===========

The Company invests in auction rate securities. Auction rate securities have
long-term underlying maturities; however, the market is highly liquid and the
interest rates reset every 7, 28 or 35 days.

NOTE 6: Inventories

Inventories are summarized as follows:

                                            December 31, 2006      June 30, 2006
                                            -----------------      -------------
                                              (As restated)

Component parts                                $13,242,650            $9,936,858
Work in process                                  8,364,709             8,330,110
Finished goods                                   5,276,911             3,560,303
                                               -----------           -----------
                                               $26,884,270           $21,827,271
                                               ===========           ===========

NOTE 7: Property, Plant and Equipment

Property, plant and equipment are summarized as follows:

                                            December 31, 2006      June 30, 2006
                                            -----------------      -------------
Land and land improvements                       $ 2,150,823        $ 2,207,823
Construction in process                            3,958,809          1,918,653
Buildings, furniture and fixtures                 17,578,862         16,608,430
Machinery and equipment                           60,338,386         57,176,071
                                                 -----------        -----------
                                                 $84,026,880        $77,910,977
Less accumulated depreciation
 and amortization                                (52,800,032)       (50,275,816)
                                                 -----------        -----------
                                                 $31,226,848        $27,635,161
                                                 ===========        ===========



                                       17
<PAGE>


NOTE 8: Accrued Expenses

Accrued expenses consist of the following:

                                            December 31, 2006      June 30, 2006
                                            -----------------      -------------
Compensation                                    $1,535,573            $2,082,104
Commissions                                        789,361               732,749
Health insurance                                   255,201               294,500
Other                                               (4,223)              145,463
                                                ----------            ----------
                                                $2,575,912            $3,254,816
                                                ==========            ==========

The Company maintains an accrual for incurred, but not reported, claims arising
from self-insured health benefits provided to the Company's employees in the
United States, which is included in accrued expenses in the consolidated balance
sheets. The Company determines the adequacy of this accrual by evaluating its
historical experience and trends related to both health insurance claims and
payments, information provided by its third party administrator, as well as
industry experience and trends.

NOTE 9: Other Liabilities

Other liabilities consist of the following:

                                              December 31, 2006    June 30, 2006
                                              -----------------    -------------
                                                (As restated)

Deferred compensation                             $  865,872          $  793,943
Pension liability                                    325,743             312,660
Warranty                                             402,000                --
Other                                                424,009             391,863
                                                  ----------          ----------
                                                   2,017,624           1,498,466
Less current portion                               1,216,752             769,523
                                                  ----------          ----------
                                                  $  800,872          $  728,943
                                                  ==========          ==========

NOTE 10: Earnings Per Share

Basic earnings per share is based on the weighted average number of common
shares outstanding. Diluted earnings per share is based on the weighted average
number of common shares outstanding, as well as dilutive potential common shares
which, in the Company's case, comprise shares issuable under the Company's
Comprehensive Long-Term Incentive Plan. The weighted average number of common
shares utilized in the calculation of the diluted earnings per share does not
include antidilutive shares aggregating 401,716 and 1,065,952 at December 31,
2006 and 2005, respectively. The treasury stock method is used to calculate
dilutive shares, which reduces the gross number of dilutive shares by the number
of shares purchasable from the proceeds of the options assumed to be exercised.



                                       18
<PAGE>


The following table sets forth the computation of basic and fully diluted
earnings per share:

<TABLE>
<CAPTION>
                                                    Three Months Ended          Six Months Ended
                                                         December 31                December 31
                                                --------------------------  --------------------------
                                                    2006           2005          2006           2005
                                                -------------   ----------  -------------   ----------
                                                (As restated)               (As restated)
<S>                                               <C>           <C>           <C>           <C>
Numerator:
Net income                                        $3,761,294    $2,010,082    $7,521,972    $4,236,099
                                                  ==========    ==========    ==========    ==========
Denominator:
Denominator for basic earnings
         per share:
           Weighted average shares outstanding    17,622,700    17,020,360    17,557,429    17,211,315
                                                  ==========    ==========    ==========    ==========
Denominator for diluted earnings
         per share:
         Weighted average shares outstanding      17,622,700    17,020,360    17,557,429    17,211,315
         Common stock options
           and restricted stock                      465,409       574,954       474,603       554,368
                                                  ----------    ----------    ----------    ----------
Weighted average shares and conversions           18,088,109    17,595,314    18,032,032    17,765,683
                                                  ==========    ==========    ==========    ==========
</TABLE>

NOTE 11: Components of Net Periodic Pension Benefit Costs

<TABLE>
<CAPTION>
                                                    Three Months Ended          Six Months Ended
                                                         December 31                December 31
                                                --------------------------  --------------------------
                                                    2006           2005          2006           2005
                                                -------------   ----------  -------------   ----------
                                                (As restated)               (As restated)
<S>                                               <C>           <C>           <C>           <C>
Service cost                                         $71,588       $85,587      $143,176      $171,174
Interest cost                                        164,700       151,795       329,400       303,590
Expected return on plan assets                      (185,068)     (173,365)     (370,136)     (346,730)
Amortization of prior service cost                      (325)         (808)         (650)       (1,616)
Amortization of the net (gain) loss                   18,386        47,436        36,772        94,872
                                                  ----------    ----------    ----------    ----------
Net periodic benefit cost                            $69,281      $110,645      $138,562      $221,290
                                                  ==========    ==========    ==========    ==========
</TABLE>

Expected Pension Contributions

Expected contributions for fiscal 2007 are $336,165.

Estimated Future Pension Benefit Payments

The following estimated benefit payments, which reflect future service, as
appropriate, are expected to be paid:

July 1, 2006 - June 30, 2007 ................................    $   419,601
July 1, 2007 - June 30, 2008 ................................        480,626
July 1, 2008 - June 30, 2009 ................................        487,453
July 1, 2009 - June 30, 2010 ................................        525,600
July 1, 2010 - June 30, 2011 ................................        543,938
Years 2012 - 2016 ...........................................      3,122,875



                                       19
<PAGE>


NOTE 12: Components of Net Periodic Postretirement Health Benefit Costs

                                      Three Months Ended      Six Months Ended
                                          December 31            December 31
                                      -------------------   --------------------
                                        2006        2005      2006        2005
                                      -------     -------   --------   --------
Service cost                          $18,677     $14,285   $ 37,354   $ 28,570
Interest cost                          36,665      46,327     73,330     92,654
Amortization of the net (gain) loss    13,208      18,788     26,416     37,576
                                      -------     -------   --------   --------
Postretirement Health                 $68,550     $79,400   $137,100   $158,800
                                      =======     =======   ========   ========

Expected Postretirement Health Contributions

Expected contributions for fiscal 2007 are $165,149, net of $39,381 expected
subsidy receipts.

Estimated Future Benefit Payments

Shown below are expected gross benefit payments (including prescription drug
benefits) and the expected gross amount of subsidy receipts.

                                    Employer Contributions      Subsidy Receipts
                                    ----------------------      ----------------
July 1, 2006 - June 30, 2007                204,530                  (39,381)
July 1, 2007 - June 30, 2008                199,286                  (48,950)
July 1, 2008 - June 30, 2009                214,390                  (53,689)
July 1, 2009 - June 30, 2010                216,892                  (59,938)
July 1, 2010 - June 30, 2011                220,394                  (64,144)
Years 2012 - 2016                         1,140,941                 (364,243)

NOTE 13: Segment Information

The Company operates predominately in the wireless communications, satellite
communications and defense electronics markets. The Company's two reportable
segments are the wireless group and the space and defense group. These segments
have been determined based upon the nature of the products and services offered,
customer base, technology, availability of discrete internal financial
information, homogeneity of products and delivery channel, and are consistent
with the way the Company organizes and evaluates financial information
internally for purposes of making operating decisions and assessing performance.

The wireless segment designs, manufactures and markets commercial products used
mainly by the wireless communications market. The space and defense segment of
the business designs, manufactures and markets specialized products for the
defense electronics and satellite communications markets. The revenue
disclosures for the Company's reportable segments depict products that are
similar in nature.



                                       20
<PAGE>


The following table reflects the operating results of the segments consistent
with the Company's internal financial reporting process. The following results
are used in part, by management, both in evaluating the performance of, and in
allocating resources to, each of the segments:

<TABLE>
<CAPTION>
                                                          Space &   Corporate and
                                           Wireless       Defense    Unallocated    Consolidated
                                          ----------    ----------  -------------   ------------
<S>                                      <C>           <C>           <C>           <C>
Net sales:
Three months ended:
       December 31, 2006 (As restated)    16,998,534    13,324,251            --    30,322,785
       December 31, 2005                  15,494,100     9,524,913            --    25,019,013
Six months ended:
       December 31, 2006 (As restated)    36,825,941    23,699,954            --    60,525,895
       December 31, 2005                  31,904,835    17,728,536            --    49,633,371

Operating income:
Three months ended:
       December 31, 2006 (As restated)     1,199,641     2,815,716            --     4,015,357
       December 31, 2005                   1,233,695     1,004,709            --     2,238,404
Six months ended:
       December 31, 2006 (As restated)     3,934,703     4,200,869            --     8,135,572
       December 31, 2005                   3,278,886     1,318,934            --     4,597,820

Goodwill and intangible assets:
     December 31, 2006                    30,901,796            --            --    30,901,796
     June 30, 2006                        31,056,232            --            --    31,056,232

Identifiable assets:*
       December 31, 2006 (As restated)    23,226,038    20,014,607   127,505,416   170,746,061
       June 30, 2006                      20,376,293    17,944,131   119,649,773   157,970,197

Depreciation:**
Three months ended:
       December 31, 2006                     631,936       569,187             --    1,201,123
       December 31, 2005                     607,047       582,111             --    1,189,158
Six months ended:
       December 31, 2006                   1,406,897     1,117,319             --    2,524,216
       December 31, 2005                   1,245,959     1,145,118             --    2,391,077

Intangibles amortization: ***
Three months ended:
       December 31, 2006                      74,218            --             --       74,218
       December 31, 2005                      83,217            --             --       83,217
Six months ended:
       December 31, 2006                     154,436            --             --      154,436
       December 31, 2005                     166,435            --             --      166,435
</TABLE>

      *     Segment assets primarily include receivables and inventories. The
            Company does not segregate other assets on a products and services
            basis for internal management reporting and, therefore, such
            information is not presented. Assets included in corporate and
            unallocated principally are cash and cash equivalents, marketable
            securities, other receivables, prepaid expenses, deferred income
            taxes, and property, plant and equipment not specific to business
            acquisitions.



                                       21
<PAGE>


      **    Depreciation expense related to acquisition - specific property,
            plant and equipment is included in the segment classification of the
            acquired business. Depreciation expense related to non- business
            combination assets is allocated departmentally based on an estimate
            of capital equipment employed by each department. Depreciation
            expense is then further allocated within the department as it
            relates to the specific business segment impacted by the consumption
            of the capital resources utilized. Due to the similarity of the
            property, plant and equipment utilized, the Company does not
            specifically identify these assets by individual business segment
            for internal reporting purposes.

      ***   Amortization of identifiable intangible assets arising from business
            combinations and patent amortization is allocated to the segments
            based on the segment classification of the acquired or applicable
            operation.

Item  2.   Management's Discussion and Analysis of Financial Condition and
           Results of Operations

The following Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the consolidated
financial statements and the notes thereto appearing elsewhere in this Form
10-Q/A. The following discussion, other than historical facts, contains
forward-looking statements that involve a number of risks and uncertainties. The
Company's results could differ materially from those anticipated in these
forward-looking statements as a result of various factors, including factors
described elsewhere in this Quarterly Report on Form 10-Q/A.

The purpose of this amended Quarterly Report on Form 10-Q/A of Anaren, Inc. (the
"Company") is to restate the Company's consolidated condensed financial
statements for the three and six months ended December 31, 2006 ("the financial
statements") and to modify the related disclosures. See note 1 to the
consolidated condensed financial statements included in this amended Quarterly
Report. The restatement arose from the Company's determination that accounting
errors had occurred at its China subsidiary. The accounting errors were caused
by a material weakness in the Company's risk assessment and oversight controls
as disclosed in the June 30, 2007 Annual Report Form 10-K. The unapproved and
undetected changes in procedures over accounting for the reconciliation of
inventory and the recording of vendor payables for materials received, but not
yet invoiced at the China facility resulted in a misstatement of pre-tax income
and inventory. Additionally, the Company has corrected certain errors in
accounting for income taxes, equity based compensation and pension expense; and,
as part of the Company's adoption of the Securities and Exchange Commissions
Staff Accounting Bulletin No. 108, the Company has corrected errors in their
warranty expense and allowance for sales returns. As a result of these errors,
the Company has determined that its pre-tax income for the three and six months
ended December 31, 2006 was overstated by $238,000.

Overview

The consolidated financial statements present the financial condition of the
Company as of December 31, 2006 and June 30, 2006, and the consolidated results
of operations and cash flows of the Company for the three months and six months
ended December 31, 2006 and 2005.

The Company designs, develops and markets microwave components and assemblies
for the wireless communications, satellite communications and defense
electronics markets. The



                                       22
<PAGE>


Company's distinctive manufacturing and packaging techniques enable it to
cost-effectively produce compact, lightweight microwave products for use in base
stations for wireless communications systems, in satellites and in defense
electronics systems. Beginning in 2004, the Company has introduced new
components addressing consumer wireless applications such as wireless local area
networks, Bluetooth, WiFi, cellular handsets and satellite telecommunications.
The Company sells its products to leading wireless communications equipment
manufacturers such as Ericsson, Motorola, Nokia, Nortel Networks, and Andrew,
and to satellite communications and defense electronics companies such as Boeing
Satellite, ITT, Lockheed Martin, Northrup Grumman and Raytheon.

The Company generally recognizes sales at the time products are shipped to
customers, provided that persuasive evidence of an arrangement exists, the sales
price is fixed or easily determinable, collectibility is reasonably assured and
title and risk of loss has passed to the customer. Title and the risks and
rewards of ownership of products are generally transferred at the time of
shipment. Payments received from customers in advance of products delivered are
recorded as customer advance payments until earned. Annually, a small percentage
of sales are derived from fixed-price contracts for the sale of engineering
design and development efforts for space and defense electronics products. Sales
and estimated profits under long-term contracts are recognized according to
customer contractual milestones on a units-of-delivery basis. Profit estimates
are revised periodically based upon changes in sales value and costs at
completion. Any losses on these contracts are recognized in the period in which
such losses are determined.

In April 2006, the Company entered into a lease for a new 76,000 square foot
facility in Suzhou, China, at an annual rent of $165,227 to replace its current
25,000 square foot leased facility. The initial lease period on the new building
runs through April 2013 and is renewable through April 2023. No additional cost
was incurred for termination of the lease on the current building in the second
quarter of fiscal 2007. The Company has moved its China operation to this new
facility and was fully operational in this new facility prior to the end of
calendar year 2006.

In July 2006, the Company began construction on a 54,000 square foot addition to
its facility in East Syracuse, New York. This addition is needed primarily to
accommodate the growth of the Company's Space and Defense business. The project
is expected to be completed during the third quarter of calendar 2007 at an
estimated cost of $5.8 million for the building addition.

Third Quarter of Fiscal 2007 Outlook

For the third quarter, the Company expects moderate demand for wireless
infrastructure products, a seasonally driven decrease in demand for the consumer
component product line and increased sales for the Space & Defense segment as a
result of recent new contract wins. As a result, the Company expects net sales
to be in the range of $27.0 - $30.0 million for the third quarter of fiscal
2007. With an anticipated tax rate of approximately 25.0% and an expected stock
based compensation expense of approximately $0.04 per diluted share, we expect
net earnings per diluted share to be in the range of $0.16 - $0.21 for the third
quarter.

Results of Operations

Net sales from continuing operations for the three months ended December 31,
2006 were $30.3 million, up $5.3 million from $25.0 million for the second
quarter of fiscal 2006. Net income for the second quarter of fiscal 2007 was
$3.8 million (As restated), or 12.4% (As restated) of net sales, up $1.8 million
(As restated), or 90.0% (As restated) from net income of $2.0 million in the
second quarter of fiscal 2006.



                                       23
<PAGE>


The following table sets forth the percentage relationships of certain items
from the Company's consolidated condensed statements of earnings as a percentage
of net sales.

                                      Three Months Ended      Six Months Ended
                                    ---------------------- ---------------------
                                       Dec. 31,   Dec. 31, Dec. 31,   Dec. 31,
                                         2006       2005     2006       2005
                                    ------------- -------- ------- -------------
                                    (As restated)                  (As restated)
Net Sales                                100.0%    100.0%    100.0%    100.0%

Cost of sales                             64.1%     65.0%     64.1%     64.9%
                                          ----      ----      ----      ----
Gross profit                              35.9%     35.0%     35.9%     35.1%
                                          ----      ----      ----      ----
Operating expenses:
   Marketing                               6.4%      6.9%      6.2%      7.0%
   Research and development                7.2%      9.1%      7.2%      8.7%
   General and administrative              9.1%     10.1%      9.1%     10.1%
                                          ----      ----      ----      ----
     Total operating expenses             22.7%     26.1%     22.5%     25.8%
                                          ----      ----      ----      ----
Operating income                          13.2%      8.9%     13.4%      9.3%
                                          ----      ----      ----      ----
Other income (expense):
     Other, primarily interest income      3.0%      2.1%      3.0%      2.2%
     Interest expense                      0.0%      0.0%      0.0%      0.0%
                                          ----      ----      ----      ----
     Total other income (expense), net     3.0%      2.1%      3.0%      2.2%
                                          ----      ----      ----      ----
Income before income taxes                16.2%     11.0%     16.4%     11.5%
Income taxes                               3.8%      3.0%      4.0%      3.0%
                                          ----      ----      ----      ----
   Net income                             12.4%      8.0%     12.4%      8.5%
                                          ====      ====      ====      ====

The following table summarizes the Company's net sales by operating segments for
the periods indicated. Amounts are in thousands.

                                   Three Months Ended        Six Months Ended
                               -----------------------   -----------------------
                                December 31               December 31
                               (As restated)             (As restated)
                                    2006         2005         2006         2005
                               -------------   -------   -------------   -------
Wireless                          $16,999      $15,494      $36,826      $31,905
Space and Defense                  13,324        9,525       23,700       17,728
                                  -------      -------      -------      -------
     Total                        $30,323      $25,019      $60,526      $49,633
                                  =======      =======      =======      =======

Three Months Ended December 31, 2006 Compared to Three Months Ended December 31,
2005

Net sales. Net sales increased $5.3 million, or 21.2% to $30.3 million for the
second quarter ended December 31, 2006 compared to $25.0 million for the second
quarter of fiscal 2006. This increase resulted from a $1.5 million rise in
shipments of wireless infrastructure and consumer products and a $3.8 million
rise in sales of Space and Defense products.

The increase in sales of Wireless products, which consist of standard
components, ferrite components and custom subassemblies for use in building
wireless basestation and consumer equipment, was a result of a rise in customer
demand for standard Wireless components during the current second quarter
compared to the second quarter of last year.



                                       24
<PAGE>


Wireless product sales rose $1.5 million, or 9.7% in the second quarter of
fiscal 2007 compared to the second quarter of fiscal 2006, due to a $900,000
increase in shipments of standard Wireless components in the second quarter of
fiscal 2007 compared to the same quarter in fiscal 2006 due to a continuing
higher level of worldwide demand for infrastructure products. Additionally, new
Wireless consumer product sales increased $729,000 or 68.0% in the current
second quarter compared to the second quarter of fiscal 2006, reflecting the
improving customer acceptance of our new commercial products.

Space and Defense products consist of custom components and assemblies for
communication satellites and defense radar, receiver, and countermeasure
subsystems for the military. Sales of Space and Defense products rose $3.8
million, or 40.0% in the second quarter of fiscal 2007 compared to the second
quarter of the previous fiscal year. This increase consisted of a $3.7 million
increase in Defense product shipments during the current second quarter compared
to the same quarter in fiscal 2006. Defense product sales are increasing due to
the higher level of new business booked by the Company over the last two fiscal
years. Additionally, shipments under the initial production phase of a contract
with SRC Tec, Inc. for components used in a system designed to counter remote
controlled improvised explosive devices (Counter IED) amounted to $3.5 million
in the quarter. Shipments under this contract are expected to continue at the
current rate through the third quarter of fiscal 2007 and then fall to a rate of
approximately $0.5 - $1.0 million per quarter in the fourth quarter and beyond.

Gross Profit. Cost of sales consists primarily of engineering design costs,
materials, material fabrication costs, assembly costs, direct and indirect
overhead, and test costs. Gross profit for the second quarter of fiscal 2007 was
$10.9 million (As restated), (35.9% (As restated) of net sales), up $2.2 million
(As restated) from $8.7 million (35.0% of net sales) for the same quarter of the
prior year. Gross profit on sales increased in the second quarter of fiscal 2007
over the second quarter of last year due to the substantial rise in overall
sales of $5.3 million and a more favorable product mix resulting from the
increase in sales of higher margin standard Wireless components and the large
increase in overall Defense product sales in the current quarter.

Marketing. Marketing expenses consist mainly of employee related expenses,
commissions paid to sales representatives, trade show expenses, advertising
expenses and related travel expenses. Marketing expenses were $1.9 million (6.4%
of net sales) for the second quarter of fiscal 2007, compared to $1.7 million
(6.9% of net sales) for the second quarter of fiscal 2006. Marketing expenses in
the current second quarter rose $213,000 over the second quarter of last fiscal
year due to increased commission expense resulting from the higher sales levels,
additional personnel to serve the Asian Wireless and Defense markets and
increased expenditures for travel.

Research and Development. Research and development expenses consist of material
and salaries and related overhead costs of employees engaged in ongoing
research, design and development activities associated with new products and
technology development. Research and development expenses were $2.2 million
(7.2% of net sales) in the second quarter of fiscal 2007, down 3.0% from $2.3
million (9.1% of net sales) for the second quarter of fiscal 2006. Research and
development expenditures are supporting further development of Wireless
infrastructure and consumer component opportunities, as well as new technology
development in the Space and Defense Group. Research and Development
expenditures have fluctuated with the level of opportunities in the marketplace
which have resulted in the hiring of additional personnel over the last twelve
months to do development work. The Company does not expect to reduce its current
research and development efforts and is presently working on a number of new
standard and custom Wireless and Space and Defense opportunities.



                                       25
<PAGE>


General and Administrative. General and administrative expenses consist of
employee related expenses, professional services, intangible amortization,
travel related expenses and other corporate costs. General and administrative
expenses increased 9.4% (As restated) to 2.8 million (As restated) (9.1% (As
restated) of net sales) for the second quarter of fiscal 2007 from $2.5 million
(10.1% of net sales) for the second quarter of fiscal 2006. The increase
resulted primarily from additional personnel costs due to the expanded level of
the Company's business, as well as, additional outside consulting services
retained by the Company for specific short term initiatives.

Operating Income. Operating income rose 79.4% (As restated) in the second
quarter of fiscal 2007 to $4.0 million (As restated) (13.2% (As restated) of
sales) compared to $2.2 million (8.9% of net sales) for the second quarter of
fiscal 2006. On a reporting segment basis, Wireless operating income was $1.2
million (As restated) for the second quarter of fiscal 2007, remaining flat
compared to the same period fiscal 2006

Space and Defense operating income was $2.8 million (As restated) (21.1% (As
restated) of Space and Defense net sales), for the second quarter of fiscal
2007, up $1.8 million (As restated) from $1.0 million for the second quarter of
fiscal 2006. Operating margins in this group have improved as a result of
efficiencies realized from both the overall $5.3 million increase in sales
volume and the $3.8 million rise in shipments of Space and Defense Group
products in the current second quarter resulting from the $3.5 million of
initial production shipments of "Counter IED" products, over the same quarter of
the prior year.

Interest Expense. Interest expense represents interest paid on a deferred
obligation. Interest expense for the second quarter of fiscal 2007 was $6,000;
unchanged from the second quarter of fiscal 2006.

Other Income. Other income is primarily interest income received on invested
cash balances. Other income increased 71.0% to $917,000 in the second quarter of
fiscal 2007 compared to $537,000 for the second quarter of last year. This
increase was caused mainly by the rise in market interest rates over the last
twelve months and the approximately $5.0 million increase in investable cash
balances during the second quarter. Other income will fluctuate based on short
term market interest rates and the level of investable cash balances.

Income Taxes. Income taxes for the second quarter of fiscal 2007 were $1.2
million (As restated) (3.8% (As restated) of net sales), including a tax benefit
resulting from the renewal of the federal research and experimentation credit
retroactively to January 2006, representing an effective tax rate of 23.6% (As
restated). This compares to income tax expense of $759,000 (3.0% of net sales)
for the second quarter of fiscal 2006, representing an effective tax rate of
27.4%. The Company's effective tax rate is a direct result of the proportion of
federally exempt state municipal bond income and federal tax credits and
benefits in relation to the levels of taxable income or loss. The projected
effective tax rate for fiscal 2007 is approximately 25.0% compared to an actual
effective tax rate of 22.1% for fiscal 2006. The increase in the projected
effective tax rate is due mainly to the higher level of taxable income the
Company is currently generating.

Six Months Ended December 31, 2006 Compared to Six Months Ended December 31,
2005

Net Sales. Net sales increased $10.9 million, or 22.0% to $60.5 million for the
first six months ended December 31, 2006 compared to $49.6 million for the first
six months of fiscal 2006. This increase resulted from a $4.9 million rise in
shipments of wireless infrastructure and consumer products and a $6.0 million
rise in sales of Space and Defense products.



                                       26
<PAGE>


The increase in sales of Wireless products was a result of a rise in worldwide
customer demand for Wireless infrastructure products over the past year.
Wireless product sales rose $4.9 million or 15.0% in the first half of fiscal
2007 compared to the first six months of fiscal 2006, due to a $1.4 million
increase in shipments of custom products resulting from higher demand from
Nokia, a $1.4 million increase (60.0%) in sales of new consumer component
products and a $2.1 million rise in sales of standard Wireless components used
mainly in power amplifier basestation applications.

Sales of Space and Defense products rose $6.0 million, or 33.7%, in the first
half of fiscal 2007 compared to the same period last year. This increase
consisted mainly of a $5.8 million rise in shipments of Defense products and a
relatively minor increase in sales of Space products. Approximately $4.0 million
of the increase in Defense product shipments resulted from the initial
production phase of a contract with SRC Tec, Inc. to provide components used in
a jammer system designed to counter remote controlled improvised explosive
devices (Counter IED). Shipments under this contract, which began in September
2006, were approximately $3.5 million in the second quarter and are expected to
continue at this rate through the third quarter of 2007 and then to drop to
between $0.5 to $1.0 million per quarter in the fourth quarter.

Gross Profit. Gross profit for the first half of fiscal 2007 was $21.7 million
(As restated), (35.9% (As restated) of net sales), up $4.3 million (As restated)
from $17.4 million (35.1% of net sales) for the same period of the prior year.
Gross profit on sales increased in the first half of fiscal 2007 over the first
half of last year due to the substantial rise in overall sales of $10.9 million
including a substantial increase in defense sales and a more favorable product
mix resulting from the increase in sales of higher margin standard wireless
components in the current six months compared to the first half of last year.

Marketing. Marketing expenses were $3.7 million, (6.2% of net sales) for the
first half of fiscal 2007, up 7.4% from $3.5 million (7.0% of net sales) for the
first half of fiscal 2006. Marketing expenses in the current first six months
rose over the first half of last fiscal year due to increased commission expense
resulting from the higher sales levels and additional personnel and travel
expenses to serve the expanding Asian and Defense markets.

Research and Development. Research and development expenses were $4.3 million
(7.2% (As restated) of net sales) in the first six months of fiscal 2007,
unchanged from $4.3 million (8.7% of net sales) for the first six months of
fiscal 2006. Research and development expenditures are supporting further
development of Wireless infrastructure and consumer component opportunities, as
well as new technology development in the Space and Defense Group. Internal
Research and Development expenditures have increased with the higher level of
opportunities in the marketplace. The Company does not expect to reduce its
current research and development efforts and is presently working on a number of
new standard and custom Wireless and Space and Defense opportunities.

General and Administrative. General and administrative expenses increased 10.2%
to $5.5 million (9.1% of net sales) for the first half of fiscal 2007 from $5.0
million (10.1% of net sales) for the first half of fiscal 2006. The increase
resulted primarily from additional personnel costs due to the expanded level of
Company business, a one-time, first quarter write down of the China facility
leasehold improvement costs of $80,000 resulting from the move to a new larger
facility, and additional outside consulting services retained by the Company for
specific short-term initiatives.



                                       27
<PAGE>



Operating Income. Operating income rose 77.0% (As restated) in the first six
months of fiscal 2007 to $8.1 million (As restated) (13.4% (As restated) of
sales) compared to $4.6 million (9.3% of net sales) for the first six months of
fiscal 2006. On a reporting segment basis, Wireless operating income was $3.9
million (As restated) for the first six months of fiscal 2007, up $656,000 (As
restated), or 20.9% (As restated), from Wireless operating income of $3.3
million in the first half of fiscal 2006. Wireless operating income improved
significantly in the current first six months as compared to the first half of
last fiscal year. This increase was due to efficiency gains derived from the
large overall increase in sales and a more favorable Wireless product mix.

Space and Defense operating income was $4.2 million (As restated) (17.7% of
Space and Defense net sales), for the first half of fiscal 2007, up $2.9 million
(As restated) from $1.3 million for the first half of fiscal 2006. Operating
margins in this group have improved as a result of efficiencies realized from
both the overall $10.9 million increase in sales volume and the $6.0 million
rise in shipments of Space and Defense Group products in the current first six
months resulting from $4.0 million of initial production shipments of "Counter
IED" products in the first half of fiscal 2007, compared to the same six months
of the prior year.

Interest Expense. Interest expense represents interest paid on a deferred
obligation. Interest expense for the first half of fiscal 2007 was $12,000; no
change from the first half of fiscal 2006.

Other Income. Other income is primarily interest income received on invested
cash balances and gains on the sale of land. Other income increased 61.0% to
$1.8 million in the first half of fiscal 2007 compared to $1.1 million for the
first half of last year. This increase was caused mainly by the rise in market
interest rates over the last twelve months and a one-time gain of $80,000 on the
sale of a small parcel of land during the current first quarter. Other income
will fluctuate based on short term market interest rates and the level of
investable cash balances.

Income Taxes. Income taxes for the first six months of fiscal 2007 were $2.4
million (4.0% (As restated) of net sales), including a tax benefit resulting
from the renewal of the federal research and experimentation credit retroactive
to January 1, 2006 representing an effective tax rate of 24.3% (As restated).
This compares to income tax expense of $1,474,000 (3.0% of net sales) for the
first six months of fiscal 2006, representing an effective tax rate of 25.8%.
The Company's effective tax rate is a direct result of the proportion of
federally exempt state municipal bond income and federal tax credits and
benefits in relation to the levels of taxable income or loss. The projected
effective tax rate for fiscal 2007 is approximately 25.0% compared to an actual
effective tax rate of 22.1% for fiscal 2006. The increase in the projected
effective tax rate is due mainly to the higher level of taxable income the
Company is currently generating.



                                       28
<PAGE>


Critical Accounting Policies

The methods, estimates and judgments management uses in applying the Company's
most critical accounting policies have a significant impact on the results
reported in the Company's financial statements. The U.S. Securities and Exchange
Commission has defined the most critical accounting policies as the ones that
are most important to the portrayal of the Company's financial condition and
results, and that require management to make the most difficult and subjective
judgments, often as a result of the need to make estimates of matters that are
inherently uncertain. Based on this definition, the Company's most critical
policies include: 1) valuation of accounts receivable, which impacts general and
administrative expense; 2) valuation of inventory, which impacts cost of sales
and gross margin; 3) the assessment of recoverability of goodwill and other
intangible and long-lived assets, which impacts write-offs of goodwill,
intangibles and long-lived assets; 4) accounting for stock based compensation,
which impacts multiple expense components throughout the statements of income;
and 5) accounting for income taxes, which impacts the valuation allowance and
the effective tax rate. Management reviews the estimates, including, but not
limited to, allowance for doubtful accounts, inventory reserves and income tax
valuations on a regular basis and makes adjustments based on historical
experiences, current conditions and future expectations. The reviews are
performed regularly and adjustments are made as required by current available
information. The Company believes these estimates are reasonable, but actual
results could and have differed at times from these estimates.

The Company's accounts receivable represent those amounts which have been billed
to its customers but not yet collected. The Company analyzes various factors
including historical experience, credit worthiness of customers and current
market and economic conditions. The allowance for doubtful accounts balance is
established based on the portion of those accounts receivable which are deemed
to be potentially uncollectible. Changes in judgments on these factors could
impact the timing of costs recognized.

The Company states inventories at the lower of cost or market, using a standard
cost methodology to determine the cost basis for the inventory. This method
approximates actual cost on a first-in-first-out basis. The recoverability of
inventories is based on the types and levels of inventory held, forecasted
demand, pricing, competition and changes in technology.

The Company records valuation allowances to reduce deferred tax assets when it
is more likely than not that some portion of the amount may not be realized. The
Company evaluates the need for valuation allowances on a regular basis and
adjusts the allowance as needed. These adjustments, when made, would have an
impact on the Company's financial statements in the period that they were
recorded.

Intangible assets with estimable useful lives are amortized to their residual
values over those estimated useful lives in proportion to the economic benefit
consumed.

Long-lived assets with estimated useful lives are depreciated to their residual
values over those useful lives in proportion to the economic value consumed.
Long-lived assets are tested for impairment at the group level, which is usually
an economic unit such as a manufacturing facility or department, which has a
measurable economic output or product. Long-lived assets are tested for
impairment when events or changes in circumstances indicate that the carrying
amount of a long-lived asset may not be recoverable and exceeds its fair market
value. This circumstance exists if the carrying amount of the assets in question
exceeds the sum of the undiscounted cash flows expected to result from the use
of the asset. The impairment loss is measured as the amount by which the
carrying amount of a long-lived asset exceeds its fair value as determined by
the discounted cash flow or in the case of negative cash flow, an independent
market appraisal of the asset.



                                       29
<PAGE>


Goodwill is tested annually during the fourth fiscal quarter, or sooner if
indicators of impairment exist, for impairment by the Company at the reporting
unit level by comparing the fair value of the reporting unit with its carrying
value. Valuation methods for determining the fair value of the reporting unit
include reviewing quoted market prices and discounted cash flows. If the
goodwill is indicated as being impaired (the fair value of the reporting unit is
less than the carrying amount), the fair value of the reporting unit is then
allocated to its assets and liabilities in a manner similar to a purchase price
allocation in order to determine the implied fair value of the reporting unit
goodwill. This implied fair value of the reporting unit goodwill is then
compared with the carrying amount of the reporting unit goodwill and, if it is
less, the Company would then recognize an impairment loss.

The Company accounts for stock based compensation by recognizing expense over
the vesting period for any nonvested stock option awards granted. Stock option
grants are valued by using a Black-Scholes method at the date of the grant.
There are assumptions and estimates made by management which go into the
valuation of the options granted, such as volatility, expected option term, and
forfeiture rate. The Company recognizes expense on options granted using a
straight-line method over the vesting period. Restricted stock grants are
expensed over the vesting period, which is determined at the date of the grant.

The projection of future cash flows for the goodwill impairment analysis
requires significant judgments and estimates with respect to future revenues
related to the assets and the future cash outlays related to those revenues.
Actual revenues and related cash flows or changes in anticipated revenues and
related cash flows could result in changes in this assessment and result in an
impairment charge. The use of different assumptions could increase or decrease
the related impairment charge.

Liquidity and Capital Resources

Net cash provided by operations for the six months ended December 31, 2006 was
$6.2 million compared to net cash provided by operations for the first half of
the prior year of $6.9 million. The positive cash flow from operations in the
current six months was due to the high level of net income before depreciation
and non cash equity compensation ($11.7 million) (As restated) which more than
off-set the $5.0 million used to fund the current inventory increase. The
positive cash flow from operations in the first half of fiscal 2006 was due
primarily to income before depreciation and non cash equity compensation for the
period of $8.4 million coupled with a $877,000 decline in trade and other
receivables which off-set a $2.7 million increase in inventory.

Net cash used in, or provided by, investing activities consists of funds used to
purchase capital equipment, proceeds from the sale of land and equipment and
funds used or provided by the net purchase or maturity of marketable debt
securities.

Net cash used by investing activities in the first half of fiscal 2007 was ($6.7
million) and consisted of $648,000 used for net purchases and settlement of
matured investments and $6.2 million used to acquire capital equipment and fund
the Company's current physical plant expansion. Net cash provided by investing
activities in the first half of fiscal 2006 was $522,000 and consisted of funds
provided by net purchases and settlement of matured investments totaling $3.5
million, less capital additions of $3.0 million.

Net cash provided by financing activities was $2.7 million in the first half of
fiscal 2007 and consisted entirely of funds and tax benefits received from the
exercise of stock options. Cash used in financing activities the first half of
fiscal 2006 consisted of $9.8 million used for the



                                       30
<PAGE>


purchase of 343,611 treasury shares, net of $646,000 received from the exercise
of stock options and $378,000 in tax benefits generated by option exercises.

During the remainder of fiscal 2007, the Company anticipates that its main cash
requirements will be for additions to capital equipment and funds for the
current building expansion. Capital expenditures are expected to total between
$11.0 and $12.0 million for fiscal 2007 and will be funded by existing cash
balances.

Although no shares have been purchased in the past six months, the Company
expects to continue to purchase shares of its common stock in the open market
and/or through private negotiated transactions under the current Board
authorization, depending on market conditions. At December 31, 2006, there were
1,078,000 shares remaining under the current Board repurchase authorization.

At December 31, 2006, the Company had approximately $91.5 million in cash, cash
equivalents, and marketable securities. The Company has no debt, and on a fiscal
year basis has had positive operating cash flow for over eight years. The
Company believes that its cash requirements for the foreseeable future will be
satisfied by currently invested cash balances and expected cash flows from
operations.

Disclosures About Contractual Obligations and Commercial Commitments

Accounting standards require disclosure concerning the Company's obligations and
commitments to make future payments under contracts, such as debt, lease
agreements, and under contingent commitments, such as debt guarantees. The
Company's obligations and commitments are as follows:

<TABLE>
<CAPTION>
                                                    Payment Due by Period
                                -------------------------------------------------------------
                                               Less
                                  Total      than 1 Yr.    2-3 Yrs      4-5 Yrs    Over 5 Yrs
                                ----------   ----------  ----------   ----------   ----------
<S>                             <C>           <C>        <C>          <C>          <C>
Contractual obligations
Operating leases - facilities   $4,907,470    $686,804   $1,373,607   $1,373,607   $1,473,452
Deferred compensation              343,671      65,000      130,000      130,000       18,671
</TABLE>

Recent Accounting Pronouncements

FASB Interpretation 48 was issued in July 2006 to clarify the criteria for
recognizing tax benefits under FASB Statement No. 109, Accounting for Income
Taxes. The Interpretation defines the threshold for recognizing the benefits of
tax-return positions in the financial statements as "more-likely-than-not" to be
sustained by the taxing authority and will affect many companies' reported
results and their disclosures of uncertain tax positions. The Interpretation
does not prescribe the type of evidence required to support meeting the
more-likely-than-not threshold, stating that it depends on the individual facts
and circumstances. The benefit recognized for a tax position meeting the
more-likely-than-not criterion is measured based on the largest benefit that is
more than 50 percent likely to be realized. The measurement of the related
benefit is determined by considering the probabilities of the amounts that could
be realized upon ultimate settlement, assuming the taxing authority has full
knowledge of all relevant facts and including expected negotiated settlements
with the taxing authority. Interpretation 48 is effective as of the beginning of
the first fiscal year beginning after December 15, 2006 (the Company's 2008
fiscal year). The company is currently analyzing the financial statement impact
of adopting this pronouncement.



                                       31
<PAGE>


Accounting for Pension and Other Postretirement Benefits -- In September 2006,
the FASB published Statement of Financial Accounting No. 158, Employers
Accounting for Defined Benefit Pension and Other Postretirement Plans. This
statement requires companies to report on their balance sheets the funded status
of pension and other post retirement benefit plans. The proposal would also
require companies to measure plan assets and obligations as of the employer's
balance-sheet date. As a result, companies would recognize on their balance
sheets actuarial gains and losses and prior service cost that have not yet been
included in income. This could significantly increase reported liabilities for
many companies with a corresponding reduction in equity reported as accumulated
other comprehensive income. The provisions for the statement are effective for
fiscal years ending after December 15, 2006, (the Company's 2007 fiscal year)
with earlier application encouraged. The Company adopted SFAS No. 158 effective
June 30, 2007, and the effect of the adoption did not have a material impact to
the consolidated condensed financial statements.

In September 2006, SEC Staff Accounting Bulletin No. 108 was issued to provide
guidance on Quantifying Financial Statement Misstatements. Staff Accounting
Bulletin No. 108 addresses how the effects of prior-year uncorrected
misstatements should be considered when quantifying misstatements in
current-year financial statements. The SAB requires registrants to quantify
misstatements using both the balance sheet and income-statement approaches and
to evaluate whether either approach results in quantifying an error that is
material in light of relevant quantitative and qualitative factors. The SAB does
not change the staff's previous guidance in SAB 99 on evaluating the materiality
of misstatements. When the effect of initial adoption is determined to be
material, the SAB allows registrants to record that effect as a
cumulative-effect adjustment to beginning-of-year retained earnings. The
requirements are effective for annual financial statements covering the first
fiscal year ending after November 15, 2006 (the Company's fiscal 2007). The
Company adopted SAB 108 effective July 1, 2006, see note 2 to the consolidated
condensed financial statements.

Fair Value Measurements. In September 2006, the FASB published Statement of
Financial Accounting No. 157, Fair Value Measurements. This Statement
establishes a single authoritative definition of fair value, sets out a
framework for measuring fair value, and requires additional disclosures about
fair-value measurements. The Statement applies only to fair-value measurements
that are already required or permitted by other accounting standards and is
expected to increase the consistency of those measurements. It will also affect
current practices by nullifying the Emerging Issues Task Force (EITF) guidance
that prohibited recognition of gains or losses at the inception of derivative
transactions whose fair value is estimated by applying a model and by
eliminating the use of "blockage" factors by brokers, dealers, and investment
companies that have been applying AICPA Guides. The Statement is effective for
fair-value measures already required or permitted by other standards for
financial statements issued for fiscal years beginning after November 15, 2007
(the Company's fiscal 2009) and interim periods within those fiscal years. Early
application is permissible only if no annual or interim financial statements
have been issued for the earlier periods. The requirements of the Statement are
applied prospectively, except for changes in fair value related to estimating
the fair value of a large block position and instruments measured at fair value
at initial recognition based on transaction price in accordance with EITF 02-3
or Statement 155. The Company is currently assessing the financial impact of
SFAS No. 157 on its consolidated financial statements.



                                       32
<PAGE>


Forward-Looking Cautionary Statement

The statements contained in this Form 10-Q/A which are not historical
information are "forward-looking statements". These, and other forward-looking
statements, are subject to business and economic risks and uncertainties that
could cause actual results to differ materially from those discussed. The risks
and uncertainties described below are not the only risks and uncertainties
facing our Company. Additional risks and uncertainties not presently known to us
or that are currently deemed immaterial may also impair our business operations.
If any of the following risks actually occur, our business could be adversely
affected, and the trading price of our common stock could decline, and you may
lose all or part of your investment. Such known factors include, but are not
limited to: the need for any follow-on actions in connection with the Company's
accounting practices, and the impact of the Company's restatements and the
reaction to them from the Company's stockholders and the financial markets in
general; the Company's ability to timely ramp up to meet some of our customers'
increased demands; potential unanticipated liabilities and delays associated
with the physical expansion of the Company's Syracuse, New York facility;
unanticipated delays in successfully completing customer orders within
contractually required timeframes; increased pricing pressure from our
customers; decreased capital expenditures by wireless service providers; the
possibility that the Company may be unable to successfully execute its business
strategies or achieve its operating objectives, generate revenue growth or
achieve profitability expectations; successfully securing new design wins from
our OEM customers, reliance on a limited number of key component suppliers,
unpredictable difficulties or delays in the development of new products; order
cancellations or extended postponements; the risks associated with any
technological shifts away from the Company's technologies and core competencies;
unanticipated impairments of assets including investment values and goodwill;
diversion of defense spending away from the Company's products and or
technologies due to on-going military operations; and litigation involving
antitrust, intellectual property, environmental, product warranty, product
liability, and other issues. You are encouraged to review Anaren's 2006 Annual
Report, Anaren's Form 10-K (as mended) for the fiscal year ended June 30, 2006
and Anaren's Form 10-Q (as amended) for the three months ended September 30,
2006 and exhibits to those Reports filed with the Securities and Exchange
Commission to learn more about the various risks and uncertainties facing
Anaren's business and their potential impact on Anaren's revenue, earnings and
stock price. Unless required by law, Anaren disclaims any obligation to update
or revise any forward-looking statement.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

The following discusses the Company's possible exposure to market risk related
to changes in interest rates, equity prices and foreign currency exchange rates.
This discussion contains forward-looking statements that are subject to risks
and uncertainties. Results could differ materially from those anticipated in
these forward-looking statements as a result of various factors, including
factors described elsewhere in this Quarterly Report on Form 10-Q.

As of December 31, 2006, the Company had cash, cash equivalents and marketable
securities of $91.5 million, all of which consisted of cash and highly liquid
investments in marketable debt securities. The marketable debt securities at
date of purchase normally have maturities between one and 18 months, are exposed
to interest rate risk and will decrease in value if market interest rates
increase. A hypothetical decrease in market interest rates of 10.0% from
December 31, 2006 rates, or 0.375%, would have reduced net income and cash flow
by approximately $83,000, or $0.004 per share for the quarter. Due to the
relatively short maturities of the securities and its ability to hold those
investments to maturity, the Company does not believe that an immediate decrease
in interest rates would have a significant effect on its financial condition or
results of



                                       33
<PAGE>


operations. Over time, however, declines in interest rates will reduce the
Company's interest income.

Item 4.    Controls and Procedures

A. Evaluation of Disclosure Controls and Procedures

The Company's Chief Executive Officer and its Chief Financial Officer evaluated
the Company's disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this
quarterly report. Management has concluded that their disclosure controls and
procedures were not effective at December 31, 2006 due to the material
weaknesses in internal control over financial reporting as described below:

The Company did not maintain policies and procedures that were sufficient to
assess financial reporting risks on a timely basis. Specifically,

(i)   Management did not have an adequate process to assess risks when changes
      in the internal control system or key finance personnel occur and provide
      the appropriate level of oversight. This material weakness contributed to
      the material weakness listed in item (iii) below.

(ii)  Management did not maintain controls sufficient to assess on a timely
      basis the financial statement impact of significant contracts and
      agreements or to identify, monitor, and measure and accounting practices
      that are not in compliance with generally accepted accounting principles.
      This material weakness contributed to the material weaknesses in items
      (iv) through (vi) below.

These material weaknesses contributed to the material weaknesses listed in items
(iii) through (vi) below.

(iii) Accounting for Inventory and Cost of Sales in China: The Company's
      accounting personnel in China had insufficient knowledge and experience in
      the application of U.S. generally accepted accounting principles, which
      resulted in inappropriate changes to the policies and procedures for the
      accounting for inventory and cost of sales. As a result, the Company did
      not maintain effective policies and procedures over the determination and
      reporting of its inventory and cost of sales. This material weakness
      resulted in restatement of the Company's 2007 interim financial
      statements.

(iv)  Accounting for Distributor Agreements: The Company's policies and
      procedures were not adequate to properly account for sales transactions
      with distributors. Specifically, the Company's policies allowed for the
      recognition of revenue upon shipment to the distributor rather than when
      earned by the Company in accordance with U.S. generally accepted
      accounting principles. This material weakness resulted in adjustments to
      the fiscal 2007 annual consolidated financial statements.

(v)   Accounting for Stock-Based Compensation: The Company's policies and
      procedures were not adequate to properly recognize stock compensation
      expense. Specifically, the Company's policies allowed for the recognition
      of expense for retirement eligible employees over nonsubstantive service
      periods rather than as incurred in accordance with U.S. generally accepted
      accounting principles. This material weakness resulted in adjustments to
      the fiscal 2007 annual consolidated financial statements.



                                       34
<PAGE>

(vi)  Accounting for Warranty Reserves, Sales Returns and Allowances and
      Inventory Valuations: The warranty accrual, reserve for sales returns and
      allowances and practices related to the valuation of inventory were
      recognized in the Company's financial statements using non-GAAP policies.

      The Company did not maintain policies and procedures to monitor these
      accounting practices that were sufficient to prevent or detect, on a
      timely basis, a misstatement that could be considered to be material to
      the Company's financial statements. This material weakness resulted in
      adjustments to the fiscal 2007 annual consolidated financial statements.

B. Changes in Internal Control Over Financial Reporting

There has been no change in the Company's internal control over financial
reporting that occurred during the fiscal quarter covered by this report that
has materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.

PART II OTHER INFORMATION

Item 1A.   Risk Factors

The Company is exposed to certain risk factors that may effect operations and/or
financial results. The significant factors known to the company are described in
the Company's most recently filed annual report on Form 10-K/A and below. There
have been no material changes from the risk factors as previously disclosed in
the Company's Annual Report on Form 10-K/A.

PART II OTHER INFORMATION

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

On May 10, 2005, the Board of Directors increased by 2,000,000 the number of
shares that the Company was authorized to repurchase in open market or by
privately negotiated transactions through its previously announced stock
repurchase program. The program, which may be suspended at any time without
notice, has no expiration date. The following table sets forth information
regarding shares repurchased and purchasable under the program during and as of
the end of the periods indicated. On December 31, 2006, 1,077,879 shares
remained authorized for purchase.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                                                                      Maximum Number (or
                                                                 Total Number of      Approximate Dollar
                                                                Shares (or Units)    Value) of Shares (or
                  Total Number of                             Purchased as Part of    Units) that May Yet
                 Shares (or Units)      Average Price Paid     Publicly Announced     Be Purchased Under
  Period             Purchased         per Share (or Unit)      Plans or Programs    the Plans or Programs
----------------------------------------------------------------------------------------------------------
<S>                           <C>                    <C>                   <C>            <C>
October 2006                   0                      --                    0              1,077,879
----------------------------------------------------------------------------------------------------------
November 2006                  0                      --                    0              1,077,879
----------------------------------------------------------------------------------------------------------
December 2006                  0                      --                    0              1,077,879
----------------------------------------------------------------------------------------------------------
Total                          0                      --                    0                     --
----------------------------------------------------------------------------------------------------------
</TABLE>



                                       35
<PAGE>


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

The Company's Annual shareholders' meeting was held on November 2, 2006, at
which time the election of Directors was conducted. The following named
individuals were nominated and re-elected as Directors.

                                                   Votes         Votes
                                                    For        Withheld
                                                ----------     ---------
           Dale F. Eck                          14,730,022     1,646,914
           Carl W. Gerst, Jr.                   14,731,032     1,645,904
           James G. Gould                       14,356,789     2,020,147
           John L. Smucker                      14,890,909     1,486,027

           Mr. Smucker was elected to a term expiring in 2007. Messr. Eck, Gerst
           and Gould were elected to terms expiring in 2009. The terms of
           Directors Lawrence A. Sala, Robert U. Roberts, Dr. David Wilemon,
           Matthew S. Robison and Herbert I. Corkin continued after the meeting.

           Additionally, a proposal to amend the Company's 2004 Comprehensive
           Long Term Incentive Plan was approved by a vote of 10,240,900 for,
           3,962,624 against and 339,193 withheld.

           Additionally, the selection of KPMG LLP as the Company's independent
           registered public accounting firm for fiscal 2007 was approved by a
           vote of 15,807,861 for, 563,070 against and 6,005 withheld.

Item 6.    Exhibits

           31    Rule 13a-14(a) Certifications

           32    Section 1350 Certifications



                                       36
<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.

                                  Anaren, Inc.
                                  ------------
                                  (Registrant)


Date:  October 31, 2007             /s/Lawrence A. Sala
                                    -----------------------------------
                                    Lawrence A.Sala
                                    President & Chief Executive Officer


Date:  October 31, 2007             /s/Joseph E. Porcello
                                    -----------------------------------
                                    Joseph E. Porcello
                                    Sr. Vice President of Finance and Treasurer



                                       37