UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2011

|_|   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 checkmark  whether the registrant has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be  submitted  and posted  pursuant to Rule 405 of  regulation  S-T  (Section
232.405 of this  chapter)  during the  preceding  12 months (or for such shorter
period that the registrant  was required to submit and post such files.  Yes |_|
No |_|

Indicate by check mark whether the Registrant is a large  accelerated  filer, an
accelerated  filer, a  non-accelerated  filer, or smaller  reporting company (as
defined in Rule 12b-2 of the Exchange Act).

Check One: Large accelerated filer |_|            Accelerated filer |X|

             Non-accelerated filer |_|    Smaller reporting company |_|

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

      The number of shares of Registrant's Common Stock outstanding on April 25,
2011 was 15,116,657.

<PAGE>

                                  ANAREN, INC.
                                    FORM 10-Q
                                      INDEX

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

    Item 1.  Financial Statements

             Condensed Consolidated Balance Sheets as of                 3
             March 31, 2011 and June 30, 2010 (unaudited)

             Condensed Consolidated Statements of Income                 4
             for the Three Months Ended March 31,
             2011 and 2010 (unaudited)

             Condensed Consolidated Statements of Income                 5
             for the Nine Months Ended March 31,
             2011 and 2010 (unaudited)

             Condensed Consolidated Statements of Cash Flows             6
             for the Nine Months Ended March 31,
             2011 and 2010 (unaudited)

             Notes to Condensed Consolidated Financial                   7 - 13
             Statements (unaudited)

    Item 2.  Management's Discussion and Analysis                        14 - 20
             of Financial Condition and Results of Operations

    Item 3.  Quantitative and Qualitative Disclosures About
             Market Risk                                                 20 -21

    Item 4.  Controls & Procedures                                       21

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

    Item 1A. Risk Factors                                                21

    Item 2.  Unregistered Sales of Equity Securities and Use
             of Proceeds                                                 22

    Item 6.  Exhibits                                                    22

  Officer Certifications                                                 23 - 27


                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                                  ANAREN, INC.
                      Condensed Consolidated Balance Sheets
                        March 31, 2011 and June 30, 2010
                    (in thousands, except per share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                                     March 31,            June 30,
                                                                                                       2011                 2010
                                                                                                     ---------            --------
<S>                                                                                                  <C>                  <C>
                               ASSETS
                               ------
Assets:
      Cash and cash equivalents                                                                      $  57,155            $  50,521
      Securities held to maturity                                                                        7,961                2,334
      Receivables, less an allowance of $358 and $375
         at March 31, 2011 and June 30, 2010, respectively                                              28,547               29,124
      Inventories                                                                                       36,262               31,361
      Prepaid expenses and other current assets                                                          3,915                2,916
      Deferred income taxes                                                                              1,140                1,955
                                                                                                     ---------            ---------
         Total current assets                                                                          134,980              118,211
      Securities available-for-sale                                                                         --                1,051
      Securities held to maturity                                                                       12,563               19,756
      Property, plant, and equipment, net                                                               48,178               48,711
      Other assets                                                                                       1,634                1,031
      Goodwill                                                                                          42,435               42,435
      Other intangible assets, net of accumulated amortization                                           9,259               10,153
                                                                                                     ---------            ---------
           Total assets                                                                              $ 249,049            $ 241,348
                                                                                                     =========            =========

                 LIABILITIES AND STOCKHOLDERS' EQUITY
                 ------------------------------------
Liabilities and Stockholders' Equity:
       Current installments of long-term obligation                                                  $  10,000            $  10,000
       Accounts payable                                                                                  9,516                9,271
       Accrued expenses                                                                                  5,848                5,661
       Customer advance payments                                                                            45                  888
       Other current liabilities                                                                         2,302                2,920
                                                                                                     ---------            ---------
         Total current liabilities                                                                      27,711               28,740
      Deferred income taxes                                                                                331                  726
      Pension and postretirement benefit obligation                                                      7,461                7,083
      Long-term obligation                                                                              20,000               30,000
      Other liabilities                                                                                  1,619                1,873
                                                                                                     ---------            ---------
           Total liabilities                                                                            57,122               68,422
                                                                                                     ---------            ---------
Stockholders' Equity:
       Common stock, $0.01 par value.  Authorized 200,000
       shares; issued 28,981 and 28,506 at March 31, 2011 and
       June 30, 2010, respectively                                                                         290                  285
       Additional paid-in capital                                                                      213,129              206,193
       Retained earnings                                                                               130,268              118,111
       Accumulated other comprehensive loss                                                             (2,017)              (2,813)
                                                                                                     ---------            ---------
                                                                                                       341,670              321,776

         Less 13,864 and 13,811 treasury shares at March 31, 2011                                      149,743              148,850
         and June 30, 2010, respectively, at cost
                                                                                                     ---------            ---------
           Total stockholders' equity                                                                  191,927              172,926
                                                                                                     ---------            ---------
            Total liabilities and stockholders' equity                                               $ 249,049            $ 241,348
                                                                                                     =========            =========
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                       3
<PAGE>

                                  ANAREN, INC.
                   Condensed Consolidated Statements of Income
                   Three Months Ended March 31, 2011 and 2010
                    (in thousands, except per share amounts)
                                   (unaudited)

                                                        2011          2010
                                                       -------       -------
Net Sales                                              $44,015       $42,181
Cost of Sales                                           27,928        25,356
                                                       -------       -------
         Gross profit                                   16,087        16,825
Operating Expenses:
   Marketing                                             2,622         2,407
   Research and development                              4,656         3,999
   General and administrative                            4,521         5,096
                                                       -------       -------
         Total operating expenses                       11,799        11,502
                                                       -------       -------
         Operating income                                4,288         5,323
Other income (expense):
   Interest expense                                       (104)         (129)
   Other, primarily interest income                        139            75
                                                       -------       -------
         Total other income (expense), net                  35           (54)
                                                       -------       -------
         Income before income tax expense                4,323         5,269
Income tax expense                                         925           708
                                                       -------       -------
         Net income                                    $ 3,398       $ 4,561
                                                       =======       =======

Earnings per share:
   Basic                                               $  0.24       $  0.33
                                                       =======       =======
   Diluted                                             $  0.23       $  0.32
                                                       =======       =======

Weighted average common shares outstanding:
   Basic                                                14,123        13,919
                                                       =======       =======
   Diluted                                              14,994        14,328
                                                       =======       =======

      See accompanying notes to condensed consolidated financial statements


                                       4
<PAGE>

                                  ANAREN, INC.
                   Condensed Consolidated Statements of Income
                    Nine Months Ended March 31, 2011 and 2010
                    (in thousands, except per share amounts)
                                   (unaudited)

                                                         2011           2010
                                                       --------       --------
Net Sales                                              $131,997       $123,537
Cost of Sales                                            81,983         77,743
                                                       --------       --------
         Gross profit                                    50,014         45,794
Operating Expenses:
   Marketing                                              7,617          7,006
   Research and development                              12,024         11,140
   General and administrative                            14,384         14,218
                                                       --------       --------
         Total operating expenses                        34,025         32,364
                                                       --------       --------
         Operating income                                15,989         13,430
Other income (expense):
   Interest expense                                        (393)          (451)
   Other, primarily interest income                         436            288
                                                       --------       --------
         Total other income (expense), net                   43           (163)
                                                       --------       --------
         Income before income tax expense                16,032         13,267
Income tax expense                                        3,875          3,328
                                                       --------       --------
         Net income                                    $ 12,157       $  9,939
                                                       ========       ========

Earnings per share:
   Basic                                               $   0.87       $   0.71
                                                       ========       ========
   Diluted                                             $   0.83       $   0.68
                                                       ========       ========

Weighted average common shares outstanding:
   Basic                                                 13,973         14,083
                                                       ========       ========
   Diluted                                               14,712         14,595
                                                       ========       ========

      See accompanying notes to condensed consolidated financial statements


                                       5
<PAGE>

                                  ANAREN, INC.
                 Condensed Consolidated Statements of Cash Flows
                    Nine Months Ended March 31, 2011 and 2010
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                                         2011                2010
                                                                                                       --------            --------
<S>                                                                                                    <C>                 <C>
    CASH FLOWS FROM OPERATING ACTIVITIES:
       Net income                                                                                      $ 12,157            $  9,939
       Adjustments to reconcile net income to net cash
       provided by operating activities:
       Depreciation                                                                                       6,146               6,700
       Loss on disposal of fixed assets                                                                      --                 214
       Amortization                                                                                       1,446                 996
       Deferred income taxes                                                                               (352)               (245)
       Equity-based compensation                                                                          3,215               2,703

       Changes in operating assets and liabilities:
           Receivables                                                                                      577              (3,638)
           Inventories                                                                                   (4,913)              1,874
           Prepaid expenses and other current assets                                                     (1,601)               (722)
           Accounts payable                                                                                 246               1,126
           Accrued expenses                                                                                 187                (389)
           Customer advance payments                                                                       (844)                953
           Other liabilities                                                                               (100)               (702)
           Pension and postretirement benefit obligation                                                    378                (156)
                                                                                                       --------            --------
              Net cash provided by operating activities                                                  16,542              18,653
                                                                                                       --------            --------

   CASH FLOWS FROM INVESTING ACTIVITIES:
       Capital expenditures                                                                              (5,612)             (3,862)
       Escrow claim received for the Unicircuit acquisition                                                  --                 154
       Proceeds from sale of property, plant, and equipment                                                  --                  50
       Maturities of held to maturity and sale of available-for-sale
           securities                                                                                     3,511              11,760
       Purchases of held to maturity securities                                                          (1,057)            (17,918)
                                                                                                       --------            --------
              Net cash used in investing activities                                                      (3,158)             (9,816)
                                                                                                       --------            --------

   CASH FLOWS FROM FINANCING ACTIVITIES:

       Payment on long-term obligation                                                                  (10,000)             (9,800)
       Stock options exercised                                                                            3,555               3,149
       Excess tax benefit from exercise of stock options                                                    183                 214
       Purchase of treasury stock                                                                          (894)             (7,865)
                                                                                                       --------            --------

              Net cash used in financing activities                                                      (7,156)            (14,302)
                                                                                                       --------            --------
   Effect of exchange rates on cash                                                                         406                  17
                                                                                                       --------            --------
              Net increase (decrease) in cash and cash equivalents                                        6,634              (5,448)
   Cash and cash equivalents, beginning of year                                                          50,521              49,893
                                                                                                       ========            ========
   Cash and cash equivalents, end of period                                                            $ 57,155            $ 44,445
                                                                                                       ========            ========


Supplemental disclosures of cash flow information:
    Cash paid during the period for:
       Interest                                                                                        $    359            $    586
                                                                                                       ========            ========
       Income taxes, net of refunds                                                                    $  5,552            $  4,424
                                                                                                       ========            ========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       6
<PAGE>

The condensed  consolidated  financial  statements are unaudited and reflect all
adjustments  (consisting of normal recurring  adjustments)  and accruals,  which
are, in the opinion of  management,  necessary  for a fair  presentation  of the
financial position and operating results for the interim periods.  The condensed
consolidated  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  Annual Report on Form 10-K for the fiscal year ended
June 30,  2010.  The results of  operations  for the three and nine months ended
March 31,  2011 are not  necessarily  indicative  of the  results for the entire
fiscal year ending June 30, 2011, or any future interim period.

The income tax rate utilized for interim  financial  statement  purposes for the
three  months and nine  months  ended March 31,  2011 is based on  estimates  of
income and utilization of tax credits for the entire fiscal year ending June 30,
2011.

(1) Securities

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

<TABLE>
<CAPTION>
                                                                                          March 31, 2011
                                                               ---------------------------------------------------------------------
                                                                                     Gross                Gross
                                                               Amortized           unrealized           unrealized            Fair
(amounts in thousands)                                           Cost                 gains               losses              value
                                                               ---------           ----------           ----------           -------
<S>                                                              <C>                 <C>                 <C>                 <C>
Securities held to maturity:
    Municipal bonds                                              $18,371             $   250             $    --             $18,621
    Corporate bonds                                                2,153                  41                  --               2,194
                                                                 -------             -------             -------             -------
           Total securities held to maturity                     $20,524             $   291             $    --             $20,815
                                                                 =======             =======             =======             =======
</TABLE>

<TABLE>
<CAPTION>
                                                                                          June 30, 2010
                                                               ---------------------------------------------------------------------
                                                                                     Gross                Gross
                                                               Amortized           unrealized           unrealized            Fair
(amounts in thousands)                                           Cost                 gains               losses              value
                                                               ---------           ----------           ----------           -------
<S>                                                              <C>                 <C>                 <C>                 <C>
Securities available-for-sale:
   Auction rate securities                                       $ 1,440             $    --             $  (389)            $ 1,051

Securities held to maturity:
    Municipal bonds                                              $21,088             $   353             $    --             $21,441
    Corporate bonds                                                  503                   4                  --                 507
    Federal agency bonds                                             499                   7                  --                 506
                                                                 -------             -------             -------             -------
           Total securities held to maturity                     $22,090             $   364             $    --             $22,454
                                                                 =======             =======             =======             =======
</TABLE>


                                       7
<PAGE>

Contractual  maturities  of  marketable  debt  securities  held to maturity  are
summarized as follows:

<TABLE>
<CAPTION>
                                                                       March 31, 2011                          June 30, 2010
                                                                ----------------------------            ----------------------------
                                                                                       Fair                                    Fair
                                                                Amortized             market            Amortized             market
                                                                  Cost                value                Cost               value
                                                                ---------            -------            ---------            -------
<S>                                                              <C>                 <C>                 <C>                 <C>
(amounts in thousands)
 Within one year                                                 $ 7,961             $ 8,053             $ 2,334             $ 2,379
 One year to three years                                          12,563              12,762              19,756              20,075
                                                                 -------             -------             -------             -------
     Total                                                       $20,524             $20,815             $22,090             $22,454
                                                                 =======             =======             =======             =======
</TABLE>

Contractual  maturities  of  auction  rate  securities  available  for  sale are
summarized as follows:

<TABLE>
<CAPTION>
                                                                       March 31, 2011                          June 30, 2010
                                                                -----------------------------           ----------------------------
                                                                                       Fair                                    Fair
                                                                                      market                                  market
                                                                  Cost                value                Cost               value
                                                                ---------            -------            ---------            -------
<S>                                                              <C>                 <C>                 <C>                 <C>
(amounts in thousands)
 Within one year                                                 $    --             $    --             $ 1,440             $ 1,051
</TABLE>

(2) Fair Value Measurements

The carrying amount of financial instruments,  including cash, trade receivables
and  accounts  payable,  approximated  their fair value as of March 31, 2011 and
June 30, 2010  because of the short  maturity of these  instruments.  Also,  the
Company's carrying cost for its revolving credit note approximates fair value.

The carrying value of cash equivalents are carried at cost,  which  approximates
fair market value.

The  available-for-sale  security  was sold  during  the  second  quarter  ended
December 31, 2010. The amount  received,  based on the escrow agreement that was
in place between the Company and M. S. Kennedy  Corporation,  was the security's
par value of $1.5 million.

The following table provides the assets and liabilities carried at fair value as
measured on a recurring basis as of March 31, 2011 and June 30, 2010:

(amounts in thousands)

<TABLE>
<CAPTION>
                                                                                                 Significant other      Significant
                                                          Total Carrying    Quoted prices in        observable         unobservable
                                                             Value at        active markets           inputs              inputs
                                                          March 31, 2011        (Level 1)           (Level 2)            (Level 3)
                                                          --------------    ----------------     -----------------     ------------
<S>                                                          <C>                 <C>                 <C>                 <C>
Asset Category

Cash equivalents                                             $ 7,567             $ 7,567             $    --             $    --
</TABLE>

(amounts in thousands)

<TABLE>
<CAPTION>
                                                                                                 Significant other      Significant
                                                          Total Carrying    Quoted prices in        observable         unobservable
                                                             Value at        active markets           inputs              inputs
                                                          June 30, 2010         (Level 1)           (Level 2)            (Level 3)
                                                          --------------    ----------------     -----------------     ------------
<S>                                                          <C>                 <C>                 <C>                 <C>
Asset Category

Cash equivalents                                             $ 5,807             $ 5,807             $    --             $    --

Available-for-sale securities                                  1,051                                                       1,051
</TABLE>


                                       8
<PAGE>

(3)  Intangible Assets

The major components of intangible assets are as follows:



<TABLE>
<CAPTION>
                                                                      March 31, 2011                          June 30, 2010
(amounts in thousands)                                          Gross                 Net                Gross                Net
                                                               Carrying            Carrying            Carrying            Carrying
                                                                Amount              Amount              Amount              Amount
                                                               -------             -------             -------             -------
<S>                                                            <C>                 <C>                 <C>                 <C>
Amortizable intangible assets:
    Customer relationships                                     $ 7,530             $ 5,534             $ 7,530             $ 6,099
    Developed technology                                           780                 364                 780                 481
    Non-competition agreements                                   1,130                 381               1,130                 593
                                                               -------             -------             -------             -------

       Total                                                   $ 9,440             $ 6,279             $ 9,440             $ 7,173
                                                               =======             =======             =======             =======

Non-amortizable intangible assets:
    Trade names                                                                      2,980                                   2,980
                                                                                   -------                                 -------

Total intangible assets                                                            $ 9,259                                 $10,153
                                                                                   =======                                 =======
</TABLE>

Intangible asset amortization  expense for the three months ended March 31, 2011
and 2010  aggregated  $0.3  million in each period and for the nine months ended
March 31, 2011 and 2010  aggregated  $0.9 million in each  period.  Amortization
expense  related to  developed  technology  is  recorded  in cost of sales,  and
amortization  expense for non-compete  agreements and customer  relationships is
recorded in general and administrative expense.

There have been no changes to the goodwill  balance in the three and nine months
ended March 31, 2011.

(4) Inventories

Inventories are summarized as follows:

(amounts in thousands)                        March 31, 2011       June 30, 2010
                                              --------------       -------------
Raw materials                                     $19,144             $17,319
Work in process                                    13,315               9,396
Finished goods                                      3,803               4,646
                                                  -------             -------
                                                  $36,262             $31,361
                                                  =======             =======

(5) Property, Plant, and Equipment

Components of property, plant, and equipment consists of the following:

(amounts in thousands)                        March 31, 2011       June 30, 2010
                                              --------------       -------------
Land and land improvements                        $ 5,167             $ 5,167
Construction in process                             2,727               1,451
Buildings, furniture, and fixtures                 34,441              34,052
Machinery and equipment                            65,945              62,267
                                                  -------             -------
                                                  108,280             102,937
Less accumulated depreciation                     (60,102)            (54,226)
                                                  -------             -------
                                                  $48,178             $48,711
                                                  =======             =======

(6) Accrued Expenses

Accrued expenses consists of the following:


                                       9
<PAGE>

(amounts in thousands)                        March 31, 2011       June 30, 2010
                                              --------------       -------------
Compensation                                      $ 4,868             $ 4,483
Health insurance                                      548                 423
Commissions and other                                 432                 755
                                                  -------             -------
                                                  $ 5,848             $ 5,661
                                                  =======             =======

(7) Other Liabilities

Other liabilities consist of the following:

(amounts in thousands)                        March 31, 2011       June 30, 2010
                                              --------------       -------------
Deferred compensation                             $   395             $   425
Supplemental retirement plan                          737                 670
Accrued lease                                       1,275               1,107
Warranty accrual                                      332                 320
Income tax liability                                  293               1,610
Deferred grant income                                 375                 375
Other                                                 514                 286
                                                  -------             -------
                                                    3,921               4,793
Less current portion                               (2,302)             (2,920)
                                                  -------             -------
                                                  $ 1,619             $ 1,873
                                                  =======             =======

The Company provides warranty policies on its products. In addition, the Company
incurs  costs to service  our  products  in  connection  with  specific  product
performance  issues.  Liabilities for product warranties are based upon expected
future product  performance and durability,  and is estimated largely based upon
historical  experience.  Adjustments  are made to  accruals  as  claim  data and
historical  experience warrant. The changes in product warranty reserves for the
nine months ended March 31, 2011, is as follows:

                (amounts in thousands)
                Balance as of July 1, 2010               $   320
                Additions                                    382
                Costs incurred                              (304)
                Adjustments                                  (66)
                                                         -------
                Balance as of March 31, 2011             $   332
                                                         =======

(8) Long-term Obligation

Borrowings  under a  revolving  credit  note  (Note),  with  Key  Bank  National
Association,  bears interest at the 90-day London inter-bank offer rate (LIBOR),
plus 100 to 425 basis points, or at the Lender's prime rate, minus (100) to plus
225 basis points,  depending  upon the Company's  earnings  before  interest and
taxes and depreciation and amortization  (EBITDA) performance at the end of each
quarter as measured by the  formula:  EBITDA  divided by the Current  Portion of
Long-term Debt plus interest expense.  For the nine months ended March 31, 2011,
the  weighted   average   interest  rate  on  the  outstanding   borrowings  was
approximately  1.60%.  In the nine months ended March 31, 2011, the Company paid
$10.0  million on the Note.  The  Company's  indebtedness  and  obligations  are
guaranteed  by  three  of the  Company's  domestic  subsidiaries,  as well as an
assignment of the Company's interest in its foreign subsidiary.

(9) Earning 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  anti-dilutive  shares  aggregating  13,000 and  1,393,000  for the nine
months ended March 31, 2011 and 2010, 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.


                                       10
<PAGE>

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

<TABLE>
<CAPTION>
                                                                     Three Months Ended                      Nine Months Ended
                                                                     ------------------                      -----------------
                                                                          March 31                                March 31
                                                                          --------                                --------
(amounts in thousands)                                             2011                2010                2011                2010
                                                                 -------             -------             -------             -------
<S>                                                              <C>                 <C>                 <C>                 <C>
Numerator:
Net income                                                       $ 3,398             $ 4,561             $12,157             $ 9,939
                                                                 =======             =======             =======             =======

Denominator:
Denominator for basic earnings per share
outstanding                                                       14,123              13,919              13,973              14,083
                                                                 =======             =======             =======             =======

Denominator for diluted earnings per share:
   Weighted average shares outstanding                            14,123              13,919              13,973              14,083
Common stock options and restricted stock                            871                 409                 739                 512
                                                                 -------             -------             -------             -------

Weighted average shares                                           14,994              14,328              14,712              14,595
                                                                 =======             =======             =======             =======
</TABLE>

(10) Employee Benefit Plans

Defined Benefit Plan

Components  of net  periodic  pension  cost for the three and nine months  ended
March 31, are as follows:

<TABLE>
<CAPTION>
                                                                    Three Months Ended                      Nine Months Ended
                                                                    ------------------                      -----------------
                                                                         March 31                                March 31
                                                                         --------                                --------
                                                                  2011                2010                2011                2010
                                                                -------             -------             -------             -------
<S>                                                             <C>                 <C>                 <C>                 <C>
(amounts in thousands)
Service cost                                                    $    93             $    53             $   279             $   209
Interest cost                                                       210                 194                 630                 594
Expected return on plan assets                                     (215)               (198)               (645)               (572)
Amortization of the unrecognized loss                               120                  63                 360                 229
                                                                -------             -------             -------             -------
Net periodic benefit cost                                       $   208             $   112             $   624             $   460
                                                                =======             =======             =======             =======
</TABLE>

Required  contributions  for fiscal 2011 are  approximately  $0.3 million,  $0.2
million has been paid in the nine months ended March 31, 2011.

Postretirement Health Benefit Plan

Components  of net periodic  postretirement  benefit cost for the three and nine
months ended March 31, are as follows:

<TABLE>
<CAPTION>
                                                                    Three Months Ended                      Nine Months Ended
                                                                    ------------------                      -----------------
                                                                         March 31                                March 31
                                                                         --------                                --------
                                                                  2011                2010                2011                2010
                                                                -------             -------             -------             -------
<S>                                                             <C>                 <C>                 <C>                 <C>
(amounts in thousands)
Service cost                                                    $     9             $    20             $    27             $    60
Interest cost                                                        17                  40                  51                 120
Amortization of the unrecognized loss                               (18)                  1                 (54)                  3
Amortization of the prior service cost                               (5)                 (5)                (15)                (15)
                                                                -------             -------             -------             -------
Net periodic benefit cost                                       $     3             $    56             $     9             $   168
                                                                =======             =======             =======             =======
</TABLE>


                                       11
<PAGE>

Expected  contributions  for fiscal 2011 are estimated to be approximately  $0.1
million.

(11) Other Comprehensive Income

Other Comprehensive Income

Comprehensive income consists of the following:

<TABLE>
<CAPTION>
                                                                     Three Months Ended                      Nine Months Ended
                                                                     ------------------                      -----------------
                                                                          March 31                                March 31
                                                                          --------                                --------
                                                                   2011                2010                2011                2010
                                                                 -------             -------             -------             -------
<S>                                                              <C>                 <C>                 <C>                 <C>
(amounts in thousands)
Net income                                                       $ 3,398             $ 4,561             $12,157             $ 9,939

Other comprehensive income:
   Foreign currency translation gain                                  74                   2                 407                  17
   Mark to market adjustment                                          --                  --                 389                  --
                                                                 -------             -------             -------             -------

Comprehensive income                                             $ 3,472             $ 4,563             $12,953             $ 9,956
                                                                 =======             =======             =======             =======
</TABLE>

Accumulated Other Comprehensive Income (Loss)

The  cumulative  balance of each component of  accumulated  other  comprehensive
income (loss) is as follows:

<TABLE>
<CAPTION>
                                                              Foreign             Minimum            Mark to            Accumulated
                                                             currency             pension             market               other
                                                            translation          liability      available-for-sale     comprehensive
                                                            adjustment           adjustment         securities         income (loss)
                                                            -----------          ----------     ------------------     -------------
<S>                                                          <C>                 <C>                 <C>                 <C>
(amounts in thousands)
Balances at June 30, 2009                                     $ 1,404             $(3,412)            $  (389)            $(2,397)
Current period change                                              62                (478)                 --                (416)
                                                              -------             -------             -------             -------
Balances at June 30, 2010                                     $ 1,466             $(3,890)            $  (389)            $(2,813)
Current period change                                             407                  --                 389                 796
                                                              -------             -------             -------             -------
Balances at March 31, 2011                                    $ 1,873             $(3,890)            $    --             $(2,017)
                                                              =======             =======             =======             =======
</TABLE>

(12) Segment and Related Information

The Company's  two  reportable  segments are the Wireless  Group and the Space &
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 Group designs,  manufactures,  and markets commercial products used
mainly by the wireless communications market. The Space & Defense Group designs,
manufactures,  and  markets  specialized  products  for the  space  and  defense
electronics  markets.  The Company's  Space & Defense Group  aggregates  certain
operating segments into one reportable  segment, as the Company has assessed the
aggregation criteria and have met all requirements for aggregation.


                                       12
<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 &
(amounts in thousands)                                       Wireless            Defense            Unallocated        Consolidated
                                                             --------            --------           -----------        ------------
<S>                                                           <C>                 <C>                 <C>                 <C>
Net sales (Three Months Ended):
     March 31, 2011                                           $15,170             $28,845             $    --             $44,015
     March 31, 2010                                            14,212              27,969                  --              42,181
Net sales (Nine Months Ended):
     March 31, 2011                                            46,294              85,703                  --             131,997
     March 31, 2010                                            41,006              82,531                  --             123,537
Operating income (Three Months Ended)
     March 31, 2011                                             1,864               2,424                  --               4,288
     March 31, 2010 (1)                                         1,867               3,686                (230)              5,323
Operating income (Nine Months Ended)
     March 31, 2011 (1)                                         7,141               9,418                (570)             15,989
     March 31, 2010 (1)                                         3,635              10,419                (624)             13,430
Goodwill and intangible assets:
     March 31, 2011                                            30,716              20,978                  --              51,694
     June 30, 2010                                             30,716              21,872                  --              52,588
</TABLE>

(1)   Unallocated  amounts relate to the lease expense incurred on the Company's
      operating lease located in England.

(13) Subsequent Event

On April 13, 2011,  the Company  entered into a Termination  Agreement  with AML
Communications,  Inc.  (AML) to terminate the Agreement and Plan of Merger dated
February  13,  2011  (the  Merger  Agreement).  The  termination  of the  Merger
Agreement was due to AML's delivery of a Recommendation Change Notice indicating
that AML's Board of  Directors  intended to withdraw its  recommendation  of the
Company's acquisition.  The Company,  pursuant to the Termination Agreement, was
paid a termination fee in the amount of $0.6 million and reimbursed $0.2 million
for expenses  related to the  terminated  transaction  in the fourth  quarter of
fiscal 2011.


                                       13
<PAGE>

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. The following condensed 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 and factors described
in the  Company's  Annual Report on Form 10-K for the fiscal year ended June 30,
2010.

Overview

The consolidated  financial  statements  present the financial  condition of the
Company as of March 31, 2011 and June 30, 2010, and the consolidated  results of
operations  and cash flows of the Company  for the three and nine  months  ended
March 31, 2011 and 2010.

The Company designs,  develops and markets  microwave  components and assemblies
for  the  wireless   communications,   satellite   communications   and  defense
electronics  markets.  The  Company's  distinctive  manufacturing  and packaging
techniques enable it to cost-effectively produce compact,  lightweight microwave
products  for  use in  base  stations  and  subscriber  equipment  for  wireless
communications as well as, in satellites and in defense electronics systems. The
Company  sells  its  products  to  leading  wireless  communications   equipment
manufacturers such as Ericsson,  Motorola Solutions, Nokia Siemens Networks, and
Huawei, and to satellite  communications and defense electronics  companies such
as Boeing Satellite, ITT, Lockheed Martin, Northrop Grumman and Raytheon.

Net sales  generally  are  recognized  when units are  shipped.  Net sales under
certain long-term  contracts of the Space & Defense Group, many of which provide
for periodic payments, are recognized under the percentage-of-completion  method
based on units of delivery. Estimated manufacturing cost-at-completion for these
contracts are reviewed on a routine  periodic  basis,  and  adjustments are made
periodically to the estimated cost-at-completion based on actual costs incurred,
progress made,  and estimates of the costs required to complete the  contractual
requirements.  When the estimated manufacturing  cost-at-completion  exceeds the
contract value,  the contract is written down to its net realizable  value,  and
the loss  resulting from cost overruns is  immediately  recognized.  To properly
match net sales with costs,  certain  contracts  may have revenue  recognized in
excess of billings (unbilled revenues), and other contracts may have billings in
excess of net sales  recognized  (billings in excess of contract  costs).  Under
long-term  contracts,  the  prerequisites  for billing the customer for periodic
payments generally involve the Company's achievement of contractually  specific,
objective milestones (e.g.,  completion of design, testing, or other engineering
phase,  delivery  of  test  data  or  other  documentation,  or  delivery  of an
engineering model or flight hardware).

The Company operates in the wireless  communications,  satellite  communications
and defense  electronics  markets all of which have been affected by the current
economic  climate and  recession.  The United States defense budget has a direct
impact on the level of funding available for programs that the Company currently
participates in or has targeted for future participation.  We continue to assess
the effect of the 2011 defense  budget on these  programs and, to date have seen
little negative  impact on our  anticipated  Space & Defense Group order rate in
fiscal  2011.  The  current  economic  down  turn has  negatively  impacted  the
worldwide Wireless  infrastructure market as the market has delayed or downsized
system expansions and upgrades.  Wireless Group sales have improved in the first
nine months of fiscal 2011 due to strong demand for standard  components.  While
the Company has limited  short-term  visibility for customer demand,  we believe
that demand  should  stabilize at current  levels for the  remainder of calendar
2011.

Fourth Quarter of Fiscal 2011 Outlook

For the fourth  quarter of fiscal 2011, we anticipate  comparable  sales for the
Space & Defense Group and an increase in sales for the Wireless  Group  compared
to third quarter levels.  As a result, we expect net sales to be in the range of
$42 to $46 million. We expect GAAP earnings per diluted share, absent the effect
of any  one-time  events,  to be in  the  range  of  $0.23  -  $0.28,  using  an
anticipated tax rate of approximately 29.5% and inclusive of approximately


                                       14
<PAGE>

$0.05 to $0.06 per share related to expected non-cash equity based  compensation
expense and amortization of intangibles.

Results of Operations

Net sales for the three months ended March 31, 2011 were $44.0 million,  up 4.3%
from sales of $42.2 million for the third quarter of fiscal 2010. Net income for
the third  quarter of fiscal 2011 was $3.4 million,  or 7.7% of net sales,  down
$1.2  million  from net income of $4.6  million  in the third  quarter of fiscal
2010.

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

<TABLE>
<CAPTION>
                                                                    Three Months Ended                     Nine Months Ended
                                                           Mar. 31, 2011       Mar. 31, 2010       Mar. 31, 2011       Mar. 31, 2010
                                                           -------------       -------------       -------------       -------------
<S>                                                            <C>                 <C>                 <C>                 <C>
Net Sales                                                      100.0%              100.0%              100.0%              100.0%

Cost of sales                                                   63.5%               60.1%               62.1%               62.9%
                                                               -----               -----               -----               -----
Gross profit                                                    36.5%               39.9%               37.9%               37.1%
                                                               -----               -----               -----               -----

Operating expenses:
   Marketing                                                     6.0%                5.7%                5.8%                5.7%
   Research and development                                     10.6%                9.5%                9.1%                9.0%
   General and administrative                                   10.2%               12.1%               10.9%               11.5%
                                                               -----               -----               -----               -----
      Total operating expenses                                  26.8%               27.3%               25.8%               26.2%
                                                               -----               -----               -----               -----

Operating income                                                 9.7%               12.6%               12.1%               10.9%
                                                               -----               -----               -----               -----

Other income (expense):

      Interest expense                                          (0.2)%              (0.3)%              (0.3)%              (0.4)%
      Other, primarily interest income                           0.3%                0.2%                0.3%                0.2%
                                                               -----               -----               -----               -----
      Total other income (expense), net                          0.1%               (0.1)%               0.0%               (0.2)%
                                                               -----               -----               -----               -----

Income before income taxes                                       9.8%               12.5%               12.2%               10.7%
Income taxes                                                     2.1%                1.7%                3.0%                2.7%
                                                               -----               -----               -----               -----
   Net income                                                    7.7%               10.8%                9.2%                8.0%
                                                               =====               =====               =====               =====
</TABLE>

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

<TABLE>
<CAPTION>
                                                                   Three Months Ended                       Nine Months Ended
                                                           Mar. 31, 2011       Mar. 31, 2010       Mar. 31, 2011       Mar. 31, 2010
                                                           -------------       -------------       -------------       -------------
<S>                                                           <C>                 <C>                 <C>                 <C>
Wireless                                                      $15,170             $14,212             $ 46,294            $ 41,006
Space and Defense                                              28,845              27,969               85,703              82,531
                                                              -------             -------             --------            --------
     Total                                                    $44,015             $42,181             $131,997            $123,537
                                                              =======             =======             ========            ========
</TABLE>

Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010

Net sales.  Net sales were $44.0  million for the third  quarter ended March 31,
2011,  up 4.3%  compared to $42.2  million for the third quarter of fiscal 2010.
Sales of Wireless Group products rose $1.0 million,  or 6.7%, and sales of Space
& Defense Group products  increased $0.9 million,  or 3.1%, in the current third
quarter compared to the third quarter of fiscal 2010.

The  increase in sales of Wireless  Group  products,  which  consist of standard
components,  ferrite  components  and custom  subassemblies  for use in building
wireless  basestation  and consumer  equipment,  was the result of a substantial
increase in demand for standard Wireless component products in the current third
quarter compared to


                                       15
<PAGE>

the third quarter of fiscal 2010.  Sales of these  products rose $2.6 million in
the current third quarter over third quarter  fiscal 2010 levels on the strength
of continuing orders from both European Original Equipment  Manufacturers  (OEM)
and Asian contract manufacturers.  This increase in standard component sales was
partially  offset by a $1.6  million  decline in custom and ferrite  basestation
products in the current quarter  compared to the third quarter last fiscal year,
resulting  from loss of sales to low cost Asian  vendor  sources  and  decreased
demand for second  generation GSM equipment.  Demand for Wireless Group products
in the fourth  quarter of fiscal 2011 is expected to increase  compared to third
quarter levels.

Space & Defense Group products  consist of custom  components and assemblies for
commercial  and  military   satellites,   as  well  as  radar,   receiver,   and
countermeasure  subsystems  for the  military.  Sales of Space &  Defense  Group
products rose $0.9 million, or 3.1% in the third quarter of fiscal 2011 compared
to the third  quarter of the previous  fiscal year.  This  increase in sales was
attributable to a general rise in Space & Defense Group business due to a higher
rate of  bookings  by the  Group and not any  specific  program  sales.  Space &
Defense  Group  product  sales  continue  to benefit  from the  higher  level of
business won by the Company over the past few fiscal years which has resulted in
the Group's  backlog of $88.0  million  and $89.6  million at March 31, 2011 and
June 30, 2010, respectively.

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 third quarter of fiscal 2011 was
$16.1  million,  (36.5% of net  sales),  down from $16.8  million  (39.9% of net
sales) for the same  quarter of the prior year.  Gross  profit  decreased in the
third  quarter of fiscal  2011 from the third  quarter  of fiscal  2010 due to a
decline  in  margins  for the  Space & Defense  Group.  Margins  in this  group,
declined  5.3  percentage  points  due  to a less  favorable  product  mix  with
increased  material content,  losses  recognized on some initial  engineering to
production contracts and production yield issues due to ongoing expansion at the
Company's Unicircuit subsidiary.  The Group is focused on resolving these issues
over the next quarter of fiscal 2011. In the Wireless Group,  gross margins were
enhanced  by a $2.6  million  increase  in  sales  of  higher  margin,  standard
component products in the current third quarter compared to the same period last
year, which partially offset the decline in Space & Defense Group margins.

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 $2.6 million (6.0%
of net sales) for the third  quarter of fiscal  2011,  up $0.2 million from $2.4
million  (5.7% of net sales) for the third  quarter  of fiscal  2010.  Marketing
expenses in the  current  third  quarter  rose due to higher  personnel  levels,
commission  costs and travel expenses related to the increase in business levels
and additional  advertising  expenditures related to the Anaren Integrated Radio
(AIR) product  introduction in the current fiscal year.  Marketing  expenses are
expected to remain at this level through the fourth quarter.

Research and  Development.  Research and development  (R&D) expenses  consist of
material,  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 $4.7 million
(10.6% of net  sales) in the third  quarter of fiscal  2011,  up 16.4% from $4.0
million (9.5% of net sales) for the third  quarter of fiscal 2010.  Research and
development  expenditures are supporting  further  development of Wireless Group
infrastructure and consumer component  opportunities,  as well as new technology
development in the Space & Defense  Group.  During the second and third quarters
of fiscal 2011, the Company hired additional engineering and technical personnel
to work on funded customer development programs, as well as, further development
of AIR products.  Due to delays in  finalization  of some  contracts  during the
quarter,  these new hires and other  engineering  personnel  were  redirected to
unfunded  development  work. The Company expects to return to previous  research
and development  spending  levels in fiscal 2012, and is presently  working on a
number of new Wireless and Space & Defense Group opportunities.

General and  Administrative.  General  and  administrative  expenses  consist of
employee  related  expenses,  incentive  compensation,   professional  services,
intangible  amortization,  travel  related  expenses and  corporate  acquisition
costs.  General and  administrative  expenses  were $4.5  million  (10.2% of net
sales) for the third quarter of fiscal 2011, down 11.3% from $5.1 million (12.1%
of net sales) for the third quarter of fiscal 2010.  The decrease in the current
quarter resulted from lower personnel costs due to reductions in  administrative
personnel,  declines in the Company bonus accruals and lower expenses related to
the Company's  vacant leased facility in the United Kingdom.  These


                                       16
<PAGE>

reductions,  coupled with the  reallocation  of some  subsidiary  administrative
expenses,  more than off-set $0.2 million in acquisition  expenses  incurred for
the aborted AML Communications, Inc. transaction in the current third quarter.

Operating Income. Operating income declined 19.4% in the third quarter of fiscal
2011 to $4.3 million (9.7% of net sales), compared to $5.3 million (12.6% of net
sales) for the third quarter of fiscal 2010.  This decrease in operating  income
was a result of the Space & Defense  Group's  unfavorable  product  mix,  losses
recognized on some initial engineering to production contracts, production yield
issues at the  Company's  Unicircuit  subsidiary  and the large  increase in R&D
expenditures in both business  segments  during the current quarter  compared to
the third quarter last year.

The Wireless Group operating  income was $1.9 million (12.3% of Group sales) for
the third quarter of fiscal 2011,  unchanged from $1.9 million,  (13.1% of Group
sales) in the third  quarter of fiscal  2010.  The $0.5 million  improvement  in
Wireless  Group gross margin in the third quarter of fiscal 2011 compared to the
third quarter of fiscal 2010,  due to the higher  component  sales  levels,  was
off-set by a $0.4  million  increase in Wireless  Group R&D  spending and a $0.1
million increase in the Group's administrative expense year over year.

Space & Defense Group operating income was $2.4 million (8.4% of Group sales) in
the third quarter of fiscal 2011,  down $1.3 million from $3.7 million (13.2% of
net group  sales) for the third  quarter of fiscal 2010.  Operating  margins for
this Group  decreased  in the  current  third  quarter  due to a less  favorable
product mix, losses recognized on some initial engineering production contracts,
production yield issues at the Company's Unicircuit subsidiary and increased R&D
spending due to a delay in the finalization of some contracts, which resulted in
additional  engineering  personnel being redirected to unfunded development work
in the quarter compared to the third quarter last fiscal year.

Other Income.  Other income  primarily  consists of interest  income received on
invested cash balances and rental  income.  Other income was $0.1 million in the
third  quarter of fiscal 2011  compared to $0.1 million for the third quarter of
last year.  Earnings on invested  cash  balances  were  relatively  flat as both
investable cash and interest rate have remained  relatively  unchanged year over
year.  Other income will fluctuate based on short term market interest rates and
the level of investable cash balances.

Interest  Expense.  Interest  expense  consists  mainly of  interest  on Company
borrowings and deferred items.  Interest  expense in the third quarter of fiscal
2011 was $0.1 million,  unchanged compared to $0.1 million for the third quarter
of  fiscal  2010.  Interest  expense  has  remained  flat due to the  continuing
consistent  and low level of the 90 day London  Inter-Bank  Offer  Rate  (LIBOR)
interest rate for the third quarter of fiscal 2011 compared to the third quarter
of fiscal 2010. The Company's  long-term  obligation  declines by $10 million in
the first quarter of each fiscal year.  These borrowings bear interest at the 90
day LIBOR  rate,  plus 100 to 425 basis  points,  depending  upon the  Company's
rolling twelve month earnings  before  interest and taxes and  depreciation  and
amortization  (EBITDA)  performance.  The  rate is reset  quarterly  and for the
fourth quarter of fiscal 2011 is expected to be approximately 1.30%.

Income  Taxes.  Income  taxes for the  third  quarter  of fiscal  2011 were $0.9
million (2.1% of net sales),  representing an effective tax rate of 21.4%.  This
compares to income tax expense of $0.7 million (1.7% of net sales) for the third
quarter of fiscal 2010, representing an effective tax rate of 13.4%. The current
year quarter's  uncertain tax positions (UTP) was approximately $0.2 million and
favorably  affected the rate for the  quarter.  The  effective  tax rate for the
third quarter of fiscal 2010 was a result of the inclusion of the effects of the
settlement of the IRS examination of the Company's fiscal 2007 and 2008 returns,
as well as,  adjustments  to the balances for UTPs related to the results of the
examination  amounting  to a  reduction  in tax  expense of  approximately  $1.0
million.  The projected effective tax rate for fiscal 2011 is now expected to be
approximately  29.5%. 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 United  States and foreign
taxable income or loss.

Nine Months Ended March 31, 2011 Compared to Nine Months Ended March 31, 2010

Net sales.  Net sales were $132.0  million  for the nine months  ended March 31,
2011,  up 6.8%  compared to $123.5  million  for the first nine of fiscal  2010.
Sales for the Wireless Group rose $5.3 million, or 12.9%, and sales in the Space
& Defense  Group  increased  $3.2  million,  or 3.8%,  in the current first nine
months compared to the first nine months of fiscal 2010.


                                       17
<PAGE>

The  increase  in the  Wireless  Group  sales was the  result  of a  substantial
increase in demand for  standard  component  products in the current  first nine
months compared to the first nine months of fiscal 2010. Sales of these products
rose $11.6  million in the  current  first nine  months of fiscal  2011 over the
first nine  months of fiscal 2010 levels on the  strength of  continuing  orders
from both  European  OEMs and Asian  contract  manufacturers.  This  increase in
standard  component  sales was  partially  offset by a $6.3  million  decline in
custom and  ferrite  basestation  products  in the  current  first  nine  months
compared  to the first nine  months of last fiscal year due to the loss of sales
to low cost Asian vendor sources and decreased demand for second  generation GSM
equipment.  Demand for Wireless  Group  products in the fourth quarter of fiscal
2011 is expected to be higher compared to the first nine month levels.

Sales for the Space & Defense Group rose $3.2 million, or 3.8% in the first nine
months of fiscal 2011  compared to the first nine months of the previous  fiscal
year. This increase resulted from sales of counter-improvised  explosive devices
(IED) related  products  totaling $10.4 million in the current first nine months
compared  to $4.1  million  in the first nine  months of fiscal  2010 and a $1.7
million  increase in hybrid  module sales in fiscal 2011  compared to last year.
This  increase was partially  off-set by a decline in sales of military  printed
wire board  products,  which fell $4.0 million in the current  first nine months
compared to the first nine months of fiscal  2010 due to  production  delays and
inefficiencies  caused by ongoing  capacity  expansion  and  renovations  at the
Company's Unicircuit facility.

Gross  Profit.  Gross  profit for the first nine months of fiscal 2011 was $50.0
million,  (37.9% of net sales),  up from $45.8 million  (37.1% of net sales) for
the same period of the prior year.  Gross profit as a percent of sales increased
in the first nine  months of fiscal 2011 from the first nine months of last year
due to the higher  Wireless Group sales and a more favorable  product mix in the
Wireless  Group.  Wireless  Group gross  margins were enhanced by a $6.3 million
reduction in sales of lower margin,  high material content custom products which
were  replaced by $11.6  million of sales of higher  margin  standard  component
products in the current  nine months  compared to the same period last year.  In
the Space & Defense  Group,  margins  declined  slightly due to a less favorable
product mix and  production  inefficiencies  and yield issues at the  Unicircuit
operation.

Marketing.  Marketing  expenses  were $7.6  million  (5.8% of net sales) for the
first nine months of fiscal 2011, up $0.6 million from $7.0 million (5.7% of net
sales) for the first  nine  months of fiscal  2010.  Marketing  expenses  in the
current  first nine months rose $0.6  million from the first nine months of last
fiscal year due to higher personnel levels, commission costs and travel expenses
related  to  the  increase  in  business   levels  and  additional   advertising
expenditures related to the AIR product introduction in the current fiscal year.

Research and Development.  Research and development  expenses were $12.0 million
(9.1% of net sales) in the first nine months of fiscal 2011,  up 7.9% from $11.1
million  (9.0% of net sales) for the first nine months of fiscal 2010.  Research
and  development  expenditures  are supporting  further  development of Wireless
Group consumer component opportunities, as well as new technology development in
the Space & Defense Group. Research and development  expenditures have increased
in the first nine  months of fiscal  2011  versus the first nine  months of last
year due to the higher level of  opportunities  in the Space & Defense Group and
Wireless Group marketplaces. During the second and third quarters of fiscal 2011
the Company hired  additional  engineering  and  technical  personnel to work on
funded customer  development  programs,  as well as, further  development of AIR
products.  Due to delays in finalization  of some contracts  during the quarter,
these new hires and other  engineering  personnel  were  redirected  to unfunded
development  work. The Company is presently  working on a number of new Wireless
Group and Space & Defense Group opportunities.

General and  Administrative.  General and  administrative  expenses increased to
$14.4  million  (10.9% of net sales) for the first nine  months of fiscal  2011,
from $14.2  million  (11.5% of net  sales)  for the first nine  months of fiscal
2010.  The  increase  in general and  administrative  expense in the first three
quarters  of fiscal  2011  compared  to the first  three  quarters  of last year
resulted from the inclusion of $0.2 million in acquisition expenses incurred for
the aborted AML Communications, Inc. transaction in the current third quarter.

Operating  Income.  Operating income increased 19.1% in the first nine months of
fiscal 2011 to $16.0  million,  (12.1% of net sales),  compared to $13.4 million
(10.9% of net sales) for the first nine months of fiscal 2010.  This increase in
the first three  quarters  of fiscal 2011 from the first three  quarters of last
year was due to the $8.5  million  increase  in sales  volume and the  favorable
product mix caused by the $11.6 million rise in sales of higher margin


                                       18
<PAGE>

standard  components  coupled  with the $6.3  million  decline in sales of lower
margin custom assemblies in the Wireless Group.

On an operating segment basis,  Wireless Group operating income was $7.1 million
(15.4% of group  sales) for the first  three  quarters of fiscal  2011,  up $3.5
million, from the Group's operating income of $3.6 million (8.9% of group sales)
in the first  three  quarters of fiscal  2010.  The  increase in Wireless  Group
operating  income in the first nine months of fiscal  2011  compared to the same
period  of fiscal  2010 was a result of the $5.3  million  overall  increase  in
Wireless Group sales and the combined  impact of the  continuing  decline in low
margin  custom  assembly  sales,  which fell $6.3  million in the  current  nine
months,  and the increased demand for higher margin standard  component products
which rose $11.6 million in the current nine months.

Space & Defense Group  operating  income was $9.4 million (11.0% of Group sales)
in the first nine months of fiscal 2011,  down $1.0  million from $10.4  million
(12.6% of net group sales) for the first nine months of fiscal  2010.  Operating
margins for this Group  decreased in the current first nine months due to a less
favorable product mix, losses recognized on some initial engineering  production
contracts,  production  yield issues due to ongoing  expansion at the  Company's
Unicircuit  facility  and  increased  group R&D  spending  due to a delay in the
IridiumNext  contract  finalization,  which  resulted in additional  engineering
personnel being redirected to unfunded development work in the current period.

Other Income. Other income increased to $0.4 million in the first nine months of
fiscal  2011  compared  to $0.3  million for the first nine months of last year.
This increase was a result of a lengthening  of the  maturities of the Company's
investment  portfolio  resulting  in 50%  increase in average  return as well as
higher interest rates on funds held in China.  Other income will fluctuate based
on short term market interest rates and the level of investable cash balances.

Interest  Expense.  Interest expense in the first nine months of fiscal 2011 was
$0.4 million  compared to $0.5 million for the first nine months of fiscal 2010.
The Company currently has $30.0 million outstanding on its long-term obligation.
These  borrowings  bear interest at the 90 day LIBOR rate, plus 100 to 425 basis
points,  depending upon the Company's  rolling twelve month EBITDA  performance.
The rate is  reset  quarterly  and for the  fourth  quarter  of  fiscal  2011 is
expected to be approximately 1.30%.

Income  Taxes.  Income  taxes for the first nine months of fiscal 2011 were $3.9
million (2.9% of net sales),  representing an effective tax rate of 24.2%.  This
compares to income tax expense of $3.3 million (2.7% of net sales) for the first
nine months of fiscal 2010,  representing  an effective  tax rate of 25.1%.  The
projected  effective tax rate for fiscal 2011 is approximately 29.5% compared to
an actual  effective tax rate of 26.1% for fiscal 2010. 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 United States and foreign taxable income or loss.

Critical Accounting Policies

There  have been no  changes  to the  Company's  critical  accounting  policies,
estimates, or judgments from those discussed in the Company's 2010 Annual Report
on Form 10-K.

Liquidity and Capital Resources

Net cash  provided  by  operations  in the first nine  months of fiscal 2011 was
$16.5  million  and  resulted  primarily  from net income  before  depreciation,
amortization  and non-cash equity based  compensation  expense,  which more than
off-set a $4.9 million  increase in inventory.  The increase of inventory is due
to the long lead times required for some of the Space & Defense Group programs.

Net cash  provided  by  operations  in the first nine  months of fiscal 2010 was
$18.7 million and resulted from the net income before depreciation  amortization
and non-cash equity based compensation  expense,  plus a $1.9 million decline in
inventory.  The  positive  cash  flow  from  earnings  for the nine  months  was
partially  off-set by a $3.6  million  increase  in  receivables  due to heavier
shipments in the last half of the third quarter.

Net cash used in  investing  activities  in the nine months ended March 31, 2011
was  $3.2  million  and  consisted  of $5.6  million  used  to pay  for  capital
additions,  which was  partially  off-set by $2.4  million  provided  by the net
maturities of marketable  debt and sale of  available-for-sale  securities.  Net
cash used in investing activities in the


                                       19
<PAGE>

first nine months of fiscal 2010 was $9.8 million and  consisted of $6.2 million
from the net  purchases  of  marketable  debt  securities,  in  addition to $3.9
million used to pay for capital additions.

Net cash used in  financing  activities  in the nine months ended March 31, 2011
was $7.2 million and consisted of $10.0  million used to pay long-term  debt and
$0.9 million used to purchase  approximately  53,000 treasury shares,  partially
offset by $3.7  million  generated by cash  receipts  and tax benefits  from the
exercise of stock  options.  Net cash used in financing  activities in the first
nine months of fiscal 2010 was $14.3  million and consisted of $9.8 million used
to pay long-term  debt and $7.9 million used to purchase  approximately  557,000
treasury shares, partially offset by $3.4 million generated by cash receipts and
tax benefits from the exercise of stock options.

During  the next  twelve  months,  the  Company  anticipates  that its main cash
requirement  will  be for  capital  expenditures,  continued  repurchase  of the
Company's  common stock and the $10.0 million  principal  payment on its line of
credit due in July 2011.  Capital  expenditures for the remainder of fiscal 2011
and the first  half of  fiscal  2012 are  expected  to be in the range of 4 to 5
percent of sales and will be funded from existing cash and investments.

The Company may  continue to  repurchase  shares of its common stock in the open
market and/or through privately negotiated  transactions under the current Board
authorization,  depending on market conditions and restricted stock vesting.  At
March 31, 2011,  there were  approximately  463,000 shares  remaining  under the
current Board repurchase authorization.

At March 31, 2011,  the Company had  approximately  $77.7 million in cash,  cash
equivalents,  and marketable securities.  The Company has had positive operating
cash flow for over ten years,  and believes that its cash  requirements  for the
foreseeable  future will be satisfied by currently  invested  cash  balances and
expected cash flows from operations.

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.  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.

As of March 31, 2011,  the Company had cash,  cash  equivalents  and  marketable
securities of $77.7 million, all of which consisted of highly liquid investments
in  marketable  debt  securities.  The  marketable  debt  securities  at date of
purchase have maturities  within 3 years,  are exposed to interest rate risk and
will  decrease  in value if  market  interest  rates  increase.  A  hypothetical
decrease in market  interest rate of 10.0% from March 31, 2011 rates, or 0.035%,
would have reduced net income by approximately  $7,000, or $.0005 net income per
diluted share for the quarter and would have reduced cash flow by  approximately
$7,000 in the quarter. Due to the relatively short maturities of the securities,
continuing  current  unprecedented low market rates and the Company's 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 operations.  Over time,  however,  declines in
interest rate will reduce the Company's interest income.

As of March 31, 2011,  the Company had $30.0 million in  outstanding  debt under
its  revolving  line of  credit  with Key Bank  National  Association.  The line
consists of a $50,000,000  revolving credit note for which principal amounts are
due on August 1, 2011, and on each anniversary date thereafter  through July 31,
2013.  Borrowings under this Note bear interest at LIBOR,  plus 100 to 425 basis
points or at the  Lender's  prime rate,  minus  (100) to plus 225 basis  points,
depending  upon the Company's  EBITDA  performance at the end of each quarter as
measured by the formula: EBITDA divided by the current portion of long-term debt
plus interest  expense.  For the three months ended March 31, 2011, the weighted
average interest rate on the outstanding  borrowings was 1.30%. Interest expense
for these  borrowings  is exposed to  interest  rate risk and will  increase  if
market  interest rates rise. A hypothetical  increase in market interest rate of
10.0% from March 31,  2011  rates,  or 0.13%,  would have  reduced net income by
approximately  $10,000,  or $.0007 net income per diluted  share for the quarter
and would have reduced cash flow by approximately $10,000 in the quarter. Due to
the Company's significant cash reserves and historical


                                       20
<PAGE>

positive  operating  cash flow,  the Company  does not believe that an immediate
increase in  interest  rates would have a  significant  effect on its  financial
condition  or results of  operations.  Over time,  however,  increases in market
interest rates will increase the Company's interest expense.

Forward-Looking Cautionary Statement

The Private Securities  Litigation Reform Act of 1995 provides a safe harbor for
"forward-looking  statements"  made by or on behalf of the Company.  We may from
time  to time  make  written  or oral  statements  that  are  "forward-looking,"
including  statements  contained  in this  report  and  other  filings  with the
Securities  and  Exchange  Commission  and in reports to our  shareholders.  All
forward-looking  statements  are made on the  basis of  management's  views  and
assumptions  regarding future events and business performance as of the time the
statements  are made and the Company does not undertake any obligation to update
its disclosure  relating to forward looking  matters.  Actual results may differ
materially from those expressed or implied.  The  uncertainties and risk factors
that could affect our Company,  its  business and actual  results are  described
throughout this filing and in our 2010 Annual Report on Form 10-K under the Item
1A, "Risk Factors."

Item 4. Controls and Procedures

A. Disclosure Controls and Procedures

An evaluation of the  effectiveness of the design and operation of the Company's
disclosure  controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the  Securities  Exchange Act of 1934,  as amended  ("Exchange  Act")) was
carried out under the  supervision and with the  participation  of the Company's
management,  including the President and Chief  Executive  Officer and the Chief
Financial  Officer ("the  Certifying  Officers") as of March 31, 2011.  Based on
that evaluation, the Certifying Officers concluded that the Company's disclosure
controls and procedures were effective as of March 31, 2011.

B. Changes in Internal Control Over Financial Reporting

There  were no changes  in the  registrant's  internal  control  over  financial
reporting  during our fiscal quarter to which this Quarterly Report on Form 10-Q
relates that have materially  affected,  or are reasonably  likely to materially
affect, internal control over financial reporting.

PART II OTHER INFORMATION

Item 1A. Risk Factors

The Company is exposed to certain risk factors that may affect 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. There have been no
material changes from the risk factors as previously  disclosed in the Company's
Annual Report on Form 10-K.


                                       21
<PAGE>

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

(c) Issuer Purchases of Equity Securities

On November 5, 2007, the Board of Directors increased by an additional 2,000,000
the number of shares that the Company was  authorized  to repurchase in the open
market or by privately negotiated  transactions through its previously announced
stock repurchase program.  The program (originally  announced on March 5, 2001),
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  March  31,  2011,  approximately  463,000  shares  remained  authorized  for
purchase, depending on market conditions.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
           Period            Total Number of Shares    Average Price Paid per   Total Number of Shares      Maximum Number (or
                              (or Units) Purchased        Share (or Unit)       (or Units) Purchased as     Approximate Dollar
                                                                                   Part of Publicly        Value) of Shares (or
                                                                                  Announced Plans or      Units) that May Yet Be
                                                                                       Programs             Purchased Under the
                                                                                                             Plans or Programs
--------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                       <C>                       <C>                     <C>
January 2011                                     --                        --                        --                  463,759
--------------------------------------------------------------------------------------------------------------------------------
February 2011                                   420                     20.03                       420                  463,339
--------------------------------------------------------------------------------------------------------------------------------
March 2011                                       --                        --                        --                  463,339
--------------------------------------------------------------------------------------------------------------------------------
Total                                           420                     20.03                       420                  463,339
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Item 6.         Exhibits

                31         Rule 13a-14(a) Certifications

                32         Section 1350 Certifications


                                       22
<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: April 29, 2011                 /s/ Lawrence A. Sala
                                     -------------------------------------------
                                     Lawrence A.Sala
                                     President & Chief Executive Officer

Date: April 29, 2011                 /s/ George A. Blanton
                                     -------------------------------------------
                                     George A. Blanton
                                     Sr. Vice President, Chief Financial Officer
                                     and Treasurer


                                       23