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, 1997

[ ]  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 MICROWAVE, 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

                                       N/A
(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 __

     The number of shares of Registrant's Common Stock outstanding on May 2,
1997 was 4,110,842.

<PAGE>

                             ANAREN MICROWAVE, INC.

                                      INDEX

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

  Item 1.    Financial Statement (Unaudited)

             Consolidated Balance Sheets                                   3
             March 31, 1997 and June 30, 1996

             Consolidated Statements of Earnings                           4
             Three months ended March 31, 1997 and
             March 31, 1996

             Consolidated Statements of Earnings                           5
             Nine months ended March 31, 1997 and
             March 31, 1996

             Consolidated Statements of Cash Flows -                       6
             Nine months ended March 31, 1997 and
             March 31, 1996

             Notes to Consolidated Condensed Financial
             Statements - March 31, 1997                                   7


  Item 2.    Management's Discussion and Analysis                          10
             of Financial Condition and Results of Operations

  PART II - OTHER INFORMATION

  Item 6.    Exhibits and Reports on Form 8-K                              14


                                       2
<PAGE>

                             ANAREN MICROWAVE, INC.
                                AND SUBSIDIARIES

                      Consolidated Condensed Balance Sheets
                        March 31, 1997 and June 30, 1996

                                                    Unaudited
             Assets                               Mar. 31, 1997   June 30, 1996
                                                  -------------   -------------
Current assets:
    Cash and cash equivalents                     $  3,248,789    $  1,739,569
    Receivables, less allowance of $13,000           5,706,066       5,167,996
    Refundable income Taxes                               --           320,945
    Inventories                                      8,332,561       7,210,320
    Prepaid expenses                                   212,219         255,723
                                                  ------------    ------------
          Total current assets                      17,499,635      14,694,553

Property, plant and equipment                       29,590,795      28,925,878
    Less accumulated depreciation 
      and amortization                             (22,811,062)    (21,871,008)
                                                  ------------    ------------
          Net property, plant and equipment          6,779,733       7,054,870

Other assets, net                                       93,693          43,793
                                                  ------------    ------------
                                                  $ 24,373,061    $ 21,793,216
                                                  ============    ============

    Liabilities and Stockholders' Equity
Current liabilities:
    Current installments of long-term debt        $    241,782    $    394,633
    Accounts payable                                 1,433,822         663,848
    Accrued expenses                                   577,693         471,665
    Customer advance payments                        1,152,627         250,000
                                                  ------------    ------------
                Total current liabilities            3,405,924       1,780,146

Postretirement benefit obligation                    1,138,215       1,138,215
Long-term debt, less current installments              566,668         680,001
                                                  ------------    ------------
                Total liabilities                    5,110,807       3,598,362
Stockholders' equity:
    Common stock of $.01 par value.  Authorized
    12,000,000 shares; issued 5,002,116 shares
    at March 31, 1997 and 4,992,116 shares
    at June 30, 1996                                    50,021          49,921
    Additional paid-in capital                      15,529,738      15,507,088
    Retained earnings                                5,694,572       4,649,922
                                                  ------------    ------------
                                                    21,274,331      20,206,931
    Less cost of 892,274 shares in treasury
      at March 31, 1997 and June 30, 1996           (2,012,077)     (2,012,077)
                                                  ------------    ------------

                Total stockholders' equity          19,262,254      18,194,854
                                                  ------------    ------------

                                                  $ 24,373,061    $ 21,793,216
                                                  ============    ============

See accompanying notes to consolidated condensed financial statements.


                                       3
<PAGE>

                             ANAREN MICROWAVE, INC.
                                AND SUBSIDIARIES
                  Consolidated Condensed Statements of Earnings

                                                        Unaudited
                                                  For the Quarter Ended:
                                            Mar. 31, 1997       Mar. 31, 1996
                                            (Current Year)     (Preceding Year)
                                            --------------     ----------------

Net sales                                    $6,059,502           $ 4,101,685 
                                                                 
Costs and expenses                                               
   Costs of sales                             3,995,195             2,913,676
   Marketing, including sales commissions       895,667               831,023
   General and administrative                   562,119               528,676
   Research and development                     149,548               228,996
   Restructuring                                   --                 810,000
                                             ----------           ----------- 
                                                                 
   Total costs and expenses                   5,602,529             5,312,371
                                             ----------           ----------- 
                                                                 
Operating earnings (loss)                       456,973            (1,210,686)
                                                                 
Other income                                     27,701                38,736
Interest expense                                (19,941)              (25,845)
                                             ----------           ----------- 
                                                                 
Earnings before income taxes                    464,733            (1,197,795)
                                                                 
Total taxes on income                              --                    --
                                             ----------           ----------- 
                                                                 
Net earnings                                 $ 464,733            $(1,197,795)
                                             ==========           =========== 
                                                                 
Earnings (loss) per share                    $     .11            $      (.30)
                                             ==========           =========== 
                                                                 
Dividends per share                          $    --              $      --
                                             ==========           =========== 
                                                               
See accompanying notes to consolidated financial statements.


                                       4

<PAGE>

                             ANAREN MICROWAVE, INC.
                                AND SUBSIDIARIES
                  Consolidated Condensed Statements of Earnings

                                                          Unaudited
                                                   For the Nine Months Ended:
                                                Mar. 31, 1997     Mar. 31, 1996
                                               (Current Year)   (Preceding Year)
                                               --------------   ----------------
Net sales                                       $ 16,438,865      $ 12,992,779 
                                                                
Costs and expenses                                              
    Costs of sales                                11,048,482         8,467,920
    Marketing, including sales commissions         2,326,077         2,296,744
    General and administrative                     1,630,079         1,570,284
    Research and development                         379,801           989,413
    Restructuring                                       --             810,000
                                                ------------      ------------ 
    Total costs and expenses                      15,384,439        14,134,361
                                                ------------      ------------ 
Income (loss) from operations                      1,054,426        (1,141,582)
                                                                
Other income                                          63,087           120,058
Interest expense                                     (72,863)          (99,480)
                                                ------------      ------------ 
Earnings (loss) before income taxes                1,044,650        (1,121,004)
                                                                
Total taxes on income                                   --                --
                                                ------------      ------------ 
Net earnings (loss)                             $  1,044,650      $ (1,121,004)
                                                ============      ============
Earnings per share                              $        .25      $       (.28)
                                                ============      ============
Dividends per share                             $       --        $       --
                                                ============      ============
                                                               
See accompanying notes to consolidated financial statements.


                                       5

<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES
                 Consolidated Condensed Statements of Cash Flows
                               Nine Months Ended:
                        March 31, 1997 and March 31, 1996

                                                         1997           1996
                                                     -----------    -----------
Cash Flows From Operating Activities:
     Net income                                      $ 1,044,650    $(1,121,004)
     Adjustments to reconcile net income
       to net cash provided by
       operating activities:
         Depreciation and amortization of
           property, plant and equipment                 940,054      1,226,800
         Provision for losses on contracts                  --         (588,031)
         Amortization of intangibles                       3,518         25,477
         Loss on sale of equipment                          --          135,443
         Changes in:
           Receivables                                  (538,070)     2,017,203
           Refundable income taxes                       320,945           --
           Inventories                                (1,122,241)      (165,813)
           Prepaid expenses                               43,504        (80,607)
           Accounts payable                              769,974       (261,979)
           Accrued expenses                              106,028        333,351
           Customer advance payments                     902,627           --
           Other assets                                  (53,418)          --
                                                     -----------    -----------
             Net cash provided by
               operating activities                    2,417,571      1,520,840

Cash Flows From Investing Activities:
     Capital expenditures                               (664,917)      (636,121)
                                                     -----------    -----------
             Net cash provided (used in)
               investing activities                     (664,917)      (636,121)

Cash Flows From Financing Activities:
     Principal payments on long-term debt               (266,184)      (517,193)
     Net borrowings under revolving line
       of credit and overdrafts                             --           (4,631)
     Proceeds from issuance of common stock               22,750        400,738
                                                     -----------    -----------
             Net cash provided by (used in)
               financing activities                     (243,434)      (121,086)

             Net increase (decrease) in cash
               and cash equivalents                    1,509,220        763,633

Cash and cash equivalents at beginning of period       1,739,569      2,139,795
                                                     -----------    -----------
Cash and cash equivalents at end of period           $ 3,248,789    $ 2,903,428
                                                     ===========    ===========

SUPPLEMENTAL DISCLOSURES OF
  CASH FLOW INFORMATION:
     Cash Paid During the Period For:
       Interest                                      $    59,011    $    84,486
                                                     ===========    ===========
       Income taxes                                  $      --      $      --
                                                     ===========    ===========

See accompanying notes to consolidated condensed financial statements.


                                       6
<PAGE>

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

The accompanying financial statements and notes should be read in conjunction
with the consolidated financial statements and related notes contained in the
Company's annual report for the year ended June 30, 1996.

In the opinion of the Company, the accompanying unaudited consolidated condensed
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as of
March 31, 1997 and the results of operations and cash flows for the nine months
ended March 31, 1997 and March 31, 1996.

The income tax rate for interim statement purposes is based on estimates of
income and tax credits for the entire year.

NOTE 1:  Inventories

         Inventories at March 31, 1997 and June 30, 1996 are summarized as
         follows:

                                                    Mar. 31           June 30
                                                    -------           -------
           Raw materials                          $ 3,489,775       $ 3,027,700
           Work in process                          3,760,279         3,031,441
           Finished goods                           1,082,507         1,151,179
                                                  -----------         ---------
                                                  $ 8,332,561       $ 7,210,320
                                                  ===========       ===========

NOTE 2:  Property, Plant and Equipment

         Property, plant and equipment at March 31, 1997 and June 30,
         1996 are shown in the following summary:

                                                    Mar. 31           June 30
                                                    -------           -------
           Land and land improvements             $ 1,362,050       $ 1,362,050
           Buildings and improvements               5,120,245         5,120,245
           Machinery and equipment                 23,108,500        22,443,583
                                                  -----------       -----------
                                                  $29,590,795       $28,925,878
                                                  ===========       ===========


                                       7

<PAGE>

NOTE 3:  Long-Term Debt

         Long-term debt at March 31, 1997 and June 30, 1996 is comprised of the
         following:

                                                    Mar. 31           June 30
                                                    -------           -------
           Term loan payable, due in         
           semi-annual installments
           through May 1, 2000                      $  793,334       $     --
           
           75% of prime rate Industrial
           Development Revenue Bonds, due
           in semi-annual installments
           through May 1, 2000                            --            906,668
           
           Capitalized lease obligations                15,116          167,966
           Revolving line of credit                       --               --
                                                    ----------       ----------
                                                    $  808,450       $1,074,634
           
           Less Current Installments                   241,782          394,633
                                                    ----------       ----------
                                                    $  566,668       $  680,001
                                                    ==========       ==========

NOTE 4:  Per Share Data

         Per share data are based on a weighted average of 4,104,375 common
         shares issued and outstanding.

NOTE 5:  Income Taxes

         Effective June 27, 1993, the Company adopted the provisions of
         Statement of Financial Accounting Standards No. 109, "Accounting for
         Income Taxes" on a prospective basis. The cumulative effect of the
         initial adoption of Statement 109 was insignificant. Under the asset
         and liability method of Statement 109, deferred tax assets and
         liabilities are recognized for the future tax consequences attributable
         to differences between the financial statement carrying amounts of
         existing assets and liabilities and their respective tax bases and
         operating loss and tax credit carry forwards. Deferred tax assets and
         liabilities are measured using enacted tax rates.

         Pursuant to the deferred method under APB Opinion 11, which was applied
         in fiscal 1993 and prior years, deferred income taxes are recognized
         for income and expense items that are reported in different years for
         financial reporting purposes and income tax purposes using the tax rate
         applicable in the year of the calculation. Under the deferred method,
         deferred taxes are not adjusted for subsequent changes in tax rates.

 
                                        8
<PAGE>

         Deferred tax assets and liabilities at March 31, 1997 and June 30, 1996
         are summarized as follows:

                                                       Mar. 31        June 30
                                                    -----------     -----------
           Gross deferred tax assets                $ 2,053,110     $ 2,408,291
           Less valuation allowance                  (1,288,522)     (1,643,703)
                                                    -----------     -----------
           Net deferred tax assets                      764,588         764,588
                                                                   
           Gross deferred tax liabilities              (764,588)       (764,588)
                                                    -----------     -----------
           Net deferred taxes                       $         0     $         0
                                                                  
         The valuation allowance for the deferred tax assets as of March 31,
         1997 and June 30, 1996 was $1,288,522 and $1,643,703, respectively. The
         net change in the total valuation allowance for the nine months ended
         March 31, 1997 was a decrease of $355,181. In assessing the
         realizability of deferred tax assets, management considers whether it
         is more likely than not that some portion or all of the deferred tax
         assets will not be realized. The ultimate realization of deferred tax
         assets is dependent upon the generation of future taxable income during
         the periods in which those temporary differences become deductible.
         Management considers the scheduled reversal of deferred tax
         liabilities, projected future taxable income, and tax planning
         strategies in making this assessment. Based upon the level of
         historical taxable income and projections for future taxable income
         over the periods which the deferred tax assets are deductible,
         management believes it is more likely than not the Company will realize
         the benefits of these deductible differences, net of the existing
         valuation allowances at March 31, 1997.


                                       9

<PAGE>

Management's Discussion and Analysis of Financial Condition and Results of
Operations

Results of Operations

Results of operations for the third quarter and first nine months of fiscal 1997
were highlighted by continuing increases in sales of the Company's commercial
products and a significant rise in net earnings. Net sales for the third quarter
ended March 31, 1997 were $6,059,502, up 48% from sales of $4,101,685 for the
same period in fiscal 1996, while net sales for the first nine months of fiscal
1997 were $16,438,865, up 27% over the first nine months of the previous year.
The Company recorded net earnings of $464,733 for the third quarter of fiscal
1997, compared to a net loss of ($1,197,795) for the same quarter in fiscal
1996, while earnings for the first nine months of fiscal 1997 were $1,044,650,
compared to a loss of ($1,121,004) for the same period in the previous year.

The following table sets forth the Company's net sales by product lines for the
nine months ended March 31, 1997 and 1996.

                                                          Nine Months Ended
                                                           (in thousands)
                                                       Mar. 31         Mar. 31
                                                         1997            1996
                                                         ----            ----
      Electronic Warfare                               $ 5,761         $ 7,792
      Radar and Telecommunications                       6,127           3,928
      Wireless                                           4,551           1,273
                                                       -------         -------
                                                       $16,439         $12,993
                                                       =======         =======
                                                               
Net sales historically associated with particular product lines may not be
indicative of future trends because of the relative size of individual orders
and changes in the Company's emphasis on specific product lines.

During the first nine months of fiscal 1997, sales of Wireless and Radar and
Telecommunications products rose $3,278,000 and $2,200,000, respectively,
compared to the first half of the previous year, while sales of Electronic
Warfare products fell $2,032,000, resulting in the overall sales increase of
$3,446,000, or 27%.

Sales of Wireless products, which are mainly components for use in building
cellular base station equipment, rose $3,278,000 in the first nine months of
fiscal 1997, a 258% increase over sales of $1,273,000 for the first nine months
of fiscal 1996. The rise in sales in this product area is currently being driven
by increased shipments of custom base station components being manufactured for
Lucent Technologies, Inc., Motorola, Inc. and Nortel, Inc. under a number of
production orders totaling over $4,000,000, received in the latter half of
fiscal 1996 and the first half of fiscal 1997. Shipments under these contracts
totaled over $2,600,000 in the first nine months of fiscal 1997, compared to
less than $100,000 in the first nine months of the previous year. Additionally,
sales of off-the-shelf surface mount catalog components rose approximately
$500,000 in the first nine months of fiscal 1997, compared to the same period in
fiscal 1996, as customer demand continues to increase for these products.

New order for Wireless products totaled approximately $4,050,000 during the
first nine months of fiscal 1997, resulting in a firm backlog of $3,240,000 at
March 31, 1997, compared to $3,735,000 at June 30, 1996, all of which is
expected to ship in the fourth quarter of fiscal 1997 and the first quarter of
fiscal 1998.

Through the first nine months of fiscal 1997, orders for new wireless products
were running slightly behind shipment levels due to a delay in the receipt of a
follow-on annual base station component order from Motorola, Inc. This order,
which has an annual shipment value in excess of $4,100,000, was received in mid
April 1997. It is the Company's intention to book this order at approximately
25% per quarter over the next twelve months as the customer's actual production
requirements are realized.


                                       10
<PAGE>

Shipments of Radar and Telecommunication products, which consist of custom
commercial multi-layer components such as butler matrices and beamforming
networks for commercial telecommunication satellites, increased $2,200,000 to
$6,127,000 in the first nine months of fiscal 1997 compared to $3,928,000 in the
same period in the previous year. This substantial rise in shipments is
attributed to sales of over $3,000,000 for contract engineering design work on
two beamformer networks for commercial satellite applications for Space Systems
Loral and Martin Marietta Overseas Corp. Shipments in the first nine months of
fiscal 1997 included approximately $128,000 in billing for initial design work
on these two programs.

Of the remaining $3,800,000 shipped in the first three quarters of fiscal 1996,
approximately $2,600,000 represented initial product under the Iridium program
and $960,000 represented remaining production for the Ground Based Radar
program, both of which were being built for Raytheon Company. These two programs
together accounted for approximately $2,300,000 in shipments in the first nine
months of fiscal 1997, down approximately $1,360,000 from fiscal 1996 levels, as
the Iridium program is in its final production phase and the Ground Based Radar
program is in the spares supply phase.

New orders for Radar and Telecommunications products totaled over $15,870,000 in
the first nine months of fiscal 1997. The largest of these orders was a firm
fixed price contract for over $6,000,000 from Martin Marietta Overseas Corp. for
the design and production of antenna beamforming networks for the Asia Cellular
Satellite Systems (ACeS). The ACeS system is a space based cellular
communications system, to serve Asia via two geosynchronous satellites. Firm
backlog for this product line at March 31, 1997 was $13,824,000 up 223% from
$4,125,000 at June 30, 1996. Of this amount approximately $3,100,000 is expected
to ship during the remaining three months of fiscal 1997 and the remainder in
fiscal 1998.

Sales of Electronic Warfare products fell $2,031,000 to $5,761,000 in the first
nine months of fiscal 1997 compared to $7,792,000 in the same period of the
previous year. Shipments in this business area, which include Digital Frequency
Discriminators (DFD's), Digital RF Memories (DRFM's) ESM Receivers and Microwave
Integrated Circuit Components (MIC's), have been steadily declining over the
past three fiscal years due to the continuing decline in the overall worldwide
defense market. The drop in sales in the first nine months of fiscal 1997 was
spread over all the above mentioned product areas and was a result of the
completion of one of the Company's remaining large DFD programs in fiscal 1996
and a general 25% decline in demand for off-the-shelf catalog military MIC's
during the last quarter of fiscal 1996 and the first nine months of fiscal 1997.

New orders for Electronic Warfare products totaled approximately $6,905,000 in
the first half of fiscal 1997 and firm backlog for this product area was
$16,780,000 at March 31, 1997. Of this amount, $12,230,000 represented one order
from the ASPJ Joint Venture Team of ITT Avionics and Northrop/Grumman for
foreign sales of the Airborne Self Protection Jammer System. This order should
serve to help stabilize sales in this business area when shipments begin in the
last quarter of the current fiscal year.

Net earnings for the first nine months of fiscal 1997 were $1,044,650, compared
to a net loss of ($1,121,004) for the first three quarters of fiscal 1996. The
net loss for the prior year include a one time charge totalling $810,000 to
recognize the cost of the divestiture of the Company's Electronic Warfare
Simulator manufacturing operation in England and an operating loss of
($311,000). This improvement in earnings was a result of the 27% rise in
revenues and was achieved despite a two percentage point decline in gross
margins and a small increase in both marketing and general and administrative
costs, due to a 62% decline and research and development costs as compared to
the same period in fiscal 1996.

Gross margin on sales for the first six months of fiscal 1997 was 33% compared
to 35% for the first nine months of fiscal 1996. This decline was a direct
result of lower margins on initial product runs of Wireless custom components
during the period due to excess scrap costs and significant rework costs
incurred in repairing production units above normal experience levels


                                       11
<PAGE>

during the first nine months of fiscal 1997. The Company expects that gross
margins will improve during the remaining quarter of fiscal 1997 and in fiscal
1998.

Research and development expense was $380,000 for the first nine months of
fiscal 1997, down $609,000 from $989,000 for the same period in fiscal 1996.
This decline resulted from a significant increase in customer funded engineering
design work in both the Electronic Warfare and Radar and Telecommunications
groups during the period which consumed all available engineering resources in
these groups. Customer funded design and development work in the first three
quarters of fiscal 1997 represented approximately $4,900,000 in sales, a
four-fold increase over engineering revenues of $1,130,000 in the first three
quarters of fiscal 1996. Additionally, the Company is currently participating in
a Technology Reinvestment Program through Raytheon Company, for the Advanced
Research Project Agency of the United States Government. Under this project, the
Company was reimbursed for approximately $202,000 of research and development
costs incurred during the second and third quarters of fiscal 1997 for
investigating the development of manufacturing processes for thin, multilayer
(flat panel) antenna. This program is expected to run through the remainder of
fiscal 1997 and all of fiscal 1998 at the rate of approximately $125,000 per
quarter.

Current internal research and development efforts are being targeted on adapting
existing Company technologies to produce new Wireless component products which
fit a specific customer's requirements. Future research and development
expenditures are expected to fluctuate based on sales levels, identified market
opportunities, customer funding for custom engineering development projects and
the level of government supported research and development projects.

Marketing and general and administrative expenses, varied little in the first
nine months of fiscal 1997 compared to the first nine months of fiscal 1996 as
there was little change in personnel or support services between the two nine
month periods. Presently, the Company expects that Marketing expense will rise
with sales volume during the remainder of fiscal 1997 and into fiscal 1998 in
order to meet the competitive demands of the Wireless marketplace, while general
and administrative expense is expected to remain in the range of the first nine
months levels and generally trend higher for the remainder of the current fiscal
year and into fiscal 1998.

Interest expense fell 27% in the first nine months of fiscal 1997 compared to
the same period in fiscal 1996. The decline in interest expense reflects the
continuing reduction in long-term debt over the past year. During this same
period, other income was down 57% due to lower investable cash balances during
the current year compared to the previous fiscal year.

Consolidated income tax expense was $0 in the first six months of fiscal 1997
versus an expected tax expense of approximately $355,181 based on 34% of
earnings before income taxes. The difference between the actual tax expense
recognized in the financial statements and the expected tax calculated on net
income was due to a decrease in the deferred tax asset valuation allowance
required by the new tax accounting rules (FAS No. 109) adopted by the Company at
the beginning of fiscal 1994. Under the new tax accounting rules the Company
must assess the realizability of deferred tax assets, considering whether it is
more likely than not that some portion or all of the deferred tax assets will be
realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income in the period in which those temporary
differences become deductible. Management of the Company has considered the
scheduled reversal of deferred tax liabilities and projected future taxable
income in making the assessment of the realizability of the deferred tax asset
balances at March 31, 1997. Based upon the level of historical taxable income
and projections for future taxable income over the periods which the deferred
tax assets are deductible, the Company believes it is more likely than not that
it will realize the benefit of these deductible differences, net of the existing
valuation allowances at March 31, 1997.

Liquidity and Capital Resources

At March 31, 1997, the Company had net working capital of $14,094,000, which
included $3,249,000 in cash and cash equivalents, compared to working capital of
$12,914,000, which 


                                       12
<PAGE>

included cash and cash equivalents of $1,740,000, at June 30, 1996. Net cash
surplus was $1,509,000 for the first three quarters of fiscal 1997 compared to a
net cash surplus of $764,000 in the first nine months of fiscal 1996. Cash flow
was positive in the first three quarters of fiscal 1997 due mainly to the growth
in earnings and accounts payable, and the receipt of a $321,000 tax refund from
the U.S. government and an increase in advance payments from customers of over
$900,000 during the period.

During the remainder of fiscal 1997, the company's major cash requirements will
be for additions to capital equipment and repayment of long-term debt. Capital
equipment additions for the current year have been budgeted at $1,000,000 and,
through the first nine months of fiscal 1997, approximately $665,000 has been
expended, all of which was funded by cash generated from operations. Capital
equipment additions for the remainder of fiscal 1997 will continue to be funded
through cash generated by operations as projected operating cash flows are
expected to be more than adequate to meet these financing needs.

In fiscal 1995, the Company maintained a revolving line of credit with a bank
which provided for principal drawings of up to $3,500,000. This credit agreement
carried interest on outstanding borrowings at the prime rate plus 3/4% and was
secured by all assets of the Company which were not otherwise pledged under
other agreements. This credit facility expired at December 31, 1994. In October
1996, the Company signed an agreement for a new credit facility with a bank
providing for a $3,000,000 working capital revolving line of credit bearing
interest at prime + 1% maturing on November 30, 1998, and a $907,000 term loan
payable in semi-annual installments of $113,333 through May, 2000, bearing
interest at prime plus 1.25%. The proceeds of the term loan were used to
refinance the existing loans of the Company other than capitalized lease
obligations, while the revolving credit facility will be used to supplement
short-term working capital needs brought about by the expected growth in
production and sales volume. Borrowings under the new credit facility are
secured by substantially all assets of the Company.

The Company believes that its cash requirements for the foreseeable future will
be satisfied by currently invested cash balances, expected cash flow from
operations and funds available under its credit facilities.

Forward-looking Information

Statements contained in this Form 10-Q regarding fiscal 1997 and 1998, other
than historical facts, are forward-looking statements within the meaning of the
Private Securities Litigation Act of 1995 that involve risks and uncertainties
that could cause actual results to differ materially from those projected.

In particular, statements regarding future results of operations, shipments,
margins and research and development, marketing, general and administrative and
tax expenses, involve a number of risks and uncertainties. Among the factors
that could cause actual results to differ materially are the following: general
economic conditions; the level of worldwide spending on military defense
products; competitive factors such as rival component manufactures' competing
technologies; acceptance of new company products; price pressures; the company's
ability to invest in new product development and new processes and its ability
to integrate these processes in its manufacturing operation; manufacturing
capacity and the ability to "ramp" to meet anticipated demand; engineering
development costs; availability of third party supplier parts at reasonable
prices; obsolescence of inventory due to changes in customer demand;
efficiencies of manufacturing processes; and availability of financial resources
to fund anticipated growth.

The Company believes it has the products, personnel, facilities, and financial
resources to achieve the proposed results, but future revenues, margins and
profits are all influenced by a number of risk factors, including but not
limited to those discussed above.


                                       13
<PAGE>

Item 6.             Exhibits and Reports on Form 8-K

Item 6(a)           Exhibits

Exhibit No. 27      Financial Data Schedule for the nine month period ended 
                    March 31, 1997.

Item 6(b)           Reports on Form 8K

The registrant was not required to file an 8-K during the current fiscal period.


                                       14
<PAGE>

                                   SIGNATURES

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

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


Date:  May 6, 1997                     S/Hugh A. Hair
                                       -------------------------------------
                                       Chairman & Chief Executive Officer



Date:  May 6, 1997                     S/Joseph E. Porcello
                                       --------------------------------------
                                       Vice President of Finance & Controller


                                       15
<PAGE>

                                  Exhibit Index

Number                                Description
------                                -----------

27                   Financial Data Schedule for the nine month period ended
                     March 31, 1997.


                                       16