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 September 30, 2009
                               ------------------

__    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
       East Syracuse, New York                               13057
       -----------------------                             ---------
        (Address of principal                             (Zip Code)
          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 October
26, 2009 was 14,928,614.

<PAGE>

                                  ANAREN, INC.
                                    FORM 10-Q
                                      INDEX

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

     Item 1.  Financial Statements

              Condensed Consolidated Balance Sheets as of                3
              September 30, 2009 and June 30, 2009 (unaudited)

              Condensed Consolidated Statements of Income                4
              for the Three Months Ended September 30,
              2009 and 2008 (unaudited)

              Condensed Consolidated Statements of Cash Flows            5
              for the Three Months Ended September 30,
              2009 and 2008 (unaudited)

              Notes to Condensed Consolidated Financial                  6 - 13
              Statements (unaudited)

     Item 2.  Management's Discussion and Analysis                       14 - 18

              of Financial Condition and Results of Operations

     Item 3.  Quantitative and Qualitative Disclosures About Market Risk 19

     Item 4.  Controls & Procedures                                      19 - 20

PART II - OTHER INFORMATION

     Item 1A. Risk Factors                                               20

     Item 6.  Exhibits                                                   20

Officer Certifications                                                   21 - 25


                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1.     Financial Statements

                                  ANAREN, INC.
                      Condensed Consolidated Balance Sheets
                      September 30, 2009 and June 30, 2009
                    (in thousands, except per share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                     September 30,   June 30,
                                                                          2009         2009
                                                                     -------------  ---------
                            ASSETS
                            ------
<S>                                                                    <C>          <C>
Assets:
     Cash and cash equivalents                                         $  52,815    $  49,893
     Securities held to maturity                                           5,977       11,810

     Receivables, less an allowance of $0.4 million at
        September 30, 2009 and June 30, 2009                              26,303       24,466
     Inventories                                                          34,939       35,282
     Prepaid expenses and other current assets                             3,496        4,033
     Deferred income taxes                                                 1,383        1,547
                                                                       ---------    ---------
        Total current assets                                             124,913      127,031
     Securities available-for-sale                                         1,050        1,050
     Securities held to maturity                                           2,067        2,079
     Property, plant, and equipment, net                                  51,960       52,889
     Deferred income taxes                                                    27           27
     Goodwill                                                             42,635       42,635
     Other intangible assets, net of accumulated amortization             11,046       11,344
                                                                       ---------    ---------
     Total assets                                                      $ 233,698    $ 237,055
                                                                       =========    =========

             LIABILITIES AND STOCKHOLDERS' EQUITY
             ------------------------------------
Liabilities and Shareholders' Equity:
      Current installments of long-term obligation                     $  10,000    $   9,800
      Accounts payable                                                     8,953        6,991
      Accrued expenses                                                     3,419        5,208
      Deferred income taxes                                                  100          177
      Customer advance payments                                               75          118
      Other current liabilities                                            2,409        2,525
                                                                       ---------    ---------
        Total current liabilities                                         24,956       24,819
                                                                       ---------    ---------
     Deferred income taxes                                                 2,743        2,103
     Pension and postretirement benefit obligation                         6,726        6,496
     Long-term obligation                                                 30,000       40,000
     Other liabilities                                                     2,731        2,692
                                                                       ---------    ---------
     Total liabilities                                                    67,156       76,110
                                                                       ---------    ---------
Stockholders' Equity:
      Common stock, $0.01 par value.  Authorized 200,000
      shares;  issued  28,191 and 28,007 at September  30, 2009
      and June 30, 2009, respectively                                        282          280
      Additional paid-in capital                                         202,790      199,597
      Retained earnings                                                  107,256      104,399
      Accumulated other comprehensive loss                                (2,383)      (2,397)
                                                                       ---------    ---------
                                                                         307,945      301,879
       Less 13,280 and 13,251  treasury shares at September 30, 2009
         and June 30, 2009, respectively, at cost                        141,403      140,934
                                                                       ---------    ---------
        Total stockholders' equity                                       166,542      160,945
                                                                       ---------    ---------
      Total liabilities and stockholders' equity                       $ 233,698    $ 237,055
                                                                       =========    =========
</TABLE>

      See accompanying notes to condensed consolidated financial statements


                                       3
<PAGE>

                                  ANAREN, INC.
                   Condensed Consolidated Statements of Income
                 Three Months Ended September 30, 2009 and 2008
                    (in thousands, except per share amounts)
                                   (unaudited)

                                                           2009          2008
                                                         --------      --------
Net Sales                                                $ 40,337      $ 38,124
Cost of Sales                                              25,673        26,460
                                                         --------      --------
        Gross profit                                       14,664        11,664

Operating Expenses:
   Marketing                                                2,363         2,093
   Research and development                                 3,608         3,085
   General and administrative                               4,480         4,560
                                                         --------      --------
        Total operating expenses                           10,451         9,738
                                                         --------      --------
        Operating income                                    4,213         1,926

Other income (expense):
   Interest expense                                          (183)         (266)
   Other, primarily interest income                           127           404
                                                         --------      --------
        Total other income (expense), net                     (56)          138
                                                         --------      --------
        Income before income tax expense                    4,157         2,064
Income tax expense                                          1,300           722
                                                         --------      --------
        Net income                                       $  2,857      $  1,342
                                                         ========      ========

Earnings per share:
   Basic                                                 $   0.20      $   0.09
                                                         ========      ========
   Diluted                                               $   0.19      $   0.09
                                                         ========      ========

Weighted average common shares Outstanding:
      Basic                                                14,117        14,131
                                                         ========      ========
      Diluted                                              14,795        14,268
                                                         ========      ========

      See accompanying notes to condensed consolidated financial statements


                                       4
<PAGE>

                                  ANAREN, INC.
                 Condensed Consolidated Statements of Cash Flows
                 Three Months Ended September 30, 2009 and 2008
                                 (in thousands)
                                   (unaudited)

                                                             2009        2008
                                                           --------    --------
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income                                           $  2,857    $  1,342
      Adjustments to reconcile net income to net cash
      provided by operating activities:
      Depreciation                                            2,104       1,878
      Loss on disposal of fixed assets                           10           4
      Amortization                                              344         383
      Deferred income taxes                                     305        (267)
      Equity based compensation                                 702       1,066

      Changes in operating assets and liabilities:
         Receivables                                         (1,836)      2,261
         Inventories                                            350        (316)
         Prepaid expenses and other current assets              101        (656)
         Accounts payable                                     1,962        (671)
         Accrued expenses                                    (1,788)       (487)
         Customer advance payments                              (43)       (505)
         Other liabilities                                      344         868
         Pension and postretirement benefit obligation          230          84
                                                           --------    --------
           Net cash provided by operating activities          5,642       4,984
                                                           --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Capital expenditures                                   (1,188)     (1,834)
      Payment for  purchase of M. S.  Kennedy and
         Unicircuit, net of cash acquired                        --     (47,296)
      Proceeds from sale of property, plant,
         and equipment                                            3          --
      Maturities  of held to maturity  and
         available-for-sale  securities                       5,800       9,224
      Purchases  of held to  maturity  and
         available-for-sale securities                           --      (2,127)
                                                           --------    --------
           Net cash provided by (used in)
              investing activities                            4,615     (42,033)
                                                           --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
      Payments on mortgage payable                               --      (1,210)
      Payment on note payable                                (9,800)
      Proceeds from note payable                                 --      49,800
      Stock options exercised                                 2,729          92
      Excess tax benefit from exercise of stock options         191           5
      Purchase of treasury stock                               (469)     (5,014)
                                                           --------    --------
           Net cash used in financing activities             (7,349)     43,673
                                                           --------    --------
Effect of exchange rates on cash                                 14          --
                                                           --------    --------
           Net increase in cash and cash equivalents          2,922       6,624
Cash and cash equivalents, beginning of year                 49,893      10,711
                                                           --------    --------
Cash and cash equivalents, end of period                   $ 52,815    $ 17,335
                                                           ========    ========

Supplemental disclosures of cash flow information:
  Cash paid during the period for:
       Interest                                            $    278    $     20
                                                           ========    ========
       Income taxes, net of refunds                        $    180    $     --
                                                           ========    ========

     See accompanying notes to condensed consolidated financial statements


                                       5
<PAGE>

                                  ANAREN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

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, 2009.  The results of operations  for the three months ended  September
30, 2009 are not  necessarily  indicative  of the results for the entire  fiscal
year ending June 30, 2010, or any future interim period.

The income tax rates utilized for interim financial  statement  purposes for the
nine months ended  September  30, 2009 and 2008 are based on estimates of income
and utilization of tax credits for the entire fiscal year ending June 30, 2010.

The Company  evaluated all events or transactions  that occurred after September
30,  2009 up  through  October  30,  2009,  the date the  Company  issued  these
financial  statements.  During  this  period,  the  Company  did  not  have  any
recognizable subsequent events.

(1) New Accounting Pronouncements

In October 2009,  new  accounting  guidance was issued related to the accounting
for revenue  recognition  from  arrangement  with  multiple  deliverables.  This
guidance  removes  the  objective-and-reliable-evidence-of-fair-value  criterion
from the separation criteria used to determine whether an arrangement  involving
multiple  deliverables  contains  more  than  one unit of  accounting,  replaces
references to "fair value" with  "selling  price" to  distinguish  from the fair
value measurements  required under the "Fair Value Measurements and Disclosures"
guidance,  provides a hierarchy  that  entities must use to estimate the selling
price, eliminates the use of the residual method for allocation, and expands the
ongoing  disclosure  requirements.  This  update is  effective  for the  company
beginning  July 1, 2011 and can be  applied  prospectively  or  retrospectively.
Management is currently  evaluating the effect that adoption of this update will
have, if any, on the Company's condensed  consolidated financial statements when
it becomes effective in 2012.

In September 2009, new accounting guidance was issued, which permits entities to
measure the fair value of certain investments,  including those with fair values
that are not readily determinable, on the basis of the net asset value per share
of the investment (or its equivalent) if such net asset value is calculated in a
manner    consistent   with   the    measurement    principles   in   "Financial
Services-Investment  Companies" as of the reporting  entity's  measurement  date
(measurement of all or  substantially  all of the underlying  investments of the
investee  in  accordance  with the "Fair  Value  Measurements  and  Disclosures"
guidance).  The update also requires  enhanced  disclosures about the nature and
risks of  investments  within  its scope  that are  measured  at fair value on a
recurring or nonrecurring  basis.  The Company does not believe that this update
will have a material effect on the Company's  condensed  consolidated  financial
position and results of operations.

In  January  2009,  new   accounting   guidance  which  requires  more  detailed
disclosures  about  employers'  plan  assets,  including  employers'  investment
strategies, major categories of plan assets,  concentrations of risk within plan
assets, and valuation  techniques used to measure the fair value of plan assets.
Other than for some  additional  disclosures  in the Annual Report on Form 10-K,
adoption of this  guidance  will not have an effect on the  Company's  condensed
consolidated financial statements.


                                       6
<PAGE>

                                  ANAREN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

In November  2008,  new  accounting  guidance was  proposed  that relates to the
milestone method of revenue recognition.  This guidance would define a milestone
and to determine whether an entity may recognize  consideration  earned from the
achievement  of a milestone  in the period in which the  milestone  is achieved.
This Issue applies to revenue  arrangements  under which a vendor  satisfies its
performance  obligations  to  a  customer  over  a  period  of  time,  when  the
deliverable or unit of accounting is not within the scope of other authoritative
literature,  and when  the  arrangement  consideration  is  contingent  upon the
achievement  of a milestone.  The Company is currently  evaluating the impact of
this guidance on the condensed consolidated financial statements.

(2) Equity Based Compensation
The  components  of  equity-based  compensation  expense  in the  statements  of
earnings are as follows:

                                                             Three Months Ended
(amounts in thousands)                                           September 30
                                                           ---------------------
                                                            2009           2008
                                                           ------         ------
Stock option                                               $  218         $  549
Restricted stock                                              484            517
                                                           ------         ------
      Stock-based compensation                             $  702         $1,066
                                                           ======         ======

(3) Securities

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

                                                September 30, 2009
                                 -----------------------------------------------
                                                Gross       Gross
                                 Amortized   unrealized  unrealized
(amounts in thousands)             cost         gains      losses     Fair value
                                 ---------   ----------  ----------   ----------
Securities available-for-sale:
   Auction rate securities         $1,440     $    --     $  (390)    $ 1,050

Securities held to maturity:
   Municipal bonds                 $8,044     $   225     $    --     $ 8,269

                                                  June 30, 2009
                                 -----------------------------------------------
                                                Gross       Gross
                                 Amortized   unrealized  unrealized
(amounts in thousands)             cost         gains      losses     Fair value
                                 ---------   ----------  ----------   ----------
Securities available-for-sale:
   Auction rate securities        $ 1,440     $    --     $  (390)    $ 1,050

Securities held to maturity:
   Municipal bonds                $13,889     $   310     $    --     $14,199

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

                                  September 30, 2009        June 30, 2009
                                 ----------------------------------------------
                                                Fair                    Fair
                                 Amortized     market    Amortized     market
(amounts in thousands)            cost         value       cost        value
                                 ---------    --------  ----------   ----------
 Within one year                  $ 5,977     $ 6,116     $11,810     $12,075
 One year to five years             2,067       2,153       2,079       2,124
                                  -------     -------     -------     -------
    Total                         $ 8,044     $ 8,269     $13,889     $14,199
                                  =======     =======     =======     =======


                                       7
<PAGE>

                                  ANAREN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

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

                                     September 30, 2009        June 30, 2009
                                     -------------------------------------------
                                                   Fair                    Fair
                                                  market                  market
(amounts in thousands)                Cost        value       Cost        value
                                     --------    --------    -------     -------
 One year to five years               $1,440      $1,050      $1,440      $1,050

The Company  owns one auction  rate  security.  The security has gone to auction
once  every 365 days,  and  since  September  2008,  the  security  has not been
purchased.  Therefore based on the outlook of the auction  process,  the Company
has recorded the security as long term.

(4) Fair Value Measurements

The  carrying  amount  of  financial   instruments,   including  cash  and  cash
equivalents,  trade  receivables and accounts payable,  approximated  their fair
value  as of  September  30,  2009  because  of  the  short  maturity  of  these
instruments.  Also,  the Company's  carrying cost for its revolving  credit note
approximates fair value.

Valuations on certain  instruments  are  prioritized  into three broad levels as
follows.  Level 1 inputs are quoted prices  (unadjusted)  in active  markets for
identical  assets or  liabilities.  Level 2 inputs are quoted prices for similar
assets and liabilities in active markets, quoted prices for identical or similar
assets in markets that are not active,  inputs other than quoted prices that are
observable for the asset or liability,  including  interest rates,  yield curves
and credit risks, or inputs that are derived principally from or corroborated by
observable  market data  through  correlation.  Level 3 inputs are  unobservable
inputs based on our own  assumptions  used to measure assets and  liabilities at
fair value. A financial asset or liability's  classification is determined based
on the lowest level input that is significant to the fair value measurement.

The following table provides the assets and liabilities carried at fair value as
measured on a recurring basis as of September 30, 2009:

 (amounts in thousands)
                                                       Significant
                       Total Carrying                     other     Significant
                          Value at    Quoted prices in  observable  unobservable
                        September 30,   Active markets    inputs       inputs
                            2009          (Level 1)      (Level 2)    (Level 3)
                       -------------- ---------------- -----------  ------------
Available for sale
   securities              $1,050          $   --          $  --       $1,050

Valuation Techniques.

In the first quarter ended September 30, 2008, the Company acquired this Level 3
security,  noted  in the  table  above,  with an  estimated  fair  value of $1.4
million. As of September 30, 2009, this security was valued at $1.1 million. The
Company's  available-for-sale  security is a debt  security that is traded in an
inactive  market.  After  analyzing the  underlying  assets and structure of the
student loan auction rate  security,  the Company has  determined  that the most
appropriate  method of deriving a value  indication  was a discounted  cash flow
analysis.  The  Company  found  that  collateral   characteristics,   redemption
probability,  credit rating,  and discount  rates are the most  important  value
drivers to determine an estimated fair value of the underlying security,  and is
classified within Level 3 of the valuation hierarchy.


                                       8
<PAGE>

                                  ANAREN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

(5) Intangible Assets

The major components of intangible assets are as follows:

                                         September 30, 2009     June 30, 2009
                                         ------------------  ------------------
 (amounts in thousands)                   Gross       Net      Gross      Net
                                         Carrying  Carrying  Carrying  Carrying
                                          Amount    Amount    Amount    Amount
                                         --------  --------  --------  --------
Amortizable intangible assets:
   Customer relationships                $ 7,530   $ 6,664   $ 7,530   $ 6,852
   Developed technology                      780       598       780       637
   Non-competition agreements              1,130       804     1,130       875
                                         -------   -------   -------   -------
      Total                              $ 9,440   $ 8,066   $ 9,440   $ 8,364
                                         =======   =======   =======   =======

Non-amortizable intangible assets:
   Trade names                                       2,980               2,980
                                                   -------             -------
Total intangible assets                            $11,046             $11,344
                                                   =======             =======

Intangible asset amortization expense for the three month period ended September
30, 2009 and 2008 aggregated $0.3 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 in the  carrying  amount of  goodwill  for the three
months ended September 30, 2009.

(6) Inventories

Inventories are summarized as follows:


(amounts in thousands)                    September 30, 2009     June 30, 2009
                                          -------------------    -------------
Raw Materials                                   $19,742             $18,533
Work in process                                  11,344              12,664
Finished goods                                    3,853               4,085
                                                -------             -------
                                                $34,939             $35,282
                                                =======             =======

(7) Property, Plant, and Equipment

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

(amounts in thousands)                     September 30, 2009    June 30, 2009
                                          -------------------    -------------
Land and land improvements                      $  5,260            $  5,260
Construction in process                            1,224                 964
Buildings, furniture, and fixtures                33,913              33,872
Machinery and equipment                           59,593              58,865
                                                --------            --------
                                                  99,990              98,961
Less accumulated depreciation                    (48,030)            (46,072)
                                                --------            --------
                                                $ 51,960            $ 52,889
                                                ========            ========


                                       9
<PAGE>

                                  ANAREN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

(8) Accrued Expenses

Accrued expenses consists of the following:

(amounts in thousands)                     September 30, 2009    June 30, 2009
                                          -------------------    -------------
Compensation                                     $2,056             $3,638
Commissions                                         639                760
Health insurance                                    590                685
Other                                               134                125
                                                 ------             ------
                                                 $3,419             $5,208
                                                 ======             ======

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

(9) Other Liabilities

Other liabilities consists of the following:

(amounts in thousands)                     September 30, 2009    June 30, 2009
                                           ------------------    -------------
Deferred compensation                             $   232            $   243
Supplemental Retirement Plan                          604                584
Accrued lease                                       1,053              1,184
Warranty accrual                                      422                434
Income tax liability                                1,942              1,747
Deferred revenue                                      375                375
Interest                                              176                350
Other                                                 336                300
                                                  -------            -------
                                                    5,140              5,217
Less current portion                               (2,409)            (2,525)
                                                  -------            -------
                                                  $ 2,731            $ 2,692
                                                  =======            =======

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.  Liability 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 the carrying  amount of product
warranty reserves for the quarter ended September 30, 2009, is as follows:

(amounts in thousands)
Balance as of June 30, 2009                                               $ 434
Additions                                                                   139
Costs incurred                                                             (137)
Adjustments                                                                 (14)
                                                                          -----
Balance as of September 30, 2009                                          $ 422
                                                                          =====

(10) Debt

Borrowings under the revolving credit note (Note), at the Company's choice, bear
interest at LIBOR, plus 100 to 425 basis points, or at Keybank 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 September 30, 2009, the weighted  average interest rate on the outstanding
borrowings was approximately 1.3%.


                                       10
<PAGE>

                                  ANAREN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

In the first quarter ending  September,  30, 2009, the Company paid $9.8 million
on the Note.

(11) 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  antidilutive  shares aggregating 604,000 and 2,078,000 at September 30,
2009 and 2008,  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.

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

                                                     For the Three Month Ended
                                                           September 30,
                                                     -------------------------
(amounts in thousands)                                 2009              2008
                                                     -------           -------
Numerator:
Earnings available to common stockholders            $ 2,857           $ 1,342
                                                     =======           =======
Denominator:
Denominator  for basic  earnings  per share
outstanding                                           14,117            14,131
                                                     =======           =======
Denominator for diluted earnings per share:
   Weighted average shares outstanding                14,117            14,131
Common stock options and restricted stock                678               137
                                                     -------           -------
Weighted average shares                               14,795            14,268
                                                     =======           =======

(12)  Employee Benefit Plans

Defined Benefit Plan

Components of net periodic  pension cost for the three months ended September 30
are as follows:

(amounts in thousands)                                      2009           2008
                                                           -----          -----
Service cost                                               $  78          $  60
Interest cost                                                200            180
Expected return on plan assets                              (187)          (220)
Amortization of unrecognized loss                             83             10
                                                           -----          -----
Net periodic pension cost                                  $ 174          $  30
                                                           =====          =====

Required  contributions  for fiscal 2010 are estimated to be approximately  $0.7
million.

Postretirement Health Benefit Plan

Components of net periodic postretirement benefit cost for the three months
ended September 30 are as follows:

(amounts in thousands)                                          2009       2008
                                                                ----       ----
Service cost                                                    $ 20       $ 17
Interest cost                                                     40         40
Amortized loss                                                     1          1
Amortization of unrecognized prior service cost                   (5)        (4)
                                                                ----       ----
   Net periodic postretirement benefit cost                     $ 56       $ 54
                                                                ====       ====

Expected  contributions  for fiscal 2010 are estimated to be approximately  $0.1
million.


                                       11
<PAGE>

                                  ANAREN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

(13)  Other Comprehensive Income

Other Comprehensive Income

Comprehensive income consists of the following:

                                                             Three Months Ended
                                                                September 30
                                                            --------------------
(amounts in thousands)                                       2009          2008
                                                            ------        ------
Net income                                                  $2,857        $1,342

Other comprehensive income:
   Foreign currency translation gain                            14            18
   Mark to market adjustment                                    --           280
                                                            ------        ------

Comprehensive income                                        $2,871        $1,640
                                                            ======        ======

Accumulated Other Comprehensive Income (Loss)

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

                                                         Mark to
                                 Foreign     Minimum      Market    Accumulated
                                 currency    pension    Available      other
                               translation  liability    for Sale  comprehensive
                                adjustment  adjustment  Securities income (loss)
                               -----------  ----------  ---------- -------------
(amounts in thousands)
Balances at June 30, 2008         $ 1,370    $(1,529)     $  (185)   $  (344)
Current period change                  35     (1,883)        (205)    (2,053)
                                  -------    -------      -------    -------
Balances at June 30, 2009         $ 1,405    $(3,412)     $  (390)   $(2,397)
Current period change                  14         --           --         14
                                  -------    -------      -------    -------
Balances at September 30, 2009    $ 1,419    $(3,412)     $  (390)   $(2,383)
                                  =======    =======      =======    =======

(14) Segment and Related Information

The Company  operates  predominately in the wireless  communications,  satellite
communications,  and space and defense  electronics  markets.  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 of the
business 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  operating
segments depict similar products,  customers,  industries and experience similar
margins on products.


                                       12
<PAGE>

                                  ANAREN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

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):
    September 30, 2009                     $14,411    $25,926     $  --       $40,337
    September 30, 2008                      19,702     18,422        --        38,124
Operating income (Three Month Ended) (1)
    September 30, 2009                       1,231      3,050       (68)        4,213
    September 30, 2008                       1,134        967      (175)        1,926
Goodwill and intangible assets:
    September 30, 2009                      30,716     22,965        --        53,681
    June 30, 2009                           30,716     23,263        --        53,979
</TABLE>

(1)   Unallocated  amounts  relates to the lease expense  incurred on the London
      lease.


                                       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   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,
2009.

Overview

The consolidated  financial  statements  present the financial  condition of the
Company as of September 30, 2009 and June 30, 2009, and the consolidated results
of operations and cash flows of the Company for the three months ended September
30, 2009 and 2008.

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,  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 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 using the units of delivery  method.  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).

Second Quarter of Fiscal 2010 Outlook

For the second  quarter of fiscal 2010, we anticipate a decline in sales for the
Wireless  Group and increased  sales for the Space & Defense Group from our just
completed first quarter.  As a result, we expect net sales to be in the range of
$40 million to $44 million.  We expect GAAP net earnings per diluted share to be
in the range of $0.18 - $0.22,  using an anticipated  tax rate of  approximately
32.0% and inclusive of approximately $0.05 - $0.06 per share related to expected
equity  based  compensation  expense and  acquisition  related  amortization  of
acquired intangibles.

Results of Operations

Net sales for the three months ended  September 30, 2009 were $40.3 million,  up
5.8% from  sales of $38.1  million  for the first  quarter of fiscal  2009.  Net
income for the first  quarter of fiscal  2010 was $2.9  million,  or 7.1% of net
sales,  up $1.6 million from net income of $1.3 million in the first  quarter of
fiscal  2009.  Net income in the first  quarter  of fiscal  2010  included  $0.3
million of  acquisition  related  expense  for  intangible  amortization  and no
expense for  amortization  of  inventory  step-up  compared  to $1.3  million of
combined  acquisition  related intangible  amortization and inventory step-up in
the first quarter of fiscal 2009.


                                       14
<PAGE>

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

                                                           Three Months Ended
                                                         Sept. 30,     Sept. 30,
                                                           2009          2008
                                                         ---------     ---------
Net Sales                                                  100.0%       100.0%
Cost of sales                                               63.6%        69.4%
                                                           -----        -----
Gross profit                                                36.4%        30.6%
                                                           -----        -----
Operating expenses:
   Marketing                                                 5.9%         5.5%
   Research and development                                  9.0%         8.1%
   General and administrative                               11.1%        11.9%
                                                           -----        -----
     Total operating expenses                               26.0%        25.5%
                                                           -----        -----
Operating income                                            10.4%         5.1%
                                                           -----        -----
Other income (expense):
     Other, primarily interest income                        0.3%         1.1%
     Interest expense                                       -0.4%        -0.8%
                                                           -----        -----
     Total other income (expense), net                      -0.1%         0.3%
                                                           -----        -----

Income before income taxes                                  10.3%         5.4%
Income taxes                                                 3.3%         1.9%
                                                           -----        -----
   Net income                                                7.0%         3.5%
                                                           =====        =====

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

                                                           Three Months Ended
                                                         Sept. 30,     Sept. 30,
                                                           2009          2008
                                                         ---------     ---------
(amounts in thousands)
Wireless Group                                            $14,411       $19,702
Space & Defense Group                                      25,926        18,422
                                                          -------       -------
     Total                                                $40,337       $38,124
                                                          =======       =======

Three Months Ended  September 30, 2009 Compared to Three Months Ended  September
30, 2008

Net sales.  Net sales were $40.3  million for the first  quarter  ended
September  30, 2009,  up 5.8% compared to $38.1 million for the first quarter of
fiscal 2009.  Sales of Wireless Group products fell $5.3 million,  or 26.9%, and
sales of Space & Defense  Group  products rose $7.5  million,  or 40.7%,  in the
current first quarter compared to the first quarter of fiscal 2009.

The  decline in sales of  Wireless  Group  products,  which  consist of standard
components,  ferrite  components  and custom  subassemblies  for use in building
wireless  base  station and consumer  equipment,  was the result of a decline in
demand for custom  Wireless  Group  assemblies  during the current first quarter
compared to the first quarter of last year.  Sales of custom  products fell $2.3
million in the current  quarter  compared to the first quarter last fiscal year,
led by a $1.8 million  decline in sales to a major OEM resulting  from a general
decline in global  wireless  infrastructure  spending and  decreased  demand for
second generation GSM equipment.  Wireless Group infrastructure component demand
in the first quarter of fiscal 2010,  while  comparable  to fourth  quarter 2009
levels, fell $2.9 million from the first quarter of fiscal 2009 due to a general
decline in shipments to both OEMs and  distributors  resulting  from the general
decline in the worldwide economy and infrastructure  capital expenditure levels.
The continuing  challenging  pricing environment for both standard component and
custom  assembly  products  also  negatively  impacted net sales for the current
quarter compared to last year.  Demand for Wireless Group products in the second
quarter of fiscal 2010 is expected to decline compared to first 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 $7.5  million,  or 40.7% in the  first  quarter  of  fiscal  2010
compared to the first quarter of the


                                       15
<PAGE>

previous  fiscal  year.  Sales of Space & Defense  Group  products  in the first
quarter of the current  fiscal year  included  three  months of sales from M. S.
Kennedy Corp. and Unicircuit,  Inc., totaling $12.8 million,  while sales in the
first  quarter of fiscal 2009 included two months and one month of sales from M.
S. Kennedy and  Unicircuit,  respectively,  amounting to $4.8  million.  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 $85.7 million, including $24.8 million from M. S. Kennedy
and Unicircuit.

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 first quarter of fiscal 2010 was
$14.7 million,  (36.4% of net sales), up from $11.7 million (30.6% of net sales)
for the same  quarter  of the prior  year.  Gross  profit as a percent  of sales
increased  in the first  quarter of fiscal  2010 from the first  quarter of last
year due to the absence in the current  first  quarter of $1.1 million  (2.6% of
net sales) of amortization of inventory step-up costs related to the acquisition
of M. S. Kennedy and Unicircuit, which were included in the first quarter fiscal
2009  cost of sales.  Additionally,  gross  margins  were  enhanced  by the $2.3
million  reduction  in sales of  lower  margin,  high  material  content  custom
Wireless  Group products and by reduced  production  overhead  costs,  including
personnel,  freight, and production  supplies,  in excess of $1.1 million in the
current  first  quarter  compared to the same period  last year  resulting  from
ongoing cost reduction efforts throughout the Company.

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 $2.4 million (5.9%
of net sales) for the first  quarter of fiscal  2010,  up $0.3 million from $2.1
million  (5.5% of net sales) for the first  quarter  of fiscal  2009.  Marketing
expenses in the current  first  quarter rose $0.3 million from the first quarter
of last fiscal year due to the inclusion of $663,000 of marketing  expenses from
Unicircuit and M. S. Kennedy in the current first quarter,  compared to $282,000
for these two  subsidiaries  in the first  quarter of last  fiscal  year,  which
include  only  two  months  and one  month  of  expense  for M. S.  Kennedy  and
Unicircuit, respectively.

Research and Development.  Research and development expenses consist of material
and  salaries  and  related  overhead  costs of  employees  engaged  in  ongoing
research,  design and  development  activities  associated with new products and
technology  development.  Research and  development  expenses  were $3.6 million
(9.0% of net  sales)  in the first  quarter  of  fiscal  2010,  up 17% from $3.1
million (8.1% of net sales) for the first  quarter of fiscal 2009.  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. Research and Development  expenditures
have  increased in the first  quarter of fiscal 2010 versus the first quarter of
last year due to the higher level of  opportunities in the Space & Defense Group
marketplaces which resulted in approximately $0.5 million in additional spending
at our Anaren Ceramics,  Anaren Microwave and M. S. Kennedy operations  compared
to the first quarter of fiscal 2009. The Company expects to continue its current
research and  development  efforts and spending  levels through the remainder of
the fiscal year and is presently  working on a number of new standard and custom
Wireless Group and Space & Defense Group opportunities.

General and  Administrative.  General  and  administrative  expenses  consist of
employee  related  expenses,  professional  services,  intangible  amortization,
travel related  expenses and other corporate costs.  General and  administrative
expenses decreased to $4.5 million (11.1% of net sales) for the first quarter of
fiscal  2010,  from $4.6 million  (11.9% of net sales) for the first  quarter of
fiscal  2009.  The decrease in general and  administrative  expense in the first
quarter of fiscal 2010 compared to the first quarter last year resulted from the
inclusion of $0.4 million in additional costs and intangible  amortization  from
the  acquisitions  of M. S.  Kennedy and  Unicircuit  during the  current  first
quarter,  compared to the first  quarter of fiscal 2009 which  include  only two
months and one month of expense for M. S. Kennedy and Unicircuit,  respectively,
which was partially  offset by a net $0.3 million  decline in  compensation  and
other administrative expenses.

Operating Income. Operating income increased 119% in the first quarter of fiscal
2010 to $4.2  million,  (10.4% of net sales),  compared to $1.9 million (5.1% of
net sales) for the first  quarter of fiscal  2009.  This  increase  in the first
quarter  of  fiscal  2010  from the  first  quarter  of last year was due to the
absence  in the  current  first  quarter  of $1.1  million  of  amortization  of
inventory  step-up  costs  related  to the  acquisition  of M.  S.  Kennedy  and
Unicircuit,  which were included in the first quarter fiscal 2009 cost of sales,
as well as, the effect of ongoing cost  containment  and  reduction  initiatives
throughout  the Company over the last twelve months which have had a significant
positive effect on overall Company expense levels.

On an operating segment basis,  Wireless Group operating income was $1.2 million
(8.5% of group  sales) for the first  quarter of fiscal 2010,  up $0.1  million,
from the Group's  operating  income of $1.1 million (5.8% of group sales) in the
first quarter of fiscal 2009. The increase in Wireless Group operating income in
the first quarter of fiscal


                                       16
<PAGE>

2010  compared  to the first  quarter of fiscal  2009 was  achieved  despite the
decline in Wireless  group sales due to the  Company's  overall  cost  reduction
efforts which  resulted in a $0.7 million  (13%)  decline in R&D,  marketing and
Administrative  expenses within the group in the current first quarter  compared
to the first  quarter  last year.  Additionally,  Wireless  Group  profits  were
further  enhanced by a 6.7 percentage point increase in gross margins within the
group which resulted from $2.3 million of the group's $5.1 million sales decline
coming from lower margin high material content custom  products,  as well as the
previously discussed companywide cost reduction efforts.

Space & Defense Group  operating  income was $3.1 million (11.8% of Group sales)
in the first  quarter of fiscal  2010,  up $2.1 from $1.0  million  (5.2% of net
group sales) for the first  quarter of fiscal 2009.  Operating  margins for this
Group increased in the current first quarter, as they included only $0.3 million
of acquisition  related  intangible  amortization costs and no inventory step-up
costs in the first quarter of fiscal 2010,  compared to $1.3 million of combined
acquisition  related inventory step-up and intangible  amortization costs caused
by the  acquisition of M. S. Kennedy and Unicircuit  during the first quarter of
fiscal 2009 resulting in a 4.1 percentage  point  improvement in group gross and
operating margins. Additionally,  Group operating margins rose an additional 3.2
percentage  points  due to the  efficiencies  achieved  from  the  $7.5  million
increase in Space & Defense sales,  year over year, in the current first quarter
and as a result  of the cost  savings  achieved  through  the  companywide  cost
reduction efforts.

Other Income.  Other income  primarily  consists of interest  income received on
invested cash balances and rental income. Other income decreased to $0.1 million
in the first  quarter of fiscal  2010  compared  to $0.4  million  for the first
quarter of last year.  This  decrease was caused by the  substantial  decline in
short-term  interest  rates year over year and a  deliberate  shortening  of the
maturities  of the  Company's  investment  portfolio  due to the  turmoil in the
credit market.  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 first quarter of fiscal
2010 was $0.2 million  compared to $0.3 million for the first  quarter of fiscal
2009. This decrease,  despite a higher average outstanding debt balance over the
current first quarter  compared to the first quarter of fiscal 2009,  was due to
the substantial  decline in the 90 day LIBOR interest rate for the first quarter
of fiscal 2010 (approx. 0.5%) compared to the rate (approx. 2.79%) for the first
quarter of fiscal 2009. The Company  borrowed a total of $49.8 million under its
$50.0  million  revolving  credit  facility in the first quarter 2009 and repaid
$9.8 million in the first quarter of fiscal 2010. 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 second quarter of fiscal 2010 is expected to be approximately 1.30%.

Income  Taxes.  Income  taxes for the  first  quarter  of fiscal  2010 were $1.3
million (3.3% of net sales),  representing an effective tax rate of 31.3%.  This
compares to income tax expense of $0.7 million (1.9% of net sales) for the first
quarter  of fiscal  2009,  representing  an  effective  tax rate of  35.0%.  The
decrease  in the  effective  rate for the  quarter is a results  of the  Federal
Research and Experimentation Credit not being in effect during the first quarter
of fiscal year 2009, as it had expired and was not reinstated  until  subsequent
to  September  30, 2008.  The  projected  effective  tax rate for fiscal 2010 is
expected to be approximately 32.0%.

Critical Accounting Policies

There  have  been no  material  changes  to the  company's  critical  accounting
policies,  estimates,  or judgments  from those  discussed in the company's 2009
Annual Report Form 10-K.

Liquidity and Capital Resources

Net cash  provided by  operations  for the first three months of fiscal 2010 was
$5.6 million and resulted from net income before depreciation,  amortization and
non-cash equity based compensation expense. The positive cash flow from earnings
for the quarter was further enhanced by a $0.4 million decrease in inventory and
a $2.0  million  increase in accounts  payable,  which more than  off-set a $1.8
million increase in accounts  receivable.  The large fluctuations in the working
capital  were a result of the timing of when sales were made during the quarter.
Net cash  provided by  operations  for the first three months of fiscal 2009 was
$5.0  million and  resulted  from net income  before  depreciation  and non-cash
equity based compensation  expense. The positive cash flow from earnings for the
prior year quarter was further  enhanced by a $2.3 million  decrease in accounts
receivable due to improved collections, which more than off-set a small increase
in inventory and a pay down of current liabilities.

Net cash  provided by investing  activities  in the first three months of fiscal
2010 was $4.6 million and consisted of $5.8 million  provided by the  maturities
of marketable debt securities,  net of $1.2 million used for capital  additions.
Net cash used in investing  activities  in the first three months of fiscal 2009
was $42.0 million and consisted of $7.1 million


                                       17
<PAGE>

provided by the maturity of marketable debt securities, $1.8 million used to pay
for capital  additions and $47.3 million used to pay for the  acquisitions of M.
S. Kennedy and Unicircuit, net of the cash received in both transactions.

Net cash used in financing activities was $7.3 million in the first three months
of fiscal 2010 and  consisted of $2.7 million of cash and tax benefits  provided
by the exercise of stock  options,  less $9.8 million used to pay long-term debt
and $0.5 million used to purchase approximately 29,000 treasury shares. Net cash
provided by  financing  activities  in the first three months of fiscal 2009 was
$43.7  million and  consisted of borrowings of $49.8 million under the Company's
revolving  declining line of credit to finance the acquisitions of M. S. Kennedy
and  Unicircuit,  net of $1.2 million  used to pay off an acquired  mortgage and
$5.0 million used to purchase 471,000 treasury shares.

During the remainder of fiscal 2010, the Company  anticipates that its main cash
requirement will be for capital  expenditures,  possible continued repurchase of
the Company's common stock and the $10.0 million  principal  payment on its line
of credit due in July 2010.  Capital  expenditures  for the  remainder of fiscal
2010 are  expected to be in the range of $7.0 - $8.0  million 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  transaction under the current Board
authorization, depending on market conditions. At September 30, 2009, there were
approximately  1.0 million shares  remaining under the current Board  repurchase
authorization.

At September 30, 2009, the Company had approximately $61.9 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.


Recent Accounting Pronouncements

In October 2009,  new  accounting  guidance was issued related to the accounting
for revenue  recognition  from  arrangement  with  multiple  deliverables.  This
guidance  removes  the  objective-and-reliable-evidence-of-fair-value  criterion
from the separation criteria used to determine whether an arrangement  involving
multiple  deliverables  contains  more  than  one unit of  accounting,  replaces
references to "fair value" with  "selling  price" to  distinguish  from the fair
value measurements  required under the "Fair Value Measurements and Disclosures"
guidance,  provides a hierarchy  that  entities must use to estimate the selling
price, eliminates the use of the residual method for allocation, and expands the
ongoing  disclosure  requirements.  This  update is  effective  for the  company
beginning  July 1, 2011 and can be  applied  prospectively  or  retrospectively.
Management is currently  evaluating the effect that adoption of this update will
have, if any, on the Company's condensed  consolidated financial statements when
it becomes effective in 2012.

In September 2009, new accounting guidance was issued, which permits entities to
measure the fair value of certain investments,  including those with fair values
that are not readily determinable, on the basis of the net asset value per share
of the investment (or its equivalent) if such net asset value is calculated in a
manner    consistent   with   the    measurement    principles   in   "Financial
Services-Investment  Companies" as of the reporting  entity's  measurement  date
(measurement of all or  substantially  all of the underlying  investments of the
investee  in  accordance  with the "Fair  Value  Measurements  and  Disclosures"
guidance).  The update also requires  enhanced  disclosures about the nature and
risks of  investments  within  its scope  that are  measured  at fair value on a
recurring or nonrecurring  basis.  The Company does not believe that this update
will have a material effect on the Company's  condensed  consolidated  financial
position and results of operations.

In  January  2009,  new   accounting   guidance  which  requires  more  detailed
disclosures  about  employers'  plan  assets,  including  employers'  investment
strategies, major categories of plan assets,  concentrations of risk within plan
assets,


                                       18
<PAGE>

and valuation  techniques  used to measure the fair value of plan assets.  Other
than for some additional disclosures in the Annual Report on Form 10-K, adoption
of this guidance will not have an effect on the Company's condensed consolidated
financial statements.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

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

As of September 30, 2009, the Company had cash, cash  equivalents and marketable
securities  of $61.9  million,  all of which with the exception of the Company's
auction rate security  consisted of highly liquid investments in marketable debt
securities.  The marketable  debt  securities at date of purchase  normally have
maturities between one and 18 months, are exposed to interest rate risk and will
decrease in value if market interest rates increase. A hypothetical  decrease in
market interest rate of 10.0% from September 30, 2009 rates, or 0.1%, would have
reduced net income and cash flow by approximately  $15,000, or $.001 per diluted
share for the quarter.  Due to the relatively short maturities of the securities
and its ability to hold those  investments  to  maturity,  the Company  does not
believe that an immediate  decrease in interest  rates would have a  significant
effect on its financial condition or results of operations.  Over time, however,
declines in interest rate will reduce the Company's interest income.

As of September  30, 2009,  the Company had $40.0  million in  outstanding  debt
under its revolving line of credit with Keybank National  Association.  The line
consists of a $50,000,000 revolving credit note (the "Note") for which principal
amounts  are due on August 1,  2009,  and on each  anniversary  date  thereafter
through July 31, 2013.  Borrowings under the Note, at the Company's choice, bear
interest at LIBOR,  plus 100 to 425 basis points or at the Keybank'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 September 30, 2009, the weighted average interest rate on the
outstanding  borrowings  was 1.3%.  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 September 30, 2009
rates,  or 0.13%,  would have reduced net income and cash flow by  approximately
$15,000,  or $.001 per  diluted  share  for the  quarter.  Due to the  Company's
significant  cash reserves and  historical  positive  operating  cash flow,  the
Company does not believe that an immediate increase in interest rates would have
a material  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 particularly in the "Risk Factors" in Part II, Item
1A of this Form 10-Q,  and in our 2009 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 September 30, 2009. Based on
that evaluation, the Certifying Officers concluded that the Company's disclosure
controls and procedures were effective as of September 30, 2009.


                                       19
<PAGE>

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.

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 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  September  30,  2009,  1,047,000  million  shares  remained  authorized  for
purchase, depending on market conditions.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
         Period              Total Number of       Average Price Paid       Total Number of      Maximum Number (or
                            Shares (or Units)     per Share (or Unit)      Shares (or Units)     Approximate Dollar
                                Purchased                                Purchased as Part of   Value) of Shares (or
                                                                          Publicly Announced     Units) that May Yet
                                                                           Plans or Programs     Be Purchased Under
                                                                                                the Plans or Programs
----------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                   <C>                        <C>               <C>
July 2009                                     0                    -                      0                 1,076,099
----------------------------------------------------------------------------------------------------------------------
August 2009                              28,686                16.35                      0                 1,047,413
----------------------------------------------------------------------------------------------------------------------
September 2009                                0                    -                      0                 1,047,413
----------------------------------------------------------------------------------------------------------------------
Total                                    28,686                16.35                      0                 1,047,413
----------------------------------------------------------------------------------------------------------------------
</TABLE>

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

         None.

Item 6.  Exhibits

         31   Rule 13a-14(a) Certifications

         32   Section 1350 Certifications


                                       20
<PAGE>

                                   SIGNATURES

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

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

Date:  October 30, 2009              /s/ Lawrence A. Sala
                                     ---------------------------------------
                                     Lawrence A. Sala
                                     President & Chief Executive Officer



Date:  October 30, 2009              /s/ George A. Blanton
                                     ---------------------------------------
                                     George A. Blanton
                                     Sr. Vice President, Chief Financial Officer
                                     and Treasurer


                                       21