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

Registrant's telephone number, including area code: 315-432-8909

--------------------------------------------------------------------------------
(Former  name,  former  address and former  fiscal year,  if changed  since last
report)

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

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

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

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

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

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

      The number of shares of Registrant's Common Stock outstanding on May 2,
2009 was 14,525,763.

<PAGE>

                                  ANAREN, INC.
                                    FORM 10-Q
                                      INDEX

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

   Item 1.  Financial Statements

            Consolidated Condensed Balance Sheets as of                  3
            March 31, 2009 and June 30, 2008 (unaudited)

            Consolidated Condensed Statements of Earnings                4
            for the Three Months Ended March 31,
            2009 and 2008 (unaudited)

            Consolidated Condensed Statements of Earnings                5
            for the Nine Months Ended March 31,
            2009 and 2008 (unaudited)

            Consolidated Condensed Statements of Cash Flows              6
            for the Nine Months Ended March 31,
            2009 and 2008 (unaudited)

            Notes to Consolidated Condensed Financial                    7 - 21
            Statements (unaudited)

   Item 2.  Management's Discussion and Analysis                         22 - 29

            of Financial Condition and Results of Operations

   Item 3.  Quantitative and Qualitative Disclosures About Market Risk   29 - 30

   Item 4.  Controls & Procedures                                        30

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

   Item 1A. Risk Factors                                                 30

   Item 6.  Exhibits                                                     30

Officer Certifications                                                   31 - 35


                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                                  ANAREN, INC.
                      Consolidated Condensed Balance Sheets
                        March 31, 2009 and June 30, 2008
                                   (Unaudited)

<TABLE>
<CAPTION>
                      Assets                                                                March 31, 2009            June 30, 2008
                      ------                                                                --------------            -------------
<S>                                                                                          <C>                      <C>
Current assets:
     Cash and cash equivalents                                                               $  31,041,738            $  10,710,825
     Securities held to maturity                                                                17,217,593               21,073,929
     Receivables, less allowances of $454,597 and $419,305
       at March 31, 2009 and June 30, 2008, respectively                                        26,212,190               23,101,590
     Inventories                                                                                38,724,987               26,981,367
     Other receivables                                                                           1,567,950                1,505,162
     Prepaid expenses                                                                            1,144,193                1,152,148
     Income tax receivable                                                                         243,331                       --
     Deferred income taxes                                                                       1,637,895                1,645,955
     Other current assets                                                                          867,915                  610,981
                                                                                             -------------            -------------
                   Total current assets                                                        118,657,792               86,781,957

Securities available for sale                                                                    1,440,000                  314,200
Securities held to maturity                                                                      2,091,688               11,993,768
Property, plant and equipment, net                                                              53,918,566               42,266,431
Deferred income taxes                                                                               29,918                   31,159
Goodwill                                                                                        42,073,489               30,715,861
Other intangible assets, net                                                                    11,642,121                       --
                                                                                             -------------            -------------
                   Total assets                                                              $ 229,853,574            $ 172,103,376
                                                                                             =============            =============

      Liabilities and Stockholders' Equity
Current liabilities:
     Current portion of long-term debt                                                       $   9,800,000            $          --
     Accounts payable                                                                            9,307,966                9,160,496
     Accrued expenses                                                                            4,275,446                2,581,074
     Customer advance payments                                                                     447,692                1,259,001
     Other current liabilities                                                                   2,380,304                2,618,422
                                                                                             -------------            -------------
                   Total current liabilities                                                    26,211,408               15,618,993

Long-term debt                                                                                  40,000,000                       --
Deferred income taxes                                                                            2,604,749                  813,720
Pension and postretirement benefit obligation                                                    3,530,789                3,314,739
Other liabilities                                                                                1,806,479                1,492,268
                                                                                             -------------            -------------
                   Total liabilities                                                            74,153,425               21,239,720
                                                                                             -------------            -------------
Stockholders' equity:
     Common stock of $.01 par value.  Authorized
        200,000,000 shares; issued 27,777,186 shares
        at March 31, 2009 and 27,393,094 at June 30, 2008                                          277,772                  273,930
     Additional paid-in capital                                                                195,567,746              192,313,860
     Retained earnings                                                                         100,942,081               94,540,282
     Accumulated other comprehensive loss                                                         (153,047)                (343,990)
                                                                                             -------------            -------------
                                                                                               296,634,552              286,784,082
     Less cost of 13,251,423 treasury shares
       at March 31, 2009 and 12,780,181 at June 30, 2008                                       140,934,403              135,920,426
                                                                                             -------------            -------------
                   Total stockholders' equity                                                  155,700,149              150,863,656
                                                                                             -------------            -------------
Total liabilities and stockholders' equity                                                   $ 229,853,574            $ 172,103,376
                                                                                             =============            =============
</TABLE>

See accompanying notes to unaudited consolidated condensed financial statements.


                                       3
<PAGE>

                                  ANAREN, INC.
                  Consolidated Condensed Statements of Earnings
                               Three Months Ended
                             March 31, 2009 and 2008
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                              March 31, 2009          March 31, 2008
                                                                                              --------------          --------------
<S>                                                                                            <C>                     <C>
Net sales                                                                                      $ 43,506,697            $ 32,618,733

Cost of sales                                                                                    28,423,184              22,478,241
                                                                                               ------------            ------------
         Gross profit                                                                            15,083,513              10,140,492
                                                                                               ------------            ------------

Operating expenses:
         Marketing                                                                                2,360,415               1,766,226
         Research and development                                                                 3,391,666               2,675,685
         General and administrative                                                               4,600,911               3,408,432
                                                                                               ------------            ------------
                Total operating expenses                                                         10,352,992               7,850,343
                                                                                               ------------            ------------

Operating income                                                                                  4,730,521               2,290,149

Other income, primarily interest                                                                    257,365                 535,582
Interest expense                                                                                   (311,445)                 (6,142)
                                                                                               ------------            ------------
         Total other (expense) income                                                          $    (54,080)           $    529,440
                                                                                               ------------            ------------

Income from continuing operations before income tax expense                                       4,676,441               2,819,589

Income tax expense                                                                                1,200,000                 773,000
                                                                                               ------------            ------------

Income from continuing operations                                                                 3,476,441               2,046,589

Discontinued operations:
      Income from discontinued operations                                                                --                 770,000
                                                                                               ------------            ------------

Net income                                                                                     $  3,476,441            $  2,816,589
                                                                                               ============            ============

Basic earnings per share:
  Income from continuing operations                                                                   $0.25                   $0.14
  Income from discontinued operations                                                                    --                    0.05
                                                                                                      -----                   -----
  Net income                                                                                          $0.25                   $0.19
                                                                                                      =====                   =====

Diluted earnings per share:
  Income from continuing operations                                                                   $0.25                   $0.14
  Income from discontinued operations                                                                    --                    0.05
                                                                                                      -----                   -----
  Net income                                                                                          $0.25                   $0.19
                                                                                                      =====                   =====
Shares used in computing net earnings per share:
         Basic                                                                                   13,812,120              14,301,900
                                                                                                 ==========              ==========
         Diluted                                                                                 14,062,303              14,479,862
                                                                                                 ==========              ==========
</TABLE>

See accompanying notes to unaudited consolidated condensed financial statements.


                                       4
<PAGE>

                                  ANAREN, INC.
                  Consolidated Condensed Statements of Earnings
                                Nine Months Ended
                             March 31, 2009 and 2008
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                             March 31, 2009           March 31, 2008
                                                                                             --------------           --------------
<S>                                                                                           <C>                      <C>
Net sales                                                                                     $ 123,074,010            $ 97,076,907

Cost of sales                                                                                    84,167,791              66,016,934
                                                                                              -------------            ------------
         Gross profit                                                                            38,906,219              31,059,973
                                                                                              -------------            ------------

Operating expenses:
         Marketing                                                                                6,505,580               5,299,409
         Research and development                                                                 9,499,643               7,565,676
         General and administrative                                                              13,993,206              10,133,938
                                                                                              -------------            ------------
                Total operating expenses                                                         29,998,429              22,999,023
                                                                                              -------------            ------------

Operating income                                                                                  8,907,790               8,060,950

Other income, primarily interest                                                                    967,716               1,883,991
Interest expense                                                                                 (1,199,707)                (52,574)
                                                                                              -------------            ------------
         Total other (expense) income                                                         $    (231,991)           $  1,831,417
                                                                                              -------------            ------------

Income from continuing operations before income tax expense                                       8,675,799               9,892,367

Income tax expense                                                                                2,274,000               2,589,000
                                                                                              -------------            ------------

Income from continuing operations                                                             $   6,401,799            $  7,303,367

Discontinued operations:
      Income from discontinued operations                                                                --                 770,000
                                                                                              -------------            ------------

Net income                                                                                    $   6,401,799            $  8,073,367
                                                                                              =============            ============

Basic earnings per share:
  Income from continuing operations                                                                   $0.46                   $0.49
  Income from discontinued operations                                                                    --                    0.05
                                                                                                      -----                   -----
  Net income                                                                                          $0.46                   $0.54
                                                                                                      =====                   =====

Diluted earnings per share:
  Income from continuing operations                                                                   $0.45                   $0.48
  Income from discontinued operations                                                                    --                    0.05
                                                                                                      -----                   -----
  Net income                                                                                          $0.45                   $0.53
                                                                                                      =====                   =====

Shares used in computing net earnings per share:
         Basic                                                                                   13,916,255              15,022,181
                                                                                                 ==========              ==========
         Diluted                                                                                 14,102,237              15,282,144
                                                                                                 ==========              ==========
</TABLE>

See accompanying notes to unaudited consolidated condensed financial statements.


                                       5
<PAGE>

                                  ANAREN, INC.
                 Consolidated Condensed Statements of Cash Flows
                                Nine Months Ended
                             March 31, 2009 and 2008
                                   (Unaudited)

<TABLE>
<CAPTION>
Cash flows from operating activities:                                                             March 31, 2009      March 31, 2008
                                                                                                  --------------      --------------
<S>                                                                                                <C>                 <C>
      Net income                                                                                   $  6,401,799        $  8,073,367
      Income from discontinued operations                                                                    --             770,000
                                                                                                   ------------        ------------
      Income from continuing operations                                                               6,401,799           7,303,367

      Adjustments to reconcile  income from  continuing  operations  to net cash
        provided by operating activities:
           Depreciation                                                                               6,083,164           4,957,528
           Amortization                                                                               1,057,586             473,220
           Loss on disposal of fixed assets                                                              (3,791)                 --
           Deferred income taxes                                                                       (468,000)           (681,000)
           Stock-based compensation                                                                   3,048,166           2,781,092
           Changes in operating assets and liabilities:
             Receivables                                                                              3,309,987          (3,296,797)
             Inventories                                                                               (623,746)         (3,312,017)
             Other receivables                                                                          (47,270)             64,305
             Prepaids and other current assets                                                         (410,980)            129,433
             Accounts payable                                                                          (485,898)         (1,652,316)
             Accrued expenses                                                                           713,600          (1,803,843)
             Income taxes                                                                              (243,331)           (117,911)
             Customer advance payments                                                               (1,051,467)            681,086
             Other liabilities                                                                       (1,342,304)          2,023,110
             Pension and postretirement benefit obligation                                              216,050              76,387
                                                                                                   ------------        ------------
      Net cash provided by operating activities from
             continuing operations                                                                   16,153,565           7,625,644
      Net cash used in operating activities of discontinued operations                                       --                  --
                                                                                                   ------------        ------------
      Net cash provided by operating activities                                                      16,153,565           7,625,644
                                                                                                   ------------        ------------
Cash flows from investing activities:
      Capital expenditures                                                                           (5,474,839)         (9,767,865)
      Payment for purchase of M.S. Kennedy Corp. and
         Unicircuit, Inc.                                                                           (48,166,067)                 --
      Maturities of held to maturity and available for sale securities                               17,109,199          62,371,425
      Purchases of held to maturity and available for sale securities                                (3,130,490)        (32,324,160)
                                                                                                   ------------        ------------
               Net cash (used in) provided by investing activities                                  (39,662,197)         20,279,400
                                                                                                   ------------        ------------
Cash flows from financing activities:
      Stock options exercised                                                                           229,641             591,004
      Proceeds from revolving credit note                                                            49,800,000                  --
      Payment on mortgage payable                                                                    (1,209,574)                 --
      Excess tax benefit from exercise of stock options                                                  28,312             116,932
      Purchase of treasury stock                                                                     (5,013,977)        (30,243,169)
                                                                                                   ------------        ------------
               Net cash provided by (used in) financing activities                                   43,834,402         (29,535,233)
                                                                                                   ------------        ------------

      Effect of exchange rates on cash                                                                    5,143             190,948
                                                                                                   ------------        ------------
               Net increase (decrease) in cash and cash equivalents                                  20,330,913          (1,439,241)
Cash and cash equivalents at beginning of period                                                     10,710,825           7,912,276
                                                                                                   ------------        ------------
Cash and cash equivalents at end of period                                                         $ 31,041,738        $  6,473,035
                                                                                                   ============        ============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.


                                       6
<PAGE>

Notes to Consolidated Condensed Financial Statements (Unaudited)

The consolidated  condensed  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
consolidated  condensed financial  statements should be read in conjunction with
the  consolidated   financial  statements  and  notes  thereto,   together  with
management's  discussion  and  analysis of  financial  condition  and results of
operations, contained in the Company's Annual Report on Form 10-K for the fiscal
year ended June 30,  2008.  The  results  of  operations  for the three and nine
months ended March 31, 2009 are not  necessarily  indicative  of the results for
the entire fiscal year ending June 30, 2009, or any future interim period.

The income tax rates utilized for interim financial  statement  purposes for the
nine months  ended March 31, 2009 and 2008 are based on  estimates of income and
utilization of tax credits for the entire fiscal year ending June 30, 2009.

During the second  quarter  ending  December  31, 2008,  the Company  recorded a
correction of an over accrued amount in its commission accrual for the amount of
$275,000. This correction was recorded to the Marketing line on the Consolidated
Condensed Statements of Earnings (unaudited) for the nine months ended March 31,
2009.  The  Company  assessed  the error on prior  years and  quarters  for over
recording an accrual for commissions, and based on SEC Staff Accounting Bulletin
(SAB)  99  and  SAB  108,  the  error  was  determined  to be  immaterial  for a
restatement  of any prior filing,  and was corrected  during the second  quarter
ending December 31, 2008 filing.

(1) Acquisitions

Acquisition of M.S. Kennedy, Corp.

On August 1, 2008, the Company completed the acquisition of M.S. Kennedy,  Corp.
("MSK"),  located in Syracuse, New York. The transaction was accounted for under
the purchase method of accounting, and the results of MSK's operations have been
included in the Company's consolidated financial statements since that date. MSK
is a leading provider of high performance analog microelectronics to the Defense
and Space  markets  and is a leading  designer  and  producer  of custom  analog
hybrids,  power hybrids,  and multi-chip  modules.  MSK offers broad  electronic
component design, packaging, and integration capability. MSK was integrated into
Anaren's existing Space & Defense Group.

The Company  acquired MSK for a purchase price,  net of cash acquired,  of $27.7
million.  The Company  financed  this  transaction  through its  existing  $50.0
million  revolving  debt  facility  (note  11)  and  cash  from  operations.  In
accordance with the purchase  method of accounting,  the acquired net assets are
recorded at fair value at the date of acquisition.  The purchase price was based
primarily on the estimated future operating results of MSK.

The following table summarizes the Company's estimated fair values of the assets
acquired  and  liabilities  assumed  in  the  MSK  acquisition  at the  date  of
acquisition.  The allocation of the purchase price is preliminary and subject to
change. Estimated fair values at August 1, 2008, are as follows:

         Current assets                           $13,605,382
         Property, plant and equipment              4,016,000
         Goodwill                                   2,390,253
         Intangible assets                          9,410,000
         Other assets                               1,440,000
                                                  -----------

                Total assets acquired              30,861,635

         Current liabilities                        1,952,437
         Long-term liabilities                             --
                                                  -----------

             Total liabilities assumed              1,952,437
                                                  -----------

         Net assets acquired                      $28,909,198
                                                  ===========

The fair values of the assets acquired were  preliminarily  determined using one
of three  valuation  approaches:  market,  income and cost.  The  selection of a
particular  method for a given asset  depended on the  reliability  of available
data and the  nature  of the  asset,  among  other  considerations.  The  market
approach, which estimates the value of a subject


                                       7
<PAGE>

asset based on available market pricing for comparable  assets, was utilized for
land and in-process and finished inventory. The income approach, which estimates
the value for a subject asset based on the present value of cash flows projected
to be generated by the asset, was used for certain  intangible  assets,  such as
developed technology, customer relationships, tradenames, and for the noncompete
agreements with employees  acquired in connection with the MSK transaction.  The
projected  cash flows were  discounted at a rate of return  necessary to reflect
the  relative  risk of the MSK  transaction  and the time  value of  money.  The
projected  cash  flows for each  asset  valued  using the cost  method  required
consideration  of multiple  factors,  including  current  revenue from  existing
customers,  attrition trends,  reasonable  contract renewal assumptions from the
perspective  of a marketplace  participant,  and expected  profit margins giving
consideration to historical and expected margins.  The cost approach was used to
determine  the assumed  fair market  value of the  majority of real and personal
property and raw materials inventory. The cost to replace a given asset reflects
the  estimated  reproduction  or  replacement  cost  for the  property,  less an
allowance for loss in value due to depreciation or  obsolescence,  with specific
consideration given to economic obsolescence if indicated.

Current  assets and  current  liabilities  - The fair  value of  current  assets
(except  inventory) and current  liabilities  was assumed to  approximate  their
carrying value as of the acquisition date due to the short-term  nature of these
assets and liabilities.

The fair value of the in-process and finished  inventory  acquired was estimated
by applying a version of the market  valuation  approach  called the  comparable
sales method.  This  valuation  method  estimates the fair value of the asset by
calculating  the  potential  sales  that could be  generated  from  selling  the
inventory and then  subtracting the costs related to completion and sale of that
inventory and a reasonable  profit allowance.  Based upon this methodology,  the
Company recorded the inventory acquired at fair value,  resulting in an increase
in inventory of $2.0  million.  During the first and second  fiscal  quarters of
2009, the Company expensed,  in Cost of sales, the step-up value of the acquired
MSK  inventory  in the period in which the stepped up  inventory  was sold.  Raw
materials inventory was valued at replacement cost.

Property,  plant and  equipment  ("PP&E") - The fair value of PP&E  acquired was
estimated by applying the cost  approach for personal  property,  buildings  and
building  improvements  and the market  approach for land. The cost approach was
applied by developing a replacement  cost and  adjusting  for  depreciation  and
obsolescence.  The value of the land acquired was derived from market prices for
comparable properties.

The tradename  included in the intangible assets is not subject to amortization.
The goodwill and intangible assets related to the MSK transaction,  exclusive of
the tradename, are deductible for tax purposes.

Acquisition of Unicircuit Inc.

On August 29, 2008, the Company  completed the  acquisition  of Unicircuit  Inc.
("Unicircuit"),  located in Littleton,  Colorado.  The transaction was accounted
for under the purchase  method of  accounting,  and the results of  Unicircuit's
operations have been included in the Company's consolidated financial statements
since that date.  Unicircuit is a manufacturer  of printed  circuit boards (PCB)
used in various military and aerospace  applications.  Unicircuit is a leader in
high frequency PCB  technology and is expected to enhance the Company's  ability
to capture integrated microwave assembly opportunities in the defense, satellite
and aerospace markets.  Unicircuit was integrated into Anaren's existing Space &
Defense Group.

The Company acquired  Unicircuit for a purchase price, net of cash acquired,  of
$20.8 million.  The Company  financed this transaction by utilizing its existing
$50.0 million  revolving  debt facility (note 11) and cash from  operations.  In
accordance with the purchase  method of accounting,  the acquired net assets are
recorded at fair value at the date of acquisition.  The purchase price was based
primarily on the estimated future operating results of Unicircuit.

The following table summarizes the Company's estimated fair values of the assets
acquired and  liabilities  assumed in the Unicircuit  transaction at the date of
acquisition.  The allocation of the purchase price is preliminary and subject to
change. Estimated fair values at August 29, 2008, are as follows:

        Current assets                            $ 6,723,180
        Property, plant and equipment               8,821,838
        Goodwill                                    8,967,375
        Intangible assets                           3,010,000
        Other assets                                  285,032
                                                  -----------

               Total assets acquired               27,807,425

        Current liabilities                         2,145,057
        Long-term liabilities                       3,519,307
                                                  -----------

            Total liabilities assumed               5,664,364

        Net assets acquired                       $22,143,061
                                                  ===========


                                       8
<PAGE>

The fair values of the assets acquired were  preliminarily  determined using one
of three  valuation  approaches:  market,  income and cost.  The  selection of a
particular  method for a given asset  depended on the  reliability  of available
data and the  nature  of the  asset,  among  other  considerations.  The  market
approach, which estimates the value of a subject asset based on available market
pricing for comparable assets, was utilized for land and in-process and finished
inventory.  The income  approach,  which estimates the value for a subject asset
based on the present value of cash flows projected to be generated by the asset,
was  used  for  certain  intangible  assets,  such  as  customer  relationships,
tradenames,  and  for the  noncompete  agreements  with  employees  acquired  in
connection  with the  Unicircuit  transaction.  The  projected  cash  flows were
discounted  at a rate of return  necessary to reflect the  relative  risk of the
Unicircuit transaction and the time value of money. The projected cash flows for
each asset  value  using the cost  method  required  consideration  of  multiple
factors,  including current revenue from existing  customers,  attrition trends,
reasonable  contract  renewal  assumptions from the perspective of a marketplace
participant,  and expected profit margins giving consideration to historical and
expected  profit  margins.  The cost  approach was used to determine the assumed
fair  market  value  of the  majority  of real  and  personal  property  and raw
materials  inventory.  The cost to replace a given asset  reflects the estimated
reproduction or replacement cost for the property, less an allowance for loss in
value due to depreciation or obsolescence,  with specific consideration given to
economic obsolescence if indicated.

Current  assets and  current  liabilities  - The fair  value of  current  assets
(except  inventory) and current  liabilities  was assumed to  approximate  their
carrying value as of the acquisition date due to the short-term  nature of these
assets and liabilities.

The fair value of the in-process and finished  inventory  acquired was estimated
by applying a version of the market  valuation  approach  called the  comparable
sales method.  This  valuation  method  estimates the fair value of the asset by
calculating  the  potential  sales  that could be  generated  from  selling  the
inventory and then  subtracting the costs related to completion and sale of that
inventory and a reasonable  profit allowance.  Based upon this methodology,  the
Company recorded the inventory acquired at fair value,  resulting in an increase
in inventory of $0.2  million.  During the first and second  fiscal  quarters of
2009, the Company expensed,  in Cost of sales, the step-up value of the acquired
Unicircuit  inventory in the period in which the stepped up inventory  was sold.
Raw materials inventory was valued at replacement cost.

Property,  plant and  equipment  ("PP&E") - The fair value of PP&E  acquired was
estimated by applying the cost  approach for personal  property,  buildings  and
building  improvements  and the market  approach for land. The cost approach was
applied by developing a replacement  cost and  adjusting  for  depreciation  and
obsolescence.  The value of the land acquired was derived from market prices for
comparable properties.

The goodwill and intangible assets related to the Unicircuit transaction are not
deductible for tax purposes.

Intangible  Assets - The  purchase  price for the M.S.  Kennedy  and  Unicircuit
acquisitions was allocated to specific  intangible assets on a preliminary basis
as follows:

                                                                     Weighted
                                                  Fair                average
                                                  value            amortization
                                                assigned          period (years)
                                              -----------         --------------
Amortizing intangible assets:
    Customer relationships                    $ 7,530,000              10
    Developed technology                          780,000               5
    Non-competition agreements                  1,130,000               4
                                              -----------
       Total                                  $ 9,440,000              --

Non-amortizing intangible assets:
    Tradenames                                  2,980,000              --
                                              -----------
       Total                                    2,980,000
                                              -----------
Total intangible assets                       $12,420,000
                                              ===========


                                       9
<PAGE>

Customer  relationships  - Customer  relationships  represent the estimated fair
value of both the contractual and non-contractual customer relationships MSK and
Unicircuit  had  as of the  acquisition  date.  The  primary  customers  include
Lockheed  Martin,  Rockwell,  and  other  large  OEM's,  some of which  are also
customers  of the  Company.  These  relationships  were valued  separately  from
goodwill at the amount which an independent  third party would be willing to pay
for these relationships. The fair value of customer relationships was determined
using the  multi-period  excess-earnings  method, a form of the income approach.
The Company  determined that the estimated useful life of the intangible  assets
associated with the existing  customer  relationships is approximately 10 years.
This  life was  based  upon  historical  customer  attrition  and the  Company's
understanding  of the industry and  regulatory  environment.  The expected  cash
flows associated with these customer relationships were nominal after 10 years.

Developed  technology - Developed  technology  consists of technical  processes,
patented and unpatented technology, manufacturing know-how and the understanding
with respect to products or processes  that have been  developed by MSK and that
will be leveraged in current and future  products.  The fair value of technology
and  patents  acquired  was  determined  utilizing  method  form  of the  income
approach.  The  Company  determined  that  the  estimated  useful  life  of  the
technology  and  patents  is  approximately  5 years.  This  life is based  upon
management's  estimate of the product life cycle  associated with technology and
patents  before they will be replaced by new  technologies.  The  expected  cash
flows associated with technology and patents were nominal after 5 years.

The  noncompetition  agreements are amortized over their  contractual  life of 4
years.

Tradenames - Tradenames  represent  the  estimated  fair value of corporate  and
product names  acquired from MSK and  Unicircuit,  which will be utilized by the
Company in the future.  These tradenames were valued separately from goodwill at
the amount which an  independent  third party would be willing to pay for use of
these names.  The fair value of the  trademarks and tradenames was determined by
applying the relief from the income  approach.  The  tradenames  are  inherently
valuable as the Company  believes they convey  favorable  perceptions  about the
products with which they are associated.  This in turn generates  consistent and
increased  demand for the  products,  which  provides  the Company  with greater
revenues,  as well as greater production and operating  efficiencies.  Thus, the
Company  will  realize  larger  profit   margins  than  companies   without  the
tradenames. At this time, the Company intends to utilize these trademarks for an
indefinite  period of time given that the Company is new to the specific markets
that the  subsidiaries  operate.  Thus  these  intangible  assets  are not being
amortized but are tested for impairment on an annual basis.

Goodwill - The excess of the purchase  price over the fair value of net tangible
and  intangible  assets  acquired of $11.4  million was  allocated  to goodwill.
Various factors  contributed to the  establishment of goodwill,  including:  the
value  of MSK's  and  Unicircuit's  highly  trained  assembled  work  force  and
management  team; the expected  revenue growth over time that is attributable to
increased market penetration from future products and customers.

The following  table sets forth the unaudited pro forma results of operations of
the Company for the three and nine months  ended March 31, 2009 and 2008,  as if
the M.S.  Kennedy and the Unicircuit  acquisition  transactions  occurred at the
beginning of each fiscal year.

                                                       For the Three Months
                                                          Ended March 31,
                                                       2009             2008
                                                   -----------       -----------
Net sales                                          $43,506,697       $42,151,601
Income from continuing operations
    before income tax expense                      $ 5,241,003       $ 4,133,180
Net income                                         $ 4,041,003       $ 2,900,423

Earnings per share:
    Basic                                          $      0.29       $      0.26

    Diluted                                        $      0.29       $      0.25



Weighted average common shares
    outstanding:
    Basic                                           13,812,120        14,301,900
    Diluted                                         14,062,303        14,479,862


                                       10
<PAGE>

                                                       For the Nine Months
                                                          Ended March 31,
                                                      2009              2008
                                                  ------------      ------------
Net sales                                         $127,527,378      $127,360,936
Income from continuing operations
    before income tax expense                     $ 13,401,673      $ 14,233,856
Net income                                        $ 10,510,550      $  9,967,835

Earnings per share:
    Basic                                         $       0.76      $       0.71

    Diluted                                       $       0.74      $       0.70



Weighted average common shares
    outstanding:
    Basic                                           13,916,255        15,022,181
    Diluted                                         14,102,237        15,282,144

The pro forma results are presented  for  illustrative  purposes only and do not
include  expenses that  resulted from purchase  accounting or from the revolving
credit  note   (inventory   and  fixed  asset   step-up   expenses,   intangible
amortization,  or interest expense for the three and nine months ended March 31,
2009.   Although  certain  cost  savings  have  resulted  from  the  acquisition
transactions,  there can be no assurance  that  additional  cost savings will be
achieved. These pro forma results do not purport to be indicative of the results
that would have  actually  been  obtained if the  acquisition  transactions  had
occurred as of the dates indicated,  nor do the pro forma results intend to be a
projection of results that may be obtained in the future.

(2) Equity-based Compensation

The  components  of  equity-based  compensation  expense  in the  statements  of
earnings are as follows:

<TABLE>
<CAPTION>
                                                                    Three Months Ended                      Nine Months Ended
                                                                         March 31                               March 31
                                                                 2009               2008                2009                 2008
<S>                                                            <C>                <C>                <C>                  <C>
Stock option                                                   $389,296           $573,842           $1,346,149           $1,741,517
Restricted stock                                                607,653            368,988            1,702,017            1,039,575
                                                               --------           --------           ----------           ----------
       Stock-based compensation                                $996,949           $942,830           $3,048,166           $2,781,092
                                                               ========           ========           ==========           ==========
</TABLE>

In the three and nine months  ending  March 31,  2009,  0 and 345,391  shares of
restricted  stock with aggregate grant date fair value of $0 and $3,145,949 were
issued, respectively, with a vesting period of 1 to 4 years.

(3) Securities

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

<TABLE>
<CAPTION>
                                                                                            March 31, 2009
                                                                  ------------------------------------------------------------------
                                                                                     Gross             Gross
                                                                   Amortized       unrealized        unrealized
                                                                     cost             gains            losses            Fair value
                                                                  -----------      ----------      ---------------       -----------
<S>                                                               <C>               <C>                 <C>              <C>
Securities available-for-sale:
   Auction rate securities                                        $ 1,440,000       $     --            $   --           $ 1,440,000
                                                                  -----------       --------            ------           -----------
      Total securities available-for-sale                         $ 1,440,000       $     --            $   --           $ 1,440,000
                                                                  ===========       ========            ======           ===========
Securities held to maturity:
    Municipal bonds                                               $19,309,281       $227,160            $   --           $19,536,441
    Corporate bonds                                                        --             --                --                    --
    Federal agency bonds                                                   --             --                --                    --
                                                                  -----------       --------            ------           -----------
      Total securities held to maturity                           $19,309,281       $227,160            $   --           $19,536,441
                                                                  ===========       ========            ======           ===========
</TABLE>


                                       11
<PAGE>

<TABLE>
<CAPTION>
                                                                                             June 30, 2008
                                                                  ------------------------------------------------------------------
                                                                                     Gross             Gross
                                                                   Amortized       unrealized        unrealized
                                                                     cost             gains            losses            Fair value
                                                                  -----------      ----------      ---------------       -----------
<S>                                                               <C>               <C>               <C>                <C>
Securities available-for-sale:
   Auction rate securities                                        $   500,000       $     --          $(185,800)         $   314,200
                                                                  -----------       --------          ---------          -----------
      Total securities available-for-sale                         $   500,000       $     --          $(185,800)         $   314,200
                                                                  ===========       ========          =========          ===========
Securities held to maturity:
    Municipal bonds                                               $32,566,511       $246,941          $      --          $32,813,452
    Corporate bonds                                                   201,320          1,024                 --              202,344
    Federal agency bonds                                              299,866            323                 --              300,189
                                                                  -----------       --------          ---------          -----------
      Total securities held to maturity                           $33,067,697       $248,288          $      --          $33,315,985
                                                                  ===========       ========          =========          ===========
</TABLE>

Amortization  expense  relating to the net  discounts and premiums on securities
held to maturity  for the three and nine months  ending  March 31, 2009 and 2008
amounted to $78,820 and $140,070, and $279,706 and $435,720.

Contractual maturities of marketable debt securities held to maturity at June 30
are summarized as follows:

<TABLE>
<CAPTION>
                                                                 March 31, 2009                              June 30, 2008
                                                       ---------------------------------           ---------------------------------
                                                                                Fair                                        Fair
                                                        Amortized               market              Amortized              market
                                                           Cost                 value                 Cost                 value
                                                       -----------           -----------           -----------           -----------
<S>                                                    <C>                   <C>                   <C>                   <C>
Within one year                                        $17,217,593           $17,399,241           $21,073,929           $21,147,444
One year to five years                                   2,091,688             2,137,200            11,993,768            12,168,541
                                                       -----------           -----------           -----------           -----------
    Total                                              $19,309,281           $19,536,441           $33,067,697           $33,315,985
                                                       ===========           ===========           ===========           ===========
</TABLE>

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

<TABLE>
<CAPTION>
                                                                 March 31, 2009                              June 30, 2008
                                                       ---------------------------------           ---------------------------------
                                                                                Fair                                        Fair
                                                        Amortized               market              Amortized              market
                                                           Cost                 value                 Cost                 value
                                                       -----------           -----------           -----------           -----------
<S>                                                    <C>                   <C>                     <C>                  <C>
Within one year                                        $        --           $        --             $     --             $     --
One year to five years                                   1,440,000             1,440,000              500,000              314,200
                                                       -----------           -----------             --------             --------
    Total                                              $ 1,440,000           $ 1,440,000             $500,000             $314,200
                                                       ===========           ===========             ========             ========
</TABLE>

At March 31, 2009, the Company held one auction rate security ("ARS")  amounting
to $1.4 million.  The assets  underlying this  investment are primarily  student
loans which are AAA rated and  substantially  guaranteed by the U.S.  government
under the Federal Family Education Loan Program. Historically, this security has
provided  liquidity  through a Dutch auction  process that resets the applicable
interest rate at pre-determined intervals every 30 days. However, these auctions
began to fail in the first  quarter of 2008.  Since these  auctions have failed,
the  Company has  realized  higher  interest  rates for this ARS.  Although  the
Company has been receiving  interest payments at these higher rates, the related
principal  amounts will not be accessible  until a successful  auction occurs, a
buyer is found outside of the auction process, the issuer calls the security, or
the security matures according to contractual terms. Maturity dates for this ARS
investment is in 2038.

As a  result  of the  auction  failures,  this  ARS  does  not  have  a  readily
determinable  market value.  The Company  valued the security based on estimated
future cash flows and  determined  that the security  would become liquid within
the next three years.


                                       12
<PAGE>

To the extent that the Company  determines  that there is an impairment  that is
other-than-temporary,  the  Company  would  record  a  charge  to  earnings.  In
addition,  the Company has concluded that the auctions for these  securities may
continue  to fail for at least the next 12 months  and as a result,  it has been
classified as non-current assets on our Consolidated  Condensed Balance Sheet at
March 31, 2009.

(4) Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS
157),  which is effective for fiscal years beginning after November 15, 2007 and
for interim  periods  within those  years.  This  statement  defines fair value,
establishes  a  framework  for  measuring  fair value and  expands  the  related
disclosure   requirements.   This  statement   applies  under  other  accounting
pronouncements  that require or permit fair value  measurements.  The  statement
indicates,  among other things,  that a fair value measurement  assumes that the
transaction  to sell an asset or  transfer a liability  occurs in the  principal
market for the asset or liability or, in the absence of a principal market,  the
most advantageous market for the asset or liability. SFAS 157 defines fair value
based upon an exit price model.

Relative to SFAS 157,  the FASB issued FASB Staff  Positions  ("FSP") FAS 157-1,
FAS 157-2,  and FAS 157-3. FSP FAS 157-1 amends SFAS 157 to exclude SFAS No. 13,
"Accounting  for  Leases"  (SFAS 13),  and its related  interpretive  accounting
pronouncements that address leasing transactions, while FSP FAS 157-2 delays the
effective date of the  application of SFAS 157 to fiscal years  beginning  after
November 15, 2008 for all nonfinancial assets and nonfinancial  liabilities that
are  recognized  or disclosed  at fair value in the  financial  statements  on a
non-recurring  basis.  FSP FAS 157-3 clarifies the application of SFAS 157 as it
relates to the valuation of financial  assets in a market that is not active for
those  financial  assets.  This FSP is effective  immediately and includes those
periods for which financial statements have not been issued.

The  Company  adopted  SFAS 157 as of July 1, 2008,  with the  exception  of the
application  of  the  statement  to   non-recurring   nonfinancial   assets  and
nonfinancial  liabilities.  Non-recurring  nonfinancial  assets and nonfinancial
liabilities  for which the Company has not  applied the  provisions  of SFAS 157
include those measured at fair value in goodwill impairment testing,  indefinite
lived  intangible  assets measured at fair value for impairment  testing,  asset
retirement obligations initially measured at fair value, and those non-recurring
nonfinancial  assets and  nonfinancial  liabilities  initially  measured at fair
value in a business combination.

Valuation  Hierarchy.  SFAS 157 establishes a valuation hierarchy for disclosure
of  the  inputs  to  valuation  used  to  measure  fair  value.  This  hierarchy
prioritizes  the inputs 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 within the hierarchy 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 March 31, 2009:

<TABLE>
<CAPTION>
                                                                    Significant other   Significant
                               Total Carrying    Quoted prices in      observable       unobservable
                                  Value at        active markets        inputs             inputs
                               March 31, 2009       (Level 1)          (Level 2)          (Level 3)
                               --------------    ----------------   -----------------   ------------
<S>                              <C>                 <C>                <C>              <C>
Available for sale
  securities                     $1,440,000          $    --            $    --          $1,440,000
</TABLE>

Valuation  Techniques.  The Company's  available for sale security includes debt
securities that are traded in an inactive market. They are based on unobservable
inputs based on our own  assumptions  used to measure the security at fair value
and are classified within Level 3 of the valuation hierarchy.

In February  2007,  the FASB issued  SFAS No.  159,  "The Fair Value  Option for
Financial  Assets and  Financial  Liabilities  - Including  an amendment of FASB
Statement  No. 115" (SFAS 159),  which is effective  for fiscal years  beginning
after November 15, 2007.  This statement  permits  entities to choose to measure
many financial instruments


                                       13
<PAGE>

and  certain  other  items  at  fair  value.  This  statement  also  establishes
presentation  and  disclosure  requirements  designed to facilitate  comparisons
between entities that choose different measurement  attributes for similar types
of assets and  liabilities.  Unrealized  gains and losses on items for which the
fair value  option is elected  would be  reported in  earnings.  The Company has
adopted  SFAS  159 and has  elected  not to  measure  any  additional  financial
instruments and other items at fair value.

(5) Goodwill

The changes in the  carrying  amount of goodwill for the nine months ended March
31, 2009, are as follows:

Balance, June 30, 2008                                               $30,715,861
Purchase accounting allocations                                       11,357,628
                                                                     -----------
Balance, March 31, 2009                                              $42,073,489
                                                                     -----------

The Company's accounting allocations totaling $11.4 million consist primarily of
preliminary  purchase  accounting  allocations  associated with the M.S. Kennedy
Corp. acquisition of $2.4 million and purchase accounting allocations associated
with the  acquisition of Unicircuit,  Inc. of $9.0 million.  All of the purchase
accounting  allocations  made in the nine months ending March 31, 2009 relate to
the Space & Defense Group.

No events  during the three and nine months  ended March 31, 2009 have  occurred
that would require an impairment test.

(6) Intangible Assets

The major components of intangible assets are as follows:

<TABLE>
<CAPTION>
                                                            March 31, 2009                     June 30, 2008
                                                      Gross                  Net             Gross         Net
                                                     Carrying             Carrying         Carrying      Carrying
                                                      Amount               Amount           Amount        Amount
                                                    ----------          -----------         ------        ------
<S>                        <C>                      <C>                 <C>                 <C>           <C>
Amortizable intangible assets:
    Customer relationships (10 years)               $7,530,000          $ 7,040,494         $   --        $   --
    Developed technology (5 years)                     780,000              676,000             --            --
    Non-competition agreements (4 years)             1,130,000              945,627             --            --
                                                    ----------          -----------         ------        ------
       Total                                        $9,440,000            8,662,121         $   --            --

Nonamortizable intangible assets:
    Tradenames                                                            2,980,000                           --
                                                                        -----------                       ------
       Total                                                              2,980,000                           --
                                                                        -----------                       ------
Total intangible assets                                                 $11,642,121                       $   --
                                                                        ===========                       ======
</TABLE>

Intangible asset amortization  expense for the three and nine month period ended
March 31, 2009 and 2008  aggregated  $62,882 and  $777,879,  and $0 and $37,500,
respectively.  The June 30,  2008 table was updated to reflect  fully  amortized
intangibles  that  have no net  value at June  30,  2008.  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.  Amortization  expense was adjusted in the
three and nine months ended March 31, 2009 for a purchase  accounting  valuation
update   related  to  the   valuation  of  customer   relationships,   developed
technologies, and non-compete agreements that amounted to a reduction in expense
of $234,915 that related to first six months of fiscal 2009.


                                       14
<PAGE>

Estimated amortization expense for the remaining three months of fiscal 2009 and
for each of the five succeeding fiscal years and thereafter is as follows:

         2009                                         $  297,875
         2010                                         $1,191,500
         2011                                         $1,191,500
         2012                                         $1,191,500
         2013                                         $  936,519
         2014                                         $  766,004
         Thereafter                                   $3,087,223

The intangible assets at March 31, 2009 are subject to final purchase accounting
adjustments, and estimates recorded during fiscal 2009 may need to be adjusted.

(7) Inventory

Inventories are summarized as follows:

                                             March 31, 2009        June 30, 2008
                                             --------------        -------------
Component parts                                $21,507,016          $14,277,256
Work in process                                 13,614,556            9,077,429
Finished goods                                   3,603,415            3,626,682
                                               -----------          -----------
  Total                                        $38,724,987          $26,981,367
                                               ===========          ===========

(8)  Property, Plant and Equipment

Property, plant and equipment are summarized as follows:

                                             March 31, 2009        June 30, 2008
                                             --------------        -------------
Land and land improvements                     $ 5,260,067          $ 4,157,617
Construction in process                          2,059,201            3,022,085
Buildings, furniture and fixtures               33,700,335           25,241,565
Machinery and equipment                         56,873,917           48,383,137
                                               -----------          -----------
                                               $97,893,520          $80,804,404
Less accumulated depreciation                   43,974,954           38,537,973
                                               -----------          -----------
                                               $53,918,566          $42,266,431
                                               ===========          ===========

(9) Accrued Expenses

Accrued expenses consist of the following:

                                             March 31, 2009        June 30, 2008
                                             --------------        -------------
Compensation                                   $ 2,645,689          $ 1,400,574
Commissions                                        670,885              805,496
Health insurance                                   836,187              241,694
Other                                              122,685              133,310
                                               -----------          -----------
                                               $ 4,275,446          $ 2,581,074
                                               ===========          ===========


                                       15
<PAGE>

(10)  Other Liabilities

Other liabilities consist of the following:

                                             March 31, 2009        June 30, 2008
                                             --------------        -------------
Deferred compensation                          $   816,339          $ 1,504,676
Accrued lease                                    1,114,794              890,980
Income taxes                                     1,055,000              510,000
Warranty                                           572,758              854,536
Interest                                           303,257                   --
Other                                              337,018              350,498
                                               -----------          -----------
                                                 4,186,783            4,110,690
Less current portion                             2,380,304            2,618,422
                                               -----------          -----------
                                               $ 1,806,479          $ 1,492,268
                                               ===========          ===========

In fiscal year 2004,  the Company  began  accruing  for a deferred  compensation
agreement  that the Company  entered  into with an  employee in March 2004,  and
extended the agreement in May 2007. During fiscal year 2008, the Company entered
into a final  agreement with this  employee,  and the employee was paid the $0.7
million during the third quarter of fiscal 2009.

In accordance  with FASB  Interpretation  No. 45,  "Guarantor's  Accounting  and
Disclosure  Requirements  for  Guarantees,   Including  Indirect  Guarantees  of
Indebtedness of Others," the Company provides warranty policies on its products.
In addition,  the Company incurs  discretionary 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 service and  product  warranties  for the nine months  ended
March 31, 2009, is as follows:

         Balance as of June 30, 2008              $ 854,536
         Additions                                  185,588
         Subtractions                              (467,366)
                                                  ---------
         Balance as of March 31, 2009             $ 572,758
                                                  =========

(11) Debt

The following table summarizes the long-term debt of the Company as of March 31,
2009 and June 30, 2008:

                                                March 31,             June 30,
                                                  2009                  2008
                                               -----------           -----------
Revolving credit note                          $49,800,000           $        --

Less current maturities                         (9,800,000)                   --
                                               -----------           -----------
Long-term debt, less current maturities        $40,000,000           $        --
                                               ===========           ===========

The following table  summarizes the payments to be made on the long-term debt of
the Company for the remainder of 2009 and for the next five years:


             2009                                      $        --
             2010                                      $ 9,800,000
             2011                                      $10,000,000
             2012                                      $10,000,000
             2013                                      $10,000,000
             2014                                      $10,000,000

On July 31, 2008, the Company  entered into a loan  agreement (the  "Agreement")
with Keybank  National  Association.  The  Agreement  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 in
accordance  with the  above  schedule.  Availability  of  credit  under the Note
declines 20% annually on each  anniversary  date and any  outstanding  principal
balance in excess of the credit  availability  is due and  payable at that time.
The  Company's  indebtedness  and  obligations  are  guaranteed  by three of the
Company's  domestic  subsidiaries,  as well as, an  assignment  of the Company's
interest in its foreign subsidiary.


                                       16
<PAGE>

Borrowings under the 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 nine months ended March 31, 2009,
the  weighted   average   interest  rate  on  the  outstanding   borrowings  was
approximately 3.5%.

Borrowings  under the Agreement  are subject to certain  financial and operating
covenants. The Company was in compliance with covenants as of March 31, 2009.

The Company is also  required to pay a  commitment  fee between 0.20 - 0.35% per
annum on the unused portion of the Note.  Available borrowing capacity under the
Note was $200,000 at March 31, 2009.

(12) Income Taxes

As discussed in note 1, during the nine months ended March 31, 2009, the Company
completed  the  acquisition  of  two  subsidiaries.  As  a  result  of  acquired
unrecognized  tax benefits,  the Company  recognized an increase in unrecognized
tax benefits of $480,000. The acquired unrecognized tax benefits are recorded in
other  long-term  liabilities in the Company's  condensed  consolidated  balance
sheet,  as payment  of cash is not  anticipated  within one year of the  balance
sheet date.

Income taxes for the third quarter of fiscal 2009 were  $1,200,000  representing
an effective tax rate of 25.7%.  This compares to income tax expense of $773,000
for the third  quarter of fiscal 2008,  representing  an  effective  tax rate of
27.4%.   The  effective  tax  rate  for  fiscal  2009  is  now  expected  to  be
approximately 27.5%.

During the quarter ending March 31, 2009, the Company recognized a net reduction
in  unrecognized  tax  benefits  of  $81,000  as a  result  of the  lapse of the
applicable  statute of limitations and an increase in unrecognized  tax benefits
related to tax positions taken in a prior year. The Company is subject to income
tax  examinations  for its U.S.  federal and foreign income taxes for the fiscal
years 2006 through 2008, and for state and local taxes for the fiscal years 2002
through 2008. Various Federal and state income tax examinations are currently in
progress.  It is  reasonably  possible that the  liability  associated  with the
Company's  unrecognized  tax benefits will increase or decrease  within the next
twelve  months  as a  result  of these  examinations  or the  expiration  of the
statutes of  limitations.  At this time an  estimate of the range of  reasonably
possible outcomes cannot be made.

(13) Earnings Per Share

Basic  earnings per share is based on the weighted  average  number of shares of
common stock  outstanding.  Diluted  earnings per share is based on the weighted
average  number  of shares of  common  stock  outstanding,  as well as shares of
common stock having a dilutive potential 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
2,106,312  and 1,705,690 for the three and nine months ending March 31, 2008 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 of common  stock  that may be  purchased  from  proceeds  of  outstanding
options assumed to be exercised.

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

<TABLE>
<CAPTION>
                                                                       Three Months Ended                   Nine Months Ended
                                                                             March 31                            March 31
                                                                   -----------------------------       -----------------------------
                                                                      2009              2008              2009               2008
                                                                   -----------       -----------       -----------       -----------
<S>                                                                <C>               <C>               <C>               <C>
Numerator:
Net income                                                         $ 3,476,441       $ 2,816,589       $ 6,401,799       $ 8,073,367
                                                                   ===========       ===========       ===========       ===========
Denominator:
Denominator for basic earnings per share:
             Weighted average shares outstanding                    13,812,120        14,301,900        13,916,255        15,022,181
                                                                   ===========       ===========       ===========       ===========
Denominator for diluted earnings per share:
           Weighted average shares outstanding                      13,812,120        14,301,900        13,916,255        15,022,181
           Common stock options
             and restricted stock                                      250,183           177,962           185,982           259,963
                                                                   -----------       -----------       -----------       -----------
Weighted average shares and conversions                             14,062,303        14,479,862        14,102,237        15,282,144
                                                                   ===========       ===========       ===========       ===========
</TABLE>


                                       17
<PAGE>

(14) Employee Benefit Plans

Defined Benefit Plan

The following  table sets forth the components of net periodic  pension  benefit
costs:

<TABLE>
<CAPTION>
                                                                 Three Months Ended                         Nine Months Ended
                                                                      March 31                                   March 31
                                                           ------------------------------            ------------------------------
                                                             2009                 2008                  2009                2008
                                                           ---------            ---------            ---------            ---------
<S>                                                        <C>                  <C>                  <C>                  <C>
Service cost                                               $  65,763            $  68,080            $ 197,289            $ 204,240
Interest cost                                                187,077              176,134              561,231              528,402
Expected return on plan assets                              (211,932)            (229,413)            (635,796)            (688,239)
Amortization of the net loss                                  21,300                7,867               63,900               23,601
                                                           ---------            ---------            ---------            ---------
Net periodic benefit cost                                  $  62,208            $  22,668            $ 186,624            $  68,004
                                                           =========            =========            =========            =========
</TABLE>

Required Company contributions for fiscal 2009 are approximately $0.1 million.

Postretirement Health Benefit Plan

The following  table sets forth the  components  of net periodic  postretirement
health benefit costs:

<TABLE>
<CAPTION>
                                                                Three Months Ended                          Nine Months Ended
                                                                     March 31                                   March 31
                                                           ------------------------------            ------------------------------
                                                             2009                 2008                  2009                2008
                                                           ---------            ---------            ---------            ---------
<S>                                                        <C>                  <C>                  <C>                  <C>
Service cost                                               $  17,458            $  17,314            $  52,374            $  51,942
Interest cost                                                 39,259               36,105              117,777              108,315
Amortization of the net loss                                     931                3,903                2,793               11,709
Amortization of prior service cost                            (4,527)              (4,527)             (13,581)             (13,581)
                                                           ---------            ---------            ---------            ---------
Postretirement health benefit cost                         $  53,121            $  52,795            $ 159,363            $ 158,385
                                                           =========            =========            =========            =========
</TABLE>

Total expected  Company  contributions  for fiscal 2009 are  approximately  $0.1
million.

(15) Other Comprehensive Income

Comprehensive income consists of the following:

<TABLE>
<CAPTION>
                                                                     Three Months Ended                     Nine Months Ended
                                                                          March 31                                March 31
                                                               -------------------------------         -----------------------------
                                                                  2009                 2008               2009               2008
                                                               -----------          ----------         ----------         ----------
<S>                                                            <C>                  <C>                <C>                <C>
Net income                                                     $ 3,476,441          $2,816,589         $6,401,799         $8,073,367

Other comprehensive income:
   Foreign currency translation gain (loss)                        (37,737)            412,332              5,143            778,948
   Mark to market adjustment                                            --                  --            185,800                 --
                                                               -----------          ----------         ----------         ----------

Comprehensive income                                           $ 3,438,704          $3,228,921         $6,592,742         $8,852,315
                                                               ===========          ==========         ==========         ==========
</TABLE>


                                       18
<PAGE>

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

<TABLE>
<CAPTION>
                                                             Pension and           Foreign           Mark to            Accumulated
                                                            Postretirement         Currency           Market               Other
                                                               Benefit           Translation      Available-for-       Comprehensive
                                                              Liability           Adjustment      Sale Securities      Income (loss)
                                                            --------------       -----------      ---------------      -------------
<S>                                                          <C>                  <C>                <C>                <C>
Balance, June 30, 2008                                       $(1,528,753)         $1,370,563         $(185,800)         $(343,990)

Other comprehensive income:
   Foreign currency translation gain                                  --               5,143                --              5,143
   Mark to market adjustment                                          --                  --           185,800            185,800
                                                             -----------          ----------         ---------          ---------

Balance, March 31, 2009                                      $(1,528,753)         $1,375,706         $      --          $(153,047)
                                                             ===========          ==========         =========          =========
</TABLE>

(16) Discontinued Operations

During fiscal 2004,  the Company  discontinued  the operations of Anaren Europe,
B.V. The results of operations for Anaren Europe for the prior fiscal years have
been classified as discontinued operations in the Statement of Earnings.  During
the  quarter  ended  March 31,  2008,  income from  discontinued  operations  of
$770,000 was  recognized  due to the  reduction of an  unrecognized  tax benefit
resulting from the lapse of the applicable statute of limitations. Components of
the income from  discontinued  operations  of Anaren Europe for the three months
and nine months ended March 31 are as follows:

                                   Three Months Ended         Nine Months Ended
                                       March 31                   March 31
                                  -------------------        -------------------
                                   2009        2008           2009        2008
                                  ------     --------        ------     --------
Income tax benefit                $   --     $770,000        $   --     $770,000
                                  ======     ========        ======     ========

(17) Segment Information

The Company  operates  predominately in the wireless  communications,  satellite
communications  and defense  electronics  markets.  The  Company's two operating
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 channels,  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 defense
electronics and satellite  communications  markets.  The revenue disclosures for
the Company's operating segments depict products that are similar in nature.

The following table reflects the operating results of the Company's two 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:

In thousands

<TABLE>
<CAPTION>
                                                                                   Space &          Corporate and
                                                           Wireless Group       Defense Group        Unallocated        Consolidated
                                                           --------------       -------------       -------------       ------------
<S>                                                           <C>                  <C>                  <C>               <C>
Net sales:
Three months ended:
        March 31, 2009                                        $17,255              $26,252              $  --             $ 43,507
        March 31, 2008                                         20,222               12,397                 --               32,619
Nine months ended:
        March 31, 2009                                         53,434               69,640                 --              123,074
        March 31, 2008                                         59,183               37,894                 --               97,077

Operating income:
Three months ended:
        March 31, 2009                                        $ 2,035              $ 3,046              $(350)            $  4,731
        March 31, 2008                                          1,591                  914               (215)               2,290
Nine months ended:
        March 31, 2009                                          5,044                4,539               (675)               8,908
        March 31, 2008                                          3,770                4,709               (418)               8,061

Goodwill:
        March 31, 2009                                         30,716               11,357                 --               42,073
        June 30, 2008                                          30,716                   --                 --               30,716
</TABLE>


                                       19
<PAGE>

(18) Summary of Significant Accounting Policies

Use of estimates

The  preparation  of the  financial  statements in  conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the dates of the financial  statements and the reported  amounts of revenues and
expenses during the reporting periods.

Revenue Recognition

Net  sales  are  derived  from  sales  of  the   Company's   products  to  other
manufacturers  or systems  integrators.  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).  The
amount of unbilled  accounts  receivable  at March 31, 2009 and June 30, 2008 is
$0.5 million and $0.2 million, respectively.

An award or incentive fee is usually variable,  based upon specific  performance
criteria stated in the contract.  Award or incentive fees are recognized at 100%
only upon achieving the contractual criteria and after the customer has approved
or granted the award or incentive.

Supplemental Disclosures of Cash Flow Information

<TABLE>
<CAPTION>
<S>                                                                                               <C>                     <C>
Cash paid during the period for:
        Interest                                                                                  $    888,262            $   52,574
                                                                                                  ============            ========
        Income taxes, net of refunds                                                              $  2,756,000            $2,056,283
                                                                                                  ============            ========
Non-cash investing and financing activities:
        Fixed asset purchases included in accounts payable                                        $         --            $  488,662
                                                                                                  ============            ========
      Fair value of assets acquired, including cash acquired                                      $ 58,669,059            $       --
      Liabilities assumed                                                                           (7,616,800)                   --
                                                                                                  ------------            ----------

      Net assets acquired                                                                           51,052,259                    --
      Less -- direct acquisition costs paid in fiscal 2008                                            (329,513)                   --
      Less -- cash acquired                                                                         (2,556,681)                   --
                                                                                                  ------------            ----------

      Net cash paid in fiscal 2009 for purchases of businesses                                    $(48,166,067)           $       --
                                                                                                  ------------            ----------
</TABLE>


                                       20
<PAGE>

(19) Summary of Significant Accounting Policies

In December  2008,  the FASB issued FSP FAS  132(R)-1,  "Employers'  Disclosures
about Postretirement Benefit Plan Assets." This FSP amends SFAS No. 132 (revised
2003),   "Employers'   Disclosures  about  Pensions  and  Other   Postretirement
Benefits," to provide guidance on an employer's disclosures about plan assets of
a defined benefit pension or other  postretirement  plan on investment  policies
and strategies, major categories of plan assets, inputs and valuation techniques
used to measure the fair value of plan assets and significant  concentrations of
risk within plan  assets.  This FSP shall be  effective  for fiscal years ending
after  December  15,  2009,  with earlier  application  permitted.  Upon initial
application,  the  provisions  of this FSP are not required for earlier  periods
that are presented for comparative purposes. The Company is currently evaluating
the disclosure requirements of this new accounting requirement.

In April 2009, the FASB issued FSP FAS 157-4,  "Determining  Fair Value When the
Volume  and Level of  Activity  for the Asset or  Liability  Have  Significantly
Decreased and  Identifying  Transactions  That Are Not Orderly" (FSP FAS 157-4).
FSP FAS 157-4 amends SFAS 157 and provides  additional  guidance for  estimating
fair value in accordance with SFAS 157 when the volume and level of activity for
the asset or liability have  significantly  decreased and also includes guidance
on identifying circumstances that indicate a transaction is not orderly for fair
value measurements.  This FSP shall be applied  prospectively with retrospective
application  not  permitted.  This FSP shall be effective for interim and annual
periods ending after June 15, 2009,  with early  adoption  permitted for periods
ending after March 15, 2009.  An entity early  adopting this FSP must also early
adopt  FSP  FAS  115-2  and  FAS  124-2,   "Recognition   and   Presentation  of
Other-Than-Temporary  Impairments" (FSP FAS 115-2 and FAS 124-2).  Additionally,
if an entity  elects to early adopt either FSP FAS 107-1 and APB 28-1,  "Interim
Disclosures  about Fair Value of Financial  Instruments"  (FSP FAS 107-1 and APB
28-1) or FSP FAS 115-2 and FAS  124-2,  it must also  elect to early  adopt this
FSP. The Company is currently evaluating the disclosure requirements of this new
accounting requirement.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2. This FSP amends SFAS
115,  "Accounting for Certain  Investments in Debt and Equity  Securities," SFAS
124, "Accounting for Certain Investments Held by Not-for-Profit  Organizations,"
and EITF Issue No.  99-20,  "Recognition  of Interest  Income and  Impairment on
Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held
by   a   Transferor   in   Securitized    Financial   Assets,"   to   make   the
other-than-temporary  impairments  guidance more  operational and to improve the
presentation of  other-than-temporary  impairments in the financial  statements.
This FSP will replace the  existing  requirement  that the  entity's  management
assert it has both the intent  and  ability to hold an  impaired  debt  security
until recovery with a requirement  that  management  assert it does not have the
intent to sell the security,  and it is more likely than not it will not have to
sell the security before recovery of its cost basis. This FSP provides increased
disclosure about the credit and noncredit components of impaired debt securities
that are not expected to be sold and also  requires  increased and more frequent
disclosures  regarding  expected  cash  flows,  credit  losses,  and an aging of
securities with unrealized losses. Although this FSP does not result in a change
in the carrying amount of debt  securities,  it does require that the portion of
an  other-than-temporary   impairment  not  related  to  a  credit  loss  for  a
held-to-maturity security be recognized in a new category of other comprehensive
income and be  amortized  over the  remaining  life of the debt  security  as an
increase in the carrying value of the security.  This FSP shall be effective for
interim and annual  periods  ending  after June 15,  2009,  with early  adoption
permitted  for periods  ending after March 15,  2009.  An entity may early adopt
this FSP only if it also elects to early adopt FSP FAS 157-4. Also, if an entity
elects to early  adopt  either FSP FAS 157-4 or FSP FAS 107-1 and APB 28-1,  the
entity  also is  required  to early  adopt this FSP.  The  Company is  currently
evaluating the disclosure requirements of this new accounting requirement.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1.  This FSP amends SFAS
No. 107,  "Disclosures  about Fair Value of Financial  Instruments,"  to require
disclosures  about fair  value of  financial  instruments  not  measured  on the
balance sheet at fair value in interim financial statements as well as in annual
financial  statements.  Prior to this FSP,  fair  values  for these  assets  and
liabilities  were only  disclosed  annually.  This FSP applies to all  financial
instruments  within the scope of SFAS 107 and  requires all entities to disclose
the method(s)  and  significant  assumptions  used to estimate the fair value of
financial  instruments.  This FSP shall be effective for interim  periods ending
after June 15, 2009,  with early  adoption  permitted  for periods  ending after
March 15,  2009.  An entity may early  adopt this FSP only if it also  elects to
early  adopt FSP FAS 157-4  and FSP FAS 115-2 and FAS  124-2.  This FSP does not
require  disclosures for earlier periods  presented for comparative  purposes at
initial  adoption.  In  periods  after  initial  adoption,   this  FSP  requires
comparative  disclosures  only for periods  ending after initial  adoption.  The
Company  is  currently  evaluating  the  disclosure  requirements  of  this  new
accounting requirement.


                                       21
<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
condensed 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  those
factors  described  elsewhere  in this  Quarterly  Report  on Form  10-Q and the
factors  described in the  Company's  Annual  Report on Form 10-K for the fiscal
year ended June 30, 2008.

Overview

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  derived  from  sales  of  the   Company's   products  to  other
manufacturers or systems  integrators.  Net sales are generally  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).

On July 31, 2008,  the Company  cancelled its previous $50.0 million demand note
loan agreement with no balance outstanding on the loan; and on the same day, the
Company  signed a loan agreement with Keybank  National  Association  Bank for a
$50.0  million  declining  revolving  line  of  credit  to be  used  to  finance
acquisitions  and working  capital  needs.  On July 31 and August 29, 2008,  the
Company  took  advances  totaling  $49.8  million  on this line to  finance  the
acquisitions  of M.S.  Kennedy Corp. and  Unicircuit,  Inc.  Advances under this
line, at the  Company's  choice,  bear interest at LIBOR,  plus 100 to 425 basis
points  or at  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.  Availability  of credit  under the line  declines  20%
annually  on each  anniversary  date of the note and any  outstanding  principal
balance in excess of the new line limit is due and payable at that time.

On August 1, 2008, the Company completed the acquisition of M.S. Kennedy,  Corp.
("MSK"),  located  in  Syracuse,  New York.  MSK is a leading  provider  of high
performance  analog  microelectronics  to the Defense and Space markets and is a
leading  designer and producer of custom  analog  hybrids,  power  hybrids,  and
multi-chip modules. MSK offers broad electronic component design, packaging, and
integration capability with net sales of $22.4 million in calendar 2007. MSK was
integrated into Anaren's existing Space & Defense Group. Anaren acquired MSK for
a purchase price, net of cash acquired,  of $27.7 million, and earnings from MSK
have been accretive in fiscal year 2009. The Company  financed this  transaction
through its existing $50.0 million revolving debt facility.

On August 29, 2008, the Company  completed the  acquisition  of Unicircuit  Inc.
("Unicircuit") located in Littleton,  Colorado.  Unicircuit is a manufacturer of
printed   circuit  boards  ("PCB")  used  in  various   military  and  aerospace
applications  with net sales of $18.7 million in calendar 2007.  Unicircuit is a
leader in high  frequency  PCB  technology  and is expected to enhance  Anaren's
ability to capture integrated  microwave assembly  opportunities in


                                       22
<PAGE>

the defense,  satellite and aerospace  markets.  Unicircuit was integrated  into
Anaren's existing Space & Defense Group. Anaren acquired Unicircuit,  Inc. for a
purchase  price,  net of cash  acquired,  of $20.8  million,  and earnings  from
Unicircuit  have been accretive in fiscal year 2009.  The Company  financed this
transaction by utilizing its existing $50.0 million revolving debt facility.

Fourth Quarter of Fiscal 2009 Outlook

For the fourth  quarter of fiscal 2009,  we anticipate  comparable  sales to our
just  completed  third  quarter with higher demand for the Space & Defense Group
and lower demand for the Wireless Group. As a result,  we expect net sales to be
in the range of $41 to $46  million.  We expect  GAAP net  earnings  per diluted
share  to be in the  range of $0.19 - $0.23  using  an  anticipated  tax rate of
approximately 31.0% and is inclusive of approximately $0.05 - $0.06 per share in
charges related to expected equity based  compensation  expense and amortization
of  acquired  intangibles  related  to the  Company's  acquisition  of  MSK  and
Unicircuit.

Results of Operations

Net sales for the three months ended March 31, 2009 were $43.5 million, up 33.4%
from sales of $32.6 million for the third  quarter of fiscal 2008,  and included
$10.8 million in sales from M.S.  Kennedy Corp. and Unicircuit,  Inc. Net income
for the third quarter of fiscal 2009 was $3.5 million,  or 8.0% of net sales, up
$660,000  from net income of $2.8  million in the third  quarter of fiscal 2008.
Net income in the third quarter of fiscal 2009 included  $63,000 of  acquisition
related  expense for  intangible  amortization  compared to no expense for these
items in the third  quarter  of fiscal  2008.  Additionally,  net income for the
third  quarter of fiscal  2008,  included  $770,000 of income from  discontinued
operations,  compared to no income  from  discontinued  operations  in the third
quarter of fiscal 2009.

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

<TABLE>
<CAPTION>
                                                            Three Months Ended                   Nine Months Ended
                                                     Mar. 31, 2009       Mar. 31, 2008     Mar. 31, 2009     Mar. 31, 2008
                                                     -------------       -------------     -------------     -------------
<S>                                                      <C>                 <C>                <C>               <C>
Net Sales                                                100.0%              100.0%             100.0%            100.0%

Cost of sales                                             65.3%               68.9%              68.4%             68.0%
                                                         -----               -----              -----             -----
Gross profit                                              34.7%               31.1%              31.6%             32.0%
                                                         -----               -----              -----             -----

Operating expenses:
   Marketing                                               5.4%                5.4%               5.3%              5.5%
   Research and development                                7.8%                8.2%               7.7%              7.8%
   General and administrative                             10.6%               10.5%              11.4%             10.4%
                                                         -----               -----              -----             -----
      Total operating expenses                            23.8%               24.1%              24.4%             23.7%
                                                         -----               -----              -----             -----

Operating income                                          10.9%                7.0%               7.2%              8.3%
                                                         -----               -----              -----             -----

Other (expense) income:

      Other, primarily interest income                     0.6%                1.6%               0.8%              1.9%
      Interest expense                                    (0.7)%               0.0%              (1.0)%              0.0%
                                                         -----               -----              -----             -----
      Total other income (expense), net                   (0.1)%               1.6%              (0.2)%             1.9%
                                                         -----               -----              -----             -----

Income from continuing operations
   before income taxes                                    10.8%                8.6%               7.0%             10.2%
Income taxes                                               2.8%                2.3%               1.8%              2.7%
                                                         -----               -----              -----             -----
Income from continuing operations                          8.0%                6.3%               5.2%              7.5%
                                                         =====               =====              =====             =====

Discontinued operations:
Income from discontinued operations                        0.0%                2.3%               0.0%              0.8%
                                                         -----               -----              -----             -----
Net income                                                 8.0%                8.6%               5.2%              8.3%
                                                         =====               =====              =====             =====
</TABLE>


                                       23
<PAGE>

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

<TABLE>
<CAPTION>
                                                               Three Months Ended                    Nine months Ended
                                                         Mar. 31, 2009    Mar. 31, 2008       Mar. 31, 2009      Mar. 31, 2008
                                                         -------------    -------------       -------------      -------------
<S>                                                         <C>               <C>                <C>                <C>
Wireless Group                                              $17,255           $20,222            $ 53,434           $59,183
Space & Defense Group                                        26,252            12,397              69,640            37,894
                                                            -------           -------            --------           -------
     Total                                                  $43,507           $32,619            $123,074           $97,077
                                                            =======           =======            ========           =======
</TABLE>

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Net sales.  Net sales were $43.5  million for the third  quarter ended March 31,
2009,  up 33.4%  compared to $32.6  million for the third quarter of fiscal 2008
and included $10.8 million from M.S.  Kennedy Corp. and Unicircuit,  Inc. in the
current third  quarter.  Shipments of Wireless Group products fell $3.0 million,
or 14.7%,  and sales of Space & Defense Group  products rose $13.9  million,  or
111.8%,  in the current  third  quarter  compared to the third quarter of fiscal
2008.

Wireless Group products consist of standard  components,  ferrite components and
custom  subassemblies  for use in building  wireless  basestation  and  consumer
equipment.  Sales of Wireless  Group  products  declined in the third quarter of
fiscal 2009 due  primarily  to a large  fall-off  in demand for custom  Wireless
Group  components  compared  to the third  quarter  of last  year,  as well as a
smaller  general  decline  in overall  Wireless  Group  infrastructure  standard
component  demand.  The  decline  in demand  year over year for both  custom and
standard  component  basestation  products is a result of the general decline in
the worldwide economy and in the case of custom products was heightened by a new
platform introduction at a customer.

Space & Defense Group products  consist of custom  components and assemblies for
communication satellites and defense radar, receiver, and countermeasure systems
for the military. Sales of Space & Defense Group products rose $10.2 million, or
111.8% in the third quarter of fiscal year 2009 compared to the third quarter of
fiscal year 2008.  Sales of Space & Defense Group  products in the third quarter
of the current  fiscal year included  $10.8  million of sales from M.S.  Kennedy
Corp.  and  Unicircuit,  Inc.  Space & Defense Group  product sales  continue to
benefit  from the higher  level of business won by the Company over the past few
fiscal  years,  with  orders in the current  quarter  exceeding  $26.0  million,
resulting in the current Space & Defense Group  backlog of  approximately  $87.0
million.

Gross Profit.  Cost of sales  consists  primarily of  engineering  design costs,
materials,  material fabrication costs, assembly costs, intangible amortization,
direct and indirect overhead, and test costs. Gross profit for the third quarter
of fiscal 2009 was $15.1  million  (34.7% of net sales),  up from $10.1  million
(31.1% of net sales) for the same quarter of the prior year. Gross profit,  as a
percent of sales,  increased in the third  quarter of fiscal 2009 from the third
quarter  of last  year due to the  decrease  in sales  of  lower  margin  custom
Wireless Group  products and a more  favorable  sales mix in the Space & Defense
Group.

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 (5.4%
of net  sales) for the third  quarter  of fiscal  2009,  up  $594,000  from $1.8
million (5.4% of net sales) for the third quarter of fiscal 2008.  This increase
was  attributable  to the  inclusion  of $600,000  of  marketing  expenses  from
Unicircuit and M.S. Kennedy.

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 $3.4 million
(7.8% of net  sales) in the third  quarter  of fiscal  2009,  up 26.8% from $2.7
million (8.2% of net sales) for the third  quarter of fiscal 2008.  Research and
development   expenditures   support  further   development  of  Wireless  Group
infrastructure  and  consumer  component  products,  as well  as new  technology
development in the Space & Defense Group. Research and Development  expenditures
have  increased  in the third  quarter of fiscal  2009 as  compared to the third
quarter  of last  year  due to the  higher  level of  opportunities  in both the
Wireless  Group and Space & Defense Group  marketplaces  and the addition of M.S
Kennedy and Unicircuit, which accounted for $400,000 of the increase in research
and  development  expense.  The  Company  does not expect to reduce its  current
research and development  efforts through year-end and is presently working on a
number of new  standard  and  custom  Wireless  Group and Space & Defense  Group
opportunities.


                                       24
<PAGE>

General and Administrative.  General and administrative ("G&A") expenses consist
of employee related expenses,  professional services,  intangible  amortization,
travel related  expenses and other corporate costs.  General and  administrative
expenses  increased  $1.2 million,  to $4.6 million (10.6% of net sales) for the
third  quarter of fiscal 2009,  from $3.4  million  (10.5% of net sales) for the
third  quarter of fiscal 2008.  The increase in G&A expense in the third quarter
of  fiscal  2009  compared  to the third  quarter  of last  year  resulted  from
additional personnel in the finance,  human resources and information technology
functions,  and the inclusion of $1.1 million in additional G&A costs, including
$300,000 of intangible  amortization  from the  acquisitions of M.S. Kennedy and
Unicircuit  during the third quarter of fiscal 2009. This increase was partially
off-set by a decline in G&A costs by consolidating subsidiary operations.

Operating  Income.  Operating  income rose 106.6% in the third quarter of fiscal
2009 to $4.7 million (10.9% of net sales), compared to $2.3 million (7.0% of net
sales) for the third quarter of fiscal 2008. This increase was due mainly to the
higher sales level in the current  third  quarter  compared to the third quarter
last  year,  as well as the more  favorable  product  mix in the  current  third
quarter  which  resulted in improved  gross  margins year over year.  Assuming a
similar sales volume and product mix,  operating  margins are expected to remain
at or near current levels for the fourth quarter of fiscal 2009.

On an operating segment basis,  Wireless Group operating income was $2.0 million
for the third quarter of fiscal 2009, up $400,000 from $1.6 million in the third
quarter of fiscal 2008.  Despite the decline in Wireless Group sales levels, for
the third  quarter of fiscal  2009,  operating  income  increased  due to a more
favorable product mix.

Space & Defense Group operating  income was $3.0 million in the third quarter of
fiscal 2009, up $2.1 million from $900,000 for the third quarter of fiscal 2008.
Operating  margins in this Group  increased in the current  third quarter due to
higher Group sales levels and the operating profit generated by M.S. Kennedy and
Unicircuit.  Space & Defense Group  operating  margins,  assuming  similar sales
volume and product mix, are expected to remain at or near current levels for the
fourth quarter of fiscal 2009

Other Income.  Other income  primarily  consists of interest  income received on
invested  cash  balances  and rental  income.  Other income  decreased  51.9% to
$257,000 in the third  quarter of fiscal 2009 compared to $536,000 for the third
quarter of last year.  This  decrease  was  caused by the  decline in  available
investable  cash due to the  purchase  of  treasury  shares over the last twelve
months and the  decline in interest  rates  during the past nine  months.  Other
income will fluctuate based on short term market interest rates and the level of
investable cash balances.

Interest  Expense.  Interest  expense  consists  mainly of  interest  on Company
borrowings and deferred items.  Interest  expense in the third quarter of fiscal
2009 was $311,000 (0.7% of net sales),  compared to $6,000 for the third quarter
of fiscal 2008. This increase was due to the interest  expense  generated by the
Company's borrowings starting in the first quarter of fiscal 2009 to finance the
acquisitions  of M.S.  Kennedy and Unicircuit.  The Company  borrowed a total of
$49.8 million under its $50.0 million revolving  declining line of credit in the
first quarter.  These borrowings bear interest at the 90 day LIBOR,  plus 100 to
425 basis  points,  depending  upon the  Company's  rolling  twelve month EBITDA
performance.  The rate is reset  quarterly  and was  approximately  2.5% for the
current third quarter.  The interest rate on this  outstanding  loan balance for
the fourth quarter of fiscal 2009 is expected to be approximately 2.5%.

Income  Taxes.  Income  taxes for the  third  quarter  of fiscal  2009 were $1.2
million (2.8% of net sales),  representing an effective tax rate of 25.7%.  This
compares  to income tax  expense of  $773,000  (2.3% of net sales) for the third
quarter  of fiscal  2008,  representing  an  effective  tax rate of  27.4%.  The
projected  effective  tax  rate  for  fiscal  year  2009 is now  expected  to be
approximately  27.5%. The Company's effective tax rate is a direct result of the
proportion  of  federally  exempt  state  municipal  bond income and federal tax
credits and  benefits  in  relation  to the levels of United  States and foreign
taxable income or loss.

Discontinued  Operations.  Income  from  discontinued  operations  for the third
quarter of fiscal 2008 included $770,000 due to the reduction of an unrecognized
tax benefit  resulting from the lapse of the  applicable  statute of limitations
related to the prior dissolution of the Company's  European  subsidiary,  Anaren
Europe, B.V.

Nine Months Ended March 31, 2009 Compared to Nine Months Ended March 31, 2008

Net sales.  Net sales were $123.1  million  for the nine months  ended March 31,
2009,  up 26.8%  compared to $97.1 million for the third quarter of fiscal 2008.
Sales in the first nine months of the current fiscal year included $25.6 million
of sales from M.S. Kennedy and Unicircuit.  Shipments of Wireless Group products
fell $5.7 million,  or 9.7%,  and sales of Space & Defense  Group  products rose
$31.7 million,  or 83.8%,  in the current nine months compared to the first nine
months of fiscal 2008.


                                       25
<PAGE>

The  decline in  Wireless  Group sales was the result of a decline in demand for
custom  components  during the first nine months of fiscal 2009  compared to the
same period of last year.  Sales of custom products fell $9.3 million,  or 37.1%
in the first nine  months of fiscal  2009  compared to the same period in fiscal
2008 reflecting the overall slowing of the economy due to the worldwide economic
slow down.

Space & Defense  Group  sales  rose  $31.7  million,  or 83.8% in the first nine
months of fiscal 2009  compared to the first nine months of the previous  fiscal
year. Space & Defense Group sales in the first nine months of the current fiscal
year included $25.6 million of sales from M.S.  Kennedy and Unicircuit.  Space &
Defense  Group  product  sales  continue  to benefit  from the  higher  level of
business won by the Company over the past few fiscal  years,  with orders in the
first nine months exceeding $73.0 million.

Gross  Profit.  Gross  profit for the first nine months of fiscal 2009 was $38.9
million,  (31.6% of net sales),  up from $31.1 million  (32.0% of net sales) for
the same period of the prior year.  Gross profit as a percent of sales  declined
in the first nine months of the current  fiscal year compared to the same period
in fiscal 2008 due to the inclusion of $2.3 million of amortization of inventory
step-up costs and  intangibles  related to the  acquisition of M.S.  Kennedy and
Unicircuit.   The  amortization  of  acquisition  inventory  step-up  costs  was
completed in the second quarter of fiscal 2009.

Marketing.  Marketing  expenses  were $6.5  million  (5.3% of net sales) for the
first nine months of fiscal 2009, up $1.2 million from $5.3 million (5.5% of net
sales) for the first  nine  months of fiscal  2008.  Marketing  expenses  in the
current nine month period  included  $1.4  million of  marketing  expenses  from
Unicircuit  and M.S.  Kennedy,  which  was  partially  offset  by an  accounting
adjustment  in the second  quarter for the  reduction of  commission  expense of
$275,000 to correct an over accrual that was accumulated  over a number of prior
periods.

Research and  Development.  Research and development  expenses were $9.5 million
(7.7% of net sales) in the first nine months of fiscal 2009,  up 25.6% from $7.6
million  (7.8% of net sales) for the first nine months of fiscal 2008.  Research
and  development  expenditures  support  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 nine months of fiscal 2009 as compared to the first
nine months of last year due to the higher  level of  opportunities  in both the
Wireless  Group  and Space &  Defense  Group  marketplaces,  which  resulted  in
approximately  $800,000 in additional spending at our Anaren Ceramics and Anaren
Microwave  operations.  The addition of M.S Kennedy and Unicircuit accounted for
the  remaining  $1.1  million of the  increase.  The Company  does not expect to
reduce its current  research and  development  efforts  through  year-end 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 increased $3.9
million,  to $14.0  million  (11.4% of net sales)  for the first nine  months of
fiscal 2009,  from $10.1 million  (10.4% of net sales) for the first nine months
of fiscal  2008.  The increase in G&A expense in the first nine months of fiscal
2009  compared to the first nine months of last year  resulted  from  additional
personnel in the finance,  human resources and information technology functions,
and the inclusion of $3.6 million in additional G&A costs,  including intangible
amortization  of $700,000 from the  acquisition of M.S.  Kennedy and Unicircuit.
This increase was partially  off-set by a decline in G&A costs by  consolidating
subsidiary operations.

Operating Income. Operating income rose 10.5% in the first nine months of fiscal
2009 to $8.9 million (7.2% of net sales),  compared to $8.1 million (8.3% of net
sales) for the first nine months of fiscal 2008. This increase was due mainly to
the improvement in  profitability  in the third quarter  resulting from a higher
margin  product mix.  Operating  income as a percent of sales declined year over
year for the first  three  quarters  due to the  inclusion  of $3.0  million  of
combined acquisition related inventory step-up costs and intangible amortization
in the current first nine months compared to the first nine months of last year.

On an operating segment basis,  Wireless Group operating income was $5.0 million
for the first three  quarters of fiscal 2009,  up $1.2 million from $3.8 million
in the  first  nine  months of fiscal  2008.  The  increase  in  Wireless  Group
operating  income in the first nine months of fiscal 2009  compared to the first
nine months of fiscal 2008, despite the decline in Wireless Group sales, was due
to a more favorable sales mix.

Space & Defense Group operating income was $4.5 million in the first nine months
of fiscal 2009,  down  $200,000  from $ 4.7 million for the first nine months of
fiscal 2008.  Operating margins in this Group declined in the current first nine
months due to the  inclusion  of $3.0  million of combined  acquisition  related
inventory  step-up  and  intangible   amortization   costs  resulting  from  the
acquisition of M.S.  Kennedy and Unicircuit.  Excluding  these costs,  operating
income for the Space & Defense Group rose $2.8  million,  or 15%, in the current
year first nine  months,


                                       26
<PAGE>

compared  to  $4.7  million  for the  first  nine  months  of  last  year.  This
improvement  was due mainly to the  increase  in sales  volume and the  combined
level of profitability at the Company's new acquisitions.

Other  Income.  Other income  decreased  48.6% to $1.0 million in the first nine
months of fiscal 2009 compared to $1.9 million for the first nine months of last
year.  This decrease was caused by the decline in available  investable cash due
to the purchase of treasury  shares over the last twelve  months and the decline
in interest rates during the same period.  Other income will fluctuate  based on
short term market interest rates and the level of investable cash balances.

Interest  Expense.  Interest expense in the first nine months of fiscal 2009 was
$1.2 million  compared to $50,000 for the first nine months of fiscal 2008. This
increase was due to the interest expense  generated by the Company's  borrowings
in the first quarter of fiscal 2009 to finance the  acquisitions of M.S. Kennedy
and  Unicircuit.  The Company  borrowed a total of $49.8 million under its $50.0
million  revolving  declining  line  of  credit  in  the  first  quarter.  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 has fluctuated  between 2.5% and 5.0% for the first nine
months.  The interest  rate on this  outstanding  loan balance is expected to be
approximately 2.5% for the fourth quarter of fiscal 2009.

Income  Taxes.  Income  taxes for the first nine months of fiscal 2009 were $2.3
million (1.9% of net sales),  representing an effective tax rate of 26.2%.  This
compares to income tax expense of $2.6 million (2.7% of net sales) for the first
nine months of fiscal 2008,  representing an effective tax rate of 26.2%. During
the second  quarter of fiscal 2009,  the Federal  Research  and  Experimentation
credit was reinstated  retroactive  to January 1, 2008. The projected  effective
tax rate for fiscal 2009 is approximately  27.5% compared to an actual effective
tax rate of 26.0% for fiscal 2008. The Company's  effective tax rate is a direct
result of the  proportion of federally  exempt state  municipal  bond income and
federal tax credits and benefits in relation to the levels of United  States and
foreign taxable income or loss.

Discontinued Operations.  Income from discontinued operations for the first nine
months of fiscal  2008  included  $770,000  due to the  reduction,  in the third
quarter,  of an  unrecognized  tax  benefit  resulting  from  the  lapse  of the
applicable  statute  of  limitations  related  to the prior  dissolution  of the
Company's European subsidiary, Anaren Europe, B.V.

Liquidity and Capital Resources

Net cash  provided  by  operations  for the first nine months of fiscal 2009 was
$16.2 million and resulted from net income before depreciation, amortization and
non-cash  equity based  compensation  expense.  Cash  provided by a $3.3 million
decrease in accounts receivable due to improved  collections was off-set by cash
used to fund an increase  in  inventory  and a $3.1  million pay down of current
liabilities. Net cash provided by operations for the first nine months of fiscal
2008 was $7.6  million  and  resulted  from the high  level of net  income.  The
positive  cash flow from  earnings  for the nine months ended of fiscal 2008 was
partially  off-set by increases  in  inventory  and  receivables  totaling  $6.6
million,  as well as a pay down of accrued expenses and accounts payable of $3.5
million.

Net cash used in  investing  activities  in the first nine months of fiscal 2009
was $39.7  million and  consisted of $17.1  million  provided by the maturity of
marketable debt securities,  $5.5 million used to pay for capital  additions and
$48.2 used to pay for the  acquisitions of M.S. Kenney and Unicircuit.  Net cash
provided  by  investing  activities  in the first nine months of fiscal 2008 was
$20.3  million  and  consisted  of $30.0  million  provided  by the  maturity of
marketable  debt  securities,  net of  $9.8  million  used  to pay  for  capital
additions.

Net cash  provided by  financing  activities  in the first nine months of fiscal
2009 was $43.8  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.  Net cash used in
financing  activities  in the first nine months of fiscal 2008 was $29.5 million
and consisted of $30.2 million used to purchase 2.0 million  treasury shares net
of $708,000  generated by cash  receipts  and tax benefits  from the exercise of
stock options.

During the remainder of fiscal 2009, the Company  anticipates that its main cash
requirement will be for capital expenditures,  and possible continued repurchase
of the Company's common stock.  Capital expenditures for the remainder of fiscal
2009 are  expected to total  between  $1.5- $2.0 million and will be funded from
existing cash and investments.


                                       27
<PAGE>

The Company may  continue to  repurchase  shares of its common stock in the open
market and or through privately negotiated  transactions under the current Board
authorization,  depending on market  conditions.  At March 31, 2009,  there were
approximately  1.1 million shares  remaining under the current Board  repurchase
authorization.

At March 31, 2009, as a result of the decline in the stock market, the assets in
the Company's  defined  benefit plan declined more than  approximately  20% from
July 1,  2007  when the  plan was  considered  to be fully  funded.  Due to this
decline,  the Company was  required to make a $130,000  deposit into the plan by
March  15,  2009 to meet  the  92%  funding  requirement  for the  July 1,  2008
measurement  date  and  further  expects  the  need  to make a  contribution  of
approximately $2.0 million by March 2010 to meet the 94% funding requirement for
the July 1,  2009  measurement  date  valuation.  Additionally,  due to  defined
benefit plan's losses, it is expected that the net periodic pension benefit cost
will double to approximately $0.5 million in fiscal 2010.

At March 31, 2009,  the Company had  approximately  $50.4 million in cash,  cash
equivalents,  and marketable securities. On a fiscal year basis, the Company has
had positive  operating cash flow for over ten years.  The Company believes that
its cash requirements for the foreseeable  future will be satisfied by currently
invested cash balances and expected cash flows from operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements  within the meaning of Item 303(a) (4)
of Reg S-K.

Disclosures About Contractual Obligations and Commercial Commitments

Accounting standards require disclosure concerning the Company's obligations and
commitments  to make future  payments  under  contracts,  such as debt and lease
agreements,  and under  contingent  commitments,  such as debt  guarantees.  The
Company's obligations and commitments at March 31, 2009 are as follows:

(in thousands)

<TABLE>
<CAPTION>
                                                                          Less
                                                         Total          Than 1 Yr.       2 - 3 Yrs.       4 - 5 Yrs.     Over 5 Yrs.
                                                        -------         ----------       ----------       ----------     -----------
<S>                                                     <C>              <C>              <C>              <C>              <C>
Payment Due by Period
Contractual obligations
Debt and interest payments                              $52,711          $10,881          $21,415          $20,415          $--
Operating leases -- facilities                          $ 2,369          $   295          $ 1,145          $   929          $--
Deferred Compensation                                   $   406          $    65          $   130          $   130          $81
</TABLE>

The unrecognized  tax benefits that are recorded in other long-term  liabilities
in the Company's condensed  consolidated balance sheet are not anticipated to be
paid within one year of the balance  sheet date;  and the time period for when a
cash  payout  on these  unrecognized  tax  benefits  can not be  anticipated  or
estimated do to the uncertainty and as such are not included in the above table.

Recent Accounting Pronouncements

In December  2008,  the FASB issued FSP FAS  132(R)-1,  "Employers'  Disclosures
about Postretirement Benefit Plan Assets." This FSP amends SFAS No. 132 (revised
2003),   "Employers'   Disclosures  about  Pensions  and  Other   Postretirement
Benefits," to provide guidance on an employer's disclosures about plan assets of
a defined benefit pension or other  postretirement  plan on investment  policies
and strategies, major categories of plan assets, inputs and valuation techniques
used to measure the fair value of plan assets and significant  concentrations of
risk within plan  assets.  This FSP shall be  effective  for fiscal years ending
after  December  15,  2009,  with earlier  application  permitted.  Upon initial
application,  the  provisions  of this FSP are not required for earlier  periods
that are presented for comparative purposes. The Company is currently evaluating
the disclosure requirements of this new accounting requirement.

In April 2009, the FASB issued FSP FAS 157-4,  "Determining  Fair Value When the
Volume  and Level of  Activity  for the Asset or  Liability  Have  Significantly
Decreased and  Identifying  Transactions  That Are Not Orderly" (FSP FAS 157-4).
FSP FAS 157-4 amends SFAS 157 and provides  additional  guidance for  estimating
fair value in accordance with SFAS 157 when the volume and level of activity for
the asset or liability have  significantly  decreased and also includes guidance
on identifying circumstances that indicate a transaction is not orderly for fair
value measurements.  This FSP shall be applied  prospectively with retrospective
application  not  permitted.  This FSP shall be effective for interim and annual
periods ending after June 15, 2009,  with early  adoption  permitted for periods
ending after March 15, 2009.  An entity early  adopting this FSP must also early
adopt  FSP  FAS  115-2  and  FAS  124-2,   "Recognition   and   Presentation  of
Other-Than-Temporary  Impairments" (FSP FAS 115-2 and FAS 124-2).  Additionally,
if an entity  elects to early adopt either FSP FAS 107-1 and APB 28-1,  "Interim
Disclosures  about Fair Value of Financial  Instruments"  (FSP FAS 107-1 and APB
28-1) or FSP FAS 115-2 and FAS  124-2,  it


                                       28
<PAGE>

must also elect to early adopt this FSP. The Company is currently evaluating the
disclosure requirements of this new accounting requirement.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2. This FSP amends SFAS
115,  "Accounting for Certain  Investments in Debt and Equity  Securities," SFAS
124, "Accounting for Certain Investments Held by Not-for-Profit  Organizations,"
and EITF Issue No.  99-20,  "Recognition  of Interest  Income and  Impairment on
Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held
by   a   Transferor   in   Securitized    Financial   Assets,"   to   make   the
other-than-temporary  impairments  guidance more  operational and to improve the
presentation of  other-than-temporary  impairments in the financial  statements.
This FSP will replace the  existing  requirement  that the  entity's  management
assert it has both the intent  and  ability to hold an  impaired  debt  security
until recovery with a requirement  that  management  assert it does not have the
intent to sell the security,  and it is more likely than not it will not have to
sell the security before recovery of its cost basis. This FSP provides increased
disclosure about the credit and noncredit components of impaired debt securities
that are not expected to be sold and also  requires  increased and more frequent
disclosures  regarding  expected  cash  flows,  credit  losses,  and an aging of
securities with unrealized losses. Although this FSP does not result in a change
in the carrying amount of debt  securities,  it does require that the portion of
an  other-than-temporary   impairment  not  related  to  a  credit  loss  for  a
held-to-maturity security be recognized in a new category of other comprehensive
income and be  amortized  over the  remaining  life of the debt  security  as an
increase in the carrying value of the security.  This FSP shall be effective for
interim and annual  periods  ending  after June 15,  2009,  with early  adoption
permitted  for periods  ending after March 15,  2009.  An entity may early adopt
this FSP only if it also elects to early adopt FSP FAS 157-4. Also, if an entity
elects to early  adopt  either FSP FAS 157-4 or FSP FAS 107-1 and APB 28-1,  the
entity  also is  required  to early  adopt this FSP.  The  Company is  currently
evaluating the disclosure requirements of this new accounting requirement.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1.  This FSP amends SFAS
No. 107,  "Disclosures  about Fair Value of Financial  Instruments,"  to require
disclosures  about fair  value of  financial  instruments  not  measured  on the
balance sheet at fair value in interim financial statements as well as in annual
financial  statements.  Prior to this FSP,  fair  values  for these  assets  and
liabilities  were only  disclosed  annually.  This FSP applies to all  financial
instruments  within the scope of SFAS 107 and  requires all entities to disclose
the method(s)  and  significant  assumptions  used to estimate the fair value of
financial  instruments.  This FSP shall be effective for interim  periods ending
after June 15, 2009,  with early  adoption  permitted  for periods  ending after
March 15,  2009.  An entity may early  adopt this FSP only if it also  elects to
early  adopt FSP FAS 157-4  and FSP FAS 115-2 and FAS  124-2.  This FSP does not
require  disclosures for earlier periods  presented for comparative  purposes at
initial  adoption.  In  periods  after  initial  adoption,   this  FSP  requires
comparative  disclosures  only for periods  ending after initial  adoption.  The
Company  is  currently  evaluating  the  disclosure  requirements  of  this  new
accounting requirement.

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 March 31, 2009,  the Company had cash,  cash  equivalents  and  marketable
securities  of $51.8  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 March 31, 2009 rates,  or 0.25%,  would have
reduced net income and cash flow by approximately  $33,000, or $.002 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 March 31, 2009,  the Company had $49.8 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 March 31, 2009,  the weighted  average  interest  rate on the
outstanding  borrowings  was 2.35%.  Interest  expense for these  borrowings  is
exposed to interest rate risk and will increase if market interest rates rise. A
hypothetical  increase  in market  interest  rate of 10.0% from  March 31,  2009
rates, or 0.235%,  would have reduced net income and cash flow by  approximately
$29,000,  or $.002 per  diluted  share  for the


                                       29
<PAGE>

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 2008 Annual Report on Form 10-K under the Item
1A, "Risk Factors."

Item 4. Controls and Procedures

A. Disclosure Controls and Procedures

An evaluation of the  effectiveness of the design and operation of the Company's
disclosure  controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the  Securities  Exchange Act of 1934,  as amended  ("Exchange  Act")) was
carried out under the  supervision and with the  participation  of the Company's
management,  including the President and Chief  Executive  Officer and the Chief
Financial  Officer ("the  Certifying  Officers") as of March 31, 2009.  Based on
that evaluation, the Certifying Officers concluded that the Company's disclosure
controls and procedures were effective as of March 31, 2009.

B. Changes in Internal Control Over Financial Reporting

We completed the following acquisitions during the fiscal year 2009:

     MSK on August 1, 2008
     Unicircuit on August 31, 2008

We believe that the  internal  controls and  procedures  of the above  mentioned
acquisitions  are reasonably  likely to materially  affect our internal  control
over financial  reporting.  We are currently in the process of incorporating the
internal  controls  and  procedures  of these  acquisitions  into  our  internal
controls over financial reporting.

The Company  continues to extend its Section 404  compliance  program  under the
Sarbanes-Oxley  Act of 2002 (the "Act") and the applicable rules and regulations
under such Act to include these  acquisitions.  The Company plans to exclude the
FY  2009  acquisitions   listed  above  from  management's   assessment  of  the
effectiveness of internal control over financial  reporting as June 30, 2009, as
permitted by the guidance  issued by the Office of the Chief  Accountant  of the
Securities and Exchange Commission. The Company will report on its assessment of
the internal controls of its combined operations within the time period provided
by the Act and the  applicable  SEC rules and  regulations  concerning  business
combinations.

There were no other 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,  other  than  the  above
mentioned acquisitions.

PART II OTHER INFORMATION

Item 1A. Risk Factors

The  Company's  Annual  Report on Form 10-K for the  fiscal  year ended June 30,
2008, in Part 1, Item 1A. "Risk Factors",  describes  risks  associated with our
business. This item includes material changes to and supplements the description
of the  "Risk  Factors"  disclosed  in our  2008  Annual  Report  on Form  10-K.
Additional risk factors related to our business, financial condition and results
of  operations  include:  the current  world-wide  economic  downturn and credit
crises and their  potential  impact on our  business,  financial  condition  and
results of operations,  including  customers or potential  customers reducing or
delaying  their product  investments,  insolvency of key suppliers  resulting in
product  delays,  failures by vendors and other  third-parties  to perform their
contractual obligations,  the inability of customers to obtain credit to finance
purchases of our products, and customer insolvencies or delayed payments, any of
which could impact our ability to manage  inventory  levels and collect customer
receivables,  could lengthen our cash conversion cycle and increase our need for
cash, which could ultimately decrease our net income and profitability;  and our
Note with  Keybank  National  Association  bears  interest  at a variable  rate.
Accordingly,  unanticipated  material  increases in LIBOR or in Keybank's  prime
rate may  adversely  affect the  Company's  financial  condition  and results of
operations.

Item 6.     Exhibits

            31    Rule 13a-14(a) Certifications

            32    Section 1350 Certifications


                                       30
<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: May 8, 2009                    /s/ Lawrence A. Sala
                                     -------------------------------------------
                                     Lawrence A. Sala
                                     President & Chief Executive Officer

Date:  May 8, 2009                   /s/ George A. Blanton
                                     -------------------------------------------
                                     George A. Blanton
                                     Sr. Vice President, Chief Financial Officer
                                     and Treasurer


                                       31