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

 (Mark One)

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

For the quarterly period ended September 30, 2010

__    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 October
25, 2010 was 14,921,496.

<PAGE>

                                  ANAREN, INC.
                                    FORM 10-Q
                                      INDEX

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

   Item 1.    Financial Statements

              Condensed Consolidated Balance Sheets as of                      3
              September 30, 2010 and June 30, 2010 (unaudited)

              Condensed Consolidated Statements of Income                      4
              for the Three Months Ended September 30,
              2010 and 2009 (unaudited)

              Condensed Consolidated Statements of Cash Flows                  5
              for the Three Months Ended September 30,
              2010 and 2009 (unaudited)

              Notes to Condensed Consolidated Financial                   6 - 12
              Statements (unaudited)

   Item 2.    Management's Discussion and Analysis                       13 - 17
              of Financial Condition and Results of Operations

   Item 3.    Quantitative and Qualitative Disclosures
              About Market Risk                                               18

   Item 4.    Controls & Procedures                                           18

PART II - OTHER INFORMATION

   Item 1A.   Risk Factors                                                    19

   Item 6.    Exhibits                                                        19

 Officer Certifications                                                  20 - 24



                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

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

                                                        September 30,  June 30,
                                                            2010         2010
                                                          ---------   ---------
                            ASSETS
                            ------
Assets:
     Cash and cash equivalents                            $  43,934   $  50,521
     Securities held to maturity                              4,821       2,334
     Receivables, less an allowance of $400
        at September 30, 2010 and June 30, 2010              27,852      29,124
     Inventories                                             33,353      31,361
     Prepaid expenses and other current assets                3,016       2,916
     Deferred income taxes                                    1,545       1,955
                                                          ---------   ---------
        Total current assets                                114,521     118,211
     Securities available-for-sale                            1,051       1,051
     Securities held to maturity                             17,866      19,756
     Property, plant, and equipment, net                     48,022      48,711
     Other assets                                             1,452       1,031
     Goodwill                                                42,435      42,435
     Other intangible assets, net of
        accumulated amortization                              9,855      10,153
                                                          ---------   ---------
     Total assets                                         $ 235,202   $ 241,348
                                                          =========   =========

             LIABILITIES AND STOCKHOLDERS' EQUITY
             ------------------------------------
Liabilities and Shareholders' Equity:
      Current installments of long-term obligation        $  10,000   $  10,000
      Accounts payable                                        8,602       9,271
      Accrued expenses                                        3,837       5,661
      Customer advance payments                                 837         888
      Other current liabilities                               3,765       2,920
                                                          ---------   ---------
        Total current liabilities                            27,041      28,740
     Deferred income taxes                                      842         726
     Pension and postretirement benefit obligation            7,163       7,083
     Long-term obligation                                    20,000      30,000
     Other liabilities                                        2,248       1,873
                                                          ---------   ---------
     Total liabilities                                       57,294      68,422
                                                          ---------   ---------
Stockholders' Equity:
      Common stock, $0.01 par value. Authorized 200,000
      shares;  issued  28,756 and 28,506 at
      September  30, 2010 and June 30, 2010, respectively       288         285
      Additional paid-in capital                            207,537     206,193
      Retained earnings                                     122,216     118,111
      Accumulated other comprehensive loss                   (2,627)     (2,813)
                                                          ---------   ---------
                                                            327,414     321,776
       Less 13,851 and 13,811  treasury
         shares at September 30, 2010 and
         June 30, 2010, respectively, at cost               149,506     148,850
                                                          ---------   ---------
        Total stockholders' equity                          177,908     172,926
                                                          ---------   ---------
      Total liabilities and stockholders' equity          $ 235,202   $ 241,348
                                                          =========   =========

      See accompanying notes to condensed consolidated financial statements


                                       3
<PAGE>

                                  ANAREN, INC.
                   Condensed Consolidated Statements of Income
                 Three Months Ended September 30, 2010 and 2009
                    (in thousands, except per share amounts)
                                   (unaudited)

                                                           2010          2009
                                                         --------      --------
Net Sales                                                $ 44,539      $ 40,337
Cost of Sales                                              26,906        25,673
                                                         --------      --------
        Gross profit                                       17,633        14,664
Operating Expenses:
   Marketing                                                2,399         2,363
   Research and development                                 3,831         3,608
   General and administrative                               5,234         4,480
                                                         --------      --------
        Total operating expenses                           11,464        10,451
                                                         --------      --------
        Operating income                                    6,169         4,213
Other income (expense):
   Interest expense                                          (184)         (183)
   Other, primarily interest income                           120           127
                                                         --------      --------
        Total other income (expense), net                     (64)          (56)
                                                         --------      --------
        Income before income tax expense                    6,105         4,157
Income tax expense                                          2,000         1,300
                                                         --------      --------
        Net income                                       $  4,105      $  2,857
                                                         ========      ========
Earnings per share:
   Basic                                                 $   0.30      $   0.20
                                                         ========      ========
   Diluted                                               $   0.28      $   0.19
                                                         ========      ========
Weighted average common shares outstanding:
      Basic                                                13,839        14,117
                                                         ========      ========
      Diluted                                              14,426        14,795
                                                         ========      ========

     See accompanying notes to condensed consolidated financial statements


                                       4
<PAGE>

                                  ANAREN, INC.
                 Condensed Consolidated Statements of Cash Flows
                 Three Months Ended September 30, 2010 and 2009
                                 (in thousands)
                                   (unaudited)

                                                             2010         2009
                                                           --------    --------
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income                                           $  4,105    $  2,857
      Adjustments to reconcile net income to net cash
      provided by operating activities:
      Depreciation                                            2,129       2,104
      Loss on disposal of fixed assets                            7          10
      Amortization                                              487         344
      Deferred income taxes                                     (51)        305
      Equity based compensation                               1,093         702

      Changes in operating assets and liabilities:
         Receivables                                          1,273      (1,836)
         Inventories                                         (1,983)        350
         Prepaid expenses and other current assets             (520)        101
         Accounts payable                                      (668)      1,962
         Accrued expenses                                    (1,825)     (1,788)
         Customer advance payments                              (52)        (43)
         Other liabilities                                    1,797         344
         Pension and postretirement benefit obligation           80         230
                                                           --------    --------
           Net cash provided by operating activities          5,872       5.642
                                                           --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
      Capital expenditures                                   (1,396)     (1,188)
      Proceeds from sale of property, plant,
        and equipment                                            --           3
      Maturities of held to maturity and
        available-for-sale securities                           271       5,800
      Purchases of held to maturity and
        available-for-sale securities                        (1,057)         --
                                                           --------    --------
           Net cash (used in) provided by
              investing activities                           (2,182)      4,615
                                                           --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
      Payment on note payable                               (10,000)     (9,800)
      Stock options exercised                                   237       2,729
      Excess tax benefit from exercise of stock options           7         191
      Purchase of treasury stock                               (656)       (469)
                                                           --------    --------
           Net cash used in financing activities            (10,412)     (7,349)
                                                           --------    --------
Effect of exchange rates on cash                                135          14
                                                           --------    --------
           Net (decrease) increase in cash and cash
              equivalents                                    (6,587)      2,922
Cash and cash equivalents, beginning of year                 50,521      49,893
                                                           --------    --------
Cash and cash equivalents, end of period                   $ 43,934    $ 52,815
                                                           ========    ========

Supplemental disclosures of cash flow information:
   Cash paid during the period for:
       Interest                                            $    131    $     278
                                                           ========    ========
       Income taxes, net of refunds                        $    818    $     180
                                                           ========    ========

     See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>

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

The condensed consolidated financial statements are unaudited and reflect all
adjustments (consisting of normal recurring adjustments) and accruals, which
are, in the opinion of management, necessary for a fair presentation of the
financial position and operating results for the interim periods. The condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto, together with management's
discussion and analysis of financial condition and results of operations,
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 2010. The results of operations for the three months ended September
30, 2010 are not necessarily indicative of the results for the entire fiscal
year ending June 30, 2011, or any future interim period.

The income tax rates utilized for interim financial statement purposes for the
three months ended September 30, 2010 is based on estimates of income and
utilization of tax credits for the entire fiscal year ending June 30, 2011.

(1)  Equity Based Compensation

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

                                                 Three Months Ended
                                                   September 30
                                         -------------------------------
(amounts in thousands)                        2010               2009
                                         ---------------    ------------
Stock option                             $           137    $        218
Restricted stock                                     956             484
                                         ---------------    ------------
      Stock-based compensation           $         1,093    $        702
                                         ===============    ============

In the three months ended September 30, 2010, 231,000 shares of restricted stock
with aggregate grant date fair value of $3.8 million were issued, and 99,000
shares of restricted stock vested. The issued shares have a vesting period
ranging between 1 to 4 years.

(2)  Securities

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

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

Securities held to maturity:
   Municipal bonds                             $20,217         $350         $  --          $20,567
   Corporate bonds                               1,971           42            --            2,013
   Federal agency bonds                            499            4            --              503
                                               -------         ----         -----          -------
      Total securities held to maturity         22,687          396            --           23,083
                                               =======         ====         =====          =======
</TABLE>
<TABLE>
<CAPTION>
                                                                         June 30, 2010
--------------------------------------------------------------------------------------------------------------------
(amounts in thousands)                                       Gross          Gross
                                              Amortized    unrealized    unrealized
                                                Cost          gains        losses       Fair value
--------------------------------------------------------------------------------------------------------------------
<S>                                            <C>             <C>          <C>            <C>
Securities available-for-sale:
   Auction rate securities                     $ 1,440         $ --         $(389)         $ 1,051

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


                                       6
<PAGE>
                                  ANAREN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

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

                                   September 30, 2010      June 30, 2010
                                   -------------------   ------------------
                                                 Fair                 Fair
                                   Amortized    market   Amortized   market
                                     Cost        value      Cost      value
                                   --------     ------   ---------    ------
(amounts in thousands)
 Within one year                   $  4,821    $  4,908   $  2,334   $   2,379
 One year to three years             17,866      18,175     19,756      20,075
                                   --------    --------   --------   ---------
    Total                          $ 22,687    $ 23,083   $ 22,090   $  22,454
                                   ========    ========   ========   =========


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

                                     September 30, 2010       June 30, 2010
                                    --------------------   -------------------
                                                  Fair                  Fair
                                                  market               market
                                      Cost        value     Cost        value
                                    -------     -------    -------     -------
(amounts in thousands)
 One year to five years             $ 1,440     $ 1,051    $ 1,440     $ 1,051

The Company owns one auction rate security. The security has gone to auction
once every 365 days, and since September 2008, the security has not been
purchased. Therefore, based on the outlook of the auction process, the Company
has recorded the security as long term. The Company has an escrow agreement in
place which institutes a deemed sale of the investment on August 2011. The
Company believes there is no other than temporary impairment of this asset as of
September 30, 2010. The Company has not recognized impairment losses in the
three months ended September 30, 2010 and 2009.

(3)  Fair Value Measurements

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

The carrying value of cash equivalents and the available-for-sale security were
based on fair market value and a discounted cash flow analysis, respectively.

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


                                       7
<PAGE>
                                  ANAREN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

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

 (amounts in thousands)
<TABLE>
                              Total Carrying                            Significant other     Significant
                                 Value at         Quoted prices in         observable         unobservable
                               September 30,       active markets            inputs             inputs
                                   2010               (Level 1)             (Level 2)           (Level 3)
                          --------------------    -----------------     -----------------   ----------------

<S>                            <C>                    <C>                    <C>                <C>
Asset Category
Cash equivalents               $ 5,273                $ 5,273                $ --               $   --
Available-for-sale
   securities                    1,051                     --                  --                1,051
</TABLE>

Valuation Techniques.

In the first quarter ended September 30, 2008, the Company acquired this Level 3
security,  noted  in the  table  above,  with an  estimated  fair  value of $1.4
million. As of September 30, 2010 and June 30, 2010, this security was valued at
$1.1 million. The Company's  available-for-sale security is a debt security that
is traded in an inactive  market.  After  analyzing  the  underlying  assets and
structure of the student loan auction rate security,  the Company has determined
that the most appropriate method of deriving a value indication was a discounted
cash  flow  analysis.   The  Company  found  that  collateral   characteristics,
redemption probability, credit rating, and discount rates are the most important
value drivers to determine an estimated fair value of the  underlying  security,
and is classified within Level 3 of the valuation hierarchy.

(4)  Intangible Assets

The major components of intangible assets are as follows:

                                    September 30, 2010        June 30, 2010
 (amounts in thousands)              Gross       Net        Gross          Net
                                    Carrying   Carrying    Carrying     Carrying
                                     Amount     Amount      Amount       Amount
                                   --------   --------    --------     --------
Amortizable intangible assets:
   Customer relationships           $ 7,530    $ 5,911     $  7,530    $  6,099
   Developed technology                 780        442          780         481
   Non-competition agreements         1,130        522        1,130         593
                                    -------    -------     --------    --------
      Total                         $ 9,440    $ 6,875     $  9,440    $  7,173
                                    =======    =======     ========    ========
Non-amortizable intangible assets:
   Trade names                                   2,980                    2,980
                                               -------                 --------
Total intangible assets                        $ 9,855                 $ 10,153
                                               =======                 ========

Intangible asset  amortization  expense for the three months ended September 30,
2010 and 2009  aggregated  $0.3  million in each  period.  Amortization  expense
related to developed  technology is recorded in cost of sales,  and amortization
expense for  non-compete  agreements and customer  relationships  is recorded in
general and administrative expense.

There have been no changes to the  goodwill  balance in the three  months  ended
September 30, 2010.

(5) Inventories

Inventories are summarized as follows:

                                             September 30,          June 30,
(amounts in thousands)                           2010                 2010
                                               ---------            -------
Raw Materials                                  $  18,388            $17,319
Work in process                                   11,783              9,396
Finished goods                                     3,182              4,646
                                               ---------            -------
                                               $  33,353            $31,361
                                               =========            =======


                                       8
<PAGE>
                                  ANAREN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

(6) Property, Plant, and Equipment

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

 (amounts in thousands)                      September 30,             June 30,
                                                 2010                    2010
                                              ---------                --------
Land and land improvements                    $   5,168                $  5,167
Construction in process                           2,014                   1,451
Buildings, furniture, and fixtures               34,265                  34,052
Machinery and equipment                          62,853                  62,267
                                              ---------                --------
                                                104,300                 102,937
Less accumulated depreciation                   (56,278)                (54,226)
                                              ---------                --------
                                              $  48,022                $ 48,711
                                              =========                ========

(7) Accrued Expenses

Accrued expenses consists of the following:

 (amounts in thousands)                      September 30,             June 30,
                                                 2010                    2010
                                              ---------                --------
Compensation                                     $2,879                  $4,483
Health insurance                                    363                     423
Commissions and other                               595                     755
                                                 ------                  ------
                                                 $3,837                  $5,661
                                                 ======                  ======


(8) Other Liabilities

Other liabilities consist of the following:

 (amounts in thousands)                      September 30,             June 30,
                                                 2010                    2010
                                              ---------                --------
Deferred compensation                           $   415                 $   425
Supplemental retirement plan                        692                     670
Accrued lease                                     1,508                   1,107
Warranty accrual                                    332                     320
Income tax liability                              2,261                   1,610
Deferred grant income                               375                     375
Other                                               430                     286
                                                -------                 -------
                                                  6,013                   4,793
Less current portion                             (3,765)                 (2,920)
                                                -------                 -------
                                                $ 2,248                 $ 1,873
                                                =======                 =======

The Company provides warranty policies on its products. In addition, the Company
incurs  costs to service  our  products  in  connection  with  specific  product
performance  issues.  Liabilities for product warranties are based upon expected
future product  performance and durability,  and is estimated largely based upon
historical  experience.  Adjustments  are made to  accruals  as  claim  data and
historical  experience  warrant.  The changes in the carrying  amount of product
warranty reserves for the three months ended September 30, 2010, is as follows:

                    (amounts in thousands)
                    Balance as of July 1, 2010         $       320
                    Additions                                  128
                    Costs incurred                             (98)
                    Adjustments                                (18)
                                                       -----------
                    Balance as of September 30, 2010   $       332
                                                       ===========


                                       9
<PAGE>
                                  ANAREN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

(9)  Debt

Borrowings  under a  revolving  credit  note  (Note),  with  Key  Bank  National
Association,  bears interest at the London  inter-bank offer rate (LIBOR),  plus
100 to 425 basis points,  or at the Lender's prime rate, minus (100) to plus 225
basis points,  depending upon the Company's  earnings  before interest and taxes
and  depreciation  and  amortization  (EBITDA)  performance  at the  end of each
quarter as measured by the  formula:  EBITDA  divided by the Current  Portion of
Long-term Debt plus interest  expense.  For the three months ended September 30,
2010,  the weighted  average  interest rate on the  outstanding  borrowings  was
approximately  1.56%. In the three months ending September 30, 2010, the Company
paid $10.0 million on the Note. The Company's  indebtedness  and obligations are
guaranteed  by three of the  Company's  domestic  subsidiaries,  as well as,  an
assignment of the Company's interest in its foreign subsidiary.

(10)  Earning Per Share

Basic  earnings  per  share is based on the  weighted  average  number of common
shares outstanding.  Diluted earnings per share is based on the weighted average
number of common shares outstanding, as well as dilutive potential common shares
which,  in the Company's  case,  comprise  shares  issuable  under the Company's
Comprehensive  Long-Term  Incentive Plan. The weighted  average number of common
shares  utilized in the  calculation of the diluted  earnings per share does not
include  anti-dilutive  shares  aggregating  599,000  and  604,000 for the three
months ended  September  30, 2010 and 2009,  respectively.  The  treasury  stock
method is used to calculate  dilutive shares,  which reduces the gross number of
dilutive  shares by the number of shares  purchasable  from the  proceeds of the
options assumed to be exercised.

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

                                                      Three Months Ended
                                                         September 30
                                                   -----------------------
  (amounts in thousands)                             2010          2009
                                                   -------      ----------
Numerator:
Net income                                         $ 4,105      $    2,857
                                                   =======      ==========
Denominator:
Denominator for basic earnings per
share outstanding                                   13,839          14,117
                                                   =======      ==========
Denominator for diluted earnings per share:
   Weighted average shares outstanding              13,839          14,117
Common  stock  options  and restricted
stock                                                  587             678
                                                   -------      ----------
Weighted average diluted shares                     14,426          14,795
                                                   =======      ==========

(11)  Employee Benefit Plans

Defined Benefit Plan

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

                                                      Three Months Ended
                                                           September 30
                                                      ------------------
                                                      2010          2009
                                                      -----         ----
(amounts in thousands)
 Service cost                                         $  70           78
 Interest cost                                          198          200
 Expected return on plan assets                        (191)        (187)
 Amortization of the unrecognized loss                   76           83
                                                      -----         ----
 Net periodic benefit cost                            $ 153          174
                                                      =====         ====

Required contributions for fiscal 2011 are approximately $0.3 million; $0.1
million has been paid in the three months ending September 30, 2010.


                                       10
<PAGE>
                                  ANAREN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

Postretirement Health Benefit Plan

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

                                                       Three Months Ended
                                                           September 30
                                                    ------------------------
                                                    2010                2009
                                                    ----                ----
(amounts in thousands)
 Service cost                                       $ 13                 20
 Interest cost                                        27                 40
 Amortization of the unrecognized loss                (7)                 1
 Amortization of the prior service cost               (5)                (5)
                                                    ----                ---
 Net periodic benefit cost                          $ 28                 56
                                                    ====                ===

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


(12)  Other Comprehensive Income

Other Comprehensive Income

Comprehensive income consists of the following:

                                                         Three Months Ended
                                                             September 30
                                                   ----------------------------
                                                    2010                 2009
                                                   ------               ------
 (amounts in thousands)
Net income                                         $4,105               $2,857

Other comprehensive income:
   Foreign currency translation gain                  186                   14
   Mark to market adjustment                           --                   --
                                                   ------               ------
Comprehensive income                               $4,291               $2,871
                                                   ======               ======

Accumulated Other Comprehensive Income (Loss)

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

<TABLE>
<CAPTION>
                                       Foreign           Minimum          Mark to          Accumulated
                                      currency           pension          market              other
                                     translation        liability    available-for-sale   comprehensive
                                     adjustment        adjustment       securities        income (loss)
                                     ----------        ----------      ------------        -------------
<S>                                    <C>               <C>               <C>                <C>
(amounts in thousands)
 Balances at June 30, 2009             $1,404            $(3,412)          $(389)             $(2,397)
 Current period change                     62               (478)           --                   (416)
                                       ------            -------           -----              -------
 Balances at June 30, 2010             $1,466            $(3,890)          $(389)             $(2,813)
 Current period change                    186                 --              --                  186
                                       ------            -------           -----              -------
 Balances at September 30, 2010        $1,652            $(3,890)          $(389)             $(2,627)
                                       ======            =======           =====              =======
</TABLE>


(13) Segment and Related Information

The Company's  two  reportable  segments are the Wireless  Group and the Space &
Defense Group.  These segments have been determined based upon the nature of the
products  and services  offered,  customer  base,  technology,  availability  of
discrete internal financial  information,  homogeneity of products, and delivery
channel,  and are  consistent  with the way the Company  organizes and evaluates
financial information  internally for purposes of making operating decisions and
assessing performance.


                                       11
<PAGE>
                                  ANAREN, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

The Wireless Group designs,  manufactures,  and markets commercial products used
mainly by the wireless communications market. The Space & Defense Group designs,
manufactures,  and  markets  specialized  products  for the  space  and  defense
electronics  markets.  The Company's  Space & Defense Group  aggregates  certain
operating segments into one reportable  segment,  as the operating segments have
similar products, customers, and margins on products.

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

<TABLE>
<CAPTION>
 (amounts in thousands)                                      Space &
                                              Wireless       Defense    Unallocated   Consolidated
                                              --------       -------    -----------   ------------
<S>                                          <C>           <C>           <C>            <C>
Net sales (Three Months Ended):
    September 30, 2010                       $   15,525    $   29,014    $     -        $ 44,539
    September 30, 2009                           14,411        25,926          -          40,337
Operating income (Three Months Ended) (1)
    September 30, 2010                            2,980         3,709       (520)          6,169
    September 30, 2009                            1,231         3,050        (68)          4,213
Goodwill and intangible assets:
    September 30, 2010                           30,716        21,574          -          52,290
    June 30, 2010                                30,716        21,872          -          52,588
</TABLE>

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


                                       12
<PAGE>

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

The following  Management's  Discussion and Analysis of Financial  Condition and
Results  of  Operations  should  be read in  conjunction  with the  consolidated
financial  statements  and the notes  thereto  appearing  elsewhere in this Form
10-Q. The following condensed discussion,  other than historical facts, contains
forward-looking statements that involve a number of risks and uncertainties. The
Company's  results  could  differ  materially  from those  anticipated  in these
forward-looking  statements as a result of various  factors,  including  factors
described  elsewhere in this Quarterly Report on Form 10-Q and factors described
in the  Company's  Annual Report on Form 10-K for the fiscal year ended June 30,
2010.

Overview

The consolidated  financial  statements  present the financial  condition of the
Company as of September 30, 2010 and June 30, 2010, and the consolidated results
of operations and cash flows of the Company for the three months ended September
30, 2010 and 2009.

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

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

The Company operates in the wireless  communications,  satellite  communications
and defense  electronics  markets all of which have been affected by the current
economic  climate and  recession.  The United States defense budget has a direct
impact on the level of funding available for programs that the Company currently
participates in or has targeted for future participation.  We continue to assess
the effect of the 2011 defense  budget  proposal on these  programs and, to date
have seen little negative impact on our anticipated  Space & Defense Group order
rate in fiscal 2011. The current economic down turn has negatively  impacted the
worldwide Wireless  infrastructure market as the market has delayed or downsized
system expansions and upgrades. The Company has seen this decline in demand over
the past  twelve  months  resulting  in lower  order  volume for both custom and
standard component  wireless  infrastructure  products in fiscal 2010.  Although
Wireless  Group sales have  improved in the first  quarter of fiscal 2011 due to
strong demand for standard components,  custom product sales continue to decline
and are  expected to have an ongoing  negative  impact on  Wireless  Group sales
levels in the current  fiscal  year.  While the  Company has limited  short-term
visibility for customer demand, we believe that demand has stabilized at current
levels and should improve in calendar 2011 as the economy continues to recover.

Second Quarter of Fiscal 2011 Outlook

For the second  quarter of fiscal 2011, we anticipate a decline in sales for the
Wireless  Group and  comparable  sales for the Space & Defense Group compared to
first quarter levels. As a result, we expect net sales to be in the range of $41
to $45 million. We expect GAAP net earnings per diluted share to be in the range
of $0.23 - $0.28,  using an


                                       13
<PAGE>

anticipated tax rate of approximately 33.0% and inclusive of approximately $0.06
per share related to expected equity based compensation  expense and acquisition
related amortization of intangibles.

Results of Operations

Net sales for the three months ended  September 30, 2010 were $44.5 million,  up
10.4% from sales of $40.3  million  for the first  quarter of fiscal  2010.  Net
income for the first  quarter of fiscal  2011 was $4.1  million,  or 9.2% of net
sales,  up $1.2 million from net income of $2.9 million in the first  quarter of
fiscal 2010.

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

                                                  Three Months Ended
                                         Sept. 30, 2010        Sept. 30, 2009
                                         --------------        --------------
Net Sales                                   100.0%                 100.0%
Cost of sales                                60.4%                 63.6%
                                             ----                  ----
Gross profit                                 39.6%                 36.4%
                                             ----                  ----
Operating expenses:
   Marketing                                  5.4%                  5.9%
   Research and development                   8.6%                  9.0%
   General and administrative                11.7%                 11.1%
                                             ----                   ---
     Total operating expenses                25.7%                 26.0%
                                             ----                  ----
Operating income                             13.9%                 10.4%
                                             ----                  ----
Other income (expense):
     Other, primarily interest income         0.2%                  0.3%
     Interest expense                        (0.4%)                (0.4%)
                                             ----                  ----
     Total other income (expense), net       (0.2%)                (0.1%)
                                             ----                  ----
Income before income taxes                   13.7%                 10.3%
Income taxes                                  4.5%                  3.2%
                                             ----                  ----
   Net income                                 9.2%                  7.1%
                                             ====                  ====

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

                                                  Three Months Ended
                                         Sept. 30, 2010     Sept. 30, 2009
                                         --------------     --------------
(amounts in thousands)
Wireless Group                              $ 15,525          $ 14,411
Space & Defense Group                         29,014            25,926
                                            --------          ---------
     Total                                  $ 44,539          $  40,337
                                            ========          =========

Three Months Ended  September 30, 2010 Compared to Three Months Ended  September
30, 2009

Net sales.  Net sales were $44.5 million for the first  quarter ended  September
30, 2010,  up 10.4%  compared to $40.3  million for the first  quarter of fiscal
2010. Sales of Wireless Group products rose $1.1 million,  or 7.7%, and sales of
Space & Defense Group products rose $3.1 million, or 11.9%, in the current first
quarter compared to the first quarter of fiscal 2010.

The  increase in sales of Wireless  Group  products,  which  consist of standard
components,  ferrite  components  and custom  subassemblies  for use in building
wireless  base station and consumer  equipment,  was the result of a substantial
increase in demand for standard Wireless component products in the current first
quarter  compared to the first quarter of fiscal 2010.  Sales of these  products
rose $3.8 million in the current  first quarter over fiscal 2010 on the strength
of  orders  from  both  European  OEMs and Asian  contract  manufacturers.  This
increase in standard  component  sales was  partially  offset by a $2.7  million
decline  in custom and  ferrite  basestation  products  in the  current  quarter
compared to the first quarter last fiscal year, led by a $2.1 million decline in
sales to a major  OEM  resulting  from  loss of sales to low cost  Asian  vendor
sources and decreased demand for second generation GSM equipment. The continuing
challenging  pricing environment for standard component products also negatively

                                       14
<PAGE>

impacted  net sales for the current  quarter  compared to last year.  Demand for
Wireless  Group  products  in the second  quarter of fiscal  2011 is expected to
decline compared to first quarter levels.

Space & Defense Group products  consist of custom  components and assemblies for
commercial  and  military   satellites,   as  well  as  radar,   receiver,   and
countermeasure  subsystems  for the  military.  Sales of Space &  Defense  Group
products  rose $3.1  million,  or 11.9% in the  first  quarter  of  fiscal  2011
compared  to the first  quarter  of the  previous  fiscal  year.  This  increase
resulted  from  sales of  counter-improvised  explosive  devices  (IED)  related
products  totaling $4.0 million in the current  first  quarter  compared to $0.8
million in the first  quarter of fiscal 2010.  Current  sales under this program
are running $3.0 - $4.0 million per quarter and are expected to continue  though
the end of the third quarter of fiscal 2011. Space & Defense Group product sales
continue to benefit  from the higher  level of business  won by the Company over
the past few fiscal  years which has  resulted  in the Group's  backlog of $78.9
million at September 30, 2010.

Gross Profit.  Cost of sales  consists  primarily of  engineering  design costs,
materials,  material  fabrication  costs,  assembly  costs,  direct and indirect
overhead,  and test costs. Gross profit for the first quarter of fiscal 2011 was
$17.6 million,  (39.6% of net sales), up from $14.7 million (36.4% of net sales)
for the same  quarter  of the prior  year.  Gross  profit as a percent  of sales
increased  in the first  quarter of fiscal  2011 from the first  quarter of last
year due to  favorable  product  mix in both the  Wireless  and  Space & Defense
Groups.  In the Wireless  Group,  gross  margins were enhanced by a $2.7 million
reduction in sales of lower margin,  high material content custom products which
were  replaced  by sales of higher  margin  standard  component  products in the
current  first  quarter  compared to the same  period last year.  In the Space &
Defense Group, margins improved due to both the higher overall sales level, year
over year in the current  quarter,  and a more  favorable  product mix including
both more mature products and products with lower outside material content.

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 first quarter of fiscal 2011,  unchanged from $2.4 million
(5.9% of net sales) for the first quarter of fiscal 2010.  Marketing expenses in
the current first quarter were  unchanged  due to personnel  levels,  commission
costs and travel expenses remaining relatively unchanged.

Research and Development. Research and development expenses consist of material,
salaries and related  overhead costs of employees  engaged in ongoing  research,
design and  development  activities  associated with new products and technology
development.  Research and  development  expenses were $3.8 million (8.6% of net
sales) in the first  quarter of fiscal 2011,  up 6.2% from $3.6 million (9.0% of
net  sales) for the first  quarter  of fiscal  2010.  Research  and  development
expenditures are supporting further development of Wireless Group infrastructure
and consumer component  opportunities,  as well as new technology development in
the Space & Defense Group. Research and development  expenditures have increased
in the first  quarter of fiscal 2011 versus  fiscal 2010 due to the higher level
of opportunities  in the Space & Defense Group and Wireless Group  marketplaces,
which  resulted in  approximately  $0.1 million in  additional  spending in each
Group  compared  to fiscal  2010.  The Company  expects to continue  its current
research  and  development  efforts and spending  levels in fiscal 2011,  and is
presently  working on a number of new  standard  and custom  Wireless  Group and
Space & Defense Group opportunities.

General and  Administrative.  General  and  administrative  expenses  consist of
employee  related  expenses,  incentive  compensation,   professional  services,
intangible  amortization,  travel related  expenses and other  corporate  costs.
General and  administrative  expenses  increased 16.8% to $5.2 million (11.7% of
net sales) for the first quarter of fiscal 2011, from $4.5 million (11.1% of net
sales) for the first  quarter  of fiscal  2010.  The  increase  in  general  and
administrative expense in the first quarter resulted from a lease charge of $0.5
million in the current first quarter of fiscal 2011 to recognize additional rent
expense related to the Company's vacant facility in Frimley, U.K.  Additionally,
G&A expense rose in the current  quarter as a result of a $0.3 million  increase
in equity based  compensation  expense  related to the Company  returning to its
normal  pattern of granting  restricted  stock in August  this year  compared to
November in fiscal 2010.

Operating  Income.  Operating  income  increased  46.4% in the first  quarter of
fiscal  2011 to $6.2  million,  (13.9% of net sales),  compared to $4.2  million
(10.4% of net sales) for the first  quarter of fiscal  2010.  This  increase  in
operating income was a result of the $4.2 million increase in sales volume,  the
favorable  product  mix  caused  by the  rise  in  sales  of  Wireless  standard
components coupled with the decline in sales of Wireless custom assemblies.

On an operating segment basis,  Wireless Group operating income was $3.0 million
(19.2% of group sales) for the first  quarter of fiscal 2011,  up $1.8  million,
from the Group's  operating  income of $1.2 million (8.5% of group sales) in the
first quarter of fiscal 2010. The improvement in Wireless Group operating income
in the first quarter of


                                       15
<PAGE>

fiscal  2011  compared  to the first  quarter of fiscal 2010 was due to the $1.1
million overall  increase in Wireless Group sales and the combined impact of the
continuing  decline in low margin custom assembly sales and the increased demand
for higher  margin  standard  component  products.  This  favorable  product mix
coupled with  further  yield  improvements  for  standard  components  served to
increase  gross and  operating  margins  8.5  percentage  points in the  current
quarter compared to the first quarter of last year.

Space & Defense Group  operating  income was $3.7 million (12.8% of Group sales)
in the first  quarter of fiscal 2011,  up $0.6 from $3.1  million  (11.8% of net
group sales) for the first  quarter of fiscal 2010.  Operating  margins for this
Group  increased  in the current  first  quarter due to the higher  sales volume
which allowed for efficiencies in production resulting in a 0.5 percentage point
improvement  in gross  margins,  Additionally,  Space & Defense Group  operating
margins  were also  enhanced as a result of sales of higher  margin  counter-IED
related products  totaling $4.0 million in the current first quarter compared to
$0.8  million in the first  quarter of fiscal  2010.  Current  sales  under this
program are running $3.0 - $4.0 million per quarter and are expected to continue
through the end of the third quarter of fiscal 2011.

Other Income.  Other income  primarily  consists of interest  income received on
invested cash balances and rental income.  Other income was flat at $0.1 million
in the first  quarter of fiscal  2011  compared  to $0.1  million  for the first
quarter of last year. Short-term interest rates have remained constant year over
year and the Company has deliberately shortened the maturities of the investment
portfolio due to the turmoil in the credit  market.  Other income will fluctuate
based on short  term  market  interest  rates and the level of  investable  cash
balances.

Interest  Expense.  Interest  expense  consists  mainly of  interest  on Company
borrowings and deferred items.  Interest  expense in the first quarter of fiscal
2011 was $0.2 million,  unchanged compared to $0.2 million for the first quarter
of  fiscal  2010.  Interest  expense  has  remained  flat due to the  continuing
consistent  and low level of the 90 day London  Inter-Bank  Offer  Rate  (LIBOR)
interest rate for the first quarter of fiscal 2011 compared to the first quarter
of fiscal 2010.  The Company  borrowed a total of $49.8  million under its $50.0
million  revolving  credit facility in the first quarter 2009 and repaid a total
of $19.8 million during fiscal 2010 and the first quarter of fiscal 2011.  These
borrowings bear interest at the 90 day LIBOR rate, plus 100 to 425 basis points,
depending upon the Company's  rolling twelve month earnings  before interest and
taxes and depreciation and amortization (EBITDA) performance.  The rate is reset
quarterly  and  for  the  second  quarter  of  fiscal  2011  is  expected  to be
approximately 1.3%.

Income  Taxes.  Income  taxes for the  first  quarter  of fiscal  2011 were $2.0
million (4.5% of net sales),  representing an effective tax rate of 32.8%.  This
compares to income tax expense of $1.3 million (3.2% of net sales) for the first
quarter  of fiscal  2010,  representing  an  effective  tax rate of  31.3%.  The
increase in the  effective  rate for the quarter is a result of the  increase in
taxable  income and the mix of foreign  and  domestic  taxable  income year over
year.  The  projected  effective  tax rate for  fiscal  2011 is  expected  to be
approximately 33.0%.

Critical Accounting Policies

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

Liquidity and Capital Resources

Net cash  provided by  operations  for the first three months of fiscal 2011 was
$5.9 million and  primarily  resulted from net income  before  depreciation  and
non-cash equity based compensation expense. The positive cash flow from earnings
for the  current  quarter was further  enhanced  by a $1.3  million  decrease in
accounts  receivable  due to improved  collections,  which was off-set by a $2.0
million  increase in inventory and a $0.7 million pay down of  liabilities.  Net
cash provided by  operations  for the first three months of fiscal 2010 was $5.6
million and  resulted  from net income  before  depreciation,  amortization  and
non-cash equity based compensation expense. The positive cash flow from earnings
for the quarter was further enhanced by a $0.4 million decrease in inventory and
a $2.0  million  increase in accounts  payable,  which more than  off-set a $1.8
million increase in accounts  receivable.  The large fluctuations in the working
capital were a result of the timing of when sales were made during the quarter.

Net cash used for investing  activities in the first three months of fiscal 2011
was $2.2  million and  consisted  of $0.8  million  use for the net  purchase of
marketable debt securities and $1.4 million used for capital additions. Net cash
provided by  investing  activities  in the first three months of fiscal 2010 was
$4.6  million  and  consisted  of $5.8  million  provided by the  maturities  of
marketable debt securities, net of $1.2 million used for capital additions.

Net cash used in  financing  activities  was $10.4  million  in the first  three
months of fiscal 2011 and  consisted  of $0.2  million of cash and tax  benefits
provided  by the  exercise  of stock  options,  less $10.0  million  used to pay
long-term debt and $0.7 million used to purchase  approximately  40,000 treasury
shares.  Net cash used in  financing  activities


                                       16
<PAGE>

was $7.3 million in the first three months of fiscal 2010 and  consisted of $2.7
million of cash and tax benefits provided by the exercise of stock options, less
$9.8  million  used to pay  long-term  debt and $0.5  million  used to  purchase
approximately 29,000 treasury shares.

During the remainder of fiscal 2011,  the Company  anticipates  that its primary
cash requirement will be for capital expenditures and possible repurchase of the
Company's  common stock.  Capital  expenditures for the remainder of fiscal 2011
are  expected to be in the range of $5.0 - $6.0  million and will be funded from
existing cash and investments, and expected cash flow generated by operations.

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 September 30, 2010, there were
approximately  477,000  shares  remaining  under the  current  Board  repurchase
authorization.

At September 30, 2010, the Company had approximately $67.7 million in cash, cash
equivalents,  and marketable securities.  The Company has had positive operating
cash flow for over ten years,  and believes that its cash  requirements  for the
foreseeable  future will be satisfied by currently  invested  cash  balances and
expected cash flows from operations.


                                       17
<PAGE>

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

As of September 30, 2010, the Company had cash, cash  equivalents and marketable
securities  of $67.7  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  within 3 years,  are exposed to interest rate risk and will decrease
in value if market  interest rates increase.  A hypothetical  decrease in market
interest  rate of 10.0% from  September  30, 2010 rates,  or 0.035%,  would have
reduced net income and cash flow by approximately  $7,000, or $.0005 per diluted
share for the quarter. Due to the relatively short maturities of the securities,
continuing  current  unprecedented low market rates and the Company's ability to
hold those  investments  to  maturity,  the  Company  does not  believe  that an
immediate  decrease in interest  rates  would have a  significant  effect on its
financial condition or results of operations.  Over time,  however,  declines in
interest rate will reduce the Company's interest income.

As of September  30, 2010,  the Company had $30.0  million in  outstanding  debt
under its revolving line of credit with Key Bank National Association.  The line
consists of a $50,000,000  revolving credit note for which principal amounts are
due on August 1, 2011, and on each anniversary date thereafter  through July 31,
2013.  Borrowings under this Note bear interest at LIBOR,  plus 100 to 425 basis
points or at the  Lender's  prime rate,  minus  (100) to plus 225 basis  points,
depending  upon the Company's  EBITDA  performance at the end of each quarter as
measured by the formula: EBITDA divided by the current portion of long-term debt
plus  interest  expense.  For the three months  ended  September  30, 2010,  the
weighted average interest rate on the outstanding borrowings was 1.56%. Interest
expense for these  borrowings is exposed to interest rate risk and will increase
if market  interest rates rise. A hypothetical  increase in market interest rate
of 10.0% from September 30, 2010 rates, or 0.13%,  would have reduced net income
and cash flow by  approximately  $10,000,  or $.0007 per  diluted  share for the
quarter. Due to the Company's  significant cash reserves and historical positive
operating cash flow, the Company does not believe that an immediate  increase in
interest  rates would have a significant  effect on its  financial  condition or
results of operations.  Over time,  however,  increases in market interest rates
will increase the Company's interest expense.

Forward-Looking Cautionary Statement

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

Item 4. Controls and Procedures

A. Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended ("Exchange Act")) was
carried out under the supervision and with the participation of the Company's
management, including the President and Chief Executive Officer and the Chief
Financial Officer ("the Certifying Officers") as of September 30, 2010. Based on
that evaluation, the Certifying Officers concluded that the Company's disclosure
controls and procedures were effective as of September 30, 2010.


                                       18
<PAGE>

B. Changes in Internal Control Over Financial Reporting

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

PART II OTHER INFORMATION

Item 1A. Risk Factors

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

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

(c) Issuer Purchases of Equity Securities

On November 5, 2007, the Board of Directors increased by an additional 2,000,000
the number of shares that the Company was  authorized  to repurchase in the open
market or by privately negotiated  transactions through its previously announced
stock repurchase program.  The program (originally  announced on March 5, 2001),
which may be suspended at any time without notice,  has no expiration  date. The
following  table  sets  forth  information   regarding  shares  repurchased  and
purchasable under the program during and as of the end of the periods indicated.
On September 30, 2010,  approximately  477,000  shares  remained  authorized for
purchase, depending on market conditions.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
         Period              Total Number of       Average Price Paid       Total Number of      Maximum Number (or
                            Shares (or Units)     per Share (or Unit)      Shares (or Units)     Approximate Dollar
                                Purchased                                Purchased as Part of   Value) of Shares (or
                                                                          Publicly Announced     Units) that May Yet
                                                                           Plans or Programs     Be Purchased Under
                                                                                                the Plans or Programs
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                      <C>                   <C>                   <C>
July 2010                                     0                                              0                516,240
----------------------------------------------------------------------------------------------------------------------
August 2010                              39,658                   16.54                 39,658                476,582
----------------------------------------------------------------------------------------------------------------------
September 2010                                0                                              0                476,582
----------------------------------------------------------------------------------------------------------------------
Total                                    39,658                   16.54                 39,658                476,582
----------------------------------------------------------------------------------------------------------------------
</TABLE>


Item 6. Exhibits

        31  Rule 13a-14(a) Certifications

        32  Section 1350 Certifications


                                       19
<PAGE>

                                   SIGNATURES

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

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


Date: October 29, 2010                     /s/Lawrence A. Sala
                                           -------------------------------------
                                           Lawrence A. Sala
                                           President & Chief Executive Officer

Date:  October 29, 2010                    /s/George A. Blanton
                                           -------------------------------------
                                           George A. Blanton
                                           Sr. Vice President, Chief
                                           Financial Officer
                                           and Treasurer


                                       20