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 December 31, 1999
                               -----------------
__   TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from _____________________ to ________________________

                          Commission file number 0-6620
                                                 ------

                             ANAREN MICROWAVE, INC.
             (Exact name of Registrant as specified in its Charter)

        New York                                      16-0928561
        --------                                      ----------
 (State of incorporation)                  (I.R.S Employer Identification No.)

 6635 Kirkville Road                       13057
                                           -----
 East Syracuse, New York                   (Zip Code)
 -----------------------
 (Address of principal
 executive offices)

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

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

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

      The number of shares of Registrant's Common Stock outstanding on February
5, 2000 was 5,638,392.


                                       1
<PAGE>

                             ANAREN MICROWAVE, INC.

                                      INDEX

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

   Item 1.    Financial Statements

              Consolidated Condensed Balance Sheets as of                 3
              December 31, 1999 and June 30, 1999

              Consolidated Condensed Statements of Earnings               4
              for the Three Months ended December 31, 1999 and
              1998

              Consolidated Condensed Statements of Earnings               5
              for the Six Months ended December 31, 1999 and 1998

              Consolidated Condensed Statements of Cash Flows             6
              for the Six months ended December 31, 1999 and 1998

              Notes to Consolidated Condensed Financial                   7
              Statements

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


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

   Item 4.    Submission of matters to a                                  16
              vote of Security Holders

   Item 6.    Exhibits and Reports on Form 8-K                            17


                                       2
<PAGE>

                             ANAREN MICROWAVE, INC.
                                AND SUBSIDIARIES

                      Consolidated Condensed Balance Sheets
                       December 31, 1999 and June 30, 1999
<TABLE>
<CAPTION>
                                                                  Unaudited
                   Assets                                      Dec. 31, 1999           June 30, 1999
                   ------                                      -------------           -------------
<S>                                                            <C>                     <C>
   Current assets:
       Cash and cash equivalents                               $  6,068,059            $ 13,481,576
       Marketable debt securities                                22,884,392              15,005,129
       Receivables, less allowance of $13,000                     8,623,550               6,333,096
       Inventories                                                8,400,869               8,384,922
       Refundable income taxes                                           --                 461,846
       Prepaid expenses                                             478,071                 224,358
       Deferred income taxes                                        140,913                 116,688
                                                               ------------            ------------
                   Total current assets                          46,595,854              44,007,615
                                                               ------------            ------------

   Property, plant and equipment                                 36,506,103              34,483,025
       Less accumulated depreciation and amortization           (26,687,087)            (25,879,241)
                                                               ------------            ------------
                   Net property, plant and equipment              9,819,016               8,603,784
                                                               ------------            ------------

   Marketable debt securities                                     5,280,801               4,976,275
   Deferred income taxes, long term                                 334,393                 304,060
   Patent                                                           539,030                 574,965
                                                               ------------            ------------

                                                               $ 62,569,094            $ 58,466,699
                                                               ============            ============
       Liabilities and Stockholders' Equity
       ------------------------------------
   Current liabilities:

       Accounts payable                                        $  2,481,117            $  2,360,226
       Income taxes payable                                         121,738                 472,190
       Accrued expenses                                           1,592,924               1,773,762
       Customer advance payments                                    179,997                 348,454
                                                               ------------            ------------
                   Total current liabilities                      4,375,776               4,954,632

   Postretirement benefit obligation                              1,306,924               1,278,569
   Deferred compensation                                            488,000                 388,000
                                                               ------------            ------------
                   Total liabilities                              6,170,700               6,621,201
                                                               ------------            ------------

   Stockholders' equity:

       Common stock of $.01 par value.  Authorized
          25,000,000 shares; issued 6,624,666 shares
          at December 31, 1999 and 6,554,366 shares
          at June 30, 1999                                           66,247                  65,544
       Additional paid-in capital                                39,200,427              37,469,470
       Unearned compensation                                       (851,428)                     --
       Retained earnings                                         21,464,131              17,791,467
                                                               ------------            ------------
                                                                 59,879,377              55,326,481
       Less cost of 1,020,274 shares in treasury
         at December 31, 1999 and June 30, 1999                   3,480,983               3,480,983
                                                               ------------            ------------
                   Total stockholders' equity                    56,398,394              51,845,498
                                                               ------------            ------------
                                                               $ 62,569,094            $ 58,466,699
                                                               ============            ============
</TABLE>
     See accompanying notes to consolidated condensed financial statements.


                                       3
<PAGE>

                             ANAREN MICROWAVE, INC.
                                AND SUBSIDIARIES

                  Consolidated Condensed Statements of Earnings
                               Three Months Ended
                           December 31, 1999 and 1998
                                    Unaudited

<TABLE>
<CAPTION>
                                                               Dec. 31, 1999         Dec. 31, 1998
                                                               -------------         -------------
                                                               (Current Year)       (Preceding Year)

<S>                                                            <C>                   <C>
Net sales                                                      $ 13,270,876          $ 11,056,604

Cost of sales                                                     7,930,472             6,550,512
                                                               ------------          ------------
        Gross profit                                              5,340,404             4,506,092
                                                               ------------          ------------

Operating expenses:
        Marketing                                                 1,158,617             1,014,065
        Research and development                                    787,494               784,628
        General and administrative                                  925,527               810,610
                                                               ------------          ------------
              Total operating expenses                            2,871,638             2,609,303
                                                               ------------          ------------

Operating income                                                  2,468,766             1,896,789
                                                               ------------          ------------
Other income                                                        501,817               314,176
Interest expense                                                    (10,654)               (9,620)
                                                               ------------          ------------

Income before income taxes                                        2,959,929             2,201,345

Income tax expense                                                1,036,000               771,000
                                                               ------------          ------------

Net income                                                     $  1,923,929          $  1,430,345
                                                               ============          ============

Net income per common and common
  share equivalent:

        Basic                                                  $       0.35          $       0.26
                                                               ============          ============
        Diluted                                                $       0.32          $       0.25
                                                               ============          ============

Shares used in computing net income per common
  and common share equivalent:

        Basic                                                     5,566,383             5,496,170
                                                               ============          ============
        Diluted                                                   5,943,677             5,725,872
                                                               ============          ============

Dividends per share                                            $         --          $         --
                                                               ============          ============
</TABLE>

     See accompanying notes to consolidated condensed financial statements.


                                       4
<PAGE>

                             ANAREN MICROWAVE, INC.
                                AND SUBSIDIARIES

                  Consolidated Condensed Statements of Earnings
                                Six Months Ended
                           December 31, 1999 and 1998
                                    Unaudited
<TABLE>
<CAPTION>

                                                             Dec. 31, 1999               Dec. 31, 1998
                                                             -------------               -------------
                                                            (Current Year)              (Preceding Year)

<S>                                                          <C>                         <C>
Net sales                                                    $ 25,735,239                $ 21,535,391

Cost of sales                                                  15,443,530                  13,024,103
                                                             ------------                ------------
        Gross profit                                           10,291,709                   8,511,288
                                                             ------------                ------------

Operating expenses:
        Marketing                                               2,280,302                   1,995,960
        Research and development                                1,489,732                   1,359,733
        General and administrative                              1,789,402                   1,564,144
                                                             ------------                ------------
              Total operating expenses                          5,559,436                   4,919,837
                                                             ------------                ------------

Operating income                                                4,732,273                   3,591,451
                                                             ------------                ------------
Other income                                                      938,420                     663,738
Interest expense                                                  (20,029)                    (19,240)
                                                             ------------                ------------

Income before income taxes                                      5,650,664                   4,235,949
Income tax expense                                              1,978,000                   1,483,000
                                                             ------------                ------------

Net income                                                   $  3,672,664                $  2,752,949
                                                             ============                ============

Net income per common and common
  share equivalent:

        Basic                                                $       0.66                $       0.50
                                                             ============                ============
        Diluted                                              $       0.62                $       0.48
                                                             ============                ============

Shares used in computing net income per common
  and common share equivalent:

        Basic                                                   5,553,671                   5,510,759
                                                             ============                ============
        Diluted                                                 5,888,632                   5,736,848
                                                             ============                ============

Dividends per share                                          $         --                $         --
                                                             ============                ============
</TABLE>

     See accompanying notes to consolidated condensed financial statements.


                                       5
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES
                 Consolidated Condensed Statements of Cash Flows

                                Six Months Ended
                           December 31, 1999 and 1998
                                    Unaudited

<TABLE>
<CAPTION>
                                                             1999            1998
                                                             ----            ----
<S>                                                     <C>             <C>
Cash flows from operating activities:
     Net income                                         $  3,672,664    $  2,752,949
     Adjustments to reconcile net income
       to net cash provided by operating activities:
         Depreciation and amortization                       807,846         697,045
         Deferred income taxes                               (54,558)        (64,762)
         Amortization of intangibles                          35,935              --
         Amortization of unearned compensation                42,572              --
         Changes in operating assets and liabilities:
           Receivables                                    (2,290,454)       (305,871)
           Refundable income taxes                           461,846              --
           Inventories                                       (15,947)      1,425,019
           Prepaid expenses                                 (253,713)        (60,228)
           Accounts payable                                  120,891        (843,406)
           Accrued expenses                                 (180,838)       (148,096)
           Income taxes payable                               95,511        (116,546)
           Customer advance payments                        (168,457)        526,340
           Deferred Compensation                             100,000          72,000
           Postretirement benefit obligations                 28,355              --
                                                        ------------    ------------

             Net cash provided by
               operating activities                        2,401,653       3,934,444
                                                        ------------    ------------

Cash flows from investing activities:
     Capital expenditures                                 (2,023,078)       (658,650)
     Net purchase of marketable debt securities           (8,183,789)     (2,702,482)
                                                        ------------    ------------
             Net cash used in investing activities       (10,206,867)     (3,361,132)
                                                        ------------    ------------

Cash flows from financing activities:
     Purchase of treasury stock                                   --      (1,468,906)
     Proceeds from issuance of common stock                  391,697         373,725
                                                        ------------    ------------
             Net cash provided by (used in)
               financing activities                          391,697      (1,095,181)
                                                        ------------    ------------
             Net decrease in cash and
               cash equivalents                           (7,413,517)       (521,869)

Cash and cash equivalents at beginning of period          13,481,576      11,248,925
                                                        ------------    ------------
Cash and cash equivalents at end of period              $  6,068,059    $ 10,727,056
                                                        ============    ============

SUPPLEMENTAL DISCLOSURES OF
  CASH FLOW INFORMATION:

     Cash Paid During the Period For:
       Interest                                         $     20,029    $        490
                                                        ============    ============
       Income taxes                                     $  1,470,000    $  1,567,285
                                                        ============    ============
</TABLE>

See accompanying notes to consolidated condensed financial statements.


                                       6
<PAGE>

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
        ----------------------------------------------------------------

The consolidated condensed financial statements are unaudited (except for the
balance sheet information as of June 30, 1999, which is derived from the
Company's audited consolidated financial statements) and reflect all adjustments
(consisting only of normal recurring adjustments) 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
fiscal 1999 Annual Report to Stockholders on Form 10-K. The results of
operations for the three months and six months ended December 31, 1999 are not
necessarily indicative of the results for the entire fiscal year ending June 30,
2000, or any future interim period.

The income tax rates of 35% utilized for interim financial statement purposes
for the three and six months ended December 31, 1999 is based on estimates of
income and utilization of tax credits for the entire year.

NOTE 1: Inventories

      Inventories at December 31, 1999 and June 30, 1999 are summarized as
      follows:

                                                   Dec. 31              June 30
                                                   -------              -------

               Raw materials                     $3,961,108           $3,688,704
               Work in process                    2,796,668            3,241,935
               Finished goods                     1,643,093            1,454,283
                                                 ----------           ----------
                                                 $8,400,869           $8,384,922
                                                 ==========           ==========


NOTE 2: Property, Plant and Equipment

      Property, plant and equipment at December 31, 1999 and June 30, 1999 are
      summarized as follows:

                                                    Dec. 31            June 30
                                                    -------            -------

               Land and land improvements         $ 1,362,050        $ 1,362,050
               Buildings and improvements           5,821,587          5,266,135
               Machinery and equipment             29,322,466         27,854,840
                                                  -----------        -----------
                                                  $36,506,103        $34,483,025
                                                  ===========        ===========


                                       7
<PAGE>

NOTE 3: Net Income Per Share

      Net income per share is computed based on the weighted average number of
      common shares and common stock options (using the treasury stock method)
      outstanding in accordance with the requirements of FASB Statement No. 128
      "Earnings Per Share."

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

<TABLE>
<CAPTION>
                                                    Three Months Ended         Six Months Ended
                                                  ---------------------      --------------------
                                                  Dec. 31       Dec. 31      Dec. 31      Dec. 31
Numerator:                                          1999         1998         1999         1998
---------                                           ----         ----         ----         ----
<S>                                              <C>          <C>          <C>          <C>
Net income available to
     common stockholders                         $1,923,929   $1,430,345   $3,672,664   $2,752,949
                                                 ==========   ==========   ==========   ==========

Denominator:
------------

Denominator for basic net income
  per share:
    Weighted average shares outstanding           5,566,383    5,496,170    5,553,671    5,510,759
                                                 ==========   ==========   ==========   ==========

Denominator for diluted net income per share:

       Weighted average shares outstanding        5,566,383    5,496,170    5,510,759    5,510,759
       Common stock options                         377,294      229,702      334,961      226,089
                                                 ----------   ----------   ----------   ----------
       Weighted average shares and conversions    5,943,677    5,725,872    5,888,632    5,736,846
                                                 ==========   ==========   ==========   ==========
</TABLE>


NOTE 4: Restricted Stock Issue

      During the second quarter ended December 31, 1999, the Company issued
24,000 of restricted common stock under a deferred compensation program approved
by the board of directors. These shares have been included in the share count
calculation for diluted earnings per share for both the six months and three
months ended December 31, 1999 as required by FASB Statement No. 128 "Earnings
per Share."

NOTE 5: Segment Information

      Segments

      Organizationally, the Company operates predominately in the wireless
communications, and space and defense electronics markets. The Company's two
reportable 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, delivery channel, and
other factors.

The wireless segment designs, manufactures and markets commercial products used
mainly by the wireless communications market. Products produced in this business
segment include highly integrated microwave signal distribution components and
subsystems, as well as a product line of standard surface mount microwave signal
splitting and combining components, trade name Xinger, that are used in
terrestrial wireless communications base station amplifiers.

The space and defense segment of the business, designs, manufacturers and
markets specialized products for those Companies in the radar and satellite
communications market. Products produced in this business segment include
passive beamforming networks for communications satellite multi-beam antennas,
digital frequency discriminators and other radar type discriminators, as well as
a wide range of standard component products for defense electronics, such as
mixers, couplers, power dividers and correlators.


                                       8
<PAGE>

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

<TABLE>
<CAPTION>
                                                      Space &    Corporate and
                                       Wireless       Defense     Unallocated    Consolidated
                                       --------       -------     -----------    ------------
<S>                                  <C>           <C>           <C>             <C>
Net sales:
     Three months ended
       December 31, 1999             $ 7,547,392   $ 5,723,484   $        --     $13,270,876
       December 31, 1998               4,750,852     6,305,752            --      11,056,604

     Six months ended
       December 31, 1999             $14,251,267   $11,483,972   $        --     $25,735,239
       December 31, 1998               9,103,707    12,431,684            --      21,535,391

Operating income:
     Three months ended
       December 31, 1999               1,688,759       780,007            --       2,468,766
       December 31, 1998                 542,955     1,353,834            --       1,896,789

     Six months ended
       December 31, 1999               3,001,600     1,730,673            --       4,732,273
       December 31, 1998                 803,851     2,787,600            --       3,591,451

Identifiable assets:*
     Six months ended
       December 31, 1999               9,087,045     7,199,291    46,282,758      62,569,094
       June 30, 1999                   5,355,217     8,792,434    44,319,048      58,466,699

Depreciation and Amortization:**
     Three months ended
       December 31, 1999                 209,242       223,403            --         432,645
       December 31, 1998                 142,846       211,686            --         354,532

     Six months ended
       December 31, 1999                 417,379       426,402            --         843,781
       December 31, 1998                 280,817       416,228            --         697,045
</TABLE>

*     Segment assets primarily include trade accounts receivable and inventories
      The Company does not segregate other assets on a products and services
      basis for internal management reporting and, therefore, such information
      is not presented. Assets included in corporate and unallocated principally
      are cash and cash equivalents; marketable debt securities other
      receivables; prepaid expenses; deferred income taxes; refundable income
      taxes; property, plant and equipment; and patent.

**    Depreciation and amortization expense is allocated departmentally based on
      an estimate of capital equipment employed by each department. Depreciation
      expense is then further allocated within the department as it relates to
      the specific business segment impacted by the consumption of the capital
      resources utilized. Due to the similarity of the property, plant and
      equipment utilized, the Company does not specifically identify these
      assets by individual business segment for internal reporting purposes.


                                       9
<PAGE>

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

Management's discussion and analysis reviews the Company's operating results for
the three months and the six months ended December 31, 1999, and its financial
condition at December 31, 1999. This review should be read in conjunction with
the accompanying consolidated condensed financial statements. Statements
contained in management's discussion and analysis, other than historical facts,
are forward-looking statements that are qualified by the cautionary statements
at the end of this discussion.

Overview

The consolidated condensed financial statements present the financial condition
of the Company as of December 31, 1999 and June 30, 1999 and the consolidated
results of operations and cash flows of the Company for the three months and the
six months ended December 31, 1999 and 1998.

Operations for the second quarter and first six months of fiscal 1999 were
highlighted by continuing escalation of commercial Wireless sales and a
significant improvement in net income over the second quarter and first half of
fiscal 1999.

Net sales for the second quarter ended December 31, 1999 were $13,271,000, up
20% from net sales of $11,056,000 for the same period in fiscal 1999, while net
sales for the first six months of fiscal 2000 were $25,735,000, up 19.5% over
sales of $21,535,000 for the first six months in the previous year. The Company
recorded earnings of $1,924,000 for the second quarter of fiscal 2000, compared
to net earnings of $1,430,000 for the same quarter in fiscal 1998, while
earnings for the first six months ended December 31, 1999 amounted to
$3,673,000, an increase of 33% over earnings of $2,753,000 for the first half of
fiscal 1999.

Results of Operations
---------------------

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.

                                        Three Months Ended    Six Months Ended
                                        ------------------    -----------------
                                        Dec. 31   Dec. 31     Dec. 31   Dec. 31
                                          1999      1998       1999      1998
                                          ----      ----       ----      ----

Net sales                                100.0%    100.0%      100.0%    100.0%
Cost of sales                             59.8      59.2        60.0      60.5
                                         -----     -----       -----     -----
     Gross profit                         40.2      40.8        40.0      39.5
                                         -----     -----       -----     -----

Operating expenses:
     Marketing                             8.7%      9.2%        8.8%      9.3%
     Research and development              5.9%      7.1%        5.8%      6.3%
     General and administrative            7.0%      7.3%        7.0%      7.2%
                                         -----     -----       -----     -----
         Total operating expenses         21.6%     23.6%       21.6%     22.8%
                                         -----     -----       -----     -----

Operating income                          18.6%     17.2%       18.4%     16.7%

Other income                               3.8%      2.8%        3.7%      3.1%
Interest expense                          (0.1%)    (0.1%)      (0.1%)    (0.1%)
                                         -----     -----       -----     -----
Income before income taxes                22.3%     19.9%       22.0%     19.7%
Income tax expense                         7.8%      7.0%        7.7%      6.9%
                                         -----     -----       -----     -----
     Net income                           14.5%     12.9%       14.3%     12.8%
                                         =====     =====       =====     =====


                                       10
<PAGE>

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

                                   Three Months Ended         Six Months Ended
                                  --------------------      --------------------
                                  Dec. 31      Dec. 31      Dec. 31      Dec. 31
                                   1999          1998        1999         1998
                                   ----          ----        ----         ----

Wireless                          $ 7,547      $ 4,751      $14,251      $ 9,104
Space and Defense                   5,724        6,305       11,484       12,431
                                  -------      -------      -------      -------
                                  $13,271      $11,056      $25,735      $21,535
                                  =======      =======      =======      =======

Three Months Ended December 31, 1999 Compared to Three Months Ended December 31,
1998.

Net Sales. Net sales increased $2.2 million, or 20% to $13.3 million for the
three months ended December 31, 1999, compared to $11.1 million for the second
quarter of the previous year. This increase was led by a 59% rise in the sales
of Wireless products which more than offset a 9% decrease in sales of Space and
Defense group products.

The increase in sales of Wireless products, which consist of catalog surface
mount and custom components for use in building Wireless basestation equipment,
continues to reflect both the ongoing strong demand by the major basestation
OEM's, as well as the Company's success in achieving higher dollar content per
basestation for its latest digital backplane products. Both shipments of custom
basestation backplanes to OEM's and shipments of Xingera surface mount products
to amplifier manufacturers rose significantly in the second quarter in response
to this demand.

Sales of Space and Defense products consists of custom multi-layer components
such as butler matrices and beamforming networks for commercial and military
communication satellites, Digital Frequency Discriminators ("DFDs") Digital RF
Memories ("DRFMs") and Microwave Integrated Circuit Components ("MICs").

Sales of Space and Defense products fell 9% or $580,000 for the three months
ended December 31, 1999 compared to the second quarter of the previous year.
This drop in sales in this product group was a result of the Company completing
the last shipments under the Airborne Self-Protection Jammer (ASPJ) program in
the early part of the quarter. This program had provided between $1.5 and $2.0
million in revenue per quarter over the last two fiscal years.

Gross Profit. Cost of sales consists primarily of engineering design costs,
material, material fabrication costs, assembly costs and test costs. Cost of
sales rose 21% to $7.9 million (59.8%) of net sales) for the second quarter
ended December 31, 1999. Gross profit was 40.2% of net sales for the three
months ended December 31, 1999 compared to 40.8% of net sales for the same
period in fiscal 1999. The improvement in gross profit was due to improvement in
yields for Wireless products, as well as continuing economies of scale due to
higher production levels in the Wireless 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 increased 14% to
$1,158,000 (8.7%) for the three months ended December 31, 1999 from $1,014,000
(9.2% of net sales) for the three months ended December 31, 1998.


                                       11
<PAGE>

The increase is a result of further development of the marketing organization to
support the Company's expanding commercial markets.

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. Gross research and development costs are reduced by
expense reimbursements received under a Technology Reinvestment Program through
Raytheon, for the Advance Research Project Agency of the United States
Government. Net research and development expenses increased $2,000 to $787,000
(5.9% of net sales) for the three months ended December 31, 1999 from $785,000
(7.1% of net sales) for the three months ended December 31, 1998. Research and
development expenses expanded to support the increased development of Wireless
infrastructure and Satellite Communications products now being demanded by the
current marketplace.

General and Administrative. General and administrative expenses increased 14% to
$926,000 (7.0% of net sales) for the three months ended December 31, 1999
compared to $811,000 (7.3% of net sales) for the three months ended December 31,
1998. General and administrative expense increased due to increased staffing
levels, higher professional fees and increased compensation levels for existing
personnel.

Other Income. Other income is primarily interest income received on invested
cash balances. Other income increased 60% to $502,000 (3.8% of net sales) for
the three months ended December 31, 1999 from $314,000 (3.8% of net sales) for
the three months ended December 31, 1998, due to a higher level of investable
cash balances in the current year.

Interest Expense. Interest expense represents interest incurred on the Company's
line of credit and any outstanding letters of credit. Interest expense was
$11,000 (0.1% of net sales) for the three months ended December 31, 1999 up
$1,000 from $10,000 (0.1% of net sales) for the three months ended December 31,
1998.

Income Taxes. Income tax expense for the three months ended December 31, 1999
was $1,036,000 (7.8% of sales), an effective tax rate of approximately 35%,
while income tax expenses for the three months ended December 31, 1998 was
$771,000 (7.0% of net sales), an effective tax rate of approximately 35%.

Six Months Ended December 31, 1999 Compared to Six Months Ended December 31,
1998

Net Sales. Net sales increase 20.0% to $25.7 million for the six months ended
December 31, 1999, from $21.5 million for the first half of the previous year.
This increase resulted from a 57% rise in sales of Wireless products, which more
than offset an 8% drop in shipments of Space and Defense products. Wireless
product sales continue to rise due to high demand for custom Wireless
basestation products from all the major OEM's as well as escalating demand for
the Company's Xingera brand of surface mount components used by Wireless
amplifier manufacturers.

Sales in the Space and Defense group fell 8%, or $947,000, for the six months
ended December 31, 1999 compared to the first half of the previous year. This
fall off in sales for the Space and Defense group is due to delays in satellite
contract awards in the prior fiscal year and the completion of the "ASPJ"
program contract in the second quarter, both of which events were anticipated by
the Company. Sales in this business area are expected to remain at or below
second quarter levels for the remainder of fiscal 2000.


                                       12
<PAGE>

Gross Profit. Gross profit for the first six months of fiscal 2000 was $10.3
million (40.0% of net sales) up from $8.5 million (39.5% of net sales) for the
first six months of fiscal 1999. This improvement is a result of the increase in
sales volume which resulted in significant economies of scale in the
manufacturing operations and improvements in product yields in the Wireless
group.

Marketing. Marketing expense increased 14% to $2.3 million (8.8% of net sales)
for the first six months of fiscal 1999 from $2.0 million (9.3% of net sales)
for the first six months of fiscal 1999. This increase is a result of the
Company expanding its marketing and sales organization to support the increasing
order volume.

Research and Development. Research and development expense rose 10.0% to
$1,490,000 (5.8% of net sales) in the first half of fiscal 2000 from $1,360,000
(6.3% of net sales) for the first half of fiscal 1999. Research and development
expenditures are expanding to support further development of Wireless
infrastructure products and expanding satellite communications opportunities.

General and Administrative. General and administrative expenses increased 14.0%
to $1.8 million (7.0% of net sales) for the six months ended December 31, 1999
from $1.6 million (7.2% of net sales) for the six months ended December 31,
1998. General and administrative expenses have increased due to the hiring of
additional personnel and a rise in professional fees due to the growth of the
Company.

Other income. Other income increased 41% to $938,000 (3.7% of net sales) for the
first six months of fiscal 2000 from $664,000 (3.1% of net sales) for the first
six months of fiscal 1999 due to a significant increase in investable cash
balances in the current year compared to the prior year.

Interest Expense. Interest expense for the first half of fiscal 2000 was $20,000
(0.1% of net sales) compared to $19,000 (0.1% of net sales) for the first half
of fiscal 1999.

Income Taxes. Income tax expense for the six months ended December 31, 1999 was
$1,978,000 (7.7% of net sales), an effective tax rate of 35%. This compares to
$1,483,000 (6.9% of net sales) for the six months ended December 31, 1998, an
effective tax rate of 35.0%.

Liquidity and Capital Resources

The Company has financed its operations for the six months ended December 31,
1999 primarily from cash flow from operations. Net cash provided by operations
for the six months ended December 31, 1999 and the six months ended December 31,
1998 were $2,402,000 and $3,934,000, respectively. The positive cash flow from
operation in both the first six months of fiscal 2000 and 1999 was due primarily
to the profit attained in both years. The relatively higher level of cash
provided by operations in the first six months ended December 31, 1998 (last
year) compared to the first six months of the current fiscal year, resulted
primarily from the decrease in inventory levels in the prior year first quarter
compared to the increasing receivable levels in the first half of fiscal 2000.

Net cash used in investing activities consists of funds which were used to
purchase short-term marketable securities and capital equipment. Capital
equipment expenditures in the six months ended December 31, 1999 and the six
months ended December 31, 1998 were $2,023,000 and $659,000, respectively. These
capital investments consist primarily of equipment to further expand Wireless
production capacity.


                                       13
<PAGE>

Cash provided by financing activities for the six months ended December 31, 1999
amounted to $392,000 and consisted of cash generated by the exercise of stock
options. In the first half of the previous fiscal year, cash used in financing
activities amounted to $1,095,000 and consisted primarily of funds used to
repurchase common stock. During the six months ended December 31, 1998 the
Company repurchased 128,000 shares at a total cost of $1,469,000.

During the remainder of fiscal 2000, the Company's major cash requirements will
be for additions to capital equipment. Capital equipment additions and building
renovations for the current year have been budgeted at $4.0 to 4.5 million and
through the first six months of fiscal 1999 approximately $2,023,000 has been
expended, all of which was funded by cash generated from operations. Capital
equipment additions for the remainder of fiscal 2000 will continue to be funded
through cash generated by operations as projected operating cash flows are
expected to be more than adequate to meet these financing needs.

During December, 1999 the Company renegotiated its credit facility with its bank
obtaining more favorable terms. The new credit facility is an unsecured
$10,000,000 working capital revolving line of credit bearing interest at prime
and maturing December 31, 2003.

The terms of the credit facility require maintenance of a minimum tangible net
worth, ratio of cash flows to maturities, and leverage ratio as defined in the
respective agreements. The Company was in compliance with all restrictions and
covenants at December 31, 1999.

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

Year 2000 Status

The Company has conducted a full review of its program and systems that could be
affected by the "year 2000 problem." The "year 2000 problem" is the result of
computer programs being written using two digits instead of four to define the
applicable year. Programs with this problem may recognize a date using "00" as
the year 1900 instead of the year 2000, resulting in system failures or
miscalculations. The Company has undertaken projects to update and replace all
known non-compliant internal information systems and processes to ensure that
the year 2000 situation will not have an adverse impact on the internal
information systems and processes to ensure that the year 2000 situation will
not have an adverse impact on the internal operations of the Company.

As of the date of this filing, the Company has not incurred any significant
business interruptions a as a result of the year 2000 situation. However, while
no such occurrence has developed as of the date of this filing, year 2000
problems may surface throughout calendar year 2000. Therefore, there is no
assurance that the Company will not be negatively impacted by the year 2000
situation in the future. The Company will continue to monitor this situation and
expeditiously remediate any issues that may arise.

Based on the Company's readiness efforts, the Company currently does not
reasonably foresee any material year 2000 issues, and therefore the costs
associated with potential year 2000 issues that may arise during calendar year
2000 are not expected to have a material adverse effect on either the financial
condition or results of operations of the Company. However, there is no
guarantee that the Company will not incur significant business interruptions due
to the year 2000 situation, whether due to the Company's own year 2000 problems
or that of its customers or suppliers.


                                       14
<PAGE>

Forward-Looking Cautionary Statement

In an effort to provide investors a balanced view of the Company's current
condition and future growth opportunities, this second quarter report includes
comments by the Company's management about future performance. Because these
statements are forward-looking statements pursuant to the Safe Harbor provisions
of the Private Securities Litigation Reform Act of 1995, management's forecasts
involve risks and uncertainties, and actual results could differ materially from
those predicted in the forward-looking statement. Among the principal factors
that could cause actual results to differ materially are the following: general
market conditions, including demand for the Company's products, manufacturing
capacity and the ability to "ramp" to meet anticipated demand, fluctuations in
yield, availability of third-party supplier parts at reasonable prices,
availability of financial resources to fund anticipated growth, ability to
maintain sole supplier positions with certain defense sectors, successful
adaptation of existing Company technologies to produce new products that meet
specific customer requirements, price pressures, the level of worldwide spending
on military defense products, growth of wireless telephone and satellite
communications systems, acceptance of new products, customer order cancellations
or rescheduling and actual orders compared to annual blanket contracts from
wireless customers.

Management believes the Company has the products, human resources, facilities,
and financial resources to continue its growth, but future revenues, margins,
and profits are all influenced by a number of risk factors, including but not
limited to those discussed above.


                                       15
<PAGE>

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

The Company's annual shareholders' meeting was held on November 2, 1999, at
which time the election of Directors was conducted. The following names
individuals were nominated and elected Directors of the Company until the next
annual meeting and until their successors are elected and qualified.

                                      Votes                    Votes
                                      -----                    -----
                                       for                    withheld
                                       ---                    --------

Hugh A. Hair                         5,026,008                 240,348
Carl W. Gerst, Jr.                   5,026,008                 240,348
Abraham Manber                       5,025,983                 240,373
Lawrence A. Sala                     5,026,008                 240,348
Herbert I. Corkin                    5,026,008                 240,348
Dale F. Eck                          5,025,983                 240,373
David Wilemon                        5,025,983                 240,373
Brian Kelly                          5,025,983                 240,373
Matthew Robison                      5,025,983                 240,373

The following proposals were approved at the Company's Annual Meeting:

                                     Votes        Votes        Votes
                                     -----        -----        -----
                                      For        Against     Abstained
                                      ---        -------     ---------

1. Amendments to the Company's      2,788,155   1,309,832      7,757
   Certificate of Incorporation
   providing for a classified
   Board of Directors.


                                       16
<PAGE>

Item 6.         Exhibits and Reports on Form 8-K

Item 6(a)       Exhibits

Exhibit No. 27  Financial Data Schedule for the six month period ended December
                31, 1999.

Item 6(b)       Reports on Form 8K

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


                                       17
<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 Microwave, Inc.
                                         ----------------------
                                         (Registrant)

Date:  February 8, 2000                  S/Lawrence A. Sala
                                         -----------------------------------
                                         President & Chief Executive Officer

Date:  February 8, 2000                  S/Joseph E. Porcello
                                         -----------------------------------
                                         Vice President of Finance


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