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, 2001

|_|  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
10, 2002 was 22,450,020.


<PAGE>

                             ANAREN MICROWAVE, INC.

                                      INDEX

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

       Item 1.    Financial Statements

                  Consolidated Condensed Balance Sheets as of                3
                  December 31, 2001 (unaudited) and June 30, 2001

                  Consolidated Condensed Statements of Earnings              4
                  for the Three Months Ended December 31,
                  2001 and 2000 (unaudited)

                  Consolidated Condensed Statements of Earnings              5
                  for the Six Months Ended December 31,
                  2001 and 2000 (unaudited)

                  Consolidated Condensed Statements of Cash Flows            6
                  for the Six Months Ended December 31,
                  2001 and 2000 (unaudited)

                  Notes to Consolidated Condensed Financial                  7
                  Statements (unaudited)


       Item 2.    Management's Discussion and Analysis                      15
                  of Financial Condition and Results of Operations


       Item 3.    Quantitative and Qualitative Disclosures
                  About Market Risk                                         24

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

       Item 4.    Exhibits and Reports on Form 8-K                          26


                                       2
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES
                      Consolidated Condensed Balance Sheets
                       December 31, 2001 and June 30, 2001

                                               (Unaudited)
                                               December 31,     June 30,
             Assets                                2001           2001
             ------                           -------------   ------------
Current assets:
    Cash and cash equivalents                 $  8,839,850    $ 11,748,542
    Marketable debt securities                  94,502,752     108,557,983
    Receivables, less allowance of $173,260
      and $195,000, respectively                12,265,822      11,504,168
    Inventories (note 3)                        19,464,235      18,566,977
    Interest and other receivables               1,727,191       1,304,877
    Insurance recovery receivable (note 1)       5,410,093              --
    Deferred income taxes                          900,420         956,759
    Other current assets                         1,008,033       1,762,203
                                              ------------    ------------
                Total current assets           144,118,396     154,401,509
                                              ------------    ------------
Marketable debt securities                      18,240,553      11,725,960
Property, plant and equipment, net (note 4)     25,147,406      18,805,901
Deferred income taxes                                   --         263,348
Patents, net of accumulated amortization
    of $179,678 at December 31, 2001
    and $143,742 at June 30, 2001 (note 2)         395,288         448,224
Goodwill (note 2)                               30,715,861      23,410,534
Other intangible assets, net of accumulated
    amortization of $142,556 at
    December 31, 2001 (note 2)                   2,307,444              --
                                              ------------    ------------
                                              $220,924,948    $209,055,476
                                              ============    ============
      Liabilities and Stockholders' Equity
Current liabilities:
    Current installments of long-term
      debt (note 7)                           $    238,423    $         --
    Accounts payable                             6,108,513       2,985,793
    Accrued expenses (note 5)                    3,494,349       3,905,242
    Customer advance payments                      152,173         767,790
    Other current liabilities (note 6)              65,000          65,000
                                              ------------    ------------
                Total current liabilities       10,058,458       7,723,825
Long term debt, less current
  installments (note 7)                            191,716              --
Deferred income taxes                            2,178,552              --
Postretirement benefit obligation                1,467,995       1,391,496
Other liabilities (note 6)                         563,942         486,380
                                              ------------    ------------
                Total liabilities               14,460,663       9,601,701
                                              ------------    ------------
Stockholders' equity:
    Common stock of $.01 par value
       Authorized 200,000,000 shares;
       issued 25,625,842 shares
       at December 31, 2001 and
       25,496,238 shares
       at June 30, 2001                            256,258         254,962
    Additional paid-in capital                 168,514,560     166,051,341
    Unearned compensation                       (1,405,023)     (1,723,377)
    Accumulated other comprehensive loss
      Foreign currency translation                (202,444)             --
    Retained earnings                           44,073,572      39,643,487
                                              ------------    ------------
                                               211,236,923     204,226,413
    Less cost of 3,060,822 treasury shares       4,772,638       4,772,638
                                              ------------    ------------
                Total stockholders' equity     206,464,285     199,453,775
                                              ------------    ------------
                                              $220,924,948    $209,055,476
                                              ============    ============

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, 2001 and 2000
                                   (Unaudited)

                                                      Dec. 31,       Dec. 31,
                                                        2001           2000
                                                    -----------    -----------

Net sales                                           $17,244,979    $25,188,261

Cost of sales                                        12,777,227     15,117,855
                                                    -----------    -----------
        Gross profit                                  4,467,752     10,070,406
                                                    -----------    -----------

Operating expenses:
        Marketing                                     1,849,196      1,731,592
        Research and development                      1,591,697      1,342,931
        General and administrative                    2,083,467      2,159,807
        Fire related (note 1)                           711,400             --
                                                    -----------    -----------
              Total operating expenses                6,235,760      5,234,330
                                                    -----------    -----------

Operating income (loss)                              (1,768,008)     4,836,076
                                                    -----------    -----------

Other income, primarily interest                      1,011,256      1,800,249
Interest expense                                        (68,891)       (41,820)
                                                    -----------    -----------

Income (loss) before income taxes
 and extraordinary item                                (825,643)     6,594,505

Income tax expense (benefit)                           (474,000)     2,300,000
                                                    -----------    -----------

Income (loss) before extraordinary item                (351,643)     4,294,505
                                                    -----------    -----------

Extraordinary item - gain on acquisition (note 1)     3,407,244             --
                                                    -----------    -----------

Net income                                          $ 3,055,601    $ 4,294,505
                                                    ===========    ===========

Basic earnings (loss) per share:
        Income (loss) before
          extraordinary item                        $     (0.02)   $      0.19
        Extraordinary item - gain on
          acquisition                                      0.15           0.00
                                                    -----------    -----------
        Net income                                  $      0.13    $      0.19
                                                    ===========    ===========
Diluted earnings (loss) per share:
        Income (loss) before
          extraordinary item                        $     (0.02)   $      0.18
        Extraordinary item - gain on
          acquisition                                      0.15           0.00
                                                    -----------    -----------
        Net income                                  $      0.13    $      0.18
                                                    ===========    ===========
Shares used in computing net earnings (loss):
        Basic                                        22,336,004     22,085,318
                                                    ===========    ===========
        Diluted                                      23,164,627     23,657,599
                                                    ===========    ===========

Dividends per share                                 $        --    $        --
                                                    ===========    ===========

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, 2001 and 2000
                                   (Unaudited)
                                                  Dec. 31,       Dec. 31,
                                                    2001           2000
                                                -----------    -----------

Net sales                                       $32,246,170    $47,412,235

Cost of sales                                    22,647,365     28,515,558
                                                -----------    -----------
        Gross profit                              9,598,805     18,896,677
                                                -----------    -----------

Operating expenses:
        Marketing                                 3,368,231      3,306,014
        Research and development                  2,744,363      2,461,457
        General and administrative                3,842,158      4,016,945
        Fire related (note 1)                       711,400             --
                                                -----------    -----------
              Total operating expenses           10,666,152      9,784,416
                                                -----------    -----------

Operating income (loss)                          (1,067,347)     9,112,261
                                                -----------    -----------
Other income, primarily interest                  2,292,327      3,668,917
Interest expense                                    (85,139)       (82,587)
                                                -----------    -----------

Income before income taxes
  and extraordinary item                          1,139,841     12,698,591

Income tax expense                                  117,000      4,423,000
                                                -----------    -----------

Income before extraordinary item                  1,022,841      8,275,591

Extraordinary item - gain on
  acquisition (note 1)                            3,407,244             --
                                                -----------    -----------

Net income                                      $ 4,430,085    $ 8,275,591
                                                ===========    ===========

Basic earnings per share:
        Income before
          extraordinary item                    $      0.05    $      0.38
        Extraordinary item - gain
          on acquisition                               0.15           0.00
                                                -----------    -----------
        Net income                              $      0.20    $      0.38
                                                ===========    ===========

Diluted earnings per share:
        Income before
          extraordinary item                    $       0.04   $       0.35
        Extraordinary item - gain
          on acquisition                                0.15           0.00
                                                -----------    -----------
        Net income                              $       0.19   $       0.35
                                                ============   ============

Shares used in computing net earnings (loss):
        Basic                                     22,293,076     22,008,146
                                                ============   ============
        Diluted                                   23,148,911     23,642,139
                                                ============   ============

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, 2001 and 2000
                                   (Unaudited)

Cash flows from operating activities:              2001            2000
                                               ------------    ------------
     Net income                                $  4,430,085    $  8,275,591
     Adjustments to reconcile net income
       to net cash provided by operating
       activities:
         Depreciation and amortization            1,806,254       1,237,188
         Amortization of intangibles                178,491         764,967
         Deferred income taxes                     (640,849)       (160,541)
         Unearned compensation                      318,354         207,081
         Tax benefit from exercise of
           stock options                             96,931       4,233,791
         Gain on acquisition (note 2)            (3,407,244)             --
         Changes in operating assets
           and liabilities,
           net of acquisition:
           Receivables                            1,447,740      (3,089,421)
           Inventories                              814,362      (1,410,837)
           Insurance receivable                   5,339,020              --
           Interest and other receivables           (34,311)        457,268
           Other current assets                     807,988        (152,675)
           Accounts payable                       1,125,087         (93,041)
           Accrued expenses                      (2,497,355)         13,141
           Customer advance payments               (615,617)       (575,043)
           Other liabilities                         77,562         (63,660)
           Postretirement benefit obligation         76,499             387
                                               ------------    ------------
             Net cash provided by
               operating activities               9,322,997       9,644,196
                                               ------------    ------------
Cash flows from investing activities:
     Capital expenditures                        (6,325,529)     (5,541,881)
     Net sale (purchase) of marketable
       debt securities                            7,540,638      15,581,803
     Purchase of businesses, net of
       cash acquired                            (12,073,362)    (17,883,710)
                                               ------------    ------------

             Net cash used in investing
               activities                       (10,858,253)     (7,843,788)
                                               ------------    ------------
Cash flows from financing activities:
     Payment on long term debt                   (1,546,261)       (407,864)
     Stock options exercised                        375,269       2,226,536
                                               ------------    ------------
             Net cash provided by (used in)
               financing activities              (1,170,992)      1,818,672
                                               ------------    ------------

     Effect of exchange rates                      (202,444)             --
             Net increase (decrease) in
               cash and cash equivalents         (2,908,692)      3,619,080
Cash and cash equivalents at beginning
  of period                                      11,748,542       6,179,202
                                               ------------    ------------
Cash and cash equivalents at end of period     $  8,839,850    $  9,798,282
                                               ============    ============
SUPPLEMENTAL DISCLOSURES OF
  CASH FLOW INFORMATION:
     Cash Paid During the Period For:
       Interest                                $     85,139    $     82,587
                                               ============    ============
       Income taxes                            $  1,059,000    $    500,000
                                               ============    ============

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, 2001, 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
Annual Report on Form 10-K for the fiscal year ended June 30, 2001, as amended.
The results of operations for the six months ended December 31, 2001 are not
necessarily indicative of the results for the entire fiscal year ending June 30,
2002, or any future interim period.

The income tax rates utilized for interim financial statement purposes for the
six months ended December 31, 2001 and 2000 are based on estimates of income and
utilization of tax credits for the entire year.

NOTE 1: Acquisitions

On July 31, 2000, the Company acquired substantially all the net assets of Ocean
Microwave Corporation (Ocean). Ocean was based in Neptune, New Jersey, and was
primarily engaged in the design and manufacture of isolator and circulator
components. The acquired Ocean business was conducted from the Company's
subsidiary, Anaren Power Products, Inc. (APPI.) The transaction was accounted
for using the purchase method of accounting for business combinations and,
accordingly, the results of operations of Anaren Power Products have been
included in the Company's consolidated financial statements since the date of
acquisition.

The purchase price was $17,990,526, including cash and non-cash direct
acquisition costs, which was allocated to the net assets acquired and
liabilities assumed based upon respective fair market values. The fair market
values of plant and equipment were determined by an independent valuation which
also validated the non-existence of any identifiable intangible assets. The
excess consideration over such fair values is recorded as goodwill.

The allocation of the purchase price to the assets acquired and liabilities
assumed follows:

             Accounts receivable                      $ 1,488,092
             Inventories                                1,197,728
             Plant and equipment                          269,390
             Other assets                                  42,485
             Accounts payable                          (2,531,384)
             Accrued expenses                            (184,389)
             Notes payable                               (407,864)
             Goodwill                                  17,316,468
                                                      -----------
                                                      $17,990,526
                                                      ===========

During the fourth quarter of fiscal 2001, Anaren consolidated the operations of
APPI into its Syracuse, New York facility.

On August 31, 2001 the Company acquired all of the outstanding stock of Amitron,
Inc. (Amitron). Amitron is based in North Andover, Massachusetts, and is
primarily engaged in the manufacture of precision thick film ceramic components
and circuits for the medical,


                                       7
<PAGE>

telecommunications, and defense electronics markets. Amitron's technology is
very complimentary to the Company's multi-layer stripline technology. Whereas
the Company's multi-layer stripline technology is well suited for large scale
and high power applications, Amitron's technology is well suited for
miniaturization and low power applications. The Company believes that Amitron's
technology will enable it to significantly increase its current addressable
markets. The transaction was accounted for using the purchase method of
accounting for business combinations and, accordingly, the results of operations
of Amitron have been included in the Company's consolidated financial statements
since the date of acquisition.

The aggregate purchase consideration for Amitron was $11,693,256, consisting of
cash of $9,919,664 (including cash direct acquisition costs), non-cash direct
acquisition costs in the form of stock options for services of $18,183 and
95,704 shares of the Company's common stock with an aggregate value of
$1,755,409. The purchase price was allocated to the net assets acquired and
liabilities assumed based upon respective fair market values. The fair market
values of plant and equipment and identifiable intangible assets were determined
by an independent valuation. The identifiable intangible assets aggregating
$2,450,000 with a weighted-average useful life of approximately seven years
include customer base of $1,350,000 (six-year weighted-average useful life),
favorable lease of $600,000 (ten-year weighted-average useful life), trade name
of $320,000 (three-year weighted-average useful life), and non-competition
agreements of $180,000 (five-year weighted-average useful life). The excess
consideration over such fair values is recorded as goodwill and was assigned to
the Company's Wireless segment.

The allocation of the purchase consideration to the assets acquired and
liabilities assumed follows:

            Cash                                      $    12,844
            Accounts receivable                         1,309,618
            Other receivables                               2,258
            Inventories                                 1,081,360
            Plant and equipment                         1,822,230
            Other assets                                   36,818
            Accounts payable                             (228,751)
            Accrued expenses                             (430,448)
            Loans payable                                (716,154)
            Net deferred tax liability                   (951,846)
            Intangible assets                           2,450,000
            Goodwill                                    7,305,327
                                                      -----------
                                                      $11,693,256
                                                      ===========

On October 1, 2001, the Company, through its wholly owned subsidiary Anaren
Microwave Europe B.V., acquired all of the outstanding stock of The 5M Company
Europe B.V. (5M). 5M, based in Almelo, Netherlands is a manufacturer of
microwave circuits. 5M's manufacturing technology is very similar to the
Company's multi-layer stripline technology. In addition, 5M has a unique metal
backing technology that offers performance and cost advantages for high power
applications. The Company believes that this acquisition will enable it to
reduce its manufacturing costs in Europe, increase its dollar content in high
powered applications and provide European customers with a higher level of
vendor security with a second manufacturing facility. 5M has recently completed
the rebuilding of its factory due to a fire that occurred in July 2001. The
transaction was accounted for using the purchase method of accounting for
business combinations and, accordingly, the results of operations of 5M have
been included in the Company's consolidated financial statements since the date
of acquisition.


                                       8
<PAGE>

The purchase consideration for 5M was $3,869,823 in cash, including direct
acquisition costs, and Company stock options with an aggregate fair value of
$218,724. The fair values of 5M's assets acquired and liabilities assumed
exceeded the purchase consideration and such negative goodwill served to reduce
the fair value of purchased equipment to zero with the remaining excess
recognized as an extraordinary gain.

The preliminary allocation of the purchase consideration to the assets acquired,
liabilities assumed, and extraordinary gain follows:

          Cash                                         $ 1,703,281
          Accounts receivable                              899,776
          Insurance receivable                          10,749,113
          Other receivables                                385,745
          Inventories                                      630,260
          Accounts payable                              (1,768,882)
          Accrued expenses                              (1,656,014)
          Notes payable                                   (856,978)
          Long term debt                                  (403,268)
          Net deferred tax liability                    (2,187,242)
          Extraordinary gain                            (3,407,244)
                                                       -----------
                                                       $ 4,088,547
                                                       ===========

The 5M fire loss in July 2001 was subject to property, casualty and business
interruption insurance. As of December 31, 2001, the Company settled the
insurance claim and an insurance receivable aggregating $10,749,113 is reflected
in the allocation of the 5M purchase price as of October 1, 2001. During the
three months ended December 31, 2001, 5M recognized incremental outsourcing
costs aggregating $659,575 in cost of sales, and fire related cleaning and
remediation expenses of $711,400 in operating expenses.

The following unaudited pro forma financial information presents the combined
results of operations of the Company, Ocean, Amitron and 5M as if the
acquisitions had taken place as of July 1, 2000. The pro forma information
includes certain adjustments, including insurance recovery accounting, the
amortization of goodwill and intangibles, reduction of interest expense and
certain other adjustments, together with the related income tax effects. The pro
forma financial information does not necessarily reflect the results of
operations that would have occurred had the Company, Ocean, Amitron and 5M
constituted a single entity during such periods.

                            Three Months Ended             Six Months Ended
                        --------------------------     -------------------------
                        December 31    December 31     December 31   December 31
                           2001           2000            2001          2000
                        -----------    -----------     -----------   -----------
Net sales               $17,244,979    30,927,631      34,578,482    58,881,281

Insurance recoveries     14,126,694            --      15,999,972            --

Net income                9,838,474     4,560,841       9,871,285     7,958,562

Earnings per share:
  Basic                         .44           .21             .44           .36
  Diluted                       .42           .19             .43           .34

For purposes of the pro forma financial information, the July 2001 5M fire loss
insurance recoveries have been reflected in operations versus the recognition as
a pre-acquisition contingency in the purchase price allocation as previously
discussed. The pro forma information reflects insurance recoveries of
$14,126,694 and $15,999,972 for the three and six months ended December 31,
2001, respectively.


                                       9
<PAGE>

The pro forma information reflects no goodwill amortization for the three and
six months ended December 31, 2001 due to the adoption of FASB 142, "Goodwill
and Intangible Assets", by the Company. The pro forma information does reflect
goodwill amortization aggregating $411,461 and $855,282 for the three months and
six months ended December 31, 2000, respectively, related to acquisitions which
occurred prior to the adoption of FASB 142.

Note 2: Adoption of Accounting Standards

Effective July 1, 2001, the Company adopted Statement of Financial Accounting
Standards No. 141, "Business Combinations" (FASB 141) and Statement of Financial
Accounting Standards No. 142, "Goodwill and Intangible Assets" (FASB 142). FASB
141, which supercedes APB Opinion 16 and FASB Statement No. 38, requires all
business combinations be accounted for using the purchase method. SFAS 142,
which supercedes APB Opinion No. 17, eliminates the current requirement to
amortize goodwill and indefinite-lived intangible assets, addresses the
amortization of intangible assets with a defined life and addresses the
impairment testing and recognition of goodwill and intangible assets. The
following information provides the required disclosures and describes the impact
the early adoption of FASB 141 and 142 had on the Company during the periods
reported:

INTANGIBLE ASSETS:

Intangible assets as of December 31, 2001 are as follows:

                                 Gross Carrying       Accumulated
                                     Amount           Amortization
                                 --------------       ------------

Patent                             $  574,966         $  179,678
Customer Base                       1,350,000             75,000
Trade Name                            320,000             35,556
Non-Competition Agreements            180,000             12,000
Favorable Lease                       600,000             20,000
                                   ----------         ----------
     Total                         $3,024,966         $  322,234
                                   ==========         ==========

Intangible asset amortization expense for the six month period ended December
31, 2001 and 2000 aggregated $178,491 and $35,935, respectively. Amortization
expense related to intangible assets for the next five years is as follows:

Year Ending June 30,
               2002                              $ 428,261
               2003                              $ 499,539
               2004                              $ 499,539
               2005                              $ 410,645
               2006                              $ 392,871


                                       10
<PAGE>

GOODWILL:

The changes in the carrying amount of goodwill for the six month periods ended
December 31 are as follows:

                                     2001               2000
                                     ----               ----
Balance as of June 30            $23,410,534        $ 7,647,108

Goodwill acquired                  7,305,327         16,898,418

Goodwill amortization                     --           (729,032)
                                 -----------        -----------

Balance as of December 31        $30,715,861        $23,816,494
                                 ===========        ===========

In connection with the adoption of FASB 142, the Company completed the
transitional impairment assessment within six months from the date of adoption
as allowed by the standard. As a result of the impairment assessment, no
goodwill impairment was found and no current asset write down is required.

The impact that the adoption of FASB No. 142 had on net income and earnings per
share for the periods presented is as follows:

<TABLE>
<CAPTION>
                                             Three Months Ended               Six Months Ended
                                                 December 31                    December 31
                                          -------------------------      ------------------------
                                             2001           2000            2001          2000
                                             ----           ----            ----          ----
<S>                                       <C>            <C>             <C>           <C>
Reported net income for the period        $3,055,601     $4,294,505      $4,430,085    $8,275,591
Add back:  Goodwill amortization                  --        411,459              --       729,032
                                          ----------     ----------      ----------    ----------
Adjusted net income for the period        $3,055,601     $4,705,964      $4,430,085    $9,004,623
                                          ==========     ==========      ==========    ==========

Basic earnings per share:
         Reported net income                   $0.13          $0.19           $0.20         $0.38
         Goodwill amortization                    --           0.02              --          0.03
                                               -----          -----           -----         -----
         Adjusted net income                   $0.13          $0.21           $0.20         $0.41
                                               =====          =====           =====         =====

Diluted earnings per share:
         Reported net income                   $0.13          $0.18           $0.19         $0.35
         Goodwill amortization                    --           0.02              --          0.03
                                               -----          -----           -----         -----
         Adjusted net income                   $0.13          $0.20           $0.19         $0.38
                                               =====          =====           =====         =====
</TABLE>

NOTE 3: Inventories

      Inventories are summarized as follows:

                                         December 31         June 30
                                         -----------         -------

               Component parts           $10,861,816       $ 9,995,712
               Work in process             5,138,126         4,497,996
               Finished goods              3,464,293         4,073,269
                                         -----------       -----------
                                         $19,464,235       $18,566,977
                                         ===========       ===========


                                       11
<PAGE>

NOTE 4: Property, Plant and Equipment

      Property, plant and equipment are summarized as follows:

                                          December 31         June 30
                                          -----------         -------

          Land and land improvements      $ 1,595,821       $ 1,595,821
          Buildings                         9,243,047         9,095,944
          Machinery and equipment          47,017,742        39,213,503
          Construction in process             235,340           155,899
                                          -----------       -----------
                                          $58,091,950       $50,061,167
          Less accumulated depreciation
           and amortization                32,944,544        31,255,266
                                          -----------       -----------

                                          $25,147,406       $18,805,901
                                          ===========       ===========

NOTE 5: Accrued Expenses

      Accrued expenses consist of the following:

                                          December 31         June 30
                                          -----------         -------

          Compensation                     $1,072,795       $  989,499
          Commissions                         645,555          790,609
          Restructuring                            --          307,843
          Accrued pension cost                240,709          401,032
          Income taxes                        444,387          938,984
          Other                             1,090,903          477,275
                                           ----------       ----------

                                           $3,494,349       $3,905,242
                                           ==========       ==========

NOTE 6: Other Liabilities

      Other liabilities consist of the following:

                                           December 31         June 30
                                           -----------         -------

          Deferred compensation              $541,142          $551,380
          Other                                87,800                --
                                             --------          --------
                                              628,942           551,380
          Less current portion                 65,000            65,000
                                             --------          --------
                                             $563,942          $486,380
                                             ========          ========

NOTE 7: Long-Term Debt

      Long-term debt is summarized as follows:

                                            December 31        June 30
                                            -----------        -------
          Capitalized lease obligations      $391,468           $  --
          Other                                38,671              --
                                             --------           -----
                                              430,139              --
          Less current installments           238,423              --
                                             --------           -----
                                             $191,716           $  --
                                             ========           =====


                                       12
<PAGE>

NOTE 8: Net Income Per Share

Basic income per share is based on the weighted average number of common shares
outstanding. Diluted income 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 stock option and
restricted stock plans. 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:

<TABLE>
<CAPTION>
                                                     Three Months Ended         Six Months Ended
                                                        December 31                December 31
                                                     ------------------         ----------------
Numerator:                                           2001         2000          2001          2000
                                                     ----         ----          ----          ----
<S>                                              <C>           <C>           <C>           <C>
Earnings available to
         common stockholders                     $ 3,055,601   $ 4,294,505   $ 4,430,085   $ 8,275,591
                                                 ===========   ===========   ===========   ===========
Denominator:

Denominator for basic earnings per share:
         Weighted average shares outstanding      22,336,004    22,085,318    22,293,076    22,008,146
                                                 ===========   ===========   ===========   ===========
Denominator for diluted earnings
         per share:
         Weighted average shares outstanding      22,336,004    22,085,318    22,293,076    22,008,146
         Common stock options
           and restricted stock                      828,623     1,572,281       855,835     1,633,993
                                                 -----------   -----------   -----------   -----------
Weighted average shares and conversions           23,164,627    23,657,599    23,148,911    23,642,139
                                                 ===========   ===========   ===========   ===========
</TABLE>

NOTE 9: Segment Information

The Company operates predominately in the wireless communications, satellite
communications and space and defense electronics markets. The Company's two
reportable segments are the wireless group and the space and defense group.
These segments have been determined based upon the nature of the products and
services offered, customer base, technology, availability of discrete internal
financial information, homogeneity of products and delivery channel, and are
consistent with the way the Company organizes and evaluates financial
information internally for purposes of making operating decisions and assessing
performance.

The wireless segment designs, manufactures and markets commercial products used
mainly by the wireless communications market. The space and defense segment of
the business designs, manufactures and markets specialized products for the
radar and satellite communications markets. The revenue disclosures for the
Company's reportable segments depict products that are similar in nature.


                                       13
<PAGE>

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

<TABLE>
<CAPTION>
                                                                  Space &      Corporate and
                                                Wireless          Defense       Unallocated     Consolidated
                                                --------          -------      -------------    ------------
<S>                                          <C>                 <C>           <C>              <C>
Net sales:
     Three months ended:
       December 31, 2001                     $  10,612,648        6,632,331              --     $ 17,244,979
       December 31, 2000                     $  19,768,681        5,419,580              --     $ 25,188,261
     Six months ended
       December 31, 2001                     $  19,155,624       13,090,546              --     $ 32,246,170
       December 31, 2000                     $  36,564,405       10,847,830              --     $ 47,412,235

Operating income (loss):
     Three months ended:
       December 31, 2001                        (3,399,840)       1,631,832              --       (1,768,008)
       December 31, 2000                         3,909,200          926,876              --        4,836,076
     Six months ended:
       December 31, 2001                        (4,176,916)       3,109,569              --       (1,067,347)
       December 31, 2000                         6,945,494        2,166,767              --        9,112,261

Goodwill and intangible assets:
     December 31, 2001                          33,418,593               --              --       33,418,593
     June 30, 2001                              23,858,758               --              --       23,858,758

Identifiable assets:*
     Six months ended:
       December 31, 2001                        18,524,895       13,205,162     155,776,298      187,506,355
       June 30, 2001                            17,510,855       12,453,474     155,232,389      185,196,718

Depreciation:**
     Three months ended:
       December 31, 2001                           694,881          284,684              --          979,565
       December 31, 2000                           412,463          256,788              --          669,251
     Six months ended:
       December 31, 2001                         1,181,343          624,911              --        1,806,254
       December 31, 2000                           774,194          462,994              --        1,237,188

Goodwill and intangibles amortization:***
     Three months ended:
       December 31, 2001                           124,884               --              --          124,884
       December 31, 2000                           429,427               --              --          429,427
     Six months ended:
       December 31, 2001                           178,491               --              --          178,491
       December 30, 2000                           764,967               --              --          764,967
</TABLE>

*     Segment assets primarily include receivables, inventories, and property,
      plant and equipment related to business acquisitions. 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


                                       14
<PAGE>

      equivalents, marketable debt securities, other receivables, prepaid
      expenses, deferred income taxes and property, plant and equipment not
      specific to business acquisitions.

**    Depreciation expense related to acquisition-specific property, plant and
      equipment is included in the segment classification of the acquired
      business. Depreciation expense related to nonbusiness combination assets
      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.

***   Amortization of goodwill and identifiable intangible assets arising from
      business combinations, and patent amortization, is allocated to the
      segments based on the segment classification of the acquired or applicable
      operation.

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

Management's discussion and analysis set forth below reviews the Company's
operating results for the six month period ended December 31, 2001 and its
financial condition at December 31, 2001. 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, 2001 and June 30, 2001, and the consolidated
results of operations and cash flows of the Company for the six months ended
December 31, 2001 and 2000.

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 for wireless communications systems, in
satellites and in defense electronics systems. The Company sells its products to
leading wireless communications equipment manufacturers such as Ericsson,
Motorola, Lucent Technologies, and Nortel Networks and to satellite
communications companies such as Boeing Satellite and Lockheed Martin.

The Company operates predominantly in the wireless communications, satellite
communications, and defense electronics markets. The two reporting segments of
the Company are the Wireless group and the Space and Defense group. These groups
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 making operating decisions and assessing performance.

The Company generally recognizes sales at the time products are shipped to
customers, provided that persuasive evidence of an arrangement exists, the sales
price is fixed or easily determinable,


                                       15
<PAGE>

collectibility is reasonably assured and title and risk of loss have passed to
the customer. Title and the risks and rewards of ownership of products are
transferred at the time of shipment. Payments received from customers in advance
of products delivered are recorded as customer advance payments until earned. A
small percentage of sales are derived from long-term fixed-price contracts for
the sale of large space and defense electronics products. Sales and estimated
profits under long-term contracts are recognized using the percentage of
completion method of accounting on a units-of-delivery basis. Profit estimates
are revised periodically based upon changes in sales value and costs at
completion. Any losses on these contracts are recognized in the period in which
such losses are determined.

Effective July 1, 2001, the Company adopted Financial Accounting Standard Board
(FASB) Statement No. 141 - Business Combinations and Statement No. 142 -
Goodwill and Other Intangibles. As a result of the adoption of these new
standards and in conjunction with the completion of goodwill impairment reviews
by an outside appraisal firm, the Company ceased amortization of the goodwill
recorded as part of its previous acquisition transactions. If the Company had
discontinued amortization of goodwill at the beginning of the first quarter of
the prior fiscal year (2001), net earnings and basic and diluted earnings per
share would have been increased by $411,459, or $0.02 per share and $729,032, or
$0.03 per share for the three and six months ended December 31, 2000,
respectively.

On August 31, 2001, the Company acquired all of the outstanding capital stock of
Amitron. Amitron is based in North Andover, Massachusetts and is primarily
engaged in the design and manufacture of ceramic components and circuits for the
medical, telecommunications and defense electronics market. The aggregate
purchase consideration was $11,693,256, consisting of cash of $9,919,664
(including cash direct acquisition costs), non-cash direct acquisition costs in
the form of stock options for services of $18,183 and 95,704 shares of the
Company's common stock with an aggregate value of $1,755,409. The acquisition
was accounted for under the purchase method of accounting for business
combinations.

Effective October 1, 2001 the Company acquired all of the outstanding capital
stock of 5M, a manufacturer of microwave circuits based in Almelo, Netherlands.
5M's manufacturing technology, which is similar to the Company's multi-layer
stripline technology, uses a unique metal backing technology, which offers both
cost and performance advantages for high power applications. The aggregate
purchase consideration for this transaction was $4,088,547, consisting of cash
of $3,869,823 (including direct acquisition costs), and Company stock options
with an aggregate fair value of $218,724. The acquisition was accounted for
under the purchase method of accounting for business combinations.

5M has recently completed the reconstruction of its factory due to a fire in
July 2001 which destroyed this facility. As of January 2002, 5M had repopulated
the rebuilt facility and was testing various processes to re-enter production.
As a result of the fire, 5M received an insurance settlement through its
property and business interruption insurance policies of approximately $16.0
million in December 2001 to offset expenses incurred in out-sourcing production,
cleaning the facility and equipment and repairing equipment damaged but not
destroyed in the fire and to recognize the replacement cost to be received for
inventory and equipment destroyed by the fire.

As a result of the fire and the subsequent insurance claim, the value of the 5M
assets at the time of purchase was significantly higher than the consideration
paid by Anaren. This situation resulted in significant negative goodwill being
generated by the transaction, which, under current accounting convention, was
first offset by writing down the acquired long-lived assets to zero and


                                       16
<PAGE>

then by recognizing an "extraordinary gain" of $3,407,000, or $0.15 per share,
in both the second quarter and six months ended December 31, 2001.

Net sales for the second quarter ended December 31, 2001 were $17,245,000, down
32% from net sales of $25,188,000 for the same period in fiscal 2001. Net sales
for the quarter included $777,000 from 5M which Anaren acquired effective
October 1, 2001. The Company recorded a loss before extraordinary item of
($352,000), or ($0.02) per diluted share, for the second quarter of fiscal 2002,
including a loss before extraordinary item at 5M of ($1,557,000), or ($0.07) per
share. The extraordinary gain for the quarter was $3,407,000, or $0.15 per
diluted share, resulting in net income of $3,056,000, or $0.13 per diluted
share, compared to net income of $4,295,000, or $0.18 per diluted share, for the
second quarter in fiscal 2001.

Excluding 5M results, Anaren's results for the second quarter included net sales
of $16,468,000, and net income $1,205,000, or $0.05 per diluted share.

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.

<TABLE>
<CAPTION>
                                                 Three Months Ended               Six Months Ended
                                          Dec. 31, 2001     Dec. 31, 2000   Dec. 31, 2001  Dec. 31, 2000
                                          -------------     -------------   -------------  -------------

<S>                                           <C>               <C>             <C>            <C>
Net Sales                                     100.0%            100.0%          100.0%         100.0%

Cost of sales                                  74.1%             60.0%           70.2%          60.1%
                                              -----             -----           -----          -----
Gross profit                                   25.9%             40.0%           29.8%          39.9%
                                              -----             -----           -----          -----
Operating expenses:
   Marketing                                   10.7%              6.9%           10.5%           7.0%
   Research and development                     9.2%              5.3%            8.5%           5.2%
   General and administrative                  12.1%              8.6%           11.9%           8.5%
   Fire related                                 4.2%              0.0%            2.2%           0.0%
                                              -----             -----           -----          -----
     Total operating expenses                  36.2%             20.8%           33.1%          20.7%
                                              -----             -----           -----          -----

Operating income (loss)                       (10.3%)            19.2%           (3.3%)         19.2%
                                              -----             -----           -----          -----

Other income (expense):

   Other, primarily interest income             5.9%              7.2%            7.1%           7.7%
   Interest expense                            (0.4%)            (0.2%)          (0.3%)         (0.2%)
                                              -----             -----           -----          -----
     Total other income (expense), net          5.5%              7.0%            6.8%           7.5%
                                              -----             -----           -----          -----

Income (loss) before income taxes
  and extraordinary item                       (4.8%)            26.2%            3.5%          26.7%
Income taxes                                   (2.8%)             9.2%            0.3%           9.3%
                                              -----             -----           -----          -----
Income (loss) before extraordinary item        (2.0%)            17.0%            3.2%          17.4%

Extraordinary item - gain on acquisition       19.7%              0.0%           10.5%           0.0%
                                              -----             -----           -----          -----

   Net income                                  17.7%             17.0%           13.7%          17.4%
                                              =====             =====           =====          =====
</TABLE>


                                       17
<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
                          December 31                December 31
                          -----------                -----------
                       2001       2000             2001       2000
                       ----       ----             ----       ----
Wireless             $10,613    $19,769          $19,156    $36,564
Space and Defense      6,632      5,419           13,090     10,848
                     -------    -------          -------    -------
                     $17,245    $25,188          $32,246    $47,412
                     =======    =======          =======    =======


Three Months Ended December 31, 2001 Compared to Three Months Ended December 31,
2000

Net Sales. Net sales decreased $8.0 million, or 32%, to $17.2 million for the
three months ended December 31, 2001, compared to $25.2 million for the second
quarter of the previous year. This decrease was caused by a 46% drop in Wireless
sales which was partially offset by a 22% rise in sales of Space and Defense
products.

The decrease in sales of Wireless products, which consist of standard surface
mount components and custom subassemblies for use in building wireless base
station equipment, was caused by a rapid downturn in capital expenditures for
wireless infrastructure equipment which began in the latter part of the third
quarter of fiscal 2001. This downturn resulted in a number of reductions in
customer demand forecasts and delivery pushouts beginning in March 2001 and
continuing through the first quarter of fiscal 2002. This market downturn has
affected all the Company's Wireless product lines and has most severely affected
sales of Wireless standard components. The downturn in Wireless market sales was
somewhat offset by the inclusion of $2.3 million in sales in the first quarter
of fiscal 2002 for 5M and Amitron. Although delivery pushouts have stopped and
the Company believes the sales decline has bottomed out, this worldwide Wireless
market downturn is expected to continue through most of calendar 2002.

Space and Defense products consist of custom components and assemblies for
communication satellites and defense radar countermeasures subsystems for the
military. Sales in the Space and Defense group rose $1.2 million, or 22.0%, in
the second quarter of fiscal 2002, compared to the same quarter in the prior
fiscal year. This increase in shipments resulted from the initial production
shipments for the Boeing Spaceway program. This satellite program, which entered
full factory production in the fourth quarter of fiscal 2001, is expected to
place Space and Defense shipments in the $6.0 - $7.0 million range, quarterly,
for the remainder of fiscal 2002.

Gross Profit. Cost of sales consists primarily of engineering design costs,
material, material fabrication costs, assembly costs and test costs. Gross
profit for the second quarter of fiscal 2002 was $4.5 million (25.9% of net
sales), down from $10.1 million (40.0% of net sales) for the second quarter of
the prior year. The decrease in gross margin resulted from the significant
decline in sales volume, which caused significant under absorption of the
factory overhead compared to the previous year. Presently, the Company expects
gross margins to remain at or below current levels in the second half of fiscal
2002 and not to improve absent a significant increase in sales volume, both
domestically and at 5M in the Netherlands.

Marketing. Marketing expenses consist mainly of employee related expenses,
commissions paid to sales representatives, trade show expenses, advertising
expenses and related travel expenses.


                                       18
<PAGE>

Marketing expenses increased 6.8% to $1.8 million (10.7% of net sales) for the
second quarter of fiscal 2002 from $1.7 million (6.9% of net sales) for the
second quarter of fiscal 2001. Marketing expense increased due to the addition
of new east and west coast marketing offices and marketing expenses associated
with the Company's acquired businesses, Amitron and 5M.

Research and Development. Research and development expenses consist of material
and salaries and related overhead costs of employees engaged in ongoing
research, design and development activities associated with new products and
technology development. Research and development expenses increased 18.5% to
$1.6 million (9.2% of net sales) in the second quarter of fiscal 2002 from $1.3
million (5.3% of net sales) for the second quarter of fiscal 2001. Research and
development expenditures are supporting further development of wireless
infrastructure products and new broadband fixed wireless product opportunities.
Despite the current wireless market downturn, the Company does not expect to
reduce its current research and development efforts in the near term and is
presently working on a number of new standard wireless products.

General and Administrative. General and administrative expenses consist of
employee related expenses, professional services, goodwill and intangible
amortization, travel related expenses and other corporate costs. General and
administrative expenses decreased 3.6% to $2.1 million (12.1% of net sales) for
the second quarter of fiscal 2002 from $2.2 million (8.6% of net sales) for the
second quarter of fiscal 2001. General and administrative expenses have
decreased primarily due to the adoption of FASB Statement No. 142 which
eliminated the amortization of goodwill starting in the first quarter of fiscal
2002. The reduction in goodwill reduced general and administrative expenses by
$411,000 in the current quarter compared to the second quarter last year. This
reduction in goodwill amortization was partially offset by an increase in
identifiable intangible amortization of $107,000 in the second quarter of fiscal
2002 associated with the Company's acquisition of Amitron. Additionally, general
and administrative expense for the second quarter of fiscal 2002 includes three
months of expense for Amitron and 5M, the Company's acquisitions in the current
fiscal year.

Operating Income: Operating income decreased 137.0%, to a loss of $1.8 million
(10.3% of net sales) for the second quarter of fiscal 2002, down $6.6 million
from operating income of $4.8 million (19.2% of net sales) for the same period
in fiscal 2001. On a reporting segment basis, the Wireless operating loss was
$3.4 million for the second quarter of fiscal 2002, down 187.2% or $7.3 million
from $3.9 million operating income in the second quarter of fiscal 2001. The
principal reason for the decrease in Wireless operating income in the second
quarter of fiscal 2002 compared to the same period in fiscal 2001 was the 46.6%
decrease in Wireless sales year over year due to the large decrease in Wireless
base station equipment demand worldwide which began in the third quarter of
fiscal 2001 and continues at the present time. The large decrease in sales
levels in the wireless segment resulted in significant under absorption of fixed
overhead within the group during the current quarter. Additionally, operating
income in the Wireless sector was further decreased by the $2.4 million
operating loss at 5M in the second quarter of fiscal 2002 due to fire recovery
costs and a lower level of sales due to the fire.

Space and defense operating income rose $705,000 or 76.0% for the second quarter
of fiscal 2002 compared to the second quarter of fiscal 2001. This increase
resulted from a $1.2 million rise in space and defense revenues year over year,
due to the Boeing Spaceway Program entering full production at the end of fiscal
year 2001. The higher sales levels resulted in better absorption of fixed
overhead in fiscal 2002 compared to the previous year.

Other Income. Other income is primarily interest income received on invested
cash balances. Other income decreased 44.0% to $1.0 million (5.9% of net sales)
for the quarter ended


                                       19
<PAGE>

December 31, 2001 from $1.8 million (7.2% of net sales) for the same quarter
last year. This decrease was caused mainly by the decline in market interest
rates over the last 12 months brought about by reductions in the Federal Fund
rates and the use of approximately $13.5 million in cash to complete the
acquisitions of Amitron and 5M. Interest income will fluctuate based on the
level of interest rates and the level of investable cash balances.

Interest Expense: Interest expense primarily represents loan interest,
commitment fees and interest incurred on certain deferred obligations. Interest
expense for the second quarter of fiscal 2002 was $69,000 (0.4% of net sales)
compared to $42,000 (0.2% of net sales) for the second quarter of fiscal 2001.
Additionally, the increase in interest expense resulted from the addition of
both short and long-term debt outstanding at 5M.

Income Taxes: The tax benefit for the second quarter of fiscal 2002 was
($474,000) (2.8% of net sales), representing an effective tax benefit rate of
57.4%. This compared to $2.3 million (9.2% of net sales) for the second quarter
of fiscal 2001, representing an effective tax rate of 35.0%.

The tax benefit arises from the loss at 5M in the Netherlands and is large
enough to more than offset the U.S. domestic taxes, due to the large amount of
tax exempt investment income that the Company is currently generating in the
U.S.

Extraordinary gain: The extraordinary gain of $3.4 million (19.7% of net sales)
resulted from the purchase of 5M. As a result of the fire and the subsequent
insurance claim, the value of the 5M assets at the time of purchase was
significantly higher than the consideration paid by Anaren. This situation
resulted in significant negative goodwill being generated by the transaction,
which, under current accounting convention, was first offset by writing down the
acquired long-lived assets to zero and then by recognizing an "extraordinary
gain" of $3,407,000, or $0.15 per share, in the second quarter ended December
31, 2001.

Six Months ended December 31, 2001 Compared to Six Months Ended December 31,
2000

Net Sales. Net sales decreased $15.2 million, or 32.0%, to $32.2 million for the
six months ended December 31, 2001, compared to $47.4 million for the second
quarter of the previous year. This decrease was caused by a 48.0% drop in
Wireless sales which was partially offset by a 21.0% rise in sales of Space and
Defense products.

The decrease in sales of Wireless products was caused by a rapid downturn in
capital expenditures for wireless infrastructure equipment which began in the
latter part of the third quarter of fiscal 2001. This downturn has resulted in
an increasing number of reductions in customer demand forecast and delivery
pushouts beginning in March 2001 and continuing through September 31, 2001. This
market downturn has affected all the Company's Wireless product lines and has
most severely affected sales of Wireless standard components. The downturn in
Wireless market sales was somewhat offset by the inclusion of $2.8 million in
sales in the first six months of fiscal 2002 for 5M and Amitron. Although
delivery pushouts have stopped and the Company believes the sales decline has
bottomed out, this worldwide Wireless market downturn is expected to continue
through most of calendar 2002.

Sales in the Space and Defense group rose $2.2 million, or 21.0%, in the first
six months of fiscal 2002, compared to the same period in the prior fiscal year.
This increase in shipments resulted from the initial production shipments for
the Boeing Spaceway program. This program, which entered full factory production
at the end of fiscal 2001, is expected to place


                                       20
<PAGE>

Space and Defense shipments in the $6.0 - $7.0 million range, quarterly, for the
remainder of fiscal 2002.

Gross Profit. Gross profit for the first six months of fiscal 2002 was $9.6
million (29.8% of net sales), down from $18.9 million (39.9% of net sales) for
the first half of the prior year. The decrease in gross margin resulted from the
significant decline in sales volume which caused significant under absorption of
the factory overhead compared to the previous year. Additionally, margins were
further hurt by the addition of 5M whose results consist mainly of costs
incurred to repair its manufacturing facility which was destroyed by fire in
July 2001. Presently, the Company expects gross margins to remain at or below
current levels and not to improve in the second half of fiscal 2002 without a
significant increase in sales volume, both domestically and at 5M in the
Netherlands.

Marketing. Marketing expenses increased 1.9% to $3.4 million (10.5% of net
sales) for the first six months of fiscal 2002 from $3.3 million (7.0% of net
sales) for the first half of fiscal 2001. This small increase resulted from
lower commission expense due to the decline in sales volume and the Company's
cost containment efforts instituted in the fourth quarter of fiscal 2001 which
more than offset increases in expense due to new marketing personnel, the
issuance of a new catalog and remodeling of the Company website. Marketing
expense is expected to increase over the remaining two quarters of fiscal 2002
due to the addition of new east and west coast marketing offices and marketing
expenses associated with the Company's acquired businesses.

Research and Development. Research and development expenses increased 11.5% to
$2.7 million (8.5% of net sales) in the first six months of fiscal 2002 from
$2.5 million (5.2% of net sales) for the first half of fiscal 2001. Research and
development expenditures are supporting further development of wireless
infrastructure products and new broadband fixed wireless product opportunities
with a renewed emphasis on developing new standard surface mount wireless
products. Despite the current wireless market downturn, the Company does not
expect to reduce its current research and development efforts in the near term.

General and Administrative. General and administrative expenses decreased 4.3%
to $3.8 million (11.9% of net sales) for the first six months of fiscal 2002
from $4.0 million (8.5% of net sales) for the first half of fiscal 2001. General
and administrative expenses have decreased primarily due to the adoption of FASB
Statement No. 142 which eliminated the amortization of goodwill in the first
quarter of fiscal 2002. The reduction in goodwill reduced general and
administrative expenses by $729,000 in the first six months compared to the
first half of last year. This reduction in goodwill amortization was partially
offset by an increase in identifiable intangibles amortization of $143,000 in
the first half of fiscal 2002 associated with the Company's acquisition of
Amitron. Additionally, general and administrative expense for the first half of
fiscal 2002 includes four months of expense for Amitron and three months of
expense for 5M, the Company's acquisitions in the current fiscal year.

Operating Income: Operating income decreased 111.7% to a loss of $1.1 million,
(3.3% of net sales) for the first six months of fiscal 2002, down $10.0 million
from operating income of $9.1 million (19.2% of net sales) for the same period
in fiscal 2001. On a reporting segment basis, the Wireless operating loss was
$4.2 million for the first half of fiscal 2002, down 160.0% or $11.2 million
from operating income of $7.0 million in the first half of fiscal 2001. The
principal reason for the decrease in Wireless operating income in the first half
of fiscal 2002 compared to the same period in fiscal 2001 was the 48% decrease
in Wireless sales year over year due to the large decrease in wireless base
station equipment demand worldwide which began in the third quarter of fiscal
2001 and continues at the present time. The large decrease in sales levels in
the


                                       21
<PAGE>

Wireless segment resulted in significant under absorption of fixed overhead
within the group during the current quarter. Additionally, operating income in
the Wireless sector was further decreased by the $2.4 million operating loss at
5M in the second quarter due to fire recovery expenses and a lower level of
sales due to the fire.

Space and Defense operating income rose $943,000 or 43.5% for the first half of
fiscal 2002 compared to the first six months of fiscal 2001. This increase
resulted from a $2.3 million rise in space and defense revenues year over year
in the first six months, due to the Boeing Spaceway Program entering full
production at the end of fiscal 2001. The higher sales levels resulted in better
absorption of fixed overhead in fiscal 2002 compared to the previous year.

Other Income. Other income decreased 37.5% to $2.3 million (7.1% of net sales)
for the six months ended December 31, 2001 from $3.7 million (7.7% of net sales)
for the same period last year. This decrease was caused mainly by the decline in
market interest rates over the last 12 months brought about by reductions in the
Federal Fund rates. Interest income will fluctuate based on the level of
interest rates and the level of investable cash balances.

Interest Expense. Interest expense for the first six months of fiscal 2002 was
$85,000 (0.3% of net sales) compared to $82,000 (0.2% of net sales) for the
first six months of fiscal 2001. The decrease in interest expense resulted from
the payoff of a deferred obligation in the third quarter of fiscal 2001.

Income Taxes. Income tax expense for the first half of fiscal 2002 was $117,000
(0.3% of net sales), representing an effective tax rate of 10.0%. This compared
to $4.4 million (9.3% of net sales) for the first half of fiscal 2001,
representing an effective tax rate of 35.0%. The Company's reduced effective tax
rate is a direct result of the proportion of federally exempt state municipal
bond income in relation to reduced levels of taxable income and a result of the
current loss at 5M, which is generating a foreign tax benefit.

Extraordinary gain. The extraordinary gain of $3.4 million (10.5% of net sales)
resulted from the purchase of 5M. As a result of the fire and the subsequent
insurance settlement, the value of the 5M assets at the time of purchase was
significantly higher than the consideration paid by Anaren. This situation
resulted in significant negative goodwill being generated by the transaction,
which, under current accounting convention, was first offset by writing down the
acquired fixed assets to zero and then by recognizing an "extraordinary gain" of
$3,407,000, or $0.15 per share, in the six months ended December 31, 2002.

Liquidity and Capital Resources

Net cash provided by operations for the six months ended December 31, 2001 and
the six months ended December 31, 2000 were $9.3 million and $9.6 million,
respectively. The positive flow from operations in the first six months of both
fiscal 2002 and 2001 was due primarily to the net income attained in both
periods and, in fiscal 2002, to the large amount of cash received in the second
quarter ($5.3 million) from the 5M insurance settlement.

Net cash used in investing activities consists of funds used to purchase capital
equipment and cash used to purchase the capital stock of Amitron in August and
5M in October 2001. Capital equipment placed in service amounted to $6.3
million, including $4.7 million at 5M, in the six months ended December 31, 2001
compared to $5.5 million in the first six months of the previous fiscal year.
The Company expended $9.9 million in cash to purchase all the capital


                                       22
<PAGE>

stock of Amitron. Funds for this transaction were obtained through the proceeds
of matured marketable debt securities in the amount of $9.6 million.

The Company expended $3.9 million in cash to purchase the capital stock of the
5M. Funds for this transaction came from the Company's operating cash account.

Significant cash used in investing activities in the first half of the prior
year was $17.9 million used to purchase the assets of Ocean. Funds for this
transaction were obtained through the proceeds of matured marketable debt
securities in the amount of $18.5 million.

Net cash used by financing activities was $1.2 million for the first six months
of fiscal 2002 and consisted of $1.5 million used to pay off loans of Amitron
and 5M and $375,000 generated by the exercise of stock options. In the first
half of the prior year funds generated by financing activities amounted to $1.8
million and consisted of $2.2 million generated through the exercise of stock
options, and $408,000 used to pay off loans of Ocean which were assumed as part
of the asset purchase.

During the remainder of fiscal 2002, the Company's main cash requirements will
be for additions to capital equipment. Capital expenditures, in addition to the
equipment replaced at 5M, have been budgeted at approximately $4.0 million for
fiscal 2002 and consist mainly of upgrades and replacements of production
equipment.

In addition to the Company's cash and marketable debt securities, the Company
has a credit facility providing an unsecured $10 million working capital
revolving line of credit bearing interest at the LIBOR interest rate plus one
hundred twenty-five basis points and maturing December 31, 2006. The terms of
the credit facility require maintenance of minimum tangible net worth, ratio of
cash flows to maturities, and leverage ratio as defined in the loan agreement.
The Company believes that it was in compliance with all restrictions and
covenants at December 31, 2001. At December 31, 2001, zero was outstanding under
the credit facility.

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.

Recent Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations." FASB 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. FASB 143 is required for adoption for fiscal
years beginning after June 14, 2002. The Company has reviewed the provisions of
FASB 143, and believes that upon adoption, the Statement will not have a
significant effect on its consolidated financial statements.

In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment of
Disposal of Long-Lived Assets." FASB 144 addresses financial accounting and
reporting for the impairment of long-lived assets and for long-lived assets to
be disposed of. FASB 144 is required for adoption for fiscal years beginning
after December 15, 2001 and interim periods within those fiscal years. The
Company has reviewed the provisions of FASB 144, and believes that upon
adoption, the Statement will not have a significant effect on its consolidated
financial statements.


                                       23
<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 Quarterly Report on Form 10-Q
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 statements. Among the
factors that could cause actual results to differ materially are the following:

o     further decline in the general economy, and particularly the wireless
      telecommunications sector;

o     decreased capital expenditures by wireless service providers;

o     loss of one or more of a limited number of original equipment
      manufacturers as customers;

o     unpredictable difficulties or delays in the development of new products;

o     the unavailability of component parts and services from a limited number
      of suppliers;

o     the risks associated with any technological shifts away from the Company's
      technologies and core competencies;

o     additional cancellation of existing contracts or orders, or other declines
      in demand for the Company's products;

o     difficulties in successfully integrating the businesses of Amitron and 5M;

o     unexpected delay in the resumption of 5M's manufacturing capacity;

o     unanticipated difficulties in becoming requalified by 5M's customers;

o     inability to effectively manage possible future growth;

o     increased pricing pressure and increased competition;

o     the failure of wireless customers' annual procurement forecasts to result
      in future sales;

o     unanticipated impairments of assets and investment values;

o     foreign currency fluctuations; and

o     litigation involving antitrust, intellectual property, product warranty,
      and other issues.

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 on Form 10-Q.

As of December 31, 2001, the Company had cash, cash equivalents and marketable
debt securities of $121.6 million, of which approximately $112.7 million
consisted of highly liquid investments in marketable debt securities. These
investments at the date of purchase normally have maturities between one and 18
months, are exposed to interest rate risk and will decrease in value if market
interest rates increase. A hypothetical decrease in market interest rate of
10.0% from December 31, 2001 rates, or 0.3%, would have reduced net income and
cash flow by approximately $82,000, or $0.004 per share. Due to the relatively
short maturities of the securities and its ability to hold those investments to
maturity, the Company does not believe that an immediate decrease in interest
rates would have a significant effect on its financial condition


                                       24
<PAGE>

or results of operations. Over time, however, declines in interest rates will
reduce the Company's interest income.

The Company does not currently own any material equity investments. Therefore,
the Company does not currently have any direct equity price risk.

All of the Company's sales from its domestic U.S. subsidiaries to foreign
customers are denominated in United States dollars and, accordingly are not
exposed to foreign currency exchange risk. Sales of the Company's Netherlands
subsidiary, 5M, are denominated in Euros to European customers and United States
dollars to U.S. customers. Sales to U.S. customers by 5M denominated in United
States dollars would be subject to currency exchange losses. At present, due to
the fire at 5M, sales of that subsidiary to U.S. customers in U.S. dollars
subject to possible currency losses are less than $100,000 per quarter and thus
any possible losses due to currency fluctuations would not be material to the
operating results of the Company.


                                       25
<PAGE>

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

            The Company's annual shareholders' meeting was held on November 1,
            2001, at which time the election of Directors was conducted. The
            following named individuals were nominated and re-elected as
            Directors.

                                              Votes                    Votes
                                               For                    Against
                                              -----                   -------
            Hugh A. Hair                    20,120,572                616,192
            Matthew Robison                 20,407,559                329,205
            Herbert I. Corkin               20,407,573                329,191
            Dale F. Eck                     20,373,088                363,676

            Messrs. Hair, Robison and Corkin were elected to terms expiring in
            2004. Mr. Eck was elected to a term expiring in 2003. The terms of
            Directors Lawrence A. Sala, Carl W. Gerst, Jr. and Dr. David Wilemon
            continued after the meeting. Mr. Hair passed away on January 26,
            2002.

Item 6.     Exhibits and Reports on Form 8-K

Item 6(a)   Exhibits

            Exhibit 10.1 Amendment to Revolving Credit Agreement.

Item 6(b)   Reports on Form 8-K

            None.


                                       26
<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 14, 2002                   S/Lawrence A. Sala
                                          --------------------------------------
                                          President & Chief Executive Officer

Date: February 14, 2002                   S/Joseph E. Porcello
                                          --------------------------------------
                                          Vice President of Finance and
                                            Treasurer


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