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

(Mark One)

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

For the quarterly period ended September 30, 2007

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


For the transition period from _____________________ to ________________________

                          Commission file number 0-6620


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

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

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

Registrant's telephone number, including area code: 315-432-8909
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

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

Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the
Exchange Act). Check One: Large accelerated filer __ Accelerated filer X
Non-accelerated filer __

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

      The number of shares of Registrant's Common Stock outstanding on
November 2, 2007 was 15,228,735.


                                       1
<PAGE>

                                  ANAREN, INC.

                                      INDEX

PART I - FINANCIAL INFORMATION                                         Page No.

  Item 1.    Financial Statements

             Consolidated Balance Sheets as of                           3
             September 30, 2007 (unaudited) and June 30, 2007

             Consolidated Statements of Earnings                         4
             for the Three Months Ended September 30,
             2007 and 2006 (unaudited)

             Consolidated Statements of Cash Flows                       5
             for the Three Months Ended September 30,
             2007 and 2006 (unaudited)

             Notes to Consolidated Financial                             6
             Statements (unaudited)

  Item 2.    Management's Discussion and Analysis                        11
             of Financial Condition and Results of Operations

  Item 3.    Quantitative and Qualitative Disclosures                    20
             About Market Risk

  Item 4.    Controls & Procedures                                       21

PART II - OTHER INFORMATION

  Item 1A.   Risk Factors                                                23

  Item 2.    Unregistered Sales of Equity Securities                     23
             and Use of Proceeds

  Item 6.    Exhibits                                                    23

 Officer Certifications                                                25 - 28


                                       2
<PAGE>

PART I - FINANCIAL INFORMATION

Item  1. Financial Statements

                                  ANAREN, INC.
                           Consolidated Balance Sheets
                      September 30, 2007 and June 30, 2007

<TABLE>
<CAPTION>

               Assets                                        September 30, 2007  June 30, 2007
               ------                                        ------------------  -------------
                                                                (Unaudited)
<S>                                                            <C>              <C>
Current assets
    Cash and cash equivalents                                  $   7,379,493    $   7,912,276
    Securities available for sale (note 4)                         6,000,000       14,150,000
    Securities held to maturity (note 4)                          22,254,574       20,951,788
    Receivables, less allowances of $258,588
      at September 30, 2007 and $255,677 at June 30, 2007         20,487,741       19,768,701
    Inventories (note 5)                                          25,575,943       24,331,597
    Other receivables                                              2,146,543        1,606,093
    Prepaid expenses                                                 734,917          771,251
    Deferred income taxes                                          1,174,255        1,174,255
    Other current assets                                             848,273        1,121,513
                                                               -------------    -------------
                Total current assets                              86,601,739       91,787,474

Securities held to maturity (note 4)                              24,122,451       31,540,247
Property, plant and equipment, net (note 6)                       38,740,683       37,091,786
Deferred income taxes                                                 28,890           31,447
Goodwill                                                          30,715,861       30,715,861
Other intangible assets, net (note 2)                                     --           37,500
                                                               -------------    -------------
                Total assets                                   $ 180,209,624    $ 191,204,315
                                                               =============    =============

      Liabilities and Stockholders' Equity
      ------------------------------------

Current liabilities:
    Accounts payable                                           $   9,528,342    $  11,717,120
    Accrued expenses (note 7)                                      1,381,149        3,907,652
    Income taxes payable (note 1 and 9)                               21,953          726,240
    Customer advance payments                                      2,160,266        1,318,812
    Other current liabilities (note 8)                             1,665,965        1,259,616
                                                               -------------    -------------
                Total current liabilities                         14,757,675       18,929,440
Deferred income taxes                                              1,440,353        1,373,353
Pension and postretirement benefit obligation                      3,049,664        2,954,664
Other liabilities (note 8)                                         2,445,315        1,152,710
                                                               -------------    -------------
                Total liabilities                                 21,693,007       24,410,167

Stockholders' equity:
    Common stock of $.01 par value.  Authorized
       200,000,000 shares; issued 27,347,824 shares
       at September 30, 2007 and 27,128,855 at June 30, 2007         273,478          271,288
    Additional paid-in capital                                   189,066,953      187,877,944
    Retained earnings                                             88,012,277       85,306,813
    Accumulated other comprehensive loss                            (871,478)        (984,640)
                                                               -------------    -------------
                                                                 276,481,230      272,471,405
    Less cost of 11,616,789 treasury shares
      at September 30, 2007 and 10,752,506 at June 30, 2007      117,964,613      105,677,257
                                                               -------------    -------------
                Total stockholders' equity                       158,516,617      166,794,148
                                                               -------------    -------------
Total liabilities and stockholders' equity                     $ 180,209,624    $ 191,204,315
                                                               =============    =============
</TABLE>

See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

                                  ANAREN, INC.
                       Consolidated Statements of Earnings
                               Three Months Ended
                           September 30, 2007 and 2006
                                   (Unaudited)

                                                  September 30,    September 30,
                                                      2007             2006
                                                 -------------    --------------

Net sales                                          $ 32,090,192    $ 30,203,110

Cost of sales                                        21,571,206      19,363,778
                                                   ------------    ------------
        Gross profit                                 10,518,986      10,839,332
                                                   ------------    ------------
Operating expenses:
        Marketing                                     1,757,367       1,812,706
        Research and development                      2,603,318       2,138,185
        General and administrative                    3,362,244       2,768,226
                                                   ------------    ------------
              Total operating expenses                7,722,929       6,719,117
                                                   ------------    ------------

Operating income                                      2,796,057       4,120,215

Other income, primarily interest                        750,043         896,606
Interest expense                                        (36,636)         (6,143)
                                                   ------------    ------------
              Total other income                        713,407    $    890,463
                                                   ------------    ------------

Income before income taxes                            3,509,464       5,010,678

Income tax expense                                      804,000       1,250,000
                                                   ------------    ------------

Net income                                         $  2,705,464    $  3,760,678
                                                   ============    ============


Basic earnings per share:                          $       0.17    $       0.21
                                                   ============    ============

Diluted earnings per share:                        $       0.17    $       0.21
                                                   ============    ============

Shares used in computing net earnings per share:
        Basic                                        16,042,333      17,492,157
                                                   ============    ============
        Diluted                                      16,365,305      17,975,795
                                                   ============    ============

See accompanying notes to consolidated financial statements.


                                       4
<PAGE>

                                  ANAREN, INC.
                      Consolidated Statements of Cash Flows
                               Three Months Ended
                           September 30, 2007 and 2006
                                   (Unaudited)
<TABLE>
<CAPTION>


Cash flows from operating activities:                                             September 30, 2007  September 30, 2006
                                                                                  ------------------  ------------------
<S>                                                                                  <C>               <C>
     Net income                                                                      $  2,705,464      $  3,760,678
     Adjustments to reconcile net income
       to net cash provided by operating activities:
         Depreciation                                                                   1,562,685         1,323,094
         Amortization                                                                     189,208           220,444
         Gain on sale of land                                                                --             (77,508)
         Deferred income taxes                                                             70,000           145,000
         Stock based compensation                                                         896,138           829,666
         Provision for receivables allowances                                               2,911             1,279
         Changes in operating assets and liabilities:
           Receivables                                                                   (721,951)       (3,669,997)
           Inventories                                                                 (1,259,403)       (2,850,213)
           Other receivables                                                             (540,450)          180,009
           Prepaids and other current assets                                              309,574          (895,480)
           Accounts payable                                                            (1,126,520)          678,172
           Accrued expenses                                                            (2,526,503)       (1,413,163)
           Income taxes payable                                                          (704,287)          682,955
           Customer advance payments                                                      841,454              --
           Other liabilities                                                            1,698,510            57,573
           Pension and postretirement benefit obligation                                   95,000           170,578
                                                                                     ------------      ------------
     Net cash (used in) provided by operating activities                                1,491,830          (856,913)
                                                                                     ------------      ------------
Cash flows from investing activities:
     Capital expenditures                                                              (4,273,839)       (2,270,268)
     Proceeds from sales of land                                                             --             134,508
     Increase in other assets                                                                --            (341,448)
     Maturities of held to maturity and available for sale securities                  45,537,462        39,475,003
     Purchase of held to maturity and available for sale securities                   (31,424,160)      (40,476,573)
                                                                                     ------------      ------------
             Net cash (used in) provided by investing activities                        9,839,463        (3,478,778)
                                                                                     ------------      ------------
Cash flows from financing activities:
     Stock options exercised                                                              286,467         1,225,797
     Tax benefit from exercise of stock options                                            23,651           422,080
     Purchase of treasury stock                                                       (12,287,356)             --
                                                                                     ------------      ------------
             Net cash (used in) provided by financing activities                      (11,977,238)        1,647,877
                                                                                     ------------      ------------

     Effect of exchange rates on cash                                                     113,162           (12,151)
                                                                                     ------------      ------------
             Net decrease in cash and cash equivalents                                   (532,783)       (2,699,965)
Cash and cash equivalents at beginning of period                                        7,912,276        15,733,214
                                                                                     ------------      ------------
Cash and cash equivalents at end of period                                           $  7,379,493      $ 13,033,249
                                                                                     ============      ============
Supplemental Disclosures of Cash Flow Information:
     Cash Paid During the Period For:
       Interest                                                                      $      6,143      $      6,143
       Income taxes                                                                       101,377              --
       Fixed asset purchases included in accounts payable                                 481,842              --
</TABLE>

See accompanying notes to consolidated financial statements.


                                       5
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The consolidated financial statements are unaudited and reflect all adjustments
(consisting 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 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, 2007. The results of operations for
the three months ended September 30, 2007 are not necessarily indicative of the
results for the entire fiscal year ending June 30, 2008, or any future interim
period.

The income tax rates utilized for interim financial statement purposes for the
three months ended September 30, 2007 and 2006 are based on estimates of income
and utilization of tax credits for the entire year.

NOTE 1: Adoption of Recent Accounting Pronouncements

Effective July 1, 2007, the Company adopted Financial Accounting Standards Board
("FASB") Interpretation No. 48 ("FIN No. 48"), "Accounting for Uncertainty in
Income Taxes - an interpretation of FASB Statement No. 109." FIN No. 48
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109. FIN
No. 48 prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or
expected to be taken on a tax return. Additionally, FIN No. 48 provides guidance
on derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition (note 9).

NOTE 2: Intangible Assets

Intangible assets as of September 30, 2007 and June 30, 2007 are as follows:

<TABLE>
<CAPTION>
                                     September 30                      June 30
                              ----------------------------  ----------------------------
                              Gross Carrying  Accumulated   Gross Carrying  Accumulated
                                 Amount       Amortization     Amount       Amortization
                              --------------  -----------   --------------  -----------
<S>                            <C>            <C>            <C>            <C>
Patent                         $  574,966     $  574,966     $  574,966     $  574,966
Customer Relationships          1,350,000      1,350,000      1,350,000      1,312,500
Non-Competition Agreements        180,000        180,000        180,000        180,000
                               ----------     ----------     ----------     ----------
  Total                        $2,104,966     $2,104,966     $2,104,966     $2,067,466
                               ==========     ==========     ==========     ==========
</TABLE>

Intangible asset amortization expense for the three month period ended September
30, 2007 and 2006 aggregated $37,500 and $80,218, respectively. The intangible
assets have been fully amortized during the first quarter ended September 30,
2007, and no future amortization expense related to these intangible assets will
occur in subsequent quarters.


                                       6
<PAGE>

NOTE 3: Equity Based Compensation

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

                                                 Three Months Ended
                                                    September 30
                                                 -------------------
                                                 2007           2006
                                                 ----           ----
Stock options                                  $594,422        $747,383
Restricted stock                                301,716          82,283
                                               --------        --------
Stock based compensation expense               $896,138        $829,666
                                               ========        ========

During the quarter ending September 30, 2007, 186,069 shares of restricted stock
with an aggregate  value of $3,027,343 were issued with a vesting period of 1 to
4 years.

NOTE 4: Securities

The amortized cost and fair value of securities are as follows:
<TABLE>
<CAPTION>
                                                                      September 30, 2007
                                                                      ------------------

                                                                     Gross           Gross
                                                    Amortized      Unrealized      Unrealized
                                                      Cost           Gains           Losses         Fair Value
                                                    ---------      ----------      ----------       ----------
<S>                                               <C>             <C>             <C>              <C>
Securities available for sale:
     Auction securities                           $ 6,000,000     $        --     $        --      $ 6,000,000
                                                  -----------     -----------     -----------      -----------
         Total securities
         available-for-sale                       $ 6,000,000     $        --     $        --      $ 6,000,000
                                                  ===========     ===========     ===========      ===========
Securities held to maturity:
     Municipal bonds                              $41,123,560     $    29,040     $        --      $41,152,600
     Commercial paper                               1,674,188              --              --        1,674,188
     Corporate bonds                                2,582,075              --            (507)       2,581,568
     Federal Agency Bond                              997,202           1,208              --          998,410
                                                  -----------     -----------     -----------      -----------
         Total securities held to maturity        $46,377,025     $    30,248     $      (507)     $46,406,766
                                                  ===========     ===========     ===========      ===========
</TABLE>
<TABLE>
<CAPTION>

                                                                        June 30, 2007
                                                                        -------------

                                                                    Gross            Gross
                                                    Amortized     Unrealized       Unrealized
                                                      Cost          Gains            Losses         Fair Value
                                                    ---------     ----------       ----------       ----------
<S>                                               <C>             <C>             <C>              <C>
Securities available for sale:
     Auction rate securities                      $14,150,000     $       --      $        --      $14,150,000
                                                  -----------     ----------      -----------      -----------
         Total securities
           Available-for-sale                     $14,150,000     $       --      $        --      $14,150,000
                                                  ===========     ==========      ===========      ===========
Securities held to maturity:
     Municipal bonds                              $47,059,882     $       --      $  (143,577)     $46,916,305
     Commercial paper                               2,595,026             --               --        2,595,026
     Corporate bonds                                2,238,166             --             (264)       2,237,902
     Federal agency bonds                             598,961             --             (411)         598,550
                                                  -----------     ----------      -----------      -----------
         Total securities held to maturity        $52,492,035     $       --      $  (144,252)     $52,347,783
                                                  ===========     ==========      ===========      ===========
</TABLE>

Contractual  maturities  of  marketable  debt  securities  held to  maturity  at
September 30, 2007 and June 30, 2007 are summarized as follows:

<TABLE>
<CAPTION>
                                September 30, 2007               June 30, 2007
                                ------------------               -------------
                                              Fair                            Fair
                                             Market                          Market
                              Cost           Value            Cost            Value
                              ----           ------           ----           ------
<S>                        <C>             <C>             <C>             <C>
Within one year            $22,254,574     $22,267,404     $20,951,788     $20,943,580
One year to five years      24,122,451      24,139,362      31,540,247      31,404,203
                           -----------     -----------     -----------     -----------
     Total                 $46,377,025     $46,406,766     $52,492,035     $52,347,783
                           ===========     ===========     ===========     ===========
</TABLE>


                                       7
<PAGE>

Contractual  maturities  of  auction  rate  securities  available  for  sale  at
September 30, 2007 and June 30, 2007 are summarized as follows:

<TABLE>
<CAPTION>
                               September 30, 2007                June 30, 2007
                               ------------------                -------------
                                               Fair                           Fair
                                              Market                         Market
                              Cost             Value          Cost            Value
                              ----            ------          ----           ------
<S>                        <C>             <C>             <C>             <C>
Within one year            $ 6,000,000     $ 6,000,000     $14,150,000     $14,150,000
One year to five years              --              --              --              --
                           -----------     -----------     -----------     -----------
     Total                 $ 6,000,000     $ 6,000,000     $14,150,000     $14,150,000
                           ===========     ===========     ===========     ===========
</TABLE>


The Company  invests in auction rate  securities.  Auction rate  securities have
long-term  underlying  maturities;  however, the market is highly liquid and the
interest rates reset every 7, 28 or 35 days.

Amortization  expense  relating to the net  discounts and premiums on securities
held to maturity for the quarters ending September 30, 2007 and 2006 amounted to
$151,708 and  $140,226,  respectively.  The  amortization  for the period ending
September 30, 2006 was  reclassified  from  investing to operating cash flows on
the consolidated statements of cash flows.

NOTE 5: Inventories

Inventories are summarized as follows:

                           September 30, 2007      June 30, 2007
                           ------------------      -------------
      Component parts          $12,197,226          $11,841,427
      Work in process            7,816,523            7,392,973
      Finished goods             5,562,194            5,097,197
                               -----------          -----------
        Total                  $25,575,943          $24,331,597
                               ===========          ===========

NOTE 6:             Property, Plant and Equipment

Property, plant and equipment are summarized as follows:

                                         September 30, 2007        June 30, 2007
                                         ------------------        -------------
      Land and land improvements            $  4,157,617           $  4,157,617
      Construction in process                    613,344              5,774,893
      Buildings, furniture and fixtures       24,668,798             17,956,858
      Machinery and equipment                 66,344,569             64,683,378
                                            ------------           ------------
                                            $ 95,784,328           $ 92,572,746
      Less accumulated depreciation          (57,043,645)           (55,480,960)
                                            ------------           ------------
                                            $ 38,740,683           $ 37,091,786
                                            ============           ============

NOTE 7: Accrued Expenses

Accrued expenses consist of the following:

                             September 30, 2007      June 30, 2007
                             ------------------      -------------
      Compensation              $   595,673           $ 2,945,888
      Commissions                   682,025               654,596
      Health insurance              174,253               280,819
      Other                         (70,802)               26,349
                                -----------           -----------
                                $ 1,381,149           $ 3,907,652
                                ===========           ===========

NOTE 8: Other Liabilities


                                       8
<PAGE>

Other liabilities consist of the following:

                                         September 30, 2007    June 30, 2007
                                         ------------------    -------------
      Deferred compensation                 $  927,704          $  937,811
      Supplemental retirement plan             479,809             460,459
      Accrued lease                            937,016             542,056
      Income tax liability                   1,315,000                  --
      Warranty                                 448,623             472,000
      Other                                      3,128                  --
                                            ----------          ----------
                                             4,111,280           2,412,326
      Less current portion                   1,665,965           1,259,616
                                            ----------          ----------
                                            $2,445,315          $1,152,710
                                            ==========          ==========

NOTE 9: Income Taxes

As discussed in Note 1, effective  July 1, 2007 the Company  adopted FIN No. 48.
The Company did not record a cumulative  effect  adjustment to retained earnings
as a result of this adoption.  Upon adoption,  the Company has  unrecognized tax
benefits  of  $414,000  related  to  continuing  operations.   The  Company  has
unrecognized tax benefits of $770,000  resulting from deductions  related to the
liquidation of a subsidiary  which would be recorded as discontinued  operations
if recognized.  Unrecognized tax benefits of $414,000 would affect the Company's
effective tax rate if recognized.

In  accordance  with the Company's  accounting  policy,  the Company  recognizes
accrued  interest  and  penalties  related to  unrecognized  tax  benefits  as a
component of income tax  expense.  This policy did not change as a result of the
adoption  of FIN No.  48.  As of the  date  of  adoption,  $115,000,  net of tax
benefit,  was included in the  liability  for  uncertain  tax  positions for the
possible payment of interest and penalties.

The Company  reclassified  $1,315,000 of liabilities from current to non-current
liabilities  because payment of cash is not  anticipated  within one year of the
balance  sheet date.  These  liabilities  are recorded in the other  non-current
liabilities line in the Company's Consolidated Balance Sheet.

Various  state  income  tax  examinations  are  currently  in  progress.  It  is
reasonably   possible   that  the  liability   associated   with  the  Company's
unrecognized  tax  benefits  will  increase or  decrease  within the next twelve
months as a result of these  examinations  or the  expiration of the statutes of
limitations.  At this time,  an  estimate  of the range of  reasonably  possible
outcomes  cannot be made,  however the change could include the entire amount of
unrecognized tax benefits related to discontinued operations.

As of July 1, 2007 the  Company is subject  to income tax  examinations  for its
U.S.  federal and foreign  income taxes for the fiscal years 2004 through  2007,
for state and local taxes for the fiscal years 1999 through 2007.

Income taxes for the first quarter of fiscal 2008 were $804,000, representing an
effective  tax rate of 22.9% and included a $65,000 tax benefit  resulting  from
deductible  interest accrued on prior year's tax liabilities.  The first quarter
of fiscal 2007 had an effective tax rate of 25.0%.  The projected  effective tax
rate for fiscal 2008 is  approximately  25% compared to an actual  effective tax
rate of 25.3% for fiscal 2007.


                                       9
<PAGE>

NOTE 10: Earnings Per Share

Basic earnings per share is based on the weighted average number of common
shares outstanding. Diluted earnings per share is based on the weighted average
number of common shares outstanding, as well as dilutive potential common shares
which, in the Company's case, comprise shares issuable under the Company's
Comprehensive Long-Term Incentive Plan. The weighted average number of common
shares utilized in the calculation of the diluted earnings per share does not
include antidilutive shares aggregating 1,055,364 and 946,950 at September 30,
2007 and 2006, respectively. The treasury stock method is used to calculate
dilutive shares, which reduces the gross number of dilutive shares by the number
of shares purchasable from the proceeds of the options assumed to be exercised.

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

                                                        Three Months Ended
                                                       --------------------
                                                           September 30
                                                       2007            2006
                                                       ----            ----
Numerator:
Net income                                         $ 2,705,464     $ 3,760,678
                                                    ==========      ==========
Denominator:
Denominator for basic earnings
         per share:
           Weighted average shares outstanding      16,042,333      17,492,157
                                                    ==========      ==========
Denominator for diluted earnings
         per share:
         Weighted average shares outstanding        16,042,333      17,492,157
         Common stock options
           and restricted stock                        322,972         483,638
                                                    ----------      ----------
Weighted average shares and conversions             16,365,305      17,975,795
                                                    ==========      ==========


NOTE 11: Components of Net Periodic Pension Benefit Costs

                                                      Three Months Ended
                                                    -----------------------
                                                         September 30
                                                    2007               2006
                                                    ----               ----
Service cost                                     $  75,000         $  85,587
Interest cost                                      175,000           151,795
Expected return on plan assets                    (225,000)         (173,365)
Amortization of prior service cost                      --              (808)
Amortization of the net loss                            --            47,436
                                                 ---------         ---------
Net periodic benefit cost                        $  25,000         $ 110,645
                                                 =========         =========

Expected Pension Contributions

Required contributions for fiscal 2008 are $0.

NOTE 12: Components of Net Periodic Postretirement Health Benefit Costs

                                                      Three Months Ended
                                                    -----------------------
                                                         September 30
                                                    2007               2006
                                                    ----               ----
Service cost                                     $  20,000         $  18,677
Interest cost                                       42,500            36,665
Amortization of the net loss                         7,500            13,208
                                                 ---------         ---------
Postretirement Health                            $  70,000         $  68,550
                                                 =========         =========


                                       10
<PAGE>

Expected Postretirement Health Contributions

Expected contributions for fiscal 2008 are approximately $90,000.

NOTE 13: Segment Information

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

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>
Net sales:
Three months ended:
       September 30, 2007       21,103,429     10,986,763            --     32,090,192
       September 30, 2006       19,827,407     10,375,703            --     30,203,110

Operating income:
Three months ended:
       September 30, 2007        1,742,429      1,053,628            --      2,796,057
       September 30, 2006        2,735,062      1,385,153            --      4,120,215
</TABLE>


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

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


                                       11
<PAGE>

Overview

The consolidated financial statements present the financial condition of the
Company as of September 30, 2007 and June 30, 2007, and the consolidated results
of operations and cash flows of the Company for the three months ended September
30, 2007 and 2006.

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. Beginning in 2004, the Company
has introduced new components addressing consumer wireless applications such as
wireless local area networks, Bluetooth, WiFi, cellular handsets and satellite
telecommunications. The Company sells its products to leading wireless
communications equipment manufacturers such as Ericsson, Motorola, Nokia, Nortel
Networks, and Andrew, and to satellite communications and defense electronics
companies such as Boeing Satellite, ITT, Lockheed Martin, Northrup Grumman and
Raytheon.

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, collectibility is reasonably assured and
title and risk of loss has passed to the customer. Title and the risks and
rewards of ownership of products are generally transferred at the time of
shipment. Payments received from customers in advance of products delivered are
recorded as customer advance payments until earned. Annually, a small percentage
of sales are derived from fixed-price contracts for the sale of engineering
design and development efforts for space and defense electronics products. Sales
and estimated profits under long-term contracts are recognized according to
customer contractual milestones 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.

In July 2006, the Company began construction on a 54,000 square foot addition to
its facility in East Syracuse, New York. This addition is needed primarily to
accommodate the growth of the Company's Space and Defense business. The
expansion project was completed during the third quarter of calendar 2007 at an
estimated cost of $6.1 million for the building addition. During the remainder
of fiscal 2008, the Company plans to renovate the space in its existing facility
at a cost of approximately $2.5 million.

In February 2007, the Company was selected to receive a contract valued in
excess of $8.0 million from Alcatel-Alenia Space (now Thales Alenia Space)
(France) for development and production of integrated beamforming assemblies
that will be deployed on the Globalstar-2 satellite payload. The contract award,
which was finalized in September 2007, covers design services and manufacture of
up to 48 beamforming networks. Work has been authorized to begin immediately,
with production deliveries starting in May 2008.

In July 2007, the Company was selected to receive a contract valued in excess of
$11.0 million from Northrop Grumman Corporation, located in Baltimore, Maryland.
The contract is for Integrated Ferrite Assemblies used in the S-Band radar which
is part of the Mission Equipment for the Cobra Judy Replacement Program. The
contract calls for the first full-rate production and deliveries starting in
November of 2007 and continuing for a 15 month period.


                                       12
<PAGE>

In August 2007, the Company was selected to receive a contract valued at $5.8
million from Lockheed Martin for electronic subassemblies that will help U.S.
Navy helicopters detect and identify enemy radar. Designed to process radar
signals detected by a receiver, Anaren's Passive Ranging Subsystem is a major
component of Lockheed Martin's AN/ALQ-210 Electronic Support Measures (ESM)
system, a sophisticated device carried aboard military helicopters and fixed
wing aircraft to warn of possible threats.

In August 2007, the Company announced that pre-tax income for the three months
ended December 31, 2006 and March 31, 2007 were overstated by $238,000 and
$676,000, respectively, due to certain accounting errors related to
reconciliation of inventory and recording of vendor payables at its China
subsidiary, and errors related to stock based compensation and pension expense
as well as errors involving warranty expense and allowance for sale returns. The
Company reported a material weakness in its Annual Report on Form 10-K that its
company-level risk assessment and oversight controls were not effective for the
fiscal year 2007. The restatement was reported in the Company's Annual Report on
Form 10-K for the year ended June 30, 2007 and was also reported in amendments
to its Quarterly Reports on Form 10-Q/A for the second and third quarters of
fiscal year 2007 ended December 31, 2006 and March 31, 2007, respectively in
October 2007.

Second Quarter of Fiscal 2008 Outlook

For the second quarter, the Company expects a decline in demand for wireless
infrastructure products, comparable demand for the consumer component product
line and increased sales for the Space & Defense segment. As a result, the
Company expects net sales to be in the range of $29.0 - $32.0 million for the
second quarter of fiscal 2008. With an anticipated tax rate of approximately
25.0% and an expected stock based compensation expense of approximately $0.04
per diluted share, net earnings per diluted share are expected to be in the
range of $0.14 - $0.17 for the second quarter.

Results of Operations

Net sales from continuing operations for the three months ended September 30,
2007 were $32.1 million, up $1.9 million from $30.2 million for the first
quarter of fiscal 2007. Net income for the first three months of fiscal 2008 was
$2.7 million, or 8.4% of net sales, down $1.1 million, or 28.1% from net income
of $3.8 million in the first three months of fiscal 2007.


                                       13
<PAGE>

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

                                                      Three Months Ended
                                                 Sept. 30, 2007   Sept. 30, 2006
                                                 --------------   --------------
Net Sales                                            100.0%           100.0%

Cost of sales                                         67.2%            64.1%
                                                      ----             ----
Gross profit                                          32.8%            35.9%
                                                      ----             ----

Operating expenses:
   Marketing                                           5.5%             6.0%
   Research and development                            8.1%             7.1%
   General and administrative                         10.5%             9.2%
                                                      ----             ----
     Total operating expenses                         24.1%            22.3%
                                                      ----             ----

Operating income                                       8.7%            13.6%

Other income (expense):

     Other, primarily interest income                  2.3%             3.0%
     Interest expense                                 (0.1)%            0.0%
                                                      ----             ----
     Total other income (expense), net                 2.2%             3.0%
                                                      ----             ----

Income before income taxes                            10.9%            16.6%
Income taxes                                           2.5%             4.2%
                                                      ----             ----
   Net income                                          8.4%            12.4%
                                                      ====             ====

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

                                                      Three Months Ended
                                                    ----------------------
                                                         September 30
                                                    2007              2006
                                                    ----              ----
Wireless                                         $  21,103         $  19,827
Space and Defense                                   10,988            10,376
                                                 ---------         ---------
     Total                                       $  32,091         $  30,203
                                                 =========         =========


Three Months Ended September 30, 2007 Compared to Three Months Ended September
30, 2006

Net sales. Net sales increased $1.9 million, or 6.2% to $32.1 million for the
first quarter ended September 30, 2007 compared to $30.2 million for the first
quarter of fiscal 2007. This increase resulted from a $1.3 million rise in
shipments of wireless infrastructure and consumer products and a $600,000
increase in sales of Space and Defense segment products.

The increase in sales of Wireless products, which consist of standard
components, ferrite components and custom subassemblies for use in building
wireless basestation and consumer equipment, was a result of a rise in customer
demand for custom Wireless components during the current first quarter compared
to the first quarter of last year. Shipments of custom Wireless components rose
$3.6 million, or 50% in the first quarter of fiscal 2008 compared to the first
quarter last year, led by a significant increase in demand from Nokia Corp. for
a new basestation ferrite product which began shipping in the third quarter of
fiscal 2007. This increase more than


                                       14
<PAGE>

offset a $1.0 million decline in consumer products and a $1.4 million decrease
in sales of standard wireless products. Shipments to Nokia Corp. for all
Wireless products in the first quarter of fiscal 2008 were $10.1 million, which
represents 48% of total Wireless sales and 31.5% of total Company sales for the
quarter. Demand for Wireless products is expected to decline from first quarter
levels in the second quarter of fiscal 2008.

Space and Defense products consist of custom components and assemblies for
communication satellites and defense radar, receiver, and countermeasure
subsystems for the military. Sales of Space and Defense products rose $612,000,
or 5.9% in the first quarter of fiscal 2008 compared to the first quarter of the
previous fiscal year. Space and Defense product sales continue to benefit from
the higher level of business won by the Company over the past few fiscal years
which has resulted in the current record segment backlog of over $62 million.
Quarterly shipments of Space and Defense products for the remainder of fiscal
2008 are expected to range between $12.0 and $14.0 million.

Gross Profit. Cost of sales consists primarily of engineering design costs,
materials, material fabrication costs, assembly costs, direct and indirect
overhead, and test costs. Gross profit for the first quarter of fiscal 2008 was
$10.5 million, (32.8% of net sales), down $320,000 from $10.8 million (35.9% of
net sales) for the same quarter of the prior year. Gross profit on sales
decreased in the first quarter of fiscal 2008 over the first quarter of last
year due to the substantial rise in shipments of lower margin custom Wireless
products and a decline in sales of higher margin standard Wireless components.

Marketing. Marketing expenses consist mainly of employee related expenses,
commissions paid to sales representatives, trade show expenses, advertising
expenses and related travel expenses. Marketing expenses were $1.8 million (5.5%
of net sales) for the first quarter of fiscal 2008, unchanged from $1.8 million
(6.0% of net sales) for the first quarter of fiscal 2007. Marketing expenses in
the current first quarter were relatively unchanged, falling $55,000 over the
first quarter of last fiscal year due to a reduction in payroll costs resulting
from a reduction in sales personnel.

Research and Development. Research and development expenses consist of material
and salaries and related overhead costs of employees engaged in ongoing
research, design and development activities associated with new products and
technology development. Research and development expenses were $2.6 million
(8.1% of net sales) in the first quarter of fiscal 2008, up 21.8% from $2.1
million (7.1% of net sales) for the first quarter of fiscal 2007. Research and
development expenditures are supporting further development of Wireless
infrastructure and consumer component opportunities, as well as new technology
development in the Space and Defense Group. Research and Development
expenditures have increased in the first quarter of fiscal 2008 versus the first
quarter of last year due to the higher level of opportunities in the marketplace
which have resulted in the hiring of additional personnel over the last 12
months to do development work. The Company does not expect to reduce its current
research and development efforts and is presently working on a number of new
standard and custom Wireless and Space and Defense opportunities.

General and Administrative. General and administrative expenses consist of
employee related expenses, professional services, intangible amortization,
travel related expenses and other corporate costs. General and administrative
expenses increased 21.5% to $3.4 million (10.5% of net sales) for the first
quarter of fiscal 2008 from $2.8 million (9.2% of net sales) for the first
quarter of fiscal 2007. The increase resulted primarily from additional
professional service costs associated with the restatement of the Company's
second and third quarter fiscal 2007 financial


                                       15
<PAGE>

statements. Costs related to these restatements and subsequent increased year
end audit procedures were in excess of $350,000 in the first quarter of fiscal
2008.

Operating Income. Operating income fell 32.1% in the first quarter of fiscal
2008 to $2.8 million, (8.7% of net sales) compared to $4.1 million (13.6% of net
sales) for the first quarter of fiscal 2007. On a reporting segment basis,
Wireless operating income was $1.7 million for the first quarter of fiscal 2008,
down $1.0 million, or 36.3%, from Wireless operating income of $2.7 million in
the first quarter of fiscal 2007.

The decline in Wireless segment operating income in the first quarter of fiscal
2008 compared to the first quarter of fiscal 2007 was due primarily to a shift
in product mix to more custom Wireless products. Custom Wireless products are
typically lower margin compared to standard Wireless components due to
significantly higher material content as a percentage of sales compared to
standard components. Margins were further eroded by the increase in General and
Administrative expense related to the fiscal year 2007 restatements.

Space and Defense operating income was $1.1 million in the first quarter of
fiscal 2008 down $332,000 from $1.4 million for the first quarter of fiscal
2007. Operating margins in this segment declined in the first quarter due to
manufacturing inefficiencies encountered on some programs which had material
delays, a higher level of internal research and development spending for the
segment year over year and the increase in general and administrative expense
related to the Company's fiscal year 2007 restatements.

Interest Expense. Interest expense represents interest incurred on deferred
obligations. Interest expense for the first quarter of fiscal 2008 was $37,000;
compared to $6,000 for the first quarter of fiscal 2007.

Other Income. Other income is primarily interest income received on invested
cash balances and rental income. Other income decreased 16.3% to $750,000 in the
first quarter of fiscal 2008 compared to $897,000 for the first quarter of last
year. This decrease was caused by the decline in available investable cash due
to the use of $22.3 million to purchase treasury shares over the last two
quarters. Other income will fluctuate based on short term market interest rates
and the level of investable cash balances.

Income Taxes. Income taxes for the first quarter of fiscal 2008 were $804,000
(2.5% of net sales), representing an effective tax rate of 22.9% and included a
$65,000 tax benefit resulting from deductible interest accrued on prior year's
tax liabilities. This compares to income tax expense of $1.3 million (4.1% of
net sales) for the first quarter of fiscal 2007, representing an effective tax
rate of 25.0%. The Company's effective tax rate is a direct result of the
proportion of federally exempt state municipal bond income and federal tax
credits and benefits in relation to the levels of United States and foreign
taxable income or loss. The projected effective tax rate for fiscal 2008 is
approximately 25% compared to an actual effective tax rate of 25.3% for fiscal
2007.


                                       16
<PAGE>

Critical Accounting Policies

The methods,  estimates and judgments  management uses in applying the Company's
most  critical  accounting  policies  have a  significant  impact on the results
reported in the Company's financial statements. The U.S. Securities and Exchange
Commission  has defined the most critical  accounting  policies as the ones that
are most  important to the  portrayal of the Company's  financial  condition and
results,  and that require  management to make the most difficult and subjective
judgments,  often as a result of the need to make  estimates of matters that are
inherently  uncertain.  Based on this  definition,  the Company's  most critical
policies include: 1) valuation of accounts receivable, which impacts general and
administrative  expense; 2) valuation of inventory,  which impacts cost of sales
and gross  margin;  3) the  assessment of  recoverability  of goodwill and other
intangible  and  long-lived  assets,   which  impacts  write-offs  of  goodwill,
intangibles and long-lived  assets; 4) accounting for stock based  compensation,
which impacts multiple expense  components  throughout the statements of income;
and 5) accounting  for income taxes,  which impacts the valuation  allowance and
the effective tax rate.  Management  reviews the estimates,  including,  but not
limited to, allowance for doubtful  accounts,  inventory reserves and income tax
valuations  on a  regular  basis  and  makes  adjustments  based  on  historical
experiences,  current  conditions  and  future  expectations.  The  reviews  are
performed  regularly and adjustments  are made as required by current  available
information.  The Company  believes these estimates are  reasonable,  but actual
results could and have differed at times from these estimates.

The Company's accounts receivable represent those amounts which have been billed
to its customers but not yet collected.  The Company  analyzes  various  factors
including  historical  experience,  credit  worthiness  of customers and current
market and economic  conditions.  The allowance for doubtful accounts balance is
established  based on the portion of those accounts  receivable which are deemed
to be  potentially  uncollectible.  Changes in judgments on these  factors could
impact the timing of costs recognized.

The Company states inventories at the lower of cost or market,  using a standard
cost  methodology  to determine  the cost basis for the  inventory.  This method
approximates  actual cost on a  first-in-first-out  basis. The recoverability of
inventories  is based on the types  and  levels of  inventory  held,  forecasted
demand, pricing, competition and changes in technology.

The Company records  valuation  allowances to reduce deferred tax assets when it
is more likely than not that some portion of the amount may not be realized. The
Company  evaluates  the need for  valuation  allowances  on a regular  basis and
adjusts the allowance as needed.  These  adjustments,  when made,  would have an
impact  on the  Company's  financial  statements  in the  period  that they were
recorded.

Long-lived  assets with estimated useful lives are depreciated to their residual
values over those useful lives in  proportion  to the economic  value  consumed.
Long-lived assets are tested for impairment at the group level, which is usually
an economic unit such as a  manufacturing  facility or  department,  which has a
measurable  economic  output  or  product.  Long-lived  assets  are  tested  for
impairment  when events or changes in  circumstances  indicate that the carrying
amount of a long-lived asset may not be recoverable, and exceeds its fair market
value. This circumstance exists if the carrying amount of the assets in question
exceeds the sum of the  undiscounted  cash flows expected to result from the use
of the  asset.  The  impairment  loss is  measured  as the  amount  by which the
carrying  amount of a long-lived  asset  exceeds its fair value as determined by
the  discounted  cash flow or in the case of negative cash flow, an  independent
market appraisal of the asset.


                                       17
<PAGE>

Goodwill  is tested  annually  during the fourth  fiscal  quarter,  or sooner if
indicators of impairment  exist,  for impairment by the Company at the reporting
unit level by comparing the fair value of the  reporting  unit with its carrying
value.  Valuation  methods for  determining the fair value of the reporting unit
include  reviewing  quoted  market  prices and  discounted  cash  flows.  If the
goodwill is indicated as being impaired (the fair value of the reporting unit is
less than the carrying  amount),  the fair value of the  reporting  unit is then
allocated to its assets and  liabilities in a manner similar to a purchase price
allocation in order to determine  the implied fair value of the  reporting  unit
goodwill.  This  implied  fair  value of the  reporting  unit  goodwill  is then
compared with the carrying  amount of the reporting  unit goodwill and, if it is
less, the Company would then recognize an impairment loss.

The  projection  of future  cash  flows  for the  goodwill  impairment  analysis
requires  significant  judgments and estimates  with respect to future  revenues
related to the assets and the future  cash  outlays  related to those  revenues.
Actual  revenues and related cash flows or changes in  anticipated  revenues and
related cash flows could result in changes in this  assessment  and result in an
impairment charge.  The use of different  assumptions could increase or decrease
the related impairment charge.

The Company  accounts for stock based  compensation by recognizing  expense over
the vesting  period for any unvested stock option awards  granted.  Stock option
grants  are  valued by using a  Black-Scholes  method at the date of the  grant.
There  are  assumptions  and  estimates  made by  management  which  go into the
valuation of the options granted, such as volatility,  expected option term, and
forfeiture  rate.  The Company  recognizes  expense on options  granted  using a
straight-line  method  over the  vesting  period.  Restricted  stock  grants are
expensed over the vesting period, which is determined at the date of the grant.

Liquidity and Capital Resources

Net cash  provided by  operations  for the first quarter of fiscal 2008 was $1.5
million and resulted from the high level of net income before  depreciation  and
non-cash equity based compensation expense. The positive cash flow from earnings
for the current first  quarter was  partially  off-set by increases in inventory
and receivables totaling $2.0 million, as well as a pay down of accrued expenses
and accounts payable of $3.7 million.  Net cash used in operations for the first
quarter  ended  September  30, 2006 was  $857,000.  The negative  cash flow from
operations  for the first quarter of fiscal 2007 was due to the $3.7 million and
$2.9 million rise in accounts receivable and inventory, respectively,  resulting
from the increased levels of Company business.

New cash  provided by investing  activities  in the first quarter of fiscal 2008
was $9.8  million and  consisted  of $14.1  million  provided by the maturity of
marketable  debt  securities,  net of  $4.3  million  used  to pay  for  capital
additions.  Net cash used in investing activities in the first quarter of fiscal
2007 was $3.5 million and consisted of capital  additions of $2.3  million,  and
net purchases of marketable securities totaling $1.0 million.

Net cash used in financing  activities  in the first  quarter of fiscal 2008 was
$12.0 million and consisted of $12.3 million used to purchase  864,000  treasury
shares net of $310,000  generated by cash  receipts  and tax  benefits  from the
exercise of stock  options.  Net cash provided by financing  activities was $1.6
million  in the first  quarter  of  fiscal  2007 and  consisted  of cash and tax
benefits provided by the exercise of stock options.

During the remainder of fiscal 2008, the Company  anticipates that its main cash
requirement  will be for capital  expenditures  and continued  repurchase of the
Company's common stock. Capital


                                       18
<PAGE>

expenditures for the remainder of fiscal 2008 are expected to total between $5.0
- $6.0 million and will be funded from existing cash and investments.

The Company expects to continue to repurchase  shares of its common stock in the
open market and/or through  private  negotiated  transactions  under the current
Board authorization, depending on market conditions. At September 30, 2007 there
were 710,733 shares remaining under the current Board repurchase  authorization.
On  November  5,  2007,  the  Company  announced  that the  Board  of  Directors
authorized  the  repurchase of an  additional 2 million  shares of the Company's
common  stock  in  addition  to  the  200,733   shares   remaining   from  prior
authorizations.

At September 30, 2007, the Company had approximately $59.8 million in cash, cash
equivalents, and marketable securities. The Company has no debt, and on a fiscal
year basis has had positive  operating cash flow for over ten years. The Company
believes that its cash requirements for the foreseeable future will be satisfied
by currently invested cash balances and expected cash flows from operations.

Recent Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standard
No. 157, "Fair Value Measurements" which is effective for fiscal years beginning
after November 15, 2007 (the Company's 2009 fiscal year) and for interim periods
within those years. This statement defines fair value, establishes a framework
for measuring fair value and expands the related disclosure requirements. The
Company is currently evaluating the potential impact of this statement.

In February 2007, the FASB issued Statement of Financial Accounting Standard No.
159, "The Fair Value Option for Financial Assets and Financial Liabilities -
Including an Amendment of FASB Statement No. 115" (SFAS 159). This Statement
provides companies with an option to measure, at specified election dates, many
financial instruments and certain other items at fair value that are not
currently measured at fair value. A company that adopts SFAS 159 will report
unrealized gains and losses on items for which the fair value option has been
elected in earnings at each subsequent reporting date. This Statement also
establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. This Statement is effective for fiscal
years beginning after November 15, 2007 (the Company's 2009 fiscal year). The
Company is currently evaluating the potential impact of this statement.


                                       19
<PAGE>

Item 3. Quantitative and Qualitative disclosures About Market Risk

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

As of September 30, 2007, the Company had cash, cash equivalents and marketable
securities of $59.8 million, all of which consisted of highly liquid investments
in marketable debt securities. The marketable debt securities at date of
purchase normally have maturities between one and 18 months, are exposed to
interest rate risk and will decrease in value if market interest rates increase.
A hypothetical decrease in market interest rate of 10.0% from September 30, 2007
rates, or 0.375%, would have reduced net income and cash flow by approximately
$224,000, or $.003 per diluted share for the quarter. Due to the relatively
short maturities of the securities and its ability to hold those investments to
maturity, the Company does not believe that an immediate decrease in interest
rates would have a significant effect on its financial condition or results of
operations. Over time, however, declines in interest rates will reduce the
Company's interest income.

Forward-Looking Cautionary Statement

The statements contained in this Quarterly Report which are not historical
information are "forward-looking statements". These forward looking statements
are subject to business and economic risks and uncertainties that could cause
actual results to differ materially from those discussed. The risks and
uncertainties described below are not the only risks and uncertainties facing
our Company. Additional risks and uncertainties not presently known to us or
that are currently deemed immaterial may also impair our business operations. If
any of the following risks actually occur, our business could be adversely
affected, the trading price of our common stock could decline, and you may lose
all or part of your investment.

On October 31, 2007, the Company filed amended Quarterly Reports on Form 10-Q/A
restating the Company's consolidated condensed financial statements for the
periods ending December 31, 2006 and March 31, 2007. The Company cannot predict
the reaction to the filing of these Amended Reports and if adverse, the market
price of the Company's stock could decline, potentially rapidly and sharply.

Other known risks include, but are not limited to: the Company's ability to
timely ramp up to meet some of our customers' increased demands; unanticipated
delays in successfully completing customer orders within contractually required
timeframes; unanticipated penalties resulting from failure to meet contractually
imposed delivery schedules; unanticipated costs and damages resulting from
replacement of products found to include latent defects; increased pricing
pressure from our customers; decreased capital expenditures by wireless service
providers; the possibility that the Company may be unable to successfully
execute its business strategies or achieve its operating objectives, generate
revenue growth or achieve profitability expectations; inability to successfully
secure new design wins from our OEM customers, reliance on a limited number of
key component suppliers; unpredictable difficulties or delays in the development
of new products; order cancellations or extended postponements; the risks
associated with any technological shifts away from the Company's technologies
and core competencies; unanticipated impairments of assets including investment
values and goodwill; diversion of


                                       20
<PAGE>

defense spending away from the Company's products and/or technologies due to
on-going military operations; and litigation involving antitrust, intellectual
property, environmental, product warranty, product liability, and other issues.
You are encouraged to review Anaren's 2007 Annual Report, on Anaren's Form 10-K
for the fiscal year ended June 30, 2007 and any exhibits to that Report filed
with the Securities and Exchange Commission to learn more about the various
risks and uncertainties facing Anaren's business and their potential impact on
Anaren's revenue, earnings and stock price. Unless required by law, Anaren
disclaims any obligation to update or revise any forward-looking statement.


Item 4. Controls and Procedures

      1.    Evaluation of disclosure controls and procedures. Based on their
            evaluation of the Company's disclosure controls and procedures (as
            defined in Rules 13a-15(e) and 15d-15(e) under the Securities
            Exchange Act of 1934) as of the end of the period covered by this
            Quarterly Report on Form 10-Q, the Company's chief executive officer
            and chief financial officer have concluded that the Company's
            disclosure controls and procedures are designed to ensure that
            information required to be disclosed by the Company in the reports
            that it files or submits under the Exchange Act is recorded,
            processed, summarized and reported within the time periods specified
            in the SEC's rules and forms and are operating in an effective
            manner. These disclosure controls and procedures include, without
            limitation, controls and procedures designed to ensure that the
            information required to be disclosed by the Company in the reports
            that it files or submits under the Exchange Act is accumulated and
            communicated to management, including the Company's chief executive
            officer and chief financial officer, as appropriate to allow timely
            decisions regarding required disclosure.

      2.    Changes in internal controls. During the period covered by this
            Quarterly Report on Form 10-Q, there were changes in the Company's
            internal controls over financial reporting (as defined in Rule
            13a-15(f)) that have materially affected the Company's internal
            controls over financial reporting. These changes relate to the
            remediation efforts that were put in place to respond to the
            material weaknesses identified in the June 30, 2007 Annual Report on
            Form 10-K filed on September 28, 2007. The following control
            improvements have been made to the Company's internal controls over
            financial reporting:

            i.    Monitoring Financial Reporting Risks: During the quarter, and
                  on a quarterly basis, certain members of the Company's
                  management performed an operational review at each of the
                  Company's subsidiaries to ensure that policies and procedures
                  are being applied consistently and accurately. These reviews
                  focused on the areas considered by the Company and identified
                  each quarter as those areas with the most significant risk of
                  material financial statement misstatement based on the current
                  business environment.

            ii.   Accounting for Inventory and Cost of Sales in China:

                  a.    The Company has improved its monitoring controls over
                        their subsidiaries by ensuring that a member from
                        corporate team is on site during the quarter close to
                        ensure consistent accounting practices and policies are
                        being followed. Another member from the corporate team
                        reviews any work performed by the on-site corporate team
                        member.


                                       21
<PAGE>

                  b.    Corporate Finance reviews and reperforms account
                        reconciliations for significant accounts at subsidiaries
                        to ensure they are prepared consistent with prior
                        periods, complete, and accurate.

                  c.    The Company will improve the level of accounting
                        expertise and understanding of U.S. GAAP at its
                        subsidiary in China by hiring more experienced
                        accounting personnel at that location, as well as hire a
                        new member to the corporate finance team exclusively
                        responsible for the oversight of that location.

            iii.  Accounting for Distributor Agreements: All newly negotiated
                  contracts are required to be reviewed by the Sr. VP of
                  Finance, Corporate Controller and Financial Reporting Manager
                  prior to being formerly executed with the customer to ensure
                  that all critical contract provisions that impact financial
                  reporting have been considered in the preparation of the
                  Company's financial statements.

            iv.   Accounting for Stock-Based Compensation: Improved procedures
                  surrounding the review and adoption of accounting standards
                  that have a financial impact on the Company's financial
                  statements. Procedures include a detailed review of the stock
                  compensation expense calculation by personnel independent of
                  the preparer. This review will be executed by finance
                  department personnel with adequate technical expertise
                  relative to the accounting for stock based compensation.

            v.    Accounting for Warranty Reserve, Sales Returns and Allowance
                  Reserve and Inventory Valuation: During the quarter, and on a
                  quarterly basis, the Company monitors the warranty reserve,
                  sales returns and allowance reserve and those practices
                  relative to inventory valuation to ensure that all non-GAAP
                  practices utilized do not materially impact the Company's
                  consolidated financial statements. This monitoring process
                  includes the preparation of analyses over each area, which is
                  reviewed by multiple levels with the corporate finance
                  department.


                                       22
<PAGE>

PART II           OTHER INFORMATION

Item 1A. Risk Factors

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

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

Issuer Purchases of Equity Securities

On May 16, 2007, the Board of Directors increased by 2,000,000 the number of
shares that the Company was authorized to repurchase in the open market or by
privately negotiated transactions through its previously announced stock
repurchase program. The program, which may be suspended at any time without
notice, has no expiration date. The following table sets forth information
regarding shares repurchased and purchasable under the program during and as of
the end of the periods indicated. On September 30, 2007, 710,733 shares remained
authorized for purchase as noted above,as of November 5, 2007 there were 200,733
shares remaining from prior Board authorizations and the Board authorized the
repurchase of an additional 2 million shares, depending on market conditions.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                                                           Maximum Number (or
                                                                    Total Number of        Approximate Dollar
                                                                   Shares (or Units)      Value) of Shares (or
                       Total Number of                           Purchased as Part of     Units) that May Yet
                      Shares (or Units)     Average Price Paid    Publicly Announced      Be Purchased Under
    Period                Purchased         per Share (or Unit)    Plans or Programs     the Plans or Programs
---------------------------------------------------------------------------------------------------------------
<S>                             <C>                                         <C>                 <C>
July 2007                       0                     --                    0                   1,575,016
---------------------------------------------------------------------------------------------------------------
August 2007                60,683                  14.04                    0                   1,514,333
---------------------------------------------------------------------------------------------------------------
September 2007            803,600                  14.23                    0                     710,733
---------------------------------------------------------------------------------------------------------------
Total                     864,283                  14.22                    0                          --
---------------------------------------------------------------------------------------------------------------

</TABLE>

Item  6.          Exhibits

                  31    Rule 13a-14(a) Certifications

                  32    Section 1350 Certifications


                                       23
<PAGE>

                                   SIGNATURES


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

                                  Anaren, Inc.
                                  (Registrant)

Date:  November 9, 2007           /s/ Lawrence A. Sala
                                  ----------------------------------------------
                                  Lawrence A.Sala
                                  President & Chief Executive Officer


Date:  November 9, 2007           /s/ Joseph E. Porcello
                                  ----------------------------------------------
                                  Joseph E. Porcello
                                  Sr. Vice President of Finance and Treasurer


                                       24