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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

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

      For the fiscal year ended June 30, 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, East Syracuse, New York              13057
  (Address of principal executive offices)              (Zip Code)


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

Securities Registered Pursuant to Section 12(b) of the Act: None

Securities Registered Pursuant to Section 12(g) of the Securities Act:

                          Common Stock, $.01 Par Value
                                (Title of Class)

      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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

      The  aggregate  market  value of the  Registrant's  Common  Stock  held by
non-affiliates of the Registrant,  based on the closing sale price of the Common
Stock on September  17, 2001,  as reported on the Nasdaq  National  Market,  was
approximately $294,310,203.

      The number of shares of Registrant's Common Stock outstanding on September
17, 2001 was 22,416,120.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Proxy Statement for use in connection with its 2001
Annual Meeting of  Shareholders  are  incorporated  into Part III of this Annual
Report on Form 10-K.

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                                     PART I

Item 1. Business

Forward-Looking Cautionary Statement

      In an effort to provide investors a balanced view of the Company's current
condition  and future  growth  opportunities,  this  Annual  Report on Form 10-K
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:
further  decline  in  the  general   economy,   and  particularly  the  wireless
telecommunications  sector;  loss of one or more of a limited number of original
equipment  manufacturers  ("OEMs") as  customers;  the  inability to attract and
retain  qualified  engineers  and other key  employees  to maintain and grow the
Company's  business;  the  unavailability of component parts and services from a
limited  number of suppliers;  changes in customer  order  patterns;  additional
cancellation  of existing  contracts  or orders;  difficulties  in  successfully
integrating the businesses of Amitron, Inc. ("Amitron");  potential interruption
of operations  resulting from the  consolidation of Anaren Power Products,  Inc.
("APPI")  into the  Company's  Syracuse,  New York  headquarters;  inability  to
effectively manage possible future growth;  failure to successfully  execute the
Company's   manufacturing   plan;   increased  pricing  pressure  and  increased
competition;  the failure of wireless customers' annual procurement forecasts to
result  in  future  sales;  and  litigation  involving  antitrust,  intellectual
property, product warranty, and other issues.

General

      Anaren Microwave, Inc. (the "Company" or "Anaren") was incorporated in New
York in 1967.  The  Company's  executive  offices are located at 6635  Kirkville
Road, East Syracuse, New York 13057. The telephone number of the Company at that
location is (315) 432-8909.  The Company's  common stock is listed on the Nasdaq
National Market under the symbol "ANEN." Unless the context otherwise  provides,
the "Company" or "Anaren" refers to Anaren Microwave, Inc. and its subsidiaries.

      On August 31, 2001, the Company  acquired all of the  outstanding  capital
stock of Amitron.  Amitron, based in North Andover,  Mass., is primarily engaged
in the  manufacture  of thick film  ceramic  circuits,  and  components  for the
medical, telecommunications and optics markets.

Overview

      The  Company  is  a  leading  provider  of  highly  integrated   microwave
components, assemblies and subsystems for the wireless communications, satellite
communications  and defense  electronics  markets.  Anaren uses its  proprietary
Multi-Layer   Stripline   technology   to   produce   compact,   light   weight,
cost-effective  products for use in wireless,  satellite and defense electronics
systems.  The  Company's   distinctive   microwave  modeling   capabilities  and
integration  technology  allow it to replace numerous  discrete  components with
compact   integrated   assemblies  that  consistently   deliver  optimal  signal
performance.  The  Company  sells its  integrated  assemblies,  which range from
simple splitting and combining  networks to complete microwave  backplanes,  and
its high end subsystems to leading communications equipment manufacturers in the
mobile and fixed  broadband  wireless  markets and the satellite  communications
market. The technology  utilized by the Company supports a wide range of digital
and analog wireless communications protocols, systems and standards including:

      o     Code Division Multiple Access ("CDMA")

      o     Global System for Mobile communications ("GSM")

      o     Local Multipoint Distribution System ("LMDS")

      o     Multi-channel, Multipoint Distribution System ("MMDS")

      o     Personal Communications System ("PCS")

      o     Third Generation wireless ("3G")

      o     Time Division Multiple Access ("TDMA")


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      Through its focused research and development efforts,  Anaren has designed
and  continues  to design  components  and  subsystems  that  enable  high speed
wireless access to the Internet and other broadband  wireless  applications.  In
addition,  the Company is developing and producing a diverse set of products and
technologies  to  support  the  latest  generation  of  wireless  communications
systems,  including  3G, MMDS and LMDS. 3G is the first  internationally  agreed
upon standard for a  packet-switched  data network for mobile and fixed wireless
communications applications. The Company's customer base includes leading global
OEMs  that  serve the  wireless,  satellite  and  defense  electronics  markets,
including:

      o     Ericsson

      o     Lucent Technologies

      o     Motorola

      o     Nokia

      o     Nortel Networks

      o     Powerwave Technologies

      o     Boeing, Inc.

      o     ITT Aerospace/Communications

      o     Lockheed Martin

      o     Loral Space & Communications

      o     Northrop Grumman

      o     Raytheon

Industry Background

      Worldwide  demand  for  integrated  voice,  data and video  communications
services  continues to grow. The volume of high-speed data traffic across global
communications  networks has grown as the public  Internet and private  business
intranets  have  become  essential  for  daily   communications  and  electronic
commerce.  The number of persons  using the  Internet  to buy and sell goods and
services also is expected to continue to grow.  Servicing the increasing  demand
for higher  bandwidth  content  and  applications  requires  cost-effective  and
high-speed connections,  which are often unavailable or inadequate over existing
wire-based  networks.  For  many  users,  wireless   communications  provide  an
advantageous  access solution for high-speed  Internet and multimedia  services.
This is underscored by the increasing number of wireless subscribers worldwide.

      During the first  quarter of calendar  year 2001,  the  telecommunications
industry began to experience a rapid downturn in the wireless  marketplace which
resulted in decreased demand for  infrastructure  equipment.  This severe market
downturn  has had a negative  impact on all of the  Company's  wireless  product
lines, and it appears that unfavorable  wireless market conditions will continue
potentially beyond calendar 2001.

A Wireless Network

      A typical  mobile or fixed  wireless  communications  system  comprises  a
geographic  region  containing a number of cells,  each of which contains one or
more base stations,  which are linked in a network to form a service  provider's
coverage area.  Each base station  houses the equipment  that receives  incoming
telephone  calls from the switching  offices of the local  wire-based  telephone
company and  broadcasts  calls to the  wireless  users  within the cell.  A base
station can process a fixed number of radio channels through the use of multiple
transceivers,  power  amplifiers and tunable  filters,  along with an antenna to
transmit and receive signals to and from the wireless user.

Mobile Wireless Communications

      The demand for mobile  communications has grown  significantly  during the
past decade and has been fueled by a number of factors including:

      o     decreasing prices for wireless handsets and airtime;

      o     more favorable global communications regulatory environment;


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      o     increasing competition among service providers; and

      o     greater availability of services and frequency spectrum.

      Additionally,  many developing  countries are installing wireless networks
as an alternative to installing,  expanding or upgrading traditional  wire-based
networks.

      Service  providers  are  striving  to keep up with the  demand  for mobile
wireless services by increasing the capacity of their existing base stations and
by adding more base  stations to increase  the number of  frequency  channels in
their  networks.  Cellular  service  providers are upgrading their legacy analog
networks to digital  networks,  such as CDMA, TDMA, GSM and 3G, which allow more
calls per frequency channel and provide improved quality and increased security.
In addition,  PCS service  providers,  which operate at a much higher  frequency
than cellular service  providers,  are expanding the coverage of their networks.
PCS networks  generally  require a significantly  larger number of base stations
than traditional cellular-based networks.

Fixed Broadband Wireless Communications

      Fixed broadband  wireless  solutions  provide  meaningful  advantages over
wire-based  alternatives,  such as  digital  subscriber  lines,  cable and fiber
optics.  These advantages include  significantly lower initial capital costs for
network  equipment,  reduced  installation  costs and more rapid deployment.  In
addition,  wireless  solutions are  particularly  advantageous in areas where: a
wired  infrastructure  may be  difficult  to install or  upgrade,  minimal or no
communications  infrastructure  exists  or  geographically  dispersed  customers
render the installation of a wired infrastructure impractical or uneconomical.

      Emerging  fixed  broadband  wireless data  transmissions  systems have the
potential to further expand the market for wireless  communications  by allowing
service  providers  to increase  revenue-generating  traffic on their  networks.
These systems include 3G, MMDS and LMDS.  Broadband wireless technology is being
deployed by both  incumbent  and emerging  service  providers.  The  established
carriers are expected to use broadband  wireless  technology to reach  customers
whom they  previously  could not serve,  fill  coverage  gaps in their  existing
networks and deploy value-added  services,  such as streaming video,  multimedia
conferencing and high-speed Internet access, in a cost-effective manner.

Satellite Communications

      Satellite  communications  currently  serve several  business and consumer
markets. Current satellite services include direct to home television, direct to
home  Internet  access,  business to business  data  transmission,  regional and
worldwide  telephone  services  and  worldwide  paging.  New  services are being
planned to offer high-speed Internet access, videoconferencing, large scale data
transmission  and other  multimedia  applications.  These new services will have
significantly  greater  information  content  and  will  therefore  require  the
allocation of significantly more bandwidth than many current applications. These
large bandwidth  allocations  are not available at the operating  frequencies of
current satellite systems.  To address this problem,  regulatory agencies around
the world have allocated additional frequency spectrum for two-way transmission.
The proposed systems to deliver these broadband  services are significantly more
complex  and  will  therefore   require  design   advances  in  on-board  signal
processing, on-board re-configuration of multi-beam antennas, power handling and
low-cost user equipment.

      As demand for Internet access and other data-driven  applications  expands
and as both  commercial  and  residential  consumers  are  increasingly  seeking
efficient  and  effective  means of  access,  satellite  service  providers  are
entering the  broadband  wireless  market.  Some of the  advantages of satellite
communications  for this market  are:  global  access to an  existing  satellite
infrastructure, the ability to cover large geographic areas, scalable deployment
and the ability to quickly reallocate capacity.

Defense Electronics

      There  continues  to  be  a  shift  in  defense  spending  away  from  the
development of new platforms and into  technologies that improve the performance
and survivability of existing platforms. As a result, funding for advanced radar
systems,  advanced  jamming  systems and smart  munitions has  continued.  These
technologies enable the detection, identification,  deception and elimination of
missile systems, a current focus of military planners.


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The Anaren Solution

      The Company's  technology addresses the demands of the wireless market for
high quality  products  manufactured in volume with  continuous  improvements in
performance  and cost.  The Company  also  provides  the  satellite  market with
enabling  technologies that increase network capacity and flexibility,  allowing
for  increased  revenue  generation.   The  Company's  proprietary   Multi-Layer
Stripline  technology  allows  the  Company to provide  compact,  light  weight,
cost-effective,  and highly  integrated  microwave  components,  assemblies  and
subsystems. The Company's solution includes:

      Broad Array of Standard  and  Customized  Products.  The Company  offers a
broad array of standard  and custom  microwave  products to the mobile and fixed
wireless,   satellite   communications  and  defense  electronics  markets.  The
technologies  underlying the Company's  product  portfolio  allow the Company to
address the new wireless data  communications  products  being  developed by its
existing and potential  customers with limited  incremental  investment.  As the
OEMs in the wireless  communications  industry  have been reducing the number of
their suppliers,  the Company believes that its expanding  product portfolio has
helped the Company become a strategic supplier to many of these OEMs.

      Advanced Microwave Design and Manufacturing Capabilities.  The engineering
and design staff of 107  engineers  as of June 30, 2001 works with  customers of
the Company to develop system level solutions.  Anaren's  engineers  collaborate
with customers to develop products that provide state-of-the-art performance and
that can be  manufactured  in  significant  volume  with  excellent  quality and
reliability.  The Company has consistently met the stringent requirements of the
wireless and satellite  communications markets due to the Company's strengths in
advanced packaging and  interconnecting  of radio,  microwave and extremely high
frequency  signals,  and the Company's  ability to produce small,  light weight,
cost-effective and efficient microwave components and assemblies.

      Rapid Product  Development.  Anaren's  integrated design and manufacturing
facilities allow it to produce custom solutions from concept to product delivery
in  a  matter  of  days.  With  its  Multi-Layer  Stripline  technology,  design
libraries,  manufacturing  experience and investment in automation,  the Company
can  facilitate a rapid  transition  from  development  to  production,  thereby
offering its  customers a complete  turnkey  solution and allowing them to bring
their products to market faster.

      Strong Customer Relationships.  The Company believes that it has become an
integral  part of its key  customers'  operations  by working  closely with them
through the entire  development  and production  process.  The Company assigns a
project engineer to each customer to ensure a high level of  responsiveness  and
customer  service.  The project engineer and a design team assist customers from
the  conceptual,   system  level  design  stages  through  the  development  and
manufacturing  process.  By maintaining close contact with the customers' design
engineering,  manufacturing,  purchasing and project management  personnel,  the
Company can better  understand  their needs,  rapidly develop  customer-specific
solutions  and  more  effectively  design  the  Company's   solutions  into  the
customers'  systems and networks.  The Company believes that the strength of its
customer support and depth of its customer  relationships  provide the Company a
competitive advantage.

Strategy

      The Company's  strategy is to continue to use its proprietary  Multi-Layer
Stripline  technology,  extensive microwave design libraries and turnkey design,
development and manufacturing  capabilities to further expand its penetration in
the  wireless  and  satellite  communications  markets.  Key  components  of the
Company's strategy include the following:

      Pursue New Wireless Markets.  The Company has successfully  penetrated the
mobile  wireless  market and intends to use its market  position to pursue other
wireless markets,  including the 3G and fixed broadband  wireless  markets.  The
Company also intends to offer  additional  products and  technologies to address
existing and developing wireless markets.

      Increase Component  Integration and Value Added Content. The Company plans
to continue  to increase  the value of its  products in wireless  and  satellite
communications systems. The Company intends to expand its component offerings to
enable the Company to increase the number of its products in each base  station.
In  addition,  with its  Multi-Layer  Stripline  manufacturing  technology,  the
Company  intends to continue  to increase


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the functionality of its products, thereby enabling its customers to continue to
reduce the size and cost of their  platforms,  while the Company  increases  its
content value. As an example,  the Company believes that the dollar value of its
average  product  content per base station more than doubled between fiscal 1997
and fiscal 2001. The Company is currently  selling its  integrated  solutions to
five of the largest base station manufacturers for the wireless markets.

      Strengthen and Expand Customer  Relationships.  Today, a limited number of
large systems  manufacturers  drives the wireless and  satellite  communications
markets.  The Company has developed,  and plans to continue to expand,  customer
relationships  with many of these  manufacturers,  including  Ericsson,  Lucent,
Motorola,  Nokia and Nortel  Networks  for wireless  communications  and Boeing,
Lockheed   Martin,   Loral  Space  &   Communications   and  TRW  for  satellite
communications.   The  Company  intends  to  further   strengthen  its  customer
relationships  by offering  complete  outsourcing  solutions,  from research and
development  through  product  design and  production,  thereby  increasing  the
customers' reliance on the Company.

      Enhance  Technology  Leadership  in Wireless  Communications.  The Company
intends to use its technological leadership in the mobile wireless and satellite
markets to extend its  competitive  advantage.  Anaren  plans to pursue  further
technological advances through continued investment in research and development.
The  Company  will seek to advance its  leadership  in  wireless  technology  by
developing next generation  products for the mobile and fixed broadband wireless
markets.  In addition,  the Company will build upon its  relationships  with key
wireless OEMs in order to develop state-of-the-art wireless products.

      Expand Its Business through Strategic Acquisitions. The Company intends to
continue to make  opportunistic  acquisitions  of  companies,  product lines and
technologies  that  complement  its business.  Amitron's  technology  and unique
processing  capabilities  provide  performance  advantages  for  high  frequency
applications and are another strategic acquisition for the Company. Amitron also
provides a platform to  implement  low  temperature  co-fired  ceramic  ("LTCC")
technology,  which  the  Company  believes  has  application  in high  frequency
electronics.  By expanding its product offerings,  the Company expects to better
serve the needs of its OEM  customers.  The Company  intends to use its existing
customer  relationships  and  distribution  channels  to sell  these  additional
products.

Technology

      Traditional  stripline  technology  consists  of  circuit  runs  etched on
dielectric  sheets,  or thin  teflon  layers,  which  are then  sandwiched  in a
precision  machined  aluminum case.  The case provides  grounding on the top and
bottom,  and also  provides a  structure  on the edge for  mounting  connectors.
Integration is achieved through  connecting  multiple  stripline  components via
numerous cables.

      Multi-Layer  Stripline  technology is a technique of processing  stripline
circuits,  in which multiple layers of etched  stripline  circuits are laminated
together  in  a  manner  that  is  similar  to  printed  circuit  board  ("PCB")
manufacturing,   but  with  superior  microwave   characteristics.   Similar  to
traditional  PCB  manufacturing,  holes  are used to  interconnect  layers.  The
Company's proprietary techniques enable it to implement multi-layer  connections
that  perform  optimally  at  microwave  frequencies.   Unlike  traditional  PCB
manufacturing, simply connecting the appropriate points on the multi-layer board
does not ensure  adequate  performance.  In order to achieve  optimal  microwave
performance  on a  consistent  basis,  material and process  variations  must be
tightly   controlled  and  the  circuit  design  must  take  into  consideration
variations  in  the  manufacturing   process.  The  Company's  microwave  design
engineering staff has developed  proprietary  modeling  techniques and component
design  libraries that allow for consistent and efficient  design and production
of complex microwave products.

      Anaren's  microwave  antenna  beamforming  technology,  coupled  with  the
Multi-Layer   Stripline   manufacturing   process,    produces   light   weight,
cost-effective  beamforming  assemblies  for  communication  satellites.   These
beamforming  assemblies  provide multibeam coverage where the size and direction
of beams is fixed.  Additionally,  the  Company  is  utilizing  its  Multi-Layer
Stripline  technology and microwave design experience to develop  cost-effective
solutions  for  wireless  high  data  rate  transmission  applications,  such as
Internet  access and multimedia  communications.  In  conjunction  with Raytheon
Company,  the  Company  developed  a  next  generation   Multi-Layer   Stripline
technology to address  applications at extremely high frequencies.  In addition,
the  Company  has  developed   high  density   microwave   switch   matrices  by
incorporating


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active microwave switches into the passive Multi-Layer Stripline technology. The
Company recently completed a production subsystem for a communications satellite
program.  These switch  matrices are a key element in providing the  flexibility
that system designers desire.

Products

      Wireless Communications

      The Company provides  microwave  components,  assemblies and subsystems to
leading wireless infrastructure  equipment  manufacturers.  The Company believes
that its products are used in most wireless base stations. Traditionally, all of
the signal distribution,  or combining and splitting,  within a base station has
been  accomplished  with discrete  signal  distribution  components  and coaxial
cables.  Through the use of its Multi-Layer  Stripline  technology,  the Company
provides microwave components, assemblies and subsystems that eliminate the need
for discrete components and interconnecting cables. These integrated assemblies,
which range from simple splitting and combining  networks to complete  microwave
backplanes,  distribute  microwave  signals  throughout the base stations,  from
reception at the antenna, to multiple radios, to multiple  amplifiers,  and back
to the antenna for transmission.

      The Company has  developed  its product  offerings to enable  customers to
reduce the size and cost, while enhancing the  performance,  of their equipment.
The Company  continually  invests  capital  and  resources  to enhance  existing
products as well as develop new products to address the latest  market  demands.
The  Company  has  developed  and  continues  to market a full line of  standard
products,  as well as custom products,  to wireless OEMs. A brief description of
the Company's major product categories is as follows:

Component Products

      Xinger(R)  Surface  Mount  Components.  The  Company's  Xinger(R)  line of
products are  off-the-shelf  surface mount  microwave  components  which provide
passive microwave signal distribution functions.  They were originally developed
to provide a low-cost signal  distribution  component,  which could be placed on
standard PCBs with automated  production  equipment.  The primary application of
these products is in radio frequency, or RF, power amplifiers, but they are also
found in low-noise  amplifiers and radios.  The Company believes it is currently
the market leader in this product area,  supplying industry leading OEMs such as
Ericsson,  Lucent,  Motorola  and  Nokia,  as well as  leading  power  amplifier
manufacturers  such as  Powerwave  Technologies  and  Spectrian.  The Company is
investing to expand this product line, as well as expand its addressable market.
In  addition,  the  Company  has one  patent,  and has filed four  other  patent
applications, to protect both the construction and product design.

      Ferrite  Products.  The Company's  ferrite  components  are widely used in
various  wireless  and defense  applications.  They are a key  component in base
station  amplifiers,  and their  primary  function is to protect  the  sensitive
electronics  from  damage by  isolating  them  electronically  from  potentially
harmful signal levels.

      Resistive   Products.   The  Company's  resistive  product  line  includes
resistors,  power  terminations,  and attenuators for use in high power wireless
and medical imaging  applications.  They are typically found in power amplifiers
and used in conjunction with ferrite products as well as Xinger(R) surface mount
components.

      AdrenaLine Power Splitting and Combining  Networks.  The Company developed
the AdrenaLine product line to provide a low-cost,  high-performance  network to
combine individual power modules.  These products enable the Company's customers
to produce smaller, lower cost, more efficient power amplifiers. The Company has
teamed with Motorola's  Semiconductor Product Sector in developing and marketing
AdrenaLine as an effective means of integrating  power  transistors.  AdrenaLine
supports all major  wireless  standards  and  frequencies,  including the unique
power demands of the new 3G standard.

      Custom  Splitting  and  Combining  Products.  In addition to its  standard
products,  the Company offers a wide range of custom splitting solutions.  These
custom  solutions  are typically  used to  distribute  signals to and from radio
transceivers  and  power   amplifiers.   The  Company's  custom  products  offer
consistent  performance and can be designed in unique  configurations,  allowing
base station  designers an opportunity  to greatly reduce space,  complexity and
cost while enhancing performance.


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<PAGE>

      Custom RF  Backplane  Assemblies.  The  Company's  RF  backplanes  provide
efficient  connections of microwave signals between  subsystems in wireless base
stations.  RF backplanes are similar to the motherboard in a personal  computer,
which efficiently connects signals between multiple subsystems. These assemblies
range from RF-only to fully  integrated  RF, direct  current  power,  and signal
routing   solutions.   They  are  typically  used  in  conjunction   with  radio
transceivers and RF power amplifiers.

      Hybrid Matrix  Assemblies.  The Company's  hybrid matrix  assemblies allow
customers to effectively reduce the number of amplifiers in their base stations.
Base station  amplifier  systems are designed to handle peak usage, when maximum
calls are made over a  network.  Due to the  sector  coverage  of  typical  base
stations,  some  amplifiers are heavily used while others are not. The Company's
matrices  allow  the  spreading  of high  usage  volume  over all  base  station
amplifiers, permitting a reduction in the total number of amplifiers needed.

Space and Defense

      The Company is a leading supplier of passive beamforming  networks for use
in multi-beam antennas critical to the success of communications satellites. The
Company's  Multi-Layer  Stripline  technology  enables  the  Company  to provide
customers   with  highly  complex   beamforming   networks  that  maintain  high
performance,  while  reducing  size  and  weight.  Each  of  these  products  is
specifically  designed  for a  particular  satellite  program,  and each  design
determines  the  number,  size and quality of beams that are  produced  from the
satellite's antenna.  Multi-Layer  Stripline technology can be used at extremely
high microwave frequencies,  making it well positioned to support the customers'
requirements for the next generation of satellite programs.

      The  Company  is also a leading  supplier  of  electronic  subsystems  and
passive  feed  networks  to  the  defense  electronics  market.  The  electronic
subsystems  sold  by  the  Company  utilize   several   technologies   including
Multi-Layer  Stripline,  application  specific  integrated  circuits  and signal
processing technologies.

      A brief  description  of the  Company's  major  product  categories  is as
follows:

      Passive Beamformers.  These passive beamformers determine the number, size
and quality of beams that are produced from an antenna array. These products are
essential to allowing satellite  communications providers the most efficient use
of their allocated spectrum.

      Switch  Matrices.  Switch matrices route RF signals from a single location
to one or multiple end user locations.  These products allow satellite operators
to allocate satellite capacity as required,  thereby increasing  utilization and
revenue generation.

      Radar Feed  Networks.  Radar feeds are power  dividers that  distribute RF
energy to the antenna  elements of the radar. The power dividers are arranged to
provide two or three inputs and several thousand outputs.

      Defense Radar  Countermeasure  Subsystems.  Defense  radar  countermeasure
subsystems digitally measure, locate and counter enemy radar systems.

Customers

      During the  fiscal  year ended  June 30,  2001,  approximately  73% of the
Company's sales were to customers in the wireless markets and  approximately 27%
of its sales were to customers in the space and defense markets. The Company had
two customers who each  accounted for more than 10% of net sales.  Approximately
15% of net sales were to  Motorola  through  the  Company's  Wireless  group and
approximately  11% of net sales were to Boeing  Satellite  through the Company's
Space and Defense group.

      Wireless Communications.  The Company sells its standard line of Xinger(R)
components  to  leading  OEMs  and a broad  range of  other  wireless  equipment
manufacturers.  In addition,  the Company sells its custom wireless  products to
major  wireless  infrastructure  OEMs. In general,  customers have purchased the
Company's  products  directly  from the Company or through  distributors,  sales
representatives  or  contract  manufacturers.  The  following  is a list  of the
Company's  customers  who  generated  $500,000 or more in revenues in the fiscal
year ended June 30, 2001:

      o     Alcatel Clamart

      o     Avnet


                                        8
<PAGE>

      o     BFI Optilas

      o     Cana

      o     ENI Technologies/Asia

      o     Ericsson

      o     Lucent Technologies

      o     Motorola

      o     Nortel Networks

      o     Powerwave Technologies

      o     Qtron

      o     Richardson Electronics Inc.

      o     Sanmina

      o     Spectrian

      Space and Defense.  The Company  currently sells satellite  communications
subsystems to many of the world's leading  satellite  manufacturers.  Subsystems
produced by the Company are found on communications  satellites.  The Company is
actively  involved in  developing  products for major  satellite  programs.  The
Company also sells defense electronics products to prime contractors serving the
United States and foreign governments.  The following is a list of the customers
who  generated  $500,000  or more in  revenues in the fiscal year ended June 30,
2001:

      o     Boeing Satellite

      o     FR Aviation

      o     ITT Aerospace/Communications

      o     Lockheed Martin

      o     Loral Space & Communications

      o     Northrop Grumman

      o     Raytheon Missile

Sales and Marketing

      The  Company  markets  its  products  worldwide  to OEMs in  wireless  and
satellite  markets and prime  contractors in defense markets primarily through a
sales and marketing  force of 19 people as of June 30, 2001.  The sales force is
generally organized by geographic territory and market segment. In addition,  as
of June 30, 2001, the Company had contracts with two major  distributors,  Avnet
and Richardson, and with 17 manufacturers'  representatives in the United States
and 14 international  representatives located in Western Europe, the Middle East
and Asia.  As part of its  marketing  efforts,  the Company  advertises in major
trade publications,  attends major industry shows and maintains a website on the
Internet.  Recently,  the Company has  invested  significantly  in its  Internet
website which contains an electronic version of its entire catalog. In addition,
the website enables users to download  important device  parameter files.  These
files  contain the  performance  information  for the catalog  parts in a format
which is compatible  with commonly used  computer  aided  design/computer  aided
modeling,  or CAD/CAM equipment.  The Company also provides  mechanical drawings
and  applications  notes  for  proper  use of the  parts.  This  service  allows
designers  to get the  information  they require and to easily  incorporate  the
Company's parts into their designs.

      After identifying key potential  customers,  the Company makes sales calls
with its own sales,  management and engineering personnel and its manufacturers'
representatives.  To promote widespread acceptance of the Company's products and
provide  customers with support for their  wireless  communications  needs,  the
sales and engineering teams work closely with the customers to develop solutions
tailored for their wireless requirements. The Company believes that its customer
engineering   support   team,   comprised   with  107  design  and   engineering
professionals as of June 30, 2001, is a key competitive advantage.


                                        9
<PAGE>

      The Company uses distributors for its standard products,  most notably the
Xinger(R) line of surface mount components.  In the United States,  Canada, Asia
and most of Europe,  the  Company has  exclusive  agreements  with Avnet,  which
operates under the name of BFI Optilas in Europe. The Scandinavian countries are
handled  by  A.G.   Components,   Inc.,  a  subsidiary   of   Elektronikgruppen.
Distribution  has become an important part of the sales efforts by providing the
Company with a larger sales force to promote its catalog offerings.  The Company
is also  seeing  a trend  on the  part of its  customers  to  consolidate  their
material   handling   activities,   including   purchasing,   warehousing,   and
fulfillment.  The result is that many OEMs are  outsourcing all or part of these
activities to large distribution firms like Avnet.

Backlog

      The  Company's  backlog of orders for the Wireless  group was $6.8 million
and $11.4  million as of June 30, 2001 and 2000,  respectively.  Backlog for the
Wireless group  primarily  represents firm orders for surface mount products and
signed purchase orders for custom components due to ship within the next four to
six weeks.  However,  backlog is not  necessarily  indicative  of future  sales.
Accordingly,  the Company does not believe that its backlog as of any particular
date is  representative  of actual sales for any succeeding  period.  Typically,
large OEMs including Ericsson,  Lucent,  Motorola, Nokia and Nortel, who use the
Company's surface mount and custom products,  negotiate set prices for estimated
annual volumes.  The Company  receives weekly orders one week prior to shipment.
The Company does not recognize backlog until it has received a firm order.

      As part of the Company's close working  relationships  with major wireless
communications customers, the customers expect the Company to respond quickly to
changes in the volume and delivery  schedule of their orders and, if  necessary,
to  inventory  products  at the  facilities  of  the  Company  for  just-in-time
delivery.  Therefore,  although contracts with these customers typically specify
aggregate  dollar  volumes of products  to be  purchased  over an extended  time
period, these contracts also provide for delivery flexibility,  on short notice.
In addition,  these  customers  may cancel or defer orders  without  significant
penalty.

      Backlog of orders for the Space and  Defense  group was $37.2  million and
$38.2  million as of June 30, 2001 and 2000,  respectively.  During  fiscal year
2002, the Company expects to ship between $23.0 million and $25.0 million of its
backlog  existing at June 30, 2001. All of the orders  included in the Space and
Defense  group  backlog are  covered by signed  contracts  or  purchase  orders.
However, backlog is not necessarily indicative of future sales. Accordingly, the
Company  does  not  believe  that  its  backlog  as of any  particular  date  is
representative of actual sales for any succeeding period.

Research and Development

      The Company's research and development  efforts are focused on the design,
development and engineering of both products and  manufacturing  processes.  The
Company  intends to focus its future  research and  development  efforts on next
generation  products and technologies.  The current  development  efforts of the
Company include:

      o     advanced Multi-Layer Stripline manufacturing processes for use in
            low-cost, light weight satellite and wireless applications;

      o     products for use in mobile and fixed wireless applications;

      o     advanced manufacturing technology to produce microwave stripline
            structures for broadband millimeter wave, or extremely high
            frequency, communications satellite applications;

      o     advanced low temperature co-fired ceramic for use in low-cost, light
            weight satellite and wireless applications; and

      o     broadband wireless technologies for high-speed Internet access.

      These activities include  customer-funded design and development,  as well
as efforts funded  directly by the Company.  Research and  development  expenses
funded by the Company were $5.0  million in fiscal 2001,  $3.8 million in fiscal
2000 and $2.8 million in fiscal 1999. Research and development costs are charged
to expense as incurred.

      In addition,  the Company's net sales included  approximately $4.6 million
for  fiscal  year  2001,   approximately   $5.1  million  for  fiscal  2000  and
approximately $1.4 million in fiscal 1999 attributable to payments by customers


                                       10
<PAGE>

for the design and development of products within the Space and Defense group to
meet their  specific  requirements.  In any given  year,  the amount of customer
funding for design and development can vary widely  depending upon the status of
particular  contracts.  The Company is typically  not  restricted  in the use of
technologies developed through customer funding for other applications.

Manufacturing

      The Company  continues  to invest in the  advancement  of its  proprietary
Multi-Layer  Stripline  manufacturing  processes  and in the  automation  of the
manufacturing  processes  of products  for the  Wireless  group.  Automation  is
critical in meeting the  customers'  demands for lower prices,  high quality and
on-time delivery. The Company is also investing to enhance its responsiveness to
increased  production demands from the Company's wireless customers,  as well as
the need to accommodate unpredictable surges in production rates that are common
in this market.

      In fiscal 2001,  the Company  completed a major  renovation and upgrade to
its manufacturing  facility,  located at the headquarters in East Syracuse,  New
York, to increase  current  capacity and improve response time to its customers.
Toward this end, the Company has  continued  to invest in  automated  design and
manufacturing equipment to reduce production times. The Company also reorganized
its  manufacturing  and  engineering  facility in East Syracuse to allocate more
space and provide for a better  workflow for the Wireless  group.  Additionally,
the Company has created  specialized work areas and manufacturing cells required
by its Space  and  Defense  group to meet the  demanding  specifications  of the
Company's space customers. These renovations are expected to provide the Company
with the necessary  manufacturing  capability  and capacity to meet  anticipated
customer  delivery  demands over the next 18 to 24 months.  The  Company's  East
Syracuse facility became ISO 9001 certified on July 19, 1999.

      The Company manufactures its products from standard components, as well as
from items which are manufactured by vendors to its  specifications.  A majority
of the Company's  commercial  and defense  electronics  assemblies and subsystem
products contain proprietary  Multi-Layer Stripline technology which is designed
and  tested  by  engineers  and  technicians  employed  by  the  Company  and is
manufactured primarily at the Company's East Syracuse facility.

      The raw  materials  utilized in the various  product  areas are  generally
accessible and common to both of the Company's  business  segments.  The Company
purchases  most of its raw materials from a variety of vendors and most of these
raw materials are available  from a number of sources.  During fiscal year 2001,
the Company had no vendors  from which it  purchased  more than 10% of its total
raw materials.

Competition

      The microwave component and subsystems industry is highly competitive. The
Company  competes  against many  companies,  both foreign and domestic,  many of
which  are  larger  and have  greater  financial  and  other  resources.  Direct
competitors  of the Company in the  wireless  market  include  KDI,  M/A-com,  a
division  of Tyco  International,  Merrimac  Industries,  Filtronic  PLC,  Smith
Industries  and  Mini-Circuits.  As a direct  supplier to OEMs, the Company also
faces significant  competition from the in-house  capabilities of its customers.
Recently,  however, in the wireless market many of the OEMs are outsourcing more
design and production  work,  thereby  freeing up their  internal  resources for
other use. Thus,  internal  customer  competition  exists  predominantly  in the
Company's satellite business.

      The principal competitive factors in both the foreign and domestic markets
are technical  performance,  reliability,  ability to produce in volume, on-time
delivery  and  price.  Based on these  factors,  the  Company  believes  that it
competes  favorably in its markets.  The Company  feels that it is  particularly
strong  in the  areas of  technical  performance  and  on-time  delivery  in the
wireless marketplace.

Government Regulation

      The  Company's  products are  incorporated  into  wireless  communications
systems   that  are   subject  to   regulation   domestically   by  the  Federal
Communications  Commission and internationally by other government agencies.  In
addition,  because of its participation in the defense industry,  the Company is
subject to audit from time to time for compliance with government regulations by
various governmental agencies. The Company is also


                                       11
<PAGE>

subject to a variety of local, state and federal government regulations relating
to  environmental  laws, as they relate to toxic or other  hazardous  substances
used to  manufacture  the  Company's  products.  The  Company  believes  that it
operates  its  business  in  material   compliance   with  applicable  laws  and
regulations.  However,  any  failure to comply  with  existing or future laws or
regulations  could have a material  adverse  effect on the  Company's  business,
financial condition and results of operations.

Intellectual Property

      The  Company's   success   depends  to  a  significant   degree  upon  the
preservation and protection of its product and manufacturing process designs and
other proprietary technology. To protect its proprietary technology, the Company
generally limits access to its technology, treats portions of such technology as
trade secrets,  and obtains  confidentiality  or non-disclosure  agreements from
persons  with  access  to the  technology.  The  Company's  agreements  with its
employees prohibit them from disclosing any confidential information, technology
developments  and  business  practices,  and from  disclosing  any  confidential
information  entrusted to the Company by other parties.  Consultants  engaged by
the  Company  who have  access to  confidential  information  generally  sign an
agreement  requiring them to keep  confidential  and not disclose any non-public
confidential information. The Company also relies on protections available under
trade secret,  copyright and trademark  law. The Company has recently filed four
United States patent applications  regarding new wireless products.  The Company
plans to pursue intellectual property protection in foreign countries, primarily
in the form of international  patents, in instances where the technology covered
is considered important enough to justify the added expense.

Employees

      As of June 30, 2001, the Company employed 412 full-time  people.  Of these
employees, 107 were members of the engineering staff, 253 were in manufacturing,
19 were in sales and marketing positions,  and 33 were in management and support
functions.  None of these  employees are  represented by a labor union,  and the
Company  has not  experienced  any work  stoppages.  The Company  considers  its
employee relations to be excellent.

Item 2. Properties

      The principal  facility of the Company is a 105,000  square foot building,
which the Company owns, located on a 30 acre parcel in East Syracuse,  New York.
The building currently houses a substantial portion of the Company's  marketing,
manufacturing,  administrative,  research and  development,  systems  design and
engineering activities.

      The  Company  leases a 20,000  square foot  building in Frimley,  England.
Annual rental cost of this facility is approximately $370,000 and the Company is
currently  subletting the building.  During the fiscal year ended June 30, 2001,
payments to the Company  under this  sublease  were at more than 90% of the full
lease value.  The existing lease term on this building runs to 2014. There is no
assurance  that the Company  will be able to  continuously  sublet the  building
during the  remaining  lease term so as to offset its rental cost in whole or in
part.

      The Company  also leases a 15,700  square  foot  facility in Bohemia,  New
York, which houses the production,  engineering and administrative  functions of
RF Power,  pursuant to a lease that expires in June, 2003.  Annual rent for this
facility is approximately $132,000.

      The Company  also leases a 20,000  square  foot  facility in Neptune,  New
Jersey that  formerly  housed the  production,  engineering  and  administrative
functions of APPI pursuant to a lease that expires in December 2005. Annual rent
for this facility is approximately $272,400. The Company is presently seeking to
sub-lease this building for the remainder of the lease term.

      Effective  August 31, 2001,  the Company  signed a five year lease with an
option for five additional years for  approximately  20,000 square feet in North
Andover, Massachusetts, which currently houses the acquired business of Amitron.
Annual rent for this facility is approximately $155,000.

      Management considers the foregoing facilities adequate for the current and
anticipated  short-term  future  requirements  of the Company  and expects  that
suitable  additional  space will be  available  to the  Company,  as needed,  at
reasonable commercial terms.


                                       12
<PAGE>

Item 3. Legal Proceedings

      There are no material pending legal proceedings against the Company or any
of its subsidiaries.

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

      During the fourth  quarter of the fiscal year ended June 30,  2001,  there
were no matters submitted to a vote of security holders.

Item 4A. Executive Officers of the Registrant

      Executive  officers of the Company,  their  respective ages as of June 30,
2001, and their positions held with the Company are as follows:

Name                       Age          Position
----                       ---          --------

Lawrence A. Sala ........   38   President, Chief Executive Officer and Director
Carl W. Gerst, Jr .......   63   Chief Technical Officer, Treasurer, Vice
                                   Chairman and Director
Gert R. Thygesen ........   46   Vice President, Technology
Joseph E. Porcello ......   49   Vice President, Finance
Stanley S. Slingerland ..   53   Vice President, Human Resources
Mark P. Burdick .........   43   Vice President and General Manager
Timothy P. Ross .........   42   Vice President, Business Development
Thomas J. Passaro, Jr ...   40   Vice President and President of RF Power

      Lawrence A. Sala joined the Company in 1984. He has been  President  since
May 1995 and has served as Chief  Executive  Officer since  September  1997. Mr.
Sala became a member of the Board of Directors of the Company in 1995.  He holds
a bachelor's  degree in computer  engineering,  a master's  degree in electrical
engineering and a master's degree in business administration,  all from Syracuse
University.

      Carl W.  Gerst,  Jr.  has been a member of the Board of  Directors  of the
Company  since 1968.  Mr. Gerst has served as Chief  Technical  Officer and Vice
Chairman of the Board since May 1995 and as Treasurer  since May 1992. Mr. Gerst
previously  served as Executive  Vice President of the Company from its founding
until May 1995. He holds a bachelor's  degree from  Youngstown  University and a
master's degree in business administration from Syracuse University.

      Gert R.  Thygesen  joined  the  Company  in 1981  and has  served  as Vice
President of Technology  since  September  2000.  He  previously  served as Vice
President,  Operations since April 1995 and as Operations Manager of the Company
from 1992  until  1995 and as Program  Manager,  Digital RF  Memories & Advanced
Systems,  from 1988 to 1992. Mr. Thygesen holds a bachelor of science degree and
a master's  degree in electrical  engineering  from Aalborg  University  Center,
Denmark.

      Joseph E.  Porcello  joined  the  Company  in 1977 and has  served as Vice
President,  Finance,  since  May 1995.  He  previously  served as the  Company's
Controller  from 1981 to 1999. Mr.  Porcello holds a bachelor's  degree from the
State University of New York at Buffalo and is a certified public accountant.

      Stanley S.  Slingerland  joined the Company in 1980 and has served as Vice
President,  Human Resources  since November 1996. He previously  served as Human
Resource Manager of the Company until 1996. Mr.  Slingerland  holds a bachelor's
degree from Hope College.

      Mark P.  Burdick  has been with the  Company  since 1978 and has served as
Vice  President  and General  Manager since  September,  2000. He served as Vice
President and General  Manager,  Wireless Group since November 1999, as Business
Unit Manager -- Commercial  Products from 1994 to 1999, and as Group Manager for
Defense Radar  Countermeasure  Subsystems from 1991 to 1994. Mr. Burdick holds a
bachelor of science in electrical  engineering  from the Rochester  Institute of
Technology,  and a Master's of Business  Administration  from the  University of
Rochester.

      Thomas J. Passaro,  Jr., joined the Company in February 2000 in connection
with the  acquisition of RF Power.  He serves as a Vice President of the Company
and as President of RF Power. Mr. Passaro,  a co-founder of RF Power,  served as
its  President  from June 1998 to February 2000 and as its Vice  President  from
1988 to June 1998.


                                       13
<PAGE>

      Timothy  P. Ross has been with the  Company  since  1982 and has served as
Vice President -- Business Development since September,  2000. He served as Vice
President and General  Manager,  Space and Defense  Group,  of the Company since
November   1999.   Mr.  Ross  served  as  Business  Unit  Manager  --  Satellite
Communications  of the Company  from 1995 to 1999 and as a Program  Manager from
1988 to 1995. Mr. Ross holds an associate's  degree in  engineering  science,  a
bachelor of science in electrical  engineering from Clarkson  University,  and a
Master's in Business Education from the University of Rochester.

      Each  executive  officer is elected  annually by the Board of Directors of
the Company and serves at the pleasure of the Board.


                                       14
<PAGE>

                                     PART II

Item 5. Market For the Company's Common Stock and Related Stockholder Matters

      The common  stock of the Company is quoted on The Nasdaq  National  Market
under the symbol  "ANEN." The following  table sets forth the range of quarterly
high and low  sales  prices  reported  on The  Nasdaq  National  Market  for the
Company's common stock for the quarters indicated.  Quotations  represent prices
between dealers and do not include retail mark-ups,  mark- downs or commissions.
Prices set forth below have been adjusted to reflect a  two-for-one  stock split
effectuated in the form of a stock dividend paid on November 27, 2000.

<TABLE>
<CAPTION>
                            Fiscal 2001                                           Fiscal 2000
                            -----------                                           -----------
                              Quarter                                               Quarter
                              -------                                               -------
              1st        2nd         3rd         4th               1st          2nd         3rd        4th

<S>           <C>        <C>         <C>         <C>               <C>          <C>         <C>        <C>
High          71.375     77.000      66.500      25.490            10.708       18.583      38.917     69.50

Low           31.500     34.625      11.438      10.000            6.833        8.833       14.500     26.125
</TABLE>

      The Company had approximately 425 holders of record of its common stock at
September 10, 2001.

      The Company has never  declared or paid any cash  dividends on its capital
stock. The Company currently intends to retain earnings,  if any, to support the
development  of its business and does not  anticipate  paying cash dividends for
the  foreseeable  future.  Payment of future  dividends,  if any, will be at the
discretion of the Board of Directors after taking into account various  factors,
including the Company's financial  condition,  operating results and current and
anticipated cash needs. Although there are no direct restrictions on payments of
cash dividends under the Company's bank credit facility, the Company is required
to maintain  certain level of tangible net worth.  This requirement may restrict
the ability of the Company to pay cash dividends in the future.

Item 6. Selected Consolidated Financial Data

      The selected  consolidated  financial data set forth below with respect to
the Company's  statements of operations  for each of the years in the three year
period ended June 30, 2001,  and with respect to the balance  sheets at June 30,
2000 and 2001, are derived from the consolidated  financial statements that have
been audited by KPMG LLP, independent auditors,  which are included elsewhere in
this  Annual  Report  on Form  10-K,  and are  qualified  by  reference  to such
consolidated  financial  statements.  The statement of  operations  data for the
years ended June 30, 1997 and June 30, 1998,  and the balance sheet data at June
30, 1997, June 30, 1998 and June 30, 1999, are derived from audited consolidated
financial  statements  not  included  in this  Annual  Report on Form 10-K.  The
following  selected  financial  data  should  be read in  conjunction  with  the
consolidated  financial  statements  for  the  Company  and  notes  thereto  and
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations included elsewhere herein.


                                       15
<PAGE>

<TABLE>
<CAPTION>
                                                                                      Years Ended
                                                             ----------------------------------------------------------------
                                                              June 30,    June 30,       June 30,      June 30,      June 30,
                                                               2001         2000           1999          1998          1997
                                                             --------     --------       --------      --------      --------
                                                                          (In thousands, except per share data)
<S>                                                          <C>           <C>           <C>           <C>           <C>
Statement of Operations Data:
Net sales                                                    $ 84,825      $ 60,172       $45,739       $37,449       $24,227
Cost of sales                                                  52,527        35,074        27,711        23,571        16,243
                                                             --------      --------       -------       -------       -------

Gross profit                                                   32,298        25,098        18,028        13,878         7,984
                                                             --------      --------       -------       -------       -------

Operating expenses:
         Marketing                                              6,584         5,434         4,177         3,998         3,170
         Research and development                               5,023         3,816         2,835         1,380           540
         General and administrative                             8,392         4,394         3,220         2,873         2,239
         Restructuring                                            688            --            --            --            --
                                                             --------      --------       -------       -------       -------

         Total operating expenses                              20,687        13,644        10,232         8,251         5,949
                                                             --------      --------       -------       -------       -------

Operating income                                               11,611        11,454         7,796         5,627         2,035
                                                             --------      --------       -------       -------       -------

Other income (expense):
            Interest expense                                     (159)          (66)          (38)          (82)          (94)
            Other, primarily interest income                    7,162         3,316         1,396           922           114
                                                             --------      --------       -------       -------       -------

            Total other income                                  7,003         3,250         1,358           840            20
                                                             --------      --------       -------       -------       -------

Income before income taxes                                     18,614        14,704         9,154         6,467         2,055
Income taxes                                                    6,400         5,063         2,204         2,330            --
                                                             --------      --------       -------       -------       -------

Net income                                                   $ 12,214      $  9,641       $ 6,950       $ 4,137       $ 2,055
                                                             ========      ========       =======       =======       =======

Net income per common and common equivalent share:
         Basic                                               $    .55      $    .54       $   .42       $   .28       $   .17
                                                             ========      ========       =======       =======       =======
         Diluted                                             $    .52      $    .50       $   .40       $   .26       $   .16
                                                             ========      ========       =======       =======       =======

Shares used in computing net income per common and
common equivalent share:
         Basic                                                 22,134        17,978        16,566        14,952        12,318
         Diluted                                               23,455        19,299        17,310        15,711        12,996

                                                                                      (In thousands)
Balance Sheet Data:
Cash and cash equivalents                                    $ 11,748      $  6,179       $13,482       $11,249       $ 3,807
Working capital                                               146,677       106,271        39,053        38,965        15,042
Total assets                                                  209,055       189,696        58,467        50,903        25,973
Long-term debt, less current installments                          --            --            --            --           453
Stockholders' equity                                          199,454       179,572        51,845        45,506        20,327
</TABLE>

Item 7. 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-K.  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 Annual Report on Form 10-K.


                                       16
<PAGE>

Overview

      The  Company  designs,   develops,   and  markets   integrated   microwave
components,   assemblies,   and  subsystems  for  the  wireless  communications,
satellite communications,  and defense electronics markets. The Company uses its
proprietary  Multi-Layer Stripline technology to generate compact,  lightweight,
and  cost-effective  products for use in these  markets.  The Company offers its
integrated assemblies and high-end subsystems 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  recognizes  sales at the time  products  are  shipped to its
customers or, in the case of customer-funded engineering sales, upon achievement
of design  milestones.  Revenues and estimated profits on fixed-price  contracts
are recognized  under the  percentage of completion  method of accounting on the
units-of-delivery   basis.   Provisions  for  estimated  losses  on  uncompleted
contracts are made in the period in which the losses are determined.

      In April 2000, the Company successfully  completed a follow-on offering in
which  4,689,000 new shares of the Company's  common stock  (adjusted to reflect
three-for-two  and  two-for-one  stock splits  effectuated  in the form of stock
dividends paid on June 12, 2000 and November 27, 2000,  respectively)  were sold
by the Company. The offering price was $25.34 per share (on a post-split basis),
resulting in approximately  $112.2 million in net proceeds for the Company.  The
Company plans to use these net proceeds for general  corporate  purposes and may
also use a portion  of the net  proceeds  to  acquire  additional  complementary
products, technologies, or businesses.

      On February 29, 2000, the Company acquired all of the outstanding  capital
stock of RF Power. RF Power, based in Bohemia, New York, is primarily engaged in
the manufacture of electronic products, including power resistors,  attenuators,
and couplers.  The purchase price for RF Power was $7,749,294 in cash, including
direct  acquisition  costs,  and 70,552  shares (on a  post-split  basis) of the
Company's  common  stock with an  aggregate  value of  $1,744,667.  The  Company
accounted  for this  acquisition  using the purchase  method of  accounting  for
business combinations.

      On July 31, 2000, the Company acquired substantially all the net assets of
Ocean Microwave, Inc. ("Ocean Microwave"). Ocean Microwave was based in Neptune,
New Jersey,  and is primarily  engaged in the design and manufacture of isolator
and circulator components. The acquired business of Ocean Microwave is conducted
from the  Company's  subsidiary,  APPI.  The  purchase  price  was $18  million,
including direct  acquisition costs. The acquisition was accounted for under the
purchase method of accounting for business combinations. In May 2001, due to the
severe downturn in the wireless  infrastructure  market,  the Company decided to
close the Neptune,  New Jersey  facility  and move the  isolator and  circulator
production to its East Syracuse,  New York facility.  This move was completed by
June 30, 2001 and in connection  with the relocation,  the Company  recognized a
restructuring  charge of approximately  $688,000 in the fourth quarter of fiscal
2001. This charge  consisted of employee  termination  benefits of approximately
$297,000,  recognition of a non  cancelable  lease  obligation of  approximately
$216,000, and leasehold and equipment impairments approximating $175,000.

      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 and for the medical, telecommunications and defense electronics market.
The purchase  price was  $9,775,000  in cash and 95,704  shares of the Company's
common stock with an aggregate  value of  $1,776,812.  The  acquisition  will be
accounted for under the purchase method of accounting for business combinations.


                                       17
<PAGE>

Results of Operations

      The following  table sets forth the  percentage  relationships  of certain
items from the Company's  consolidated  statements of operations as a percentage
of net sales for the periods indicated:

                                                        Years Ended June 30,
                                                        --------------------
                                                   2001        2000        1999
                                                   ----        ----        ----
Net sales ..................................      100.0%      100.0%      100.0%
Cost of sales ..............................       61.9        58.3        60.6
                                                  -----       -----       -----
Gross profit ...............................       38.1        41.7        39.4
                                                  -----       -----       -----
Operating expenses:
     Marketing .............................        7.8         9.0         9.1
     Research and development ..............        5.9         6.3         6.2
     General and administrative ............        9.9         7.3         7.0
     Restructuring .........................        0.8          --          --
                                                  -----       -----       -----
         Total operating expenses ..........       24.4        22.6        22.3
                                                  -----       -----       -----
Operating income ...........................       13.7        19.1        17.1
                                                  -----       -----       -----
Other income (expense):
     Interest expense ......................       (0.2)       (0.1)       (0.1)
     Other, primarily interest income ......        8.4         5.5         3.1
                                                  -----       -----       -----
         Total other income ................        8.2         5.4         3.0
                                                  -----       -----       -----

Income before income taxes .................       21.9        24.5        20.1
Income taxes ...............................        7.5         8.4         4.8
                                                  -----       -----       -----
Net income .................................       14.4%       16.1%       15.3%
                                                  =====       =====       =====

      The following table sets forth the Company's net sales by industry segment
for the periods indicated:

                                              Years Ended June 30,
                                              --------------------
                                           2001      2000       1999
                                           ----      ----       ----
                                                (In thousands)
Wireless .......................         $61,710    $38,807    $21,450
Space & Defense ................          23,115     21,365     24,289
                                         -------    -------    -------
                                         $84,825    $60,172    $45,739
                                         =======    =======    =======

Year Ended June 30, 2001 (Fiscal 2001) Compared to Year Ended June 30, 2000
(Fiscal 2000)

      Net Sales. Net sales for fiscal 2001 were $84.8 million, up 41.0% over net
sales of $60.2  million in fiscal  2000.  The increase was the result of a 59.0%
rise in Wireless  sales and an 8.2%  increase in  shipments of Space and Defense
products.

      The increase in the sale of Wireless  products,  which consist of standard
and  surface  mount  catalog  components  and  custom  subassemblies  for use in
building wireless basestation equipment,  amounted to $22.9 million and reflects
mainly sales of the Company's two recent acquisitions,  APPI and RF Power, whose
combined sales were $24.1 million for fiscal 2001.  Real Wireless  product sales
growth, after adjusting for these acquisitions, was approximately 12.4%, or $4.1
million, in fiscal 2001 compared to the prior year sales.

      During the latter part of the third  quarter of fiscal  2001,  the Company
saw a rapid downturn in the wireless marketplace which resulted in an increasing
number  of  reductions  in  customer  demand  forecasts  and  delivery  pushouts
beginning toward the end of February 2001 and continuing through June 2001. This
severe  market  downturn  has  had a  negative  impact  on all of the  Company's
Wireless  product  lines  and  it  appears  that  unfavorable   Wireless  market
conditions  will continue  potentially  beyond  calendar 2001.  This  world-wide
wireless market  downturn is expected to possibly result in further  declines in
the Company's Wireless sales in the first half of fiscal 2002.


                                       18
<PAGE>

      Space and Defense  products consist of custom  multi-layer  components and
assemblies  for  communication  satellites  and  defense  radar  countermeasures
subsystems  for the  military.  Sales in the Space and  Defense  group rose $1.8
million or 8.2% in fiscal 2001  compared to the prior  fiscal  year.  This small
increase  in  shipments  resulted  from  the  first  pre-production  engineering
hardware  shipments and initial  production  shipments  for the Boeing  Spaceway
program.  This program,  which has been in an  engineering  design phase for the
past year and a half,  entered full factory  production in the fourth quarter of
fiscal  2001.  This  satellite  program is  expected  to place Space and Defense
shipments in the $6.0 - $6.5 million range, quarterly, for fiscal 2002.

      Gross Profit. Gross profit for fiscal 2001 was $32.3 million (38.1% of net
sales), up $7.2 million from $25.1 million (41.7% of net sales) for fiscal 2000.
Gross profit increased  significantly  due to the absolute  increase in sales in
fiscal 2001 compared to fiscal 2000.  The rise in sales volume did not result in
further  improvement  in gross margin as a percent of sales,  year over year, as
the gross margin at the Company's new subsidiaries,  which provided the majority
of the  current  year  sales  increase,  were  below  those  of its  main  plant
operations in East Syracuse,  New York.  Additionally,  gross profit improvement
was further  hindered by the decline in  shipments  in the second half of fiscal
2001 due to the  downturn in the  world-wide  wireless  market.  In light of the
current and  expected  lower  sales  levels,  the  Company  has taken  action to
consolidate its operations,  reduced its personnel levels by over 25% from their
peak in February 2001, and minimized other indirect costs.  These efforts should
have some effect on gross  profit,  but the Company does not expect gross profit
margins to improve  significantly unless and until sales return to prior levels.
Cost  of  sales  consists  primarily  of  engineering  design  costs,   material
fabrication costs and test costs.

      Marketing. Marketing expenses consist mainly of employee-related expenses,
commissions  paid to sales  representatives,  trade-show  expenses,  advertising
expenses,  and related travel expenses.  Marketing  expenses  increased 21.1% to
$6.6 million  (7.8% of net sales) for fiscal 2001 from $5.4 million (9.0% of net
sales) for fiscal 2000.  This increase was a result of the continuing  expansion
of the  marketing  and sales  organization  to support the  Company's  expanding
commercial  markets,  as well as eleven and eight months of expense for APPI and
RF Power, respectively, not included in fiscal 2000 expenses. Despite the recent
wireless  market  downturn,  the  Company is  planning to continue to expand its
sales and marketing capabilities over the next six months.

      Research and  Development.  Research and development  expenses  consist of
materials,  salaries and related overhead costs of employees  engaged in ongoing
research,  design, and development  activities  associated with new products and
technology.  Research and development  expenses  increased 31.6% to $5.0 million
(5.9% of net  sales) in fiscal  2001 from $3.8  million  (6.3% of net sales) for
fiscal 2000.  Research and  development  expenditures  are  expanding to support
further development of wireless  infrastructure  products and 3G broadband fixed
wireless  product  opportunities.  The  inclusion  of APPI  and RF  Power in the
Company's  research  and  development  expense  in  fiscal  2001  accounted  for
approximately  $438,000 in  additional  expenses.  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 increased
91.0% to $8.4  million  (9.9% of net sales) for  fiscal  2001 from $4.4  million
(7.3% of net sales) for fiscal 2000.  General and  administrative  expenses have
increased  due to the hiring of  additional  personnel to support the  Company's
corporate acquisition activity, a rise in professional fees due to the Company's
growth,   and   amortization  of  goodwill   expense  related  to  acquisitions.
Additionally,  the current year expense includes 11 and eight months general and
administrative  expense  for APPI and RF Power,  respectively,  not  included in
fiscal 2000.

      Restructuring.  Restructuring  expense consists of severance pay, vacation
pay,   abandoned   equipment  and  leasehold   impairment  charges  and  accrued
noncancellable  lease  obligation  expenses related to the closure of APPI's New
Jersey facility and relocation of APPI's operations to East Syracuse,  New York.
Restructuring expenses were $688,000 (0.8% of net sales) in fiscal 2001 compared
to no restructuring expense in fiscal 2000.

      Interest Expense. Interest expense represents commitment fees and interest
paid on certain long-term deferred obligations. Interest expense for fiscal 2001
was  $160,000  (0.2% of net sales)  compared to $66,000  (0.1% of net sales) for
fiscal  2000.  The  increase in interest  expense was caused by the  addition of
interest bearing obligations of RF Power.

      Other  income.  Other  income is  primarily  interest  income  received on
invested cash balances.  Other income  increased 116.0% to $7.2 million (8.4% of
net sales) for fiscal 2001 from $3.3 million (5.5% of net sales) for fiscal 2000
due to the income  received on the $112 million of net proceeds  raised  through
the Company's follow-on offering completed in April 2000.


                                       19
<PAGE>

      Income Taxes. Income tax expense for fiscal 2001 was $6.4 million (7.5% of
net sales),  representing an effective tax rate of 34.4%.  This compared to $5.1
million (8.4% of net sales) for fiscal 2000, also  representing an effective tax
rate of 34.4%.

Year Ended June 30, 2000 (Fiscal 2000) Compared to Year Ended June 30, 1999
(Fiscal 1999)

      Net Sales. Net sales increased 31.6% to $60.2 million for fiscal 2000. The
increase  was led by an 80.9% rise in  Wireless  sales  which more than offset a
12.0% decline in sales of Space and Defense products.

      The increase in sales of Wireless products reflected both strong demand by
the major base  station  OEMs,  as well as the  Company's  success in  achieving
higher  dollar  content  per base  station  for its latest  microwave  backplane
products. Both shipments of custom backplanes to OEMs and shipments of Xinger(R)
surface mount products to amplifier  manufacturers  rose significantly in fiscal
2000 in response to this demand.  The increase in Wireless  sales also reflected
the  inclusion of four months sales of RF Power,  which the Company  acquired on
February 29, 2000.

      Sales in the Space and Defense group fell $2.9  million,  or 12.0% for the
year ended June 30, 2000,  compared to fiscal 1999.  This decline  resulted from
both delays in satellite  contract  awards in fiscal 1999 and the  completion of
the Airborne Self  Protection  Jammer program  contract in the second quarter of
fiscal 2000, both of which were events the Company anticipated.

      Gross Profit. Gross profit for fiscal 2000 was $25.1 million (41.7% of net
sales), up $7.1 million from $18.0 million (39.4% of net sales) for fiscal 1999.
This  improvement  resulted  from the  increase in sales  volume in the Wireless
group which  resulted in  significant  economies  of scale in the  manufacturing
operation.  These economies were further enhanced by investment in new automated
equipment within the Wireless group which helped to further increase  production
yields  and  manufacturing  efficiency.  Gross  profit was also  improved  by an
increase  in higher  margin  engineering  design  sales in the Space and Defense
group.

      Marketing. Marketing expenses increased 30.0% to $5.4 million (9.0% of net
sales) for fiscal 2000 from $4.2  million  (9.1% of net sales) for fiscal  1999.
This  increase  was a  result  of the  continuing  expansion  of  the  Company's
marketing  and sales  organization  to support  increased  order  volume and the
inclusion of four months marketing expense of RF Power.  Marketing expenses were
further  increased  in fiscal 2000 as  advertising  expense  rose due to special
programs to inform customers of acquisitions and product introductions.

      Research and  Development.  Research and  development  expenses  increased
34.6% to $3.8 million (6.3% of net sales) in fiscal 2000 from $2.8 million (6.2%
of net sales) for fiscal 1999. Research and development expenditures expanded to
support   development   of  wireless   infrastructure   products  and  satellite
communications  opportunities.  The  acquisition  of RF  Power  did  not  have a
material impact on research and development expenses in fiscal 2000.

      General and Administrative.  General and administrative expenses increased
36.5% to $4.4  million  (7.3% of net sales) for  fiscal  2000 from $3.2  million
(7.0% of net sales) for fiscal 1999.  General and  administrative  expenses have
increased due to the hiring of additional personnel, a rise in professional fees
due  to  Company   growth,   and  the  inclusion  of  four  months  general  and
administrative expense of RF Power.

      Interest  Expense.  Interest  expense for fiscal 2000 was $66,000 (0.1% of
net sales) compared to $39,000 (0.1% of net sales) for fiscal 1999. The increase
in  interest  expense  was  caused  by  the  addition  of  interest  expense  on
obligations of RF Power.

      Other income.  Other income  increased 137.5% to $3.3 million (5.5% of net
sales) for fiscal 2000 from $1.4  million  (3.1% of net sales) for fiscal  1999.
This rise was due to a significant increase in cash balances in the current year
compared to the prior year resulting from the $112.2 million net proceeds raised
through the Company's follow-on offering completed in March 2000.

      Income Taxes. Income tax expense for fiscal 2000 was $5.1 million (8.4% of
net sales)  representing  an effective tax rate of 34.4%.  This compares to $2.2
million (4.8% of net sales) in fiscal 1999 representing an effective tax rate of
24.1% compared to a normal effective tax rate of 37-38%. The lower effective tax
rate in  fiscal  1999  resulted  from a one time tax  benefit  recorded  for the
write-off of the Company's  investment in its closed  European  subsidiary.  The
lower effective tax rate in fiscal 2000 resulted from a significant  increase in
tax exempt income on investments.


                                       20
<PAGE>

Liquidity and Capital Resources

      Net cash provided by operations for the years ended June 30, 2001 and 2000
was $16.7  million and $6.8 million,  respectively.  The positive cash flow from
operations in both fiscal 2001 and 2000 was due primarily to the profit attained
in both years.  The higher level of cash  provided by operations in fiscal 2001,
compared to fiscal 2000, resulted primarily from significantly  higher levels of
non-cash items such as depreciation  and amortization of goodwill in fiscal 2001
compared to fiscal 2000.  Additionally,  the  increase in cash  generated by tax
benefits  related to the exercise of stock  options by employees  rose from $2.5
million in fiscal 2000 to $5.4 million in fiscal 2001.

      Net cash used in investing activities in fiscal 2001 and 2000 consisted of
funds used to purchase capital equipment, cash used to fund acquisitions in both
fiscal  years,  and  cash  used for or  generated  by the  purchase  and sale of
short-term marketable debt securities in both fiscal years.

      Capital equipment  purchases in fiscal 2001 and 2000 were $8.0 million and
$6.0 million,  respectively.  The capital  investments  in both years  consisted
primarily of  manufacturing  equipment  and building  renovations  to expand the
Company's wireless production capacity.  Additionally,  in fiscal 2001 and 2000,
the Company  expended $7.5 million and $17.9 million in cash,  respectively,  to
acquire RF Power and Ocean Microwave.

      Cash  provided  by  financing  activities  in fiscal  2001 and fiscal 2000
consisted  of funds  received  for the  exercise of stock  options in both years
($2.9 and $1.5 million,  respectively) and in fiscal 2000, $112.2 million in net
proceeds  received from the  completion of a follow-on  stock  offering in April
2000.  Cash used in financing  activities  in fiscal 2001 and 2000  consisted of
payments on long-term debt of $408,000 and $383,000, respectively. Additionally,
during the fourth  quarter of fiscal 2001,  $1.3 million was used to  repurchase
117,000  shares of the Company's  common stock.  The purchases were made under a
2.0 million  share  repurchase  program  authorized by the Board of Directors in
March 2001.

      The Company  has a credit  facility  providing  an  unsecured  $10 million
working capital  revolving line of credit bearing interest at prime and maturing
December 31, 2003.  The terms of the credit  facility  require  maintenance of a
minimum  tangible  net worth,  ratio of cash flows to  maturities,  and leverage
ratio as defined in the applicable loan agreement.  The Company believes that it
was in compliance with all  restrictions and covenants at June 30, 2001. At June
30, 2001, $0 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 the credit facility.

Recent Accounting Pronouncements

      In July 2001, the FASB issued Statement of Financial  Accounting Standards
No. 141,  Business  Combinations  which supersedes  Accounting  Principles Board
(APB)  Opinion  No.  16,   Business   Combinations.   SFAS  141  eliminates  the
pooling-of-interests method of accounting for business combinations and modifies
the  application  of the purchase  accounting  method.  The  elimination  of the
pooling-of-interests  method is effective for transactions  initiated after June
30,  2001.  The  remaining   provisions  of  SFAS  141  will  be  effective  for
transactions  accounted for using the purchase  method that are completed  after
June 30, 2001.  The Company has reviewed the Statement and believes  that,  upon
implementation,   the  Statement  will  not  have  a  material   impact  on  its
consolidated financial statements.

      In July 2001,  the FASB also  issued  Statement  of  Financial  Accounting
Standards No. 142,  Goodwill and Intangible  Assets which supersedes APB Opinion
No. 17,  Intangible  Assets.  SFAS 142  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 for goodwill and intangible assets.  SFAS 142
will apply to goodwill and intangible assets arising from transactions completed
before and after the  Statement's  effective  date.  SFAS 142 is  effective  for
fiscal 2002.  The Company is currently  assessing  the Statement and has not yet
made a  determination  of the  impact  adoption  will  have on its  consolidated
financial statements.

Item 7A. 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 Annual Report on Form 10-K.


                                       21
<PAGE>

      As of  June  30,  2001,  the  Company  had  cash,  cash  equivalents,  and
marketable  debt  securities of $132.0 million,  of which  approximately  $120.3
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 and are exposed to interest  rate risk and will  decrease in value
if market interest rates increase. A hypothetical increase or decrease in market
interest  rate of 10% from June 30, 2001 rates  would cause the market  price of
these securities to fluctuate by an insignificant  amount. Due to the relatively
short  maturities  of the  securities  and the  Company's  ability to hold these
investments to maturity,  an immediate increase in interest rates would not have
a significant effect on the financial  condition or results of operations of the
Company.  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 to foreign  customers are denominated in United
States dollars and, accordingly, the Company is not currently exposed to foreign
currency exchange risk.

Item 8. Financial Statements and Supplementary Data

      The financial  statements and financial  statement schedules called for by
this Item are provided under "Item 14. Exhibits,  Financial  Statement Schedules
and Reports on Form 8-K," which information is incorporated herein by reference.

      The unaudited supplementary financial information required by this Item is
contained in note 21 to the  consolidated  financial  statements  of the Company
which have been  submitted as a separate  section of this Annual  Report on Form
10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

      None.


                                       22
<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of Registrant

      Information  required by this Item concerning  directors of the Company is
contained in the Company's proxy statement filed with respect to the 2001 Annual
Meeting of Shareholders and is incorporated by reference herein. The information
regarding executive officers of the Company required by this Item is included in
Item 4A hereof.

Item 11. Executive Compensation

      Information  required by this Item is  contained  in the  Company's  proxy
statement filed with respect to the 2001 Annual Meeting of  Shareholders  and is
incorporated by reference herein.

Item 12. Security Ownership of Certain Beneficial Owners and Management

      Information  required by this Item is  contained  in the  Company's  proxy
statement filed with respect to the 2001 Annual Meeting of  Shareholders  and is
incorporated by reference herein.

Item 13. Certain Relationships and Related Transactions

      Information  required by this Item is  contained  in the  Company's  proxy
statement filed with respect to the 2001 Annual Meeting of  Shareholders  and is
incorporated by reference herein.


                                       23
<PAGE>

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)   1. and 2.   Financial Statements and Schedules:

                  Reference is made to the Index of Financial
                  Statements hereinafter contained

      3.          Exhibits:

                  Reference is made to the list of Exhibits
                  hereinafter contained

(b)   Current Reports on Form 8-K:

      The Company  filed a Current  Report on Form 8-K on April 26, 2001 related
      to its implementation of a Shareholder Protection Rights Plan.

(c)   Exhibits:

      Index to Exhibits

  Exhibit No.                     Description
  -----------                     -----------

      3.1         Certificate of Incorporation, as amended (1)

      3.2         Restated By-Laws (2)

      4.1         Specimen Certificate of Common Stock (3)

      4.2         Shareholder  Protection Rights Agreement dated as of April 20,
                  2001,  between the Company and American Stock Transfer & Trust
                  Company, including forms of Rights Certificate and Election to
                  Exercise (4)

      10.1        Employment  Agreement,  dated as of July 1, 2001,  between the
                  Company and Lawrence A. Sala

      10.2        Consulting  Agreement,  dated as of March 1, 1997, between the
                  Company and Dale F. Eck (5)

      10.3        Pension Plan and Trust (6)

      10.4        Anaren Microwave, Inc. Incentive Stock Option Plan, as amended
                  (7)

      10.5        Anaren Microwave,  Inc. 1989 Non-statutory  Stock Option Plan,
                  as amended (8)

      10.6        Employment Agreement, dated as of October 7, 1997, between the
                  Company and Hugh A. Hair (9)

      10.7        Credit  Facility  Agreement,  dated as of December  23,  1997,
                  between  the  Company  and  Manufacturers  and  Traders  Trust
                  Company,   together  with  the  Revolving  Credit  Note  dated
                  December  23,  1997  executed  by  the  Company  in  favor  of
                  Manufacturers and Traders Trust Company (10)

      10.8        Anaren  Microwave,  Inc.  Incentive  Stock Option Plan for Key
                  Employees (11)

      10.9        Anaren Microwave, Inc. Stock Option Plan (12)

      10.10       Employment  Agreement,  dated as of February 29, 2000, between
                  the Company and Thomas J. Passaro, Jr. (13)

      21          Subsidiaries of the Company.

      23          Consent of KPMG LLP.

----------

(1)   (A) Restated Certificate of Incorporation of the Company,  filed on August
      11, 1967, is incorporated herein by reference to Exhibit 3(a) to Company's
      Registration  Statement  on  Form  S-1  (Registration  No.  2-42704);  (B)
      Amendment, filed on December 19, 1980, is incorporated herein by reference
      to Exhibit  4.1(ii) to the  Company's  Registration  Statement on Form S-2
      (Registration  No.  2-86025);  (C) Amendment,  filed on March 18, 1985, is
      incorporated  herein by reference to Exhibit 3.1 to the  Company's  Annual
      Report on Form 10-K (Commission File No. 0-6620) for the fiscal year ended
      June 30, 1987; (D) Amendment,  filed on December 14, 1987, is incorporated
      herein by  reference  to Exhibit  4(a)(iv) to the  Company's  Registration
      Statement on Form S-8 (Registration No. 33-19618); (E) Amendment, filed on
      April 8, 1999, is  incorporated  herein by reference to Exhibit 3.1 to the
      Company's  Annual Report on Form 10-K (Commission File No. 0-6620) for the
      fiscal year ended June 30, 1999; (F) Amendment, filed on February 8, 2000,
      is  incorporated   herein  reference  to  Exhibit  4.1  to  the  Company's
      Registration Statement on Form S-3 (Registration No. 333-31460) filed with
      the  Securities  and  Exchange  Commission  on  March  2,  2000;  and  (G)
      Amendment,  filed on November 22, 2000,  is  incorporated  by reference to
      Exhibit 3.1 to the  Company's  Quarterly  Report on Form 10-Q  (Commission
      File No. 0-6620) for the three months ended December 31, 2000.


                                       24
<PAGE>

(2)   Incorporated herein reference to Exhibit 4.2 to the Company's Registration
      Statement  on  Form  S-3  (Registration  No.  333-31460)  filed  with  the
      Securities and Exchange Commission on March 2, 2000.

(3)   Incorporated herein reference to Exhibit 4.3 to the Company's Registration
      Statement  on  Form  S-3  (Registration  No.  333-31460)  filed  with  the
      Securities and Exchange Commission on March 2, 2000.

(4)   Incorporated  herein by reference to Exhibits 4.1 and 4.2 to the Company's
      Registration Statement on Form 8-A (Commission File No. 0-6620) filed with
      the Securities and Exchange Commission on April 26, 2001.

(5)   Incorporated  herein by reference to Exhibit 10.5 to the Company's  Annual
      Report on Form 10-K (Commission File No. 0-6620) for the fiscal year ended
      June 30, 1997.

(6)   Incorporated  herein  by  reference  to  Exhibit  4(b)  to  the  Company's
      Registration Statement on Form S-8 (Registration No. 33-19618).

(7)   Incorporated herein by reference to Appendix A to the Company's definitive
      proxy   statement  for  its  1998  annual  meeting  of  the   shareholders
      (Commission  File No.  0-6620),  filed with the  Securities  and  Exchange
      Commission on September 25, 1998.

(8)   Incorporated herein by reference to Appendix B to the Company's definitive
      proxy   statement  for  its  1998  annual  meeting  of  the   shareholders
      (Commission  File No.  0-6620),  filed with the  Securities  and  Exchange
      Commission on September 25, 1998.

(9)   Incorporated  herein  by  reference  to  Exhibit  10.12  to the  Company's
      Quarterly  Report on Form 10-Q  (Commission File No. 0-6620) for the three
      months ended September 30, 1997.

(10)  Incorporated  herein  by  reference  to  Exhibit  10.13  to the  Company's
      Quarterly  Report on Form 10-Q for the three  months  ended  December  31,
      1997.

(11)  Incorporated herein by reference to Appendix A to the Company's definitive
      proxy   statement  for  its  2000  annual  meeting  of  the   shareholders
      (Commission  File No.  0-6620),  filed with the  Securities  and  Exchange
      Commission on September 18, 2000.

(12)  Incorporated herein by reference to Appendix B to the Company's definitive
      proxy   statement  for  its  2000  annual  meeting  of  the   shareholders
      (Commission  File No.  0-6620),  filed with the  Securities  and  Exchange
      Commission on September 18, 2000.

(13)  Incorporated  herein by reference to Exhibit 10.10 to the Company's Annual
      Report Form 10-K  (Commission  File No.  0-6620) for the fiscal year ended
      June 30, 2000.


                                       25
<PAGE>

      Pursuant  to the  requirements  of Section 13 or 15 (d) 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.

                                    /s/ Lawrence A. Sala
                                    --------------------------------------------
                                    Name: Lawrence A. Sala
                                    Title: President and Chief Executive Officer

Date: September 19, 2001

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
      Signature                       Title                              Date
      ---------                       -----                              ----
<S>                              <C>                                <C>
/s/ Lawrence A. Sala             President and Chief                September 19, 2001
-----------------------          Executive Officer
Lawrence A. Sala                 (Principal Executive Officer)

/s/ Joseph E. Porcello           Vice President of Finance          September 19, 2001
-----------------------          (Principal Financial and
Joseph E. Porcello               Accounting Officer)

/s/ Hugh A. Hair                 Chairman of the Board              September 19, 2001
-----------------------
Hugh A. Hair

/s/ Carl W. Gerst, Jr.           Vice Chairman of the Board         September 19, 2001
-----------------------
Carl W. Gerst, Jr.

/s/ Herbert I. Corkin            Director                           September 19, 2001
-----------------------
Herbert I. Corkin

/s/ Dale F. Eck                  Director                           September 19, 2001
-----------------------
Dale F. Eck

/s/ Matthew S. Robison           Director                           September 19, 2001
-----------------------
Matthew S. Robison

/s/ David Wilemon                Director                           September 19, 2001
-----------------------
David Wilemon
</TABLE>


                                       26
<PAGE>

                             ANAREN MICROWAVE, INC.
                                AND SUBSIDIARIES

                        Consolidated Financial Statements

                             June 30, 2001 and 2000

                   (With Independent Auditors' Report Thereon)


                                       27
<PAGE>

                             ANAREN MICROWAVE, INC.
                                AND SUBSIDIARIES

                   Index to Consolidated Financial Statements

                                                                            Page
                                                                            ----
Independent Auditors' Report ............................................    29

Consolidated Balance Sheets as of June 30, 2001 and 2000 ................    30

Consolidated Statements of Operations for the Years ended
    June 30, 2001, 2000 and 1999 ........................................    31

Consolidated Statements of Stockholders' Equity for the Years ended
    June 30, 2001, 2000 and 1999 ........................................    32

Consolidated Statements of Cash Flows for the Years ended
    June 30, 2001, 2000 and 1999 ........................................    33

Notes to Consolidated Financial Statements ..............................    34


                                       28
<PAGE>

                          Independent Auditors' Report

The Board of Directors
Anaren Microwave, Inc.:

      We have audited the consolidated financial statements of Anaren Microwave,
Inc. and subsidiaries as listed in the accompanying  index.  These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

      We conducted our audits in accordance  with auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

      In our opinion,  the consolidated  financial  statements referred to above
present  fairly,  in all material  respects,  the  financial  position of Anaren
Microwave,  Inc. and  subsidiaries as of June 30, 2001 and 2000, and the results
of their operations and their cash flows for each of the years in the three-year
period ended June 30, 2001, in conformity with accounting  principles  generally
accepted in the United States of America.

August 1, 2001
Syracuse, New York


                                       29
<PAGE>

                    ANAREN MICROWAVE, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets
                             June 30, 2001 and 2000

                                     Assets
                                                     2001             2000
                                                 -------------    -------------
Current assets:
   Cash and cash equivalents .................   $ 11,748,542     $  6,179,202
   Marketable debt securities (note 3) .......    108,557,983       79,926,644
   Receivables, less allowance for bad
     debts of $195,000 and $55,000 in
     2001 and 2000, respectively .............     11,504,168       10,992,693
   Inventories (note 4) ......................     18,566,977       12,385,125
   Accrued interest receivable ...............      1,304,877        2,121,050
   Refundable income taxes ...................         53,804          690,729
   Prepaid expenses ..........................        569,242          658,792
   Deferred income taxes (note 17) ...........        956,759          301,220
   Other current assets ......................      1,139,157          506,621
                                                 ------------     ------------
                  Total current assets .......    154,401,509      113,762,076

Marketable debt securities (note 3) ..........     11,725,960       53,874,918
Property, plant and equipment,
   net (note 5) ..............................     18,805,901       13,336,593
Goodwill, net of accumulated amortization
   of $1,726,838 and $173,796 in 2001
   and 2000, respectively (note 2) ...........     23,410,534        7,647,108
Deferred income taxes (note 17) ..............        263,348          571,862
Patent, net of accumulated amortization
   of $143,742 and $71,871 in 2001 and
   2000, respectively (note 1) ...............        448,224          503,094
                                                 ------------     ------------
                                                 $209,055,476     $189,695,651
                                                 ============     ============

                      Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable ..........................   $  2,985,793     $  3,830,807
   Accrued expenses (note 6) .................      2,966,258        2,244,241
   Income taxes payable ......................        938,984          623,431
   Customer advance payments .................        767,790          601,957
   Other current liabilities (note 8) ........         65,000          190,814
                                                 ------------     ------------
                  Total current liabilities ..      7,723,825        7,491,250

Postretirement benefit obligation (note 16) ..      1,391,496        1,324,978
Other liabilities (note 8) ...................        486,380        1,307,788
                                                 ------------     ------------
                  Total liabilities ..........      9,601,701       10,124,016
                                                 ------------     ------------
Commitments and concentrations (notes 18,
   19, and 20) Stockholders' equity:
   Common stock of $.01 par value
     Authorized 200,000,000 shares
     (note 10); issued 25,496,238 and
     24,964,362 in 2001 and 2000,
     respectively ............................        254,962          249,644
   Additional paid-in capital ................    166,051,341      156,097,167
   Unearned compensation (note 13) ...........     (1,723,377)        (723,712)
   Retained earnings .........................     39,643,487       27,429,519
                                                 ------------     ------------
                                                  204,226,413      183,052,618
   Less cost of 3,177,822 and 3,060,822
     treasury shares in 2001 and 2000,
     respectively ............................      4,772,638        3,480,983
                                                 ------------     ------------
                  Total stockholders' equity .    199,453,775      179,571,635
                                                 ------------     ------------
                                                 $209,055,476     $189,695,651
                                                 ============     ============

          See accompanying notes to consolidated financial statements.


                                       30
<PAGE>

                    ANAREN MICROWAVE, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations
                    Years ended June 30, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                              2001            2000            1999
                                          -----------     -----------     -----------
<S>                                       <C>             <C>             <C>
Net sales .............................   $84,825,275     $60,171,836     $45,738,992

Cost of sales .........................    52,526,584      35,074,116      27,710,807
                                          -----------     -----------     -----------
         Gross profit .................    32,298,691      25,097,720      18,028,185
                                          -----------     -----------     -----------
Operating expenses:
   Marketing ..........................     6,584,090       5,433,627       4,176,762
   Research and development ...........     5,022,882       3,815,862       2,834,697
   General and administrative .........     8,392,118       4,394,099       3,220,238
   Restructuring (note 7) .............       688,337              --              --
                                          -----------     -----------     -----------
         Total operating expenses .....    20,687,427      13,643,588      10,231,697
                                          -----------     -----------     -----------
         Operating income .............    11,611,264      11,454,132       7,796,488
                                          -----------     -----------     -----------
Other income (expense):
   Interest expense ...................      (159,506)        (65,999)        (38,537)
   Other, primarily interest income ...     7,162,210       3,315,666       1,395,874
                                          -----------     -----------     -----------
         Total other income ...........     7,002,704       3,249,667       1,357,337
                                          -----------     -----------     -----------
Income before income taxes ............    18,613,968      14,703,799       9,153,825

Income tax expense (note 17) ..........     6,400,000       5,063,000       2,204,000
                                          -----------     -----------     -----------
         Net income ...................   $12,213,968     $ 9,640,799     $ 6,949,825
                                          ===========     ===========     ===========

Net income per common and
   common equivalent share:
         Basic ........................   $       .55     $       .54     $       .42
                                          ===========     ===========     ===========
         Diluted ......................   $       .52     $       .50     $       .40
                                          ===========     ===========     ===========
Shares used in computing net income per
   common and common equivalent share:
         Basic ........................    22,133,585      17,977,782      16,566,168
                                          ===========     ===========     ===========
         Diluted ......................    23,455,244      19,299,460      17,309,098
                                          ===========     ===========     ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       31
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

                 Consolidated Statements of Stockholders' Equity
                    Years ended June 30, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                Common Stock              Additional
                                        ------------------------------     Paid-in        Unearned
                                           Shares           Amount         Capital      Compensation
                                        -------------    -------------   -------------   ------------
<S>                                     <C>                <C>           <C>              <C>
Balance at June 30, 1998 ............   19,366,098         $193,661      $ 36,482,644     $        --
   Net income .......................           --               --                --              --
   Purchase of treasury stock .......           --               --                --              --
   Stock options exercised (note 12)       297,000            2,970           513,549              --
   Stock options granted in
     connection with acquisition of
     patent (notes 1 and 12) ........           --               --           249,965              --
   Tax benefit from exercise of
     stock options (note 17) ........           --               --            92,225              --
                                        ----------         --------      ------------     -----------
Balance at June 30, 1999 ............   19,663,098          196,631        37,338,383              --
   Net income .......................           --               --                --              --
   Stock options exercised (note 12)       469,800            4,698         1,459,929              --
   Tax benefit from exercise of
     stock options (note 17) ........           --               --         2,513,788              --
   Issuance of restricted stock
     (note 13) ......................       72,000              720           893,280        (894,000)
   Amortization of unearned
     compensation (note 13) .........           --               --                --         170,288
   Issuance of stock in connection
     with acquisition (note 2) ......       70,552              705         1,743,962              --
   Sale of common stock (note 10) ...    4,689,000           46,890       112,147,825              --
   Dividends to stockholders
     (note 11) ......................          (88)              --                --              --
                                        ----------         --------      ------------     -----------
Balance at June 30, 2000 ............   24,964,362          249,644       156,097,167        (723,712)
   Net income .......................           --               --                --              --
Purchase of treasury stock ..........           --               --                --              --
   Stock options exercised (note 12)       500,900            5,009         2,882,102              --
   Tax benefit from exercise of
     stock options (note 17) ........           --               --         5,375,231              --
   Issuance of restricted stock
     (note 13) ......................       30,976              309         1,524,791      (1,525,100)
   Amortization of unearned
     compensation (note 13) .........           --               --                --         525,435
   Stock options granted for services
     (note 12) ......................           --               --           172,050              --
                                        ----------         --------      ------------     -----------
Balance at June 30, 2001 ............   25,496,238         $254,962      $166,051,341     $(1,723,377)
                                        ==========         ========      ============     ===========
<CAPTION>

                                                             Treasury Stock               Total
                                           Retained     ---------------------------    Stockholders'
                                           Earnings       Shares          Amount          Equity
                                        -------------   -----------  --------------   -------------
<S>                                     <C>              <C>           <C>              <C>
Balance at June 30, 1998 ............   $10,841,642      2,676,822     $(2,012,077)     $ 45,505,870
   Net income .......................     6,949,825             --              --         6,949,825
   Purchase of treasury stock .......            --        384,000      (1,468,906)       (1,468,906)
   Stock options exercised (note 12)             --             --              --           516,519
   Stock options granted in
     connection with acquisition of
     patent (notes 1 and 12) ........            --             --              --           249,965
   Tax benefit from exercise of
     stock options (note 17) ........            --             --              --            92,225
                                        -----------      ---------     -----------      ------------
Balance at June 30, 1999 ............    17,791,467      3,060,822      (3,480,983)       51,845,498
   Net income .......................     9,640,799             --              --         9,640,799
   Stock options exercised (note 12)             --             --              --         1,464,627
   Tax benefit from exercise of
     stock options (note 17) ........            --             --              --         2,513,788
   Issuance of restricted stock
     (note 13) ......................            --             --              --                --
   Amortization of unearned
     compensation (note 13) .........            --             --              --           170,288
   Issuance of stock in connection
     with acquisition (note 2) ......            --             --              --         1,744,667
   Sale of common stock (note 10) ...            --             --              --       112,194,715
   Dividends to stockholders
     (note 11) ......................        (2,747)            --              --            (2,747)
                                        -----------      ---------     -----------      ------------
Balance at June 30, 2000 ............    27,429,519      3,060,822      (3,480,983)      179,571,635
   Net income .......................    12,213,968             --              --        12,213,968
Purchase of treasury stock ..........            --        117,000      (1,291,655)       (1,291,655)
   Stock options exercised (note 12)             --             --              --         2,887,111
   Tax benefit from exercise of
     stock options (note 17) ........            --             --              --         5,375,231
   Issuance of restricted stock
     (note 13) ......................            --             --              --                --
   Amortization of unearned
     compensation (note 13) .........            --             --              --           525,435
   Stock options granted for services
     (note 12) ......................            --             --              --           172,050
                                        -----------      ---------     -----------      ------------
Balance at June 30, 2001 ............   $39,643,487      3,177,822     $(4,772,638)     $199,453,775
                                        ===========      =========     ===========      ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       32
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                    Years ended June 30, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                                   2001            2000             1999
                                                             --------------    -------------    -------------
<S>                                                           <C>              <C>               <C>
Cash flows from operating activities:
   Net income .............................................   $ 12,213,968     $   9,640,799     $ 6,949,825
   Adjustments to reconcile net income to net cash provided
     by operating activities:
      Depreciation and amortization of plant and equipment       2,775,594         1,768,234       1,432,808
      Amortization of intangibles .........................      1,624,913           245,667              --
      Provision for doubtful accounts .....................        140,000                --              --
      Deferred income taxes ...............................       (347,025)         (120,900)       (270,778)
      Unearned compensation ...............................        525,435           170,288              --
      Tax benefit from exercise of stock options ..........      5,375,231         2,513,788          92,225
      Changes in operating assets and liabilities,
         net of business acquisitions:
            Receivables ...................................        836,617        (3,722,212)        944,488
            Refundable income taxes .......................        636,925           (56,360)       (461,846)
            Inventories ...................................     (4,184,124)       (2,527,080)      1,970,103
            Accrued interest receivable ...................        816,173        (1,537,683)             --
            Prepaid expenses ..............................         89,550          (399,468)        (85,709)
            Other assets ..................................       (590,051)         (137,428)             --
            Accounts payable ..............................     (3,376,398)          179,239         138,829
            Income taxes payable ..........................        315,553           151,241         154,930
            Accrued expenses ..............................        537,628           169,792         496,569
            Customer advance payments .....................        165,833           253,503         157,773
            Postretirement benefit obligation .............         66,518            46,409          32,148
            Other liabilities .............................       (947,222)          138,923         244,000
                                                              ------------     -------------     -----------
                Net cash provided by operating activities .     16,675,118         6,776,752      11,795,365
                                                              ------------     -------------     -----------
Cash flows from investing activities:
   Capital expenditures ...................................     (7,975,512)       (6,022,444)     (2,146,320)
   Net purchases of marketable debt securities ............     13,517,619      (113,820,158)     (6,139,007)
   Purchase of businesses, net of cash acquired (note 2) ..    (17,818,476)       (7,510,093)             --
   Patent acquisition costs ...............................        (17,001)               --        (325,000)
                                                              ------------     -------------     -----------
                Net cash used in investing activities .....    (12,293,370)     (127,352,695)     (8,610,327)
                                                              ------------     -------------     -----------
Cash flows from financing activities:
   Payments on notes and line of credit ...................       (407,864)         (383,026)             --
   Stock options exercised ................................      2,887,111         1,464,627         516,519
   Proceeds from sale of common stock, net (note 10) ......             --       112,194,715              --
   Purchase of treasury stock .............................     (1,291,655)               --      (1,468,906)
   Dividends to stockholders (note 11) ....................             --            (2,747)             --
                                                              ------------     -------------     -----------
                Net cash provided by (used in) financing
                  activities ..............................      1,187,592       113,273,569        (952,387)
                Net increase (decrease) in cash and cash
                  equivalents .............................      5,569,340        (7,302,374)      2,232,651
Cash and cash equivalents at beginning of year ............      6,179,202        13,481,576      11,248,925
                                                              ------------     -------------     -----------
Cash and cash equivalents at end of year ..................   $ 11,748,542     $   6,179,202     $13,481,576
                                                              ============     =============     ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       33
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                          June 30, 2001, 2000 and 1999

(1) Summary of Significant Accounting Policies

  (a) Principles of Consolidation

      The  consolidated  financial  statements  include  the  accounts of Anaren
Microwave, Inc. and its wholly-owned subsidiaries (the Company). All significant
intercompany balances and transactions have been eliminated in consolidation.

  (b) Operations

      The  Company is engaged in the  design,  development  and  manufacture  of
microwave components,  assemblies and subsystems which receive and analyze radar
signals and other microwave transmissions.  Its primary products include devices
and systems used in the wireless  communications,  satellite  communications and
defense electronics markets.

  (c) Sales Recognition

      The Company generally recognizes sales at the time products are shipped to
customers. 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.

  (d) Cash Equivalents

      Cash  equivalents of $11,668,663 and $6,145,080 at June 30, 2001 and 2000,
respectively,  consist of certificates  of deposit and money market  instruments
having  maturities of three months or less. Cash  equivalents are stated at cost
which approximates fair value.

  (e) Marketable Debt Securities

      The Company  classifies  its  portfolio of marketable  debt  securities as
held-to-maturity in accordance with Statement of Financial  Accounting Standards
No. 115,  Accounting for Certain  Investments in Debt and Equity Securities,  as
the Company does not hold any  securities  considered to be trading or available
for sale.  Securities  held-to-maturity are those securities the Company has the
ability and intent to hold to maturity.

      Held-to-maturity  securities are recorded at amortized  cost. A decline in
the fair value of a  held-to-maturity  security  that is deemed to be other than
temporary  results in a charge to earnings  resulting in the  establishment of a
new cost basis for the security, and dividend and interest income are recognized
when earned.

  (f) Inventories

      Inventories  are  stated  at the  lower  of cost  or  market,  cost  being
determined on a first-in,  first-out basis.  Work-in-process inventories related
to fixed-price  contracts are stated at the accumulated cost of material,  labor
and manufacturing overhead, less the estimated cost of units delivered.

  (g) Property, Plant and Equipment

      Property,  plant and  equipment are stated at cost.  Depreciation  of land
improvements  and buildings is calculated  by the  straight-line  method over an
estimated  service life of 25 years.  Machinery and  equipment  are  depreciated
primarily by the straight-line method based on estimated useful lives of 5 to 10
years.

  (h) Goodwill

      Goodwill arising from the acquisitions described in note 2 is amortized on
a straight-line  basis over 15 years. The Company assesses the recoverability of
goodwill by determining  whether the  amortization of the goodwill  balance over
its remaining life can be recovered through  undiscounted  future operating cash
flows of the acquired operation.  The amount of goodwill impairment,  if any, is
based on the excess of the carrying amount over the fair


                                       34
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)
                          June 30, 2001, 2000 and 1999

value of those assets.  No impairment has been indicated to date. The assessment
of the recoverability of goodwill will be impacted if estimated future operating
cash flows are not achieved.

  (i) Patent

      During  fiscal  1999,  the  Company  purchased a patent for  $325,000  and
150,000 stock options. The stock options were valued at $249,965 as discussed in
note 12.  The  patent  is being  amortized  on a  straight-line  basis  over its
remaining  life of 8 years.  During fiscal 2001, the Company  capitalized  legal
fees aggregating $17,001 associated with obtaining a new patent.

  (j) 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  described in notes 12 and 13. 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 weighted  average  number of common shares  outstanding  for the basic
income per share calculation was 22,133,585, 17,977,782 and 16,566,168 for 2001,
2000 and 1999,  respectively.  For diluted  earnings per share  purposes,  these
balances increased by 1,321,659, 1,321,678 and 742,930 shares for 2001, 2000 and
1999,  respectively,  due to the effect of common  equivalent  shares which were
issuable under the Company's stock option and restricted stock plans.

  (k) Research and Development Costs

      Research and development costs are charged to expense as incurred.

  (l) Income Taxes

      The Company  utilizes the asset and  liability  method of  accounting  for
income  taxes.  Under this  method,  deferred  tax assets  and  liabilities  are
recognized for the future tax consequences  attributable to differences  between
the financial  statement carrying amounts of existing assets and liabilities and
their respective tax bases and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates.

  (m) Financial Instruments

      The  Company's  financial   instruments,   which  include  cash  and  cash
equivalents,  receivables,  and  accounts  payable,  are  stated  at cost  which
approximates fair value at June 30, 2001 and 2000. The Company's marketable debt
securities are stated at amortized cost, and their fair values, as determined by
quoted market prices, are presented in note 3.

  (n) Stock-based Compensation

      The  Company  measures  compensation  expense  for its stock  option-based
employee  compensation  plans using the intrinsic  value method and has provided
pro forma disclosures of the effect on net income and net income per share as if
the fair value-based method had been applied in measuring compensation expense.

      Upon  issuance  of shares of stock  pursuant to the  Company's  Restricted
Stock Program, an unearned compensation charge equivalent to the market value of
the  shares  on the date of grant is  charged  to  stockholders'  equity  and is
amortized over the related share restriction period.

  (o) Use of Estimates

      The  preparation  of financial  statements  in conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the reported  amounts of certain assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported  amounts of sales and expenses  during the reporting
period. Actual results could differ from those estimates.


                                       35
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)
                          June 30, 2001, 2000 and 1999

  (p) Recent Pronouncements

      In July 2001, the FASB issued Statement of Financial  Accounting Standards
No. 141,  Business  Combinations  which supersedes  Accounting  Principles Board
(APB)  Opinion  No.  16,   Business   Combinations.   SFAS  141  eliminates  the
pooling-of-interests method of accounting for business combinations and modifies
the  application  of the purchase  accounting  method.  The  elimination  of the
pooling-of-interests  method is effective for transactions  initiated after June
30,  2001.  The  remaining   provisions  of  SFAS  141  will  be  effective  for
transactions  accounted for using the purchase  method that are completed  after
June 30, 2001.  The Company has reviewed the Statement and believes  that,  upon
implementation,  will not have a material impact on our  consolidated  financial
statements.

      In July 2001,  the FASB also  issued  Statement  of  Financial  Accounting
Standards No. 142,  Goodwill and Intangible  Assets which supersedes APB Opinion
No. 17,  Intangible  Assets.  SFAS 142  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 for goodwill and intangible assets.  SFAS 142
will apply to goodwill and intangible assets arising from transactions completed
before and after the  Statement's  effective  date.  SFAS 142 is  effective  for
fiscal 2002.  The Company is currently  assessing  the Statement and has not yet
made a  determination  of the  impact  adoption  will  have on our  consolidated
financial statements.

  (q) Reclassifications

      Certain  2000  amounts  have been  reclassified  to conform  with the 2001
presentation.

(2) Acquisitions

      On February 29, 2000, the Company acquired all of the outstanding stock of
RF Power Components,  Inc. (RF Power).  RF Power is based in Bohemia,  New York,
and is primarily  engaged in the manufacture of electronic  products,  including
power  resistors,  attenuators  and couplers.  The transaction was accounted for
using  the  purchase  method  of  accounting  for  business   combinations  and,
accordingly,  the results of  operations  of RF Power have been  included in the
Company's consolidated financial statements since the date of acquisition.

      The purchase price was $7,749,294 in cash,  including  direct  acquisition
costs,  and 70,552 shares of the Company's  common stock with an aggregate value
of $1,744,667.  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 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 and is being
amortized on a straight-line basis over 15 years. The allocation of the purchase
price to the assets acquired and liabilities assumed follows:

             Cash ..............................................  $   239,201
             Accounts receivable ...............................    1,520,752
             Inventories .......................................    1,473,123
             Prepaid expenses ..................................       34,966
             Refundable income taxes ...........................      172,523
             Plant and equipment ...............................      478,599
             Deposits and other assets .........................      369,193
             Deferred income taxes .............................      331,434
             Accounts payable ..................................   (1,291,342)
             Accrued expenses ..................................     (300,687)
             Line of credit indebtedness .......................     (383,026)
             Other liabilities .................................     (971,679)
             Goodwill ..........................................    7,820,904
                                                                  -----------
                                                                  $ 9,493,961
                                                                  ===========


                                       36
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)
                          June 30, 2001, 2000 and 1999

      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  is  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 APPI  have been  included  in the
Company's consolidated financial statements since the date of acquisition.

      The purchase price was  $17,990,526,  including direct  acquisition  costs
(note 12),  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  and is being
amortized on a straight-line basis over 15 years. The allocation of the purchase
price to the assets acquired and liabilities assumed follows:

            Accounts receivable ...............................  $ 1,488,092
            Inventories .......................................    1,997,728
            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
                                                                 ===========

      The  following  unaudited  pro forma  financial  information  presents the
combined  results of  operations of the Company,  RF Power and Ocean,  as if the
acquisitions  had taken  place as of July 1,  1998.  The pro  forma  information
includes certain adjustments,  including the amortization of goodwill, reduction
of interest income, and certain other adjustments,  together with related income
tax effects.  The pro forma financial  information does not necessarily  reflect
the results of operations that would have occurred had the Company, RF Power and
Ocean, constituted a single entity during such periods.

                             2001             2000             1999
                         -----------      -----------      ------------
                                          (Unaudited)
Net sales .........      $85,764,523      $77,272,375      $61,111,274
Net income ........       11,821,536        9,136,874        6,513,875
Earnings per share:
  Basic ...........              .53              .50              .33
  Diluted .........              .50              .47              .32

(3) Marketable Debt Securities

      Marketable debt securities  classified as held-to-maturity  are summarized
as follows:

<TABLE>
<CAPTION>
                                                                        June 30, 2001
                                                  -----------------------------------------------------------
                                                                      Gross           Gross
                                                    Amortized      Unrealized      Unrealized        Fair
                                                      Cost            Gains          Losses          Value
                                                  ------------      --------         -----       ------------
<S>                                               <C>               <C>               <C>        <C>
Municipal bonds ............................      $ 56,719,914      $120,478          $ --       $ 56,840,392
Commercial paper ...........................           976,483           824            --            977,307
Corporate bonds ............................        19,527,093       224,451            --         19,751,544
Medium and short-term notes ................         4,991,859        36,741            --          5,028,600
Euro dollar bonds ..........................        10,418,904        87,683            --         10,506,587
Zero coupon bonds ..........................         4,939,275         7,200            --          4,946,475
Tax free auction securities ................        17,600,262            --          (262)        17,600,000
Asset backed securities ....................         5,110,153        39,892            --          5,150,045
                                                  ------------      --------         -----       ------------
   Total ...................................      $120,283,943      $517,269         $(262)      $120,800,950
                                                  ============      ========         =====       ============
</TABLE>


                                       37
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)
                          June 30, 2001, 2000 and 1999
<TABLE>
<CAPTION>

                                                           June 30, 2000
                                      -----------------------------------------------------
                                                         Gross       Gross
                                        Amortized     Unrealized  Unrealized      Fair
                                          Cost           Gains       Gains        Value
                                      ------------      -------     -------    ------------
<S>                                   <C>               <C>       <C>          <C>
Municipal bonds ....................  $ 70,602,586      $91,992   $      --    $ 70,694,578
Corporate bonds ....................    28,975,149           --    (113,457)     28,861,692
Medium and short-term notes ........    15,355,649           --     (77,795)     15,277,854
Euro Dollar bonds ..................    17,368,178           --     (63,023)     17,305,155
Taxable auction securities .........     1,500,000           --          --       1,500,000
                                      ------------      -------   ---------    ------------
   Total ...........................  $133,801,562      $91,992   $ 254,275   $133,639,279
                                      ============      =======   =========    ============
</TABLE>

      Marketable  debt  securities are classified as either current or long-term
assets in the accompanying consolidated balance sheets based upon their maturity
dates.

(4) Inventories

      Inventories at June 30 are summarized as follows:
                                                      2001            2000
                                                   -----------     -----------
Component parts ..............................     $ 9,995,712     $ 6,538,207
Work-in-process ..............................       4,497,996       3,757,139
Finished goods ...............................       4,073,269       2,089,779
                                                   -----------     -----------
                                                   $18,566,977     $12,385,125
                                                   ===========     ===========

(5) Property, Plant and Equipment

      Components  of  property,  plant and  equipment  at June 30 consist of the
following:

                                                      2001            2000
                                                   -----------     -----------
Land and land improvements ......................  $ 1,595,821     $ 1,362,050
Buildings .......................................    9,095,944       6,986,155
Machinery and equipment .........................   39,213,503      32,635,865
Construction in process .........................      155,899              --
                                                   -----------     -----------
                                                    50,061,167      40,984,070
Less accumulated depreciation and amortization ..   31,255,266      27,647,477
                                                   -----------     -----------
                                                   $18,805,901     $13,336,593
                                                   ===========     ===========

(6) Accrued Expenses

      Accrued expenses at June 30 consist of the following:

                                                       2001            2000
                                                    ----------      ----------
Compensation ....................................   $  989,499      $1,272,376
Commissions .....................................      790,609         510,855
Restructuring (note 7) ..........................      307,843              --
Accrued pension cost (note 15) ..................      401,032         211,844
Other ...........................................      477,275         249,166
                                                    ----------      ----------
                                                    $2,966,258      $2,244,241
                                                    ==========      ==========


                                       38
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)
                          June 30, 2001, 2000 and 1999

(7) Restructuring

      In May 2001,  the Company  committed to a plan for the  relocation  of its
Anaren Power Products, Inc. subsidiary to its Syracuse, New York headquarters to
be completed in June 2001.  In  connection  with this plan, as of June 30, 2001,
the Company recognized restructuring charges as follows:

Employee termination benefits ......................................  $297,443
Noncancellable lease obligation ....................................   216,116
Leasehold and equipment impairment .................................   174,778
                                                                      --------
                                                                      $688,337
                                                                      ========

      Employee  termination  benefits  relate to the  announced  termination  of
approximately  60 salaried and hourly  employees.  Such costs include  severance
payments and costs associated with the accelerated  vesting of employee vacation
benefits.  The noncancellable lease obligation is reflected based upon estimated
discounted  noncancellable cash outlays,  including estimated broker commissions
to sublease.  Leasehold and  equipment  impairment  charges  relate to abandoned
assets and have been reflected as a reduction of the related assets.

      As of June 30, 2001,  cash  payments  aggregating  $205,716 have been made
relating to the employee termination  benefits,  leaving a restructuring accrual
of $307,843 at June 30, 2001 (note 6).

(8) Other Liabilities

      Other liabilities as of June 30 consist of the following:

                                                        2001            2000
                                                      --------      ----------
Postemployment liability ..........................   $     --      $  920,602
Deferred compensation .............................    551,380         578,000
                                                      --------      ----------
                                                       551,380       1,498,602
Less current portion ..............................     65,000         190,814
                                                      --------      ----------
                                                      $486,380      $1,307,788
                                                      ========      ==========

      In  connection  with the  acquisition  of RF  Power  Components,  Inc.  as
discussed in note 2, the Company assumed a contractual post-employment liability
for a former RF Power  Components,  Inc.  employee.  In April 2001,  the Company
satisfied the contractual obligation.

      During fiscal 1998, the Company  implemented a deferred  compensation plan
for one  employee.  Under the plan,  the Company  will pay $65,000  annually for
fifteen years upon the employee's  retirement or, in the event of death,  to the
employee's beneficiary.

(9) Long-term Debt

      The Company has a $10,000,000  unsecured working capital revolving line of
credit bearing  interest at prime (6.75% at June 30, 2001) through  December 31,
2003. The terms of the revolving line of credit require maintenance of a minimum
tangible  net worth,  ratio of cash flow to  current  maturities,  and  leverage
ratio, as defined. There were no borrowings against the line of credit in fiscal
2001 and 2000.

      Cash  payments for interest  relating to the line of credit were  $37,500,
$38,779 and $38,537 during fiscal 2001, 2000 and 1999, respectively.

(10) Common Stock

      During the third and fourth quarters of fiscal 2000, the Company completed
the sale of an  additional  4,689,000  shares  of its  common  stock in a public
offering for $112,194,715, net of issuance costs.


                                       39
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)
                          June 30, 2001, 2000 and 1999

      On November 2, 2000, the Company's  shareholders  approved an amendment to
the  Certificate  of  Incorporation  to increase  the total  number of shares of
common stock from 25,000,000 to 200,000,000.

(11) Stock Split

      On February 19, 2000, the Company's board of directors  authorized a 3 for
2 stock  split  in the  form  of a stock  dividend  paid  on  June  12,  2000 to
shareholders  of  record  on May  12,  2000.  The  issuance  of  cash in lieu of
fractional  shares has been reflected as a cash dividend and charged to retained
earnings  during  fiscal  2000.  On November  2, 2000,  the  Company's  Board of
Directors  authorized a two for one stock split in the form of a stock  dividend
paid on November 27, 2000 to shareholders of record on November 17, 2000.

      All share and per share data in these  consolidated  financial  statements
and  footnotes  have been  retroactively  restated  as if the stock  splits  had
occurred as of the earliest period presented.

(12) Stock Option Plans

      Under the Company's Key Employee Incentive Stock Option Plan (Key Employee
Plan),  2,050,200  shares of common  stock were  reserved  for the  granting  of
options to eligible employees. Options are granted at a price not less than fair
market value of shares at the date of grant,  become  exercisable 20% six months
from the date of grant and 20% per year thereafter, and must be exercised within
ten years of the date of grant.

      In November 2000, the Company  established the  Company-Wide  Stock Option
Plan  (Company-Wide  Plan)  reserving  1,000,000  shares of common stock for the
granting of incentive stock options to eligible employees. All Company employees
are eligible to participate in the  Company-Wide  Plan in any given fiscal year,
except for employees  who have been granted  options under the Key Employee Plan
in any given fiscal year.  Options are granted at a price not less than the fair
market value of shares at the date of grant,  become  exercisable 36 months from
the date of grant, and must be exercised within five years of the date of grant.

      The Company also has a Non-Statutory  Stock Option Plan (NSO) which allows
for the granting of options to Board members and  nonemployees.  Under the Plan,
500,000  shares of common  stock were  reserved  for the  granting of options at
prices to be determined by the Board  (options  granted to Board members may not
be less  than  the fair  market  value on the  date of  grant).  Options  become
exercisable  immediately and must be exercised  within five years of the date of
grant.

      As discussed  in note 1, during  fiscal 1999 the Company  granted  150,000
stock  options as partial  consideration  for a patent.  The stock  options were
valued at $249,965 using the  Black-Scholes  model as of June 30, 1999 (the date
of  grant),  become  exercisable  one year from the date of  grant,  and must be
exercised within five years of the date of grant.

      In connection  with the  acquisition  of Ocean as discussed in note 2, the
Company issued 5,000 NSO's to a non-employee for services  provided in brokering
the   transaction.   The  stock  options  were  valued  at  $172,050  using  the
Black-Scholes  model  as of  November  2,  2000  (the  date  of  grant),  became
exercisable on the date of grant, and must be exercised within five years of the
date of grant. The option value is included with Ocean direct acquisition costs.


                                       40
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)
                          June 30, 2001, 2000 and 1999

      Information  for the three years ended June 30, 2001 with respect to these
plans are as follows:

<TABLE>
<CAPTION>
                                                    Shares
                            -------------------------------------------------------
                                       ISO                                                                   Weighted
                             ---------------------                                                           Average
                                Key       Company-                                           Option          Exercise
                             Employee       Wide       NSO        Other        Total          Price           Price
                             ---------   ----------   -----      ------       ------         -------         --------
<S>                         <C>           <C>         <C>       <C>         <C>              <C>                 <C>
Outstanding at
  June 30, 1998 ........    1,403,100          --     72,000          --     1,475,100       $ .46 to 7.05       2.59
     Issued ............      462,000          --     60,000     150,000       672,000        3.71 to 8.36       6.02
     Exercised .........     (297,000)         --         --          --      (297,000)        .46 to 6.63       1.74
     Expired ...........      (36,000)         --         --          --       (36,000)       1.96               1.96
                            ---------     -------    -------     -------     ---------
Outstanding at
  June 30, 1999 ........    1,532,100          --    132,000     150,000     1,814,100       $ .46 to 8.36       4.00
     Issued ............      680,500          --    112,500          --       793,000        7.65 to 54.00     14.29
     Exercised .........     (372,300)         --    (97,500)         --      (469,800)        .46 to 8.67       3.12
     Canceled ..........      (64,200)         --         --          --       (64,200)       2.17 to 7.04       4.38
                            ---------     -------    -------     -------     ---------
Outstanding at
  June 30, 2000 ........    1,776,100          --    147,000     150,000     2,073,100       $ .46 to 54.00      8.13
     Issued ............      625,500      45,900     75,000       5,000       751,400       14.70 to 62.44     50.40
     Exercised .........     (331,900)         --    (19,000)   (150,000)     (500,900)        .46 to 13.42      5.78
     Canceled ..........      (19,500)     (2,900)        --          --       (22,400)       4.63 to 53.00     21.81
                            ---------     -------    -------     -------     ---------
Outstanding at
  June 30, 2001 ........    2,050,200      43,000    203,000       5,000     2,301,200        1.38 to 62.44     22.31
                            =========     =======    =======     =======     =========
Shares exercisable
  at June 30, 2001 .....      475,600          --    203,000       5,000       683,600        1.38 to 62.44     11.56
                            =========     =======    =======     =======     =========
Shares available
  for grant at
  June 30, 2001 ........    1,504,200     957,000    197,500          --     2,658,700
                            =========     =======    =======     =======     =========
</TABLE>


                                       41
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)
                          June 30, 2001, 2000 and 1999

      The following  table  summarizes  significant  ranges of  outstanding  and
exercisable options at June 30, 2001:

                   Options Outstanding                      Options Exercisable
---------------------------------------------------------   --------------------
                                 Weighted
                                  Average     Weighted                 Weighted
   Range of                      Remaining     Average                  Average
   Exercise                      Life in      Exercise                 Exercise
    Prices           Shares        Years        Price     Shares         Price
---------------     ---------    ---------    --------    ------       -------
$ 1.00 to 5.00        371,700      4.80         8.79      296,700        1.92
  5.01 to 15.00     1,075,500      7.14         9.35      283,900        8.60
 15.01 to 40.00       195,500      8.90        28.46       21,400       25.53
 40.01 to 65.00       658,500      8.73        53.06       81,600       53.06
                    ---------                             -------
                    2,301,200                             683,600
                    =========                             =======

      The per share weighted  average fair value of stock options granted during
fiscal years 2001, 2000 and 1999 was $32.74,  $28.73,  and $6.40,  respectively.
The fair  value of  options  at the date of the  grant was  estimated  using the
Black-Scholes  model with the following  assumptions  for the respective  fiscal
year:

                                        2001              2000           1999
                                       -------           -------        -------
      Expected option life .........    5                 5              5
      Risk-free interest rate ......    6.00%             6.00%          4.82%
      Expected volatility ..........   74.00%            69.00%         69.00%
      Expected dividend yield ......    0.00%             0.00%          0.00%

      Stock-based  compensation  costs  would  have  reduced  pretax  income  by
$7,830,825,  $3,034,635 and $773,810 in fiscal 2001, 2000 and 1999, respectively
($7,474,580, $2,884,865 and $735,791 after tax and $.33, $.16 and $.05 per share
in fiscal  2001,  2000 and 1999,  respectively)  if the fair  values of  options
granted  in  that  year  had  been  recognized  as  compensation  expense  on  a
straight-line  basis over the vesting period of the grant.  The pro forma effect
on net income for fiscal 2001,  2000 and 1999 is not  representative  of the pro
forma  effect  on net  income  in  future  years  because  it does not take into
consideration  pro forma  compensation  expense  related to grants made prior to
fiscal 1996.

(13) Restricted Stock Program

      As of June 30, 2001 and 2000,  the Company has issued  shares  aggregating
102,976 and 72,000, respectively, under its Restricted Stock Program. The shares
of restricted  stock vest over a period of 42 to 48 months.  For the years ended
June 30, 2001 and 2000, the Company recognized  compensation  expense associated
with the lapse of restrictions aggregating $525,435 and $170,288, respectively.

(14) Shareholder Protection Rights Plan

      In April 2001,  the Board of Directors  adopted a  Shareholder  Protection
Rights Plan. The plan provides for a dividend  distribution of one right on each
outstanding share of the Company's stock,  distributed to shareholders of record
on  April  27,  2001.  The  rights  will  be  exercisable  and  will  allow  the
shareholders to acquire common stock at a discounted  price if a person or group
acquires 20 percent or more of the  outstanding  shares of common stock.  Rights
held by persons  who exceed the 20 percent  threshold  will be void.  In certain
circumstances,  the rights will entitle the holder to buy shares in an acquiring
entity at a discounted price. The Board of Directors may, at its option,  redeem
all  rights  for  $.001  per  right at any time  prior  to the  rights  becoming
exercisable.  The rights will expire on April 27, 2011, unless earlier redeemed,
exchanged or amended by the Board.


                                       42
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)
                          June 30, 2001, 2000 and 1999

(15) Employee Benefit Plans

      The Company has a  non-contributory  defined benefit pension plan covering
substantially  all of its  employees.  Effective  August  15,  2000 the plan was
closed for new participants. Benefits under this plan generally are based on the
employee's years of service and  compensation.  The following table presents the
changes in the  defined  benefit  pension  plan and the fair value of the Plan's
assets for the years ended June 30:

                                           2001         2000           1999
                                       -----------   -----------    -----------
Change in benefit obligation:
   Benefit obligation at
     beginning of year .............   $5,908,615    $6,087,651     $5,565,886
   Service cost ....................      204,440       198,174        198,406
   Interest cost ...................      437,762       403,830        374,331
   Actuarial loss (gain) ...........      237,835      (619,854)        96,912
   Benefits paid ...................     (225,797)     (161,186)      (147,884)
                                       ----------    ----------     ----------
   Benefit obligation at
     end of year ...................   $6,562,855    $5,908,615     $6,087,651
                                       ==========    ==========     ==========
Change in plan assets:
   Fair value of plan assets at
     beginning of year .............    5,744,994     5,626,769      5,594,504
   Actual return on plan assets ....      718,355       241,093        128,367
   Employer contributions ..........         --          38,318         51,782
   Benefits paid ...................     (225,797)     (161,186)      (147,884)
                                       ----------    ----------     ----------
   Fair value of plan assets at
     end of year ...................   $6,237,552    $5,744,994     $5,626,769
                                       ==========    ==========     ==========
   Funded status ...................     (325,303)     (163,621)      (460,882)
   Unrecognized net loss (gain) ....     (155,335)     (155,534)       234,227
   Unrecognized net assets
     existing at initial application       18,929        28,395         37,861
   Unrecognized prior service cost .       60,677        78,916         97,155
                                       ----------    ----------     ----------
   Accrued pension cost (note 6) ...   $ (401,032)   $ (211,844)    $  (91,639)
                                       ==========    ==========     ==========

      Components of net periodic pension cost for the years ended June 30 are as
follows:

                                           2001           2000          1999
                                         ---------     ---------     ---------
   Service cost ......................   $ 204,440     $ 198,174     $ 198,406
   Interest cost .....................     437,762       403,830       374,331
   Actual return on plan assets ......    (718,355)     (241,093)     (128,367)
   Amortization of prior service cost       18,239        18,239        18,239
   Deferral of gain (loss) ...........     237,636      (230,093)     (341,093)
   Amortization of net asset
     at transition ...................       9,466         9,466         9,466
                                         ---------     ---------     ---------
   Net periodic pension cost .........   $ 189,188     $ 158,523     $ 130,982
                                         =========     =========     =========
Weighted-average assumptions:
   Discount rate at year-end .........        7.25%          7.5%          6.7%
   Rate of increase in compensation
     levels at year end ..............         4.0%          4.0%          4.0%
   Expected return on plan assets
     during the year .................         8.5%          8.5%          8.5%


                                       43
<PAGE>
                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)
                          June 30, 2001, 2000 and 1999

      Plan assets consist principally of equity securities,  and U.S. government
and corporate obligations.

      The Company  maintains a voluntary  contributory  salary  savings  plan to
which  participants  may contribute up to 15% of their total  compensation.  The
Company's  matching  contribution  is 50%  (75%  effective  August  2000) of the
participants'   contribution  up  to  a  maximum  of  5%  of  the  participants'
compensation.  During  fiscal  2001,  2000 and  1999,  the  Company  contributed
$491,550, $249,324, $256,590, respectively, to this plan.

      The  Company  maintains  a profit  sharing  plan which  provides an annual
contribution  by the Company based upon a percentage of operating  earnings,  as
defined.  Eligible employees are allocated amounts under the profit sharing plan
based upon their respective earnings,  as defined.  Contributions under the plan
were  approximately  $300,390,  $331,000 and  $207,000 in fiscal 2001,  2000 and
1999, respectively. While the Company intends to continue this plan, it reserves
the right to terminate or amend the Plan at any time.

(16) Postretirement Benefits

      The Company  provides  medical  coverage  for current and future  eligible
retirees of the Company  plus their  eligible  dependents.  Employees  generally
become eligible for retiree medical  coverage by retiring from the Company after
attaining at least age 55 with 15 years of service (active employees at June 27,
1993 were eligible by retiring after  attaining at least age 55 with 10 years of
service).  Retirees at June 27, 1993 pay  approximately $30 per month for health
care coverage and the Company is responsible for paying the remaining costs. For
this group,  any increase in health care  coverage  costs for retired  employees
will be shared by the Company and  retirees on a  fifty-fifty  basis,  while any
increase in coverage  costs for retiree  dependents  will be totally paid by the
retirees.  For eligible  employees  retiring  after June 26,  1993,  the Company
contributes  a fixed dollar  amount  towards the cost of the medical  plan.  Any
future cost  increases for the retiree  medical  program for these  participants
will be charged to the retiree.

      The following  table  presents the changes in the  postretirement  benefit
obligation and the funded status of the Plan at June 30:

                                          2001          2000           1999
                                      -----------    -----------    -----------
Benefit obligation at beginning
  of year .........................   $ 1,213,601    $ 1,363,290    $ 1,316,452
Service cost ......................        43,040         28,845         24,192
Interest cost .....................       105,780         87,539         88,202
Plan participants' contributions ..        39,274         32,601         30,444
Actuarial loss (gain) .............       248,491       (196,098)        14,690
Benefits paid .....................      (121,576)      (102,576)      (110,690)
                                      -----------    -----------    -----------
Benefit obligation at end of year .   $ 1,528,610    $ 1,213,601    $ 1,363,290
                                      ===========    ===========    ===========
Fair value of plan assets .........   $        --    $        --    $        --
                                      ===========    ===========    ===========
Funded status .....................    (1,528,610)    (1,213,601)    (1,363,290)
Unrecognized actuarial loss (gain)        137,114       (111,377)        84,721
                                      -----------    -----------    -----------
Accrued postretirement benefit cost   $(1,391,496)   $(1,324,978)   $(1,278,569)
                                      ===========    ===========    ===========

      Net  periodic   postretirement   benefit  cost   includes  the   following
components:

                                              2001          2000          1999
                                            --------      --------      --------
Service cost .........................      $ 43,040      $ 28,845      $ 24,192
Interest cost ........................       105,780        87,539        88,202
                                            --------      --------      --------
Net periodic postretirement
  benefit cost .......................      $148,820      $116,384      $112,394
                                            ========      ========      ========


                                       44
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)
                          June 30, 2001, 2000 and 1999

      The  weighted-average  discount rate used in determining  the  accumulated
postretirement  benefit obligation was 7.25%, 7.5% and 6.7% at the end of fiscal
2001, 2000 and 1999, respectively.  For measurement purposes, the annual rate of
increase  in the per capita  cost of covered  benefits  (i.e.,  health care cost
trend rate) was assumed to be 5.0% for 2001,  2000 and 1999; the rate is assumed
to remain at 5.0%  thereafter.  The health care cost trend rate  assumption  may
have a significant effect on the amounts reported. A one-percentage point change
in assumed health care cost trend rates would have the following effects:

                                                  1% increase     1% decrease
                                                  -----------     -----------
 Effect on total of service and interest
   cost components ............................     $ 4,760       $ (4,555)
 Effect on postretirement benefit obligation ..      63,468        (60,735)

(17) Income Taxes

      Income tax expense (benefit) consists of:

                                   Current           Deferred           Total
                                  ----------        ----------       ----------
Year ended June 30, 2001:
      U.S. Federal .............  $6,151,164        $(333,599)       $5,817,565
      State ....................     595,861          (13,426)          582,435
                                  ----------        ---------        ----------
                                  $6,747,025        $(347,025)       $6,400,000
                                  ==========        =========        ==========
Year ended June 30, 2000:
      U.S. Federal .............  $5,053,669        $(180,715)       $4,872,954
      State ....................     130,231           59,815           190,046
                                  ----------        ---------        ----------
                                  $5,183,900        $(120,900)       $5,063,000
                                  ==========        =========        ==========
Year ended June 30, 1999:
      U.S. Federal .............  $1,806,767        $(256,613)       $1,550,154
      State ....................     668,011          (14,165)          653,846
                                  ----------        ---------        ----------
                                  $2,474,778        $(270,778)       $2,204,000
                                  ==========        =========        ==========

      A reconciliation of the expected consolidated income tax expense, computed
by applying the U.S.  Federal  corporate income tax rate of 34% to income before
income taxes, to income tax expense, is as follows:

                                     2001             2000              1999
                                  ----------       ----------       -----------
Expected consolidated
  income tax expense ...........  $6,328,749       $4,999,292       $ 3,112,301
State income taxes, net of
  Federal income tax benefit ...     384,407          125,430           431,538
Municipal interest income ......    (815,095)        (265,708)               --
Non-deductible goodwill ........     177,276           59,092                --
Tax benefit related to
  liquidation of foreign
  subsidiary ...................          --               --        (1,012,088)
Change in valuation allowance ..          --               --          (233,044)
Other, net .....................     324,663          144,894           (94,707)
                                  ----------       ----------       -----------
                                  $6,400,000       $5,063,000       $ 2,204,000
                                  ==========       ==========       ===========


                                       45
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)
                          June 30, 2001, 2000 and 1999

      The tax effects of  temporary  differences  that give rise to the deferred
tax assets and deferred tax  liabilities at June 30, 2001 and 2000 are presented
below:

                                                         2001          2000
                                                     ------------   -----------
Deferred tax assets:
      Inventories ................................   $   619,956    $   202,487
      Deferred compensation ......................       230,377        213,860
      Retirement benefits ........................        74,939         78,382
      Postretirement benefits ....................       528,768        490,242
      Postemployment liability ...................            --        340,623
      Restricted stock ...........................       264,375         55,131
      Nondeductible reserves .....................       261,865         20,350
      Federal and state tax credit carryforwards .       605,664        633,709
      State net operating less carryforwards .....        79,580             --
      Other ......................................        43,345         63,310
                                                     -----------    -----------
          Total deferred tax assets ..............     2,708,869      2,098,094
                                                     -----------    -----------
Deferred tax liabilities:
      Plant and equipment, principally due to
        differences in depreciation ..............    (1,488,762)    (1,225,012)
                                                     -----------    -----------
        Net deferred taxes .......................   $ 1,220,107    $   873,082
                                                     ===========    ===========
Presented as:
      Current deferred tax asset .................       956,759        301,220
      Long-term deferred tax asset ...............       263,348        571,862
                                                     -----------    -----------
                                                     $ 1,220,107    $   873,082
                                                     ===========    ===========

      In  assessing  the  realizability  of  deferred  tax  assets,   management
considers  whether it is more  likely  than not that some  portion or all of the
deferred tax assets will not be realized.  The ultimate  realization of deferred
tax assets is dependent  upon the generation of future taxable income during the
periods in which  those  temporary  differences  become  deductible.  Management
considers the scheduled  reversal of deferred tax liabilities,  projected future
taxable income,  and tax planning  strategies in making this  assessment.  Based
upon the level of historical  taxable income and  projections for future taxable
income over the periods which the deferred tax assets are deductible, management
believes it is more likely than not the  Company  will  realize the  benefits of
these deductible differences.

      The  Company  recognized  a tax  benefit of  $1,012,088  during the fourth
quarter of fiscal  1999 in  connection  with the  dissolution  of the  Company's
European  subsidiary.  The disposition of the net assets of the subsidiary and a
corresponding  restructuring  charge were  recognized  for  financial  reporting
purposes in 1996.  In the fourth  quarter of fiscal  1999,  all of the  criteria
necessary to support a deduction for the tax investment in the  subsidiary  were
met and the tax benefit was recorded.

      At June 30, 2001,  the Company has Federal and State credit  carryforwards
of $880,821  which expire at various dates  through 2021. At June 30, 2001,  the
Company has state net  operating  losses of  $1,808,627  which expire at various
dates through 2021.

      The tax  benefit  associated  with  the  exercise  of  stock  options  and
disqualifying  dispositions  by employees  reduced taxes payable by  $5,375,231,
$2,513,788  and  $92,225  in  fiscal  2001,  2000 and 1999,  respectively.  Such
benefits are reflected as additional paid-in capital.

      Cash payments for income taxes (net of refunds  received)  were  $419,316,
$2,575,231 and $2,689,469 in fiscal 2001, 2000 and 1999, respectively.


                                       46
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)
                          June 30, 2001, 2000 and 1999

(18) Segment and Related Information

  Segments

      The  Company  operates  predominately  in  the  wireless   communications,
satellite  communications  and defense  electronics  markets.  The Company's two
reporting  segments are the wireless group and the space and defense group.  The
Company's two reportable  segments have been determined based upon the nature of
the products and services offered,  customer base,  technology,  availability of
discrete internal  financial  information,  homogeneity of products 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 wireless segment designs, manufactures and markets commercial products
used mainly by the wirelesss  communications  market.  Products produced in this
business segment include highly integrated microwave components,  assemblies and
subsystems, as well as a product line of standard surface mount microwave signal
splitting and combining components, trade name Xinger, that are used in wireless
communications base station amplifiers.

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

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

<TABLE>
<CAPTION>
                                                        Space &      Corporate and
                                      Wireless          Defense       Unallocated      Consolidated
                                    ------------     ------------     -----------      ------------
<S>                                  <C>              <C>             <C>              <C>
Net sales:
        2001 .....................  $61,709,080       $23,116,195     $         --     $ 84,825,275
        2000 .....................   38,806,936        21,364,900               --       60,171,836
        1999 .....................   21,450,113        24,288,879               --       45,738,992
Operating income:
        2001 .....................    6,550,461         5,060,803               --       11,611,264
        2000 .....................    8,372,808         3,081,324               --       11,454,132
        1999 .....................    3,266,508         4,529,980               --        7,796,488
Identifiable assets*:
        2001 .....................   41,369,613        12,453,474      155,232,389      209,055,476
        2000 .....................   24,841,192         6,741,828      158,112,631      189,695,651
        1999 .....................    5,355,217         8,792,434       44,319,048       58,466,699
Depreciation and amortization**:
        2001 .....................    3,254,026         1,146,481               --        4,400,507
        2000 .....................    1,189,728           824,173               --        2,013,901
        1999 .....................      612,836           819,972               --        1,432,808
</TABLE>

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

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


                                       47
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)
                          June 30, 2001, 2000 and 1999

  Geographic Information

      Net sales by geographic region are as follows:

<TABLE>
<CAPTION>
                                                                    Other Foreign    Consolidated
                                 United States        Canada          Countries        Net Sales
                                 -------------      -----------     ------------      -------------
<S>                               <C>                <C>             <C>               <C>
   2001 ......................    $63,223,230        $4,232,851      $17,369,194       $84,825,275
   2000 ......................     45,251,267         5,471,193        9,449,376        60,171,836
   1999 ......................     36,468,513         4,590,991        4,679,488        45,738,992
</TABLE>

  Customers

      In 2001, sales to two customers  (approximately  $13,012,000,  relating to
the wireless  segment,  and approximately  $9,422,000,  related to the space and
defense  electronics  segment)  exceeded 10% of consolidated net sales. In 2000,
sales to two  customers  (approximately  $10,300,000,  relating to the  wireless
segment, and $7,000,000,  relating to the space and defense electronics segment)
exceeded  10% of  consolidated  net  sales.  In  1999,  sales  to two  customers
(approximately  $8,375,000,  relating to the wireless  segment,  and $5,250,000,
relating  to  the  space  and  defense  electronics  segment)  exceeded  10%  of
consolidated net sales.

(19) Commitments

      The  Company is  obligated  under  operating  leases for three  buildings.
Future minimum  payments under the  noncancelable  operating  leases  (including
lease as  discussed  at note 7) for the  next  five  years  and  thereafter  are
summarized as follows:

         Year ending June 30,
            2002 ...............................................  $  766,537
            2003 ...............................................     771,600
            2004 ...............................................     639,971
            2005 ...............................................     639,971
            2006 ...............................................     458,368
            Thereafter .........................................   2,818,130
                                                                  ----------
                                                                   6,094,577
         Less amounts representing sublease income .............     735,133
                                                                  ----------
                                                                  $5,359,444
                                                                  ==========

      Rent  expense  for the  years  ended  June  30,  2001,  2000  and 1999 was
$616,422,  $427,890 and  $396,861,  respectively.  Rent expense for fiscal 2001,
2000 and 1999 was offset by sublease income of $367,566,  $329,698 and $347,254,
respectively.

(20) Concentrations

      The  Company and others,  which are engaged in  supplying  defense-related
equipment  to the United  States  Government  (the  Government),  are subject to
certain business risks peculiar to the defense industry. Sales to the Government
may be  affected  by changes in  procurement  policies,  budget  considerations,
changing concepts of national defense,  political  developments abroad and other
factors.  Sales to the Government accounted for approximately 9%, 13% and 13% of
consolidated  net  sales in fiscal  2001,  2000 and  1999,  respectively.  While
management believes there is a high probability of continuation of the Company's
current defense-related programs, it continues to reduce its dependence on sales
to the Government through development of its commercial electronics business.


                                       48
<PAGE>

                     ANAREN MICROWAVE, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (concluded)
                          June 30, 2001, 2000 and 1999

(21) Quarterly Financial Data (Unaudited)

      The  following  table sets forth  certain  unaudited  quarterly  financial
information for the years ended June 30, 2001 and 2000:

<TABLE>
<CAPTION>
                                                                   2001 Quarter Ended
                                            -------------------------------------------------------------
                                              Sept. 30          Dec. 31        March 31         June 30
                                            -----------      -----------     -----------      -----------
<S>                                         <C>              <C>             <C>              <C>
Net sales .............................     $22,223,974      $25,188,261     $21,716,061      $15,696,978
                                            ===========      ===========     ===========      ===========
Cost of sales .........................     $13,397,703      $15,117,855     $14,042,456      $ 9,968,570
                                            ===========      ===========     ===========      ===========
Net income ............................     $ 3,981,086      $ 4,294,505     $ 2,751,806      $ 1,186,570
                                            ===========      ===========     ===========      ===========
Net income per common and
  common equivalent share:
     Basic ............................     $       .18      $       .19     $       .12      $       .05
                                            ===========      ===========     ===========      ===========
     Diluted ..........................     $       .17      $       .18     $       .12      $       .05
                                            ===========      ===========     ===========      ===========

                                                                   2000 Quarter Ended
                                            -------------------------------------------------------------
                                             Sept. 30          Dec. 31        March 31          June 30
                                            -----------      -----------     -----------      -----------
Net sales .............................     $12,464,363      $13,270,876     $15,618,931      $18,817,666
                                            ===========      ===========     ===========      ===========
Cost of sales .........................     $ 7,513,058      $ 7,930,472     $ 8,985,214      $10,645,372
                                            ===========      ===========     ===========      ===========
Net income ............................     $ 1,748,735      $ 1,923,929     $ 2,216,431      $ 3,751,704
                                            ===========      ===========     ===========      ===========
Net income per common and
  common equivalent share:
     Basic ............................     $       .11      $       .12     $       .13      $       .18
                                            ===========      ===========     ===========      ===========

     Diluted ..........................     $       .10      $       .11     $       .12      $       .16
                                            ===========      ===========     ===========      ===========
</TABLE>

      Income per share  amounts  for each  quarter  are  required to be computed
independently.  As a result, their sum does not necessarily equal the total year
income per share amounts.

(22) Subsequent Event (Unaudited)

      On August 31, 2001, the Company  acquired all of the  outstanding  capital
stock of Amitron,  Inc.  (Amitron),  a  privately  held  company  based in North
Andover,  Massachusetts.   Amitron  is  primarily  engaged  in  the  design  and
manufacture   of   ceramic   components   and   circuits,   for   the   medical,
telecommunications,  and defense  electronics  markets.  The purchase  price was
$9,775,000  in cash,  and 95,704  shares of the  Company's  common stock with an
aggregate value of $1,776,812.  The acquisition  will be accounted for under the
purchase method of accounting for business combinations.


                                       49
<PAGE>

Index to Exhibits

  Exhibit No.                     Description
  -----------                     -----------

      3.1         Certificate of Incorporation, as amended (1)

      3.2         Restated By-Laws (2)

      4.1         Specimen Certificate of Common Stock (3)

      4.2         Shareholder  Protection Rights Agreement dated as of April 20,
                  2001,  between the Company and American Stock Transfer & Trust
                  Company, including forms of Rights Certificate and Election to
                  Exercise (4)

      10.1        Employment  Agreement,  dated as of July 1, 2001,  between the
                  Company and Lawrence A. Sala

      10.2        Consulting  Agreement,  dated as of March 1, 1997, between the
                  Company and Dale F. Eck (5)

      10.3        Pension Plan and Trust (6)

      10.4        Anaren Microwave, Inc. Incentive Stock Option Plan, as amended
                  (7)

      10.5        Anaren Microwave,  Inc. 1989 Non-statutory  Stock Option Plan,
                  as amended (8)

      10.6        Employment Agreement, dated as of October 7, 1997, between the
                  Company and Hugh A. Hair (9)

      10.7        Credit  Facility  Agreement,  dated as of December  23,  1997,
                  between  the  Company  and  Manufacturers  and  Traders  Trust
                  Company,   together  with  the  Revolving  Credit  Note  dated
                  December  23,  1997  executed  by  the  Company  in  favor  of
                  Manufacturers and Traders Trust Company (10)

      10.8        Anaren  Microwave,  Inc.  Incentive  Stock Option Plan for Key
                  Employees (11)


<PAGE>

      10.9        Anaren Microwave, Inc. Stock Option Plan (12)

      10.10       Employment  Agreement,  dated as of February 29, 2000, between
                  the Company and Thomas J. Passaro, Jr. (13)

      21          Subsidiaries of the Company.

      23          Consent of KPMG LLP.

----------

(1)   (A) Restated Certificate of Incorporation of the Company,  filed on August
      11, 1967, is incorporated herein by reference to Exhibit 3(a) to Company's
      Registration  Statement  on  Form  S-1  (Registration  No.  2-42704);  (B)
      Amendment, filed on December 19, 1980, is incorporated herein by reference
      to Exhibit  4.1(ii) to the  Company's  Registration  Statement on Form S-2
      (Registration  No.  2-86025);  (C) Amendment,  filed on March 18, 1985, is
      incorporated  herein by reference to Exhibit 3.1 to the  Company's  Annual
      Report on Form 10-K (Commission File No. 0-6620) for the fiscal year ended
      June 30, 1987; (D) Amendment,  filed on December 14, 1987, is incorporated
      herein by  reference  to Exhibit  4(a)(iv) to the  Company's  Registration
      Statement on Form S-8 (Registration No. 33-19618); (E) Amendment, filed on
      April 8, 1999, is  incorporated  herein by reference to Exhibit 3.1 to the
      Company's  Annual Report on Form 10-K (Commission File No. 0-6620) for the
      fiscal year ended June 30, 1999; (F) Amendment, filed on February 8, 2000,
      is  incorporated   herein  reference  to  Exhibit  4.1  to  the  Company's
      Registration Statement on Form S-3 (Registration No. 333-31460) filed with
      the  Securities  and  Exchange  Commission  on  March  2,  2000;  and  (G)
      Amendment,  filed on November 22, 2000,  is  incorporated  by reference to
      Exhibit 3.1 to the  Company's  Quarterly  Report on Form 10-Q  (Commission
      File No. 0-6620) for the three months ended December 31, 2000.

(2)   Incorporated herein reference to Exhibit 4.2 to the Company's Registration
      Statement  on  Form  S-3  (Registration  No.  333-31460)  filed  with  the
      Securities and Exchange Commission on March 2, 2000.

(3)   Incorporated herein reference to Exhibit 4.3 to the Company's Registration
      Statement  on  Form  S-3  (Registration  No.  333-31460)  filed  with  the
      Securities and Exchange Commission on March 2, 2000.

(4)   Incorporated  herein by reference to Exhibits 4.1 and 4.2 to the Company's
      Registration Statement on Form 8-A (Commission File No. 0-6620) filed with
      the Securities and Exchange Commission on April 26, 2001.

(5)   Incorporated  herein by reference to Exhibit 10.5 to the Company's  Annual
      Report on Form 10-K (Commission File No. 0-6620) for the fiscal year ended
      June 30, 1997.


<PAGE>

(6)   Incorporated  herein  by  reference  to  Exhibit  4(b)  to  the  Company's
      Registration Statement on Form S-8 (Registration No. 33-19618).

(7)   Incorporated herein by reference to Appendix A to the Company's definitive
      proxy   statement  for  its  1998  annual  meeting  of  the   shareholders
      (Commission  File No.  0-6620),  filed with the  Securities  and  Exchange
      Commission on September 25, 1998.

(8)   Incorporated herein by reference to Appendix B to the Company's definitive
      proxy   statement  for  its  1998  annual  meeting  of  the   shareholders
      (Commission  File No.  0-6620),  filed with the  Securities  and  Exchange
      Commission on September 25, 1998.

(9)   Incorporated  herein  by  reference  to  Exhibit  10.12  to the  Company's
      Quarterly  Report on Form 10-Q  (Commission File No. 0-6620) for the three
      months ended September 30, 1997.

(10)  Incorporated  herein  by  reference  to  Exhibit  10.13  to the  Company's
      Quarterly  Report on Form 10-Q for the three  months  ended  December  31,
      1997.

(11)  Incorporated herein by reference to Appendix A to the Company's definitive
      proxy   statement  for  its  2000  annual  meeting  of  the   shareholders
      (Commission  File No.  0-6620),  filed with the  Securities  and  Exchange
      Commission on September 18, 2000.

(12)  Incorporated herein by reference to Appendix B to the Company's definitive
      proxy   statement  for  its  2000  annual  meeting  of  the   shareholders
      (Commission  File No.  0-6620),  filed with the  Securities  and  Exchange
      Commission on September 18, 2000.

(13)  Incorporated  herein by reference to Exhibit 10.10 to the Company's Annual
      Report Form 10-K  (Commission  File No.  0-6620) for the fiscal year ended
      June 30, 2000.